IMO Briefing 14 /2009

9 April 2009

Legal Committee (LEG) - 95th session: 31 March -3 April 2009

IMO approves draft HNS Protocol aimed at bringing 1996 HNS Convention into effect

The Legal Committee of the International Maritime Organization (IMO), meeting for its 95th session at IMO Headquarters in London, has approved a draft Protocol to the 1996 HNS Convention (the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea).

The draft Protocol is designed to address practical problems that have prevented many States from ratifying the original Convention which, despite being adopted in 1996, has, to date, only 13 ratifications and is some way from meeting the level of ratification that would trigger its entry into force .

The 1996 HNS Convention is based on the highly successful model of the Civil Liability and Fund Conventions. Like the regime introduced by the latter Conventiosn, it seeks to establish a two-tier system for compensation to be paid in the event of accidents at sea, in this case involving hazardous and noxious substances, such as chemicals. Tier one will be covered by compulsory insurance taken out by shipowners, who would be able to limit their liability; in those cases where the insurance does not cover an incident, or is insufficient to satisfy the claim, compensation shall be paid from a fund, made up of contributions from the receivers of HNS. Contributions will be calculated according to the amount of HNS received in each State in the preceding calendar year.

However, among the obstacles that have discouraged ratification of the Convention, one of the most difficult to overcome has been the requirement for States to report the quantities of HNS received to IMO. This difficulty is due, in part, to the sheer range and diversity of hazardous and noxious substances that will be governed by the HNS Convention.  As the reports act, among other things, as a trigger mechanism for the entry into force of the Convention, the omission of States to file them has effectively prevented the Convention from becoming operative.  The draft Protocol, which was developed initially by a focus group established by the 1992 IOPC Fund Assembly, is set to address this problem, as well as others thought to be acting as barriers to ratification of the Convention.

The IMO Legal Committee has now requested the IMO Council, which meets in June 2009, to approve the holding of a diplomatic conference as early as possible during 2010 to consider the draft Protocol, with a view to formally adopting it.

Key issues

It has been widely recognized that three issues have been instrumental in preventing States from ratifying the HNS Convention. The draft Protocol addresses each of them, as follows:

1. Problem: The difficulties in setting up the reporting system for packaged goods.

Solution: Packaged goods have been excluded from the definition of contributing cargo and, accordingly, receivers of these goods will not be liable for contributions to the HNS Fund.  However, since incidents involving packaged goods will remain eligible for compensation, the shipowners’ limits of liability for incidents involving packaged HNS will be increased.  The precise level of increase will be set at the Diplomatic Conference.

2. Problem: Under the 1996 HNS Convention, the person liable for LNG contributions is the person who held title to an LNG cargo immediately prior to its discharge.  In the case of other accounts, the person liable is the receiver. While the receiver must be subject to the jurisdiction of a State Party, the titleholder need not be.  It would, therefore, have been impossible to enforce payment of contributions to the LNG account by titleholders in non-State Parties.

Solution: Under the draft Protocol the receiver, as defined in Article 1.4 of the Convention, will be liable for annual contributions to the LNG account, except in the limited situation where the titleholder pays them, following an agreement to this effect with the receiver and the receiver has informed the State Party that such an agreement exists.

3. Problem: Despite an obligation to do so, very few States, when ratifying the HNS Convention, have submitted reports on contributing cargo.  This omission has been a contributing factor to the Convention not entering into force.  In addition, there has been a growing awareness of the desirability of preventing the invidious situation which has occurred in the IOPC Funds, where non-submission of reports results in non-payment of contributions but not in withholding of compensation.

Solution:  The draft Protocol deals with this in three ways.

*     In order to ratify the draft Protocol, States will be required to submit reports on contributing cargo - IMO, as Depositary, will not accept any ratifications which are not accompanied by such reports. States will also be obliged to continue to submit reports annually thereafter until the Protocol enters into force.

*     Should a State fail to submit reports annually, after depositing its instrument of ratification, but prior to entry into force of the Protocol, it will be temporarily suspended from being a Contracting State. The Protocol will, therefore, not enter into force for any State which is in arrears with reports.

*     Once the Protocol has entered into force for a State, compensation will be withheld, temporarily or permanently, in respect of that State, if it is in arrears with reports, except in the case of claims for personal injury and death.

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Note:

Entry into force will occur 18 months after the following conditions have been fulfilled:

*     12 States have accepted the Convention, four of which have not less than two million units of gross tonnage

*     Provided that persons in these States who would be responsible to pay contributions to the general account have received a total quantity of at least 40 million tonnes of contributing cargo in the preceding calendar year.

IMO - the International Maritime Organization - is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships.

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Lee Adamson, Head, Public Information Services on 020 7587 3153 (media@imo.org) or

Natasha Brown, External Relations Officer on 020 7587 3274 (media@imo.org).