Compensation regime for Hazardous and Noxious Cargoes a step closer

Two ratifications to a key compensation treaty covering the transport of hazardous and noxious substances (HNS) by ship have brought the instrument a step closer to entry into force.

Canada and Turkey on Monday (23rd April) deposited their instruments of ratification to the 2010 Protocol to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 (2010 HNS Convention)

When in force, the treaty will provide a regime of liability and compensation for damage caused by HNS cargoes transported by sea, including oil and chemicals, and covers not only pollution damage, but also the risks of fire and explosion, including loss of life or personal injury as well as loss of or damage to property. The HNS Convention establishes the principle that the ‘polluter pays’ by ensuring that the shipping and HNS industries provide compensation for those who have suffered loss or damage resulting from an HNS incident. An HNS Fund will be established, to pay compensation once ship owner’s liability is exhausted. This Fund will be financed through contributions paid post incident by receivers of HNS cargoes.

Both Canada and Turkey provided, as required by the treaty, data on the total quantities of liable contributing cargo. Turkey reported more than 25.4 million tonnes of cargo received.

Entry into force of the treaty requires accession by at least 12 States, meeting certain criteria in relation to tonnage and reporting annually the quantity of HNS cargo received in a State. The treaty requires a total quantity of at least 40 million tonnes of cargo contributing to the general account to have been received in the preceding calendar year.

The treaty has now been ratified by three States, Canada, Norway and Turkey. The total quantity of contributing cargo has reached 28.7 million tonnes, or nearly 72% of that required for entry into force.

IMO Secretary-General Kitack Lim welcomed the notable progress towards entry into force of the HNS Convention, seen as the last piece needed to complete IMO’s comprehensive liability and compensation regime.

“I thank Canada, Norway and Turkey for their commitment and strongly encourage other Member States to ratify the 2010 HNS Protocol. The IMO Secretariat stands ready to assist States considering ratifying the Convention,” said Mr Lim.

His Excellency Abdurrahman Bilgiç, Ambassador Extraordinary and Plenipotentiary, Permanent Representative of the Republic of Turkey to IMO, handed over Turkey’s instrument of ratification during IMO’s Legal Committee, which is meeting 23rd-25th April.

Earlier, Sarah Fountain Smith, Deputy High Commissioner, High commission of Canada in the United Kingdom, deposited Canada’s instrument of ratification with IMO Secretary-General Lim.

IMO is hosting a two-day workshop (26th-27th April) for States planning to ratify the HNS treaty. The workshop, organised in cooperation with the International Oil Pollution Compensation Funds (IOPC Funds), will focus on practical issues raised by States implementing the 2010 HNS Convention, which are mainly linked to the reporting of contributing cargo that need to be in place prior to a State being able to ratify or accede to the Convention. There will also be discussions on HNS incidents and risks.

IMO measures relating to the prevention of accidents that involve HNS cargoes are already in force, including ship design, operations and safety onboard as well as safety of loading and unloading operations. There is also a Protocol covering preparedness and response to shipping accidents involving hazardous substances.

The 2010 HNS Convention aims to deliver the uniform and comprehensive regime needed to provide compensation for costs, including clean-up and restoring the environment, in the event of an incident involving HNS cargoes.

The treaty complements existing regimes already in force for the transport of oil as cargo, bunker oil used for the operation and propulsion of ships, the removal of hazardous wrecks and claims for death of or personal injury to passengers, or for damage to their luggage, on ships.

Total compensation available under the HNS Convention is capped at 250 million Special Drawing Rights (SDR) of the International Monetary Fund (approximately $360 million at current exchange rates) per event. Ship owners are held strictly liable up to a maximum limit of liability established by the Convention for the cost of an HNS incident. Registered owners of ships carrying HNS cargoes have to maintain insurance that is State certified. The HNS Fund pays compensation once ship owner’s liability is exhausted and is financed through contributions paid post incident by receivers of HNS cargoes.

The HNS Fund is administered by States and contributions will be based on the actual need for compensation.

HNS covered by the Convention include: oils; other liquid substances defined as noxious or dangerous; liquefied gases; liquid substances with a flashpoint not exceeding 60˚C; dangerous, hazardous and harmful materials and substances carried in packaged form or in containers; and solid bulk materials defined as possessing chemical hazards.