European Union member states meet today to consider ratification of the carriage of hazardous and noxious substances by sea convention (HNS Convention 1996) as amended by the 2010 Protocol.
The updated regulation, which shipping associations have called on member states to ratify, would ensure higher compensation for victims of pollution and accidents caused by hazardous and noxious substances.
The HNS Convention was adopted in 1996 but due to practical problems with the convention member states were prohibited from ratifying it.
Under the convention (also as amended), an HNS fund will be established. Countries that ratify the convention will become members of the fund that provides an additional tier of compensation in the event of damage resulting from the carriage of hazardous and noxious substances.
The first tier of compensation would be paid by the shipowner through the relevant insurers or P&I clubs, with a limit of about USD140 million. Where damage is caused by packaged HNS, or by both bulk HNS and packaged HNS, the maximum liability for the shipowner would be USD161 million; and once this limit is reached, compensation would be paid from the second tier, the HNS Fund, up to a maximum of USD350 million (including compensation paid under the first tier).
If the damages are in excess of that amount, or if the shipowner is exonerated of liability, the country where the incident happens will pay.
A European Union (EU) source told IHS Maritime, “there seem to be no major obstacles to an adoption of the proposed decision”, but that ratification “must in the end be decided by national parliaments and therefore there is never a guarantee that an international agreement of this kind is ratified”. However, the source added that “some member states are preparing” for the ratification.
The new convention has pros and cons. The EU source listed the benefit as “better protection of (compensation for) victims of pollution and accidents caused by hazardous and noxious substances (i.e. chemicals)”. The downside of the regulation is that it is a “complicated and burdensome system, not easy to put into practice”- the same reason why the previous 1996 HNS Convention never entered into force. In addition, the source said, “Financial contributions might be heavy and might create an uneven playing field as long as not all major shipping nations (inside and outside the EU) have ratified.”
The International Chamber of Shipping, BIMCO, and the European Community Shipowners’ Associations submitted a paper to the EU urging member states “to ratify or accede to the Protocol of 2010 to the HNS Convention soonest”.
The group listed several benefits of ratification, including: A “very high level” of compensation for victims; a “regime of strict liability for the carrier”, and of “compulsory insurance as well as direct action against the carrier’s insurer”; and it would ensure that “costs are shared between shipowners and HNS cargo receivers”.
The shipping associations pointed out that environmental damages from HNS incidents are currently governed by the EU Directive 2004/35/EC on Environmental Liability for Preventing and Remedying Environmental Damage, which “does not provide victims/claimants with the same benefits as would be the case under the Convention itself”.
The paper concluded, “The shipping industry firmly believes that the moment has come for States, including EU Member States, to take up their responsibility and therefore calls upon all EU Member States to make a firm commitment – as opposed to a loose recommendation – in favour of a speedy ratification of or accession to the Protocol of 2010 to the HNS Convention, preferably no later than two years from the date of entry into force of the Council Decision or at the very latest no later than four years from this date.”