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29 April 2015
In December 2014 the government proposed to Parliament that the International Convention on Liability and Compensation for Damage in connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 (the 'HNS Convention') be ratified and that the Maritime Code be amended accordingly.
The HNS Convention establishes a new liability and compensation regime that will cover not only pollution damage from hazardous and noxious (HNS) substances carried by ships, but also the risks of fire and explosion, including loss of life or personal injury and loss of or damage to property. Its aim is to improve the position of claimants after accidents with hazardous and noxious goods onboard ships, as well as to protect environmental interests.
The HNS Convention has still not entered into force internationally, although 19 years has passed since it first was adopted. A protocol to the convention was agreed in 2010, designed to overcome practical problems that prevented the HNS Convention from entering into force. The changes implemented by the 2010 protocol include:
It also provided that the receivers of liquefied natural gas cargo must pay contributions to the HNS Fund, rather than the owners, before discharge.
The HNS Convention and its protocol work together as one instrument, meaning that any state which adopts the 2010 protocol will be bound by the HNS Convention as amended by the protocol.
The HNS Convention will create a two-tier compensation system which is largely modelled on the existing regime for oil pollution from oil tankers under the 1992 Civil Liability Convention and the 1992 Fund Convention. The financial burdens of the new regime will be shared by shipowners and cargo interests.
Shipowners will contribute to the first tier through strict liability for damage caused by HNS in connection with their carriage by sea. Liability may be limited, but for significantly higher amounts than under the existing global limitation rules. The maximum liability will be 100 million special drawing rights (SDR) ($140 million). Where damage is caused by packaged HNS or by both packaged and bulk HNS, the maximum liability will be 115 million SDR ($161 million). The shipowner will be obliged to take out compulsory liability insurance covering this liability, and the injured party will be entitled to bring a direct action against the liability insurer.
The second tier of compensation will be a compensation fund – the HNS Fund – which will compensate the injured party to the extent that it does not receive full indemnification from the shipowner or the insurer. The fund will cover claims arising out of the same incident for amounts up to 250 million SDR ($350 million) insofar as such claims are not covered by the shipowner or the insurer. The fund will be financed by contributions from the receivers of HNS cargo.
The HNS Convention will enter into force 18 months after it has been ratified by at least 12 states, of which at least four states each have a minimum fleet of 2 million gross tonnage, and when the International Maritime Organisation secretary general has received information substantiating that these states have received a total quantity of at least 40 million tonnes of HNS cargo in the year before ratification. To date, Norway has signed the HNS Convention, along with Denmark, Canada, France, Germany, the Netherlands and Turkey. Significant efforts are now being made internationally in order to facilitate implementation and entry into force of the HNS Convention.
Norway is expected to ratify the HNS Convention in 2015 or 2016, although the timing will presumably depend on when the other European countries – particulatly the Nordic countries – will ratify the convention.
For further information on this topic please contact Kaja Oftedal Rasting, Herman Steen or Gaute Gjelsten at Wikborg Rein by telephone (+47 22 82 75 00) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Wikborg Rein website can be accessed at www.wr.no.
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