International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996

International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996

1 The History of the Convention

These were the fundamental questions that required consideration in order to establish the scope of application of this new convention:

(a) What should be the substances, other than oil within the meaning given to it in the CLC?

(b) What should be the damages to which the future convention should apply?

(c) Who should provide the funds for the settlement of claims arising out of such damages?

In respect of the first issue it was decided that, as it was done with the CLC, the method to be adopted should be that of a definition of such substances: a task much more difficult than that of the definition of ‘oil’ given the great variety of substances that, in addition to oil, could cause damages. In respect of the second issue, which was linked to the solution adopted for the first, it was decided that the damages should include not only damage to the environment, but also loss of life and personal injuries. In respect of the third issue, the same two-tier solution adopted by the CLC, accompanied by the owner’s compulsory insurance and the Fund Convention was chosen; but more difficulties had arisen in respect of whether contributions to the fund should be provided by the shippers or the receivers of the hazardous and noxious substances.

The Convention was adopted on 3 May 1996, but at the end of 2008, over 12 years after its adoption, it had been acceded to by only 14 States, out of which only three¹ had a tonnage in excess of 2 million tons, the required number of States with tonnage in excess of 2 million tons being four, pursuant to art. 46 of the Convention. An enquiry into the underlying reasons that had inhibited the entry into force of the Convention was carried out by the IMO Secretariat. It appeared that these had included the heavy burden on States having to report the vast range of packaged substances received by them pursuant to art. 21(3) of the Convention, the fact that, in the case of LNG cargoes, the title holder, who would be the person responsible for making contributions, may not be subject to the jurisdiction of a State Party and the possible non-submission of contributing cargo reports on ratification of the Convention and annually thereafter.²

With a view to curing those difficulties a Protocol to the Convention was adopted on 30 April 2010 with amendments, inter alia, to the definition of hazardous and noxious substances in art. 1(5), including the new definitions of ‘Bulk HNS’ and ‘Packaged HNS’ required for the amendment of art. 9 in which distinct limits were adopted for hazardous and noxious substances.

Four Resolutions were also adopted by the Conference:³ with the first, the Assembly of the IOPC Fund was requested to set up the HNS Fund; with the second, States Parties to the 2010 HNS Protocol, Member States of IMO and other appropriate organisations as well as the maritime industry were requested to provide assistance to those States which required support in the consideration of adoption and implementation of the Protocol; with the third, States were invited to give early and urgent consideration to acceptance of the Protocol, in order to avoid the contemporary existence of two different regimes, that of the HNS 1996 and that created by the Protocol; with the fourth, the Legal Committee of IMO was invited to reconsider its overview of the 1996 HNS Convention in light of the adoption of the Protocol.

The efforts to encourage the adoption of the HNS Convention, as amended by the 2010 Protocol (reference to which was made as the ‘2010 HNS Convention’) continued in the following years.

On 28 January 2011, an Overview of the 2010 HNS Convention was prepared by the IMO Secretariat and submitted to the Legal Committee for its comments and decisions as appropriate.⁴ During the HNS Workshop held at IMO Headquarters on 12 and 13 November 2012, Guidelines on reporting of HNS contributing cargo were prepared and endorsed by the IMO Legal Committee at its 100th session on 19 April 2013. At the time of endorsing the Guidelines it was agreed that States should continue to monitor and coordinate ratification and accession timelines and that the IMO and the IOPC Funds should continue their work to promote the entry into force of the HNS Protocol. At a subsequent informal meeting that took place on 24 October 2013, during a subsequent meeting of the IOPC Funds, it was agreed that an Informal Correspondence Group be constituted to continue the dialogue among States aiming at resolving implementation issues. At the 101st session of the Legal Committee, the following Terms of Reference for the Correspondence Group were submitted by Canada, Denmark, France, Germany, the Netherlands and Norway:⁵

1 to provide a forum for an exchange of views concerning HNS implementation issues and to monitor and inform the implementation process in States;

2 to provide, with a view to encouraging early entry into force of the 2010 HNS Convention at a global level, and for the benefit of both potential States Parties and affected industries seeking a coordinated approach to ratification, accession or acceptance, guidance and assistance on issues regarding the implementation and operation of the Convention such as, but not limited, to:

(a) the collection of information on contributing cargo, the development of appropriate reporting and verification systems, and the contribution system in accordance with the Guidelines on reporting of HNS contributing cargo;

(b) the acceptability of insurance or other financial security for the purpose of article 12 of the 2010 HNS Convention;

(c) assisting the IOPC Fund 1992 with the development of the various documents and decisions required for the first sessions of the HNS Assembly, in accordance with resolution 1 on setting up the HNS Fund agreed to at the international conference which adopted the 2010 HNS Protocol; and

3 to report to the Legal Committee on a regular basis.

However no success has so far been achieved towards the entry into force of the HNS Convention 2010. As at 30 September 2014, no State had deposited an instrument of ratification or accession to the Convention as amended by the Protocol.⁶

2 The Structure of the Convention

While in respect of oil pollution damage there are, owing to their history, two separate conventions — the CLC Convention which regulates the liability of the owners of ships carrying oil and the Fund Convention which regulates the contribution of the cargo — in respect of damage in connection with the carriage of hazardous and noxious substances both aspects are regulated in the same convention. Its structure is therefore different. The Convention is divided into six chapters: the first containing general provisions applicable to the whole Convention; the second containing rules on the liability of the owner as the CLC does for oil; the third containing rules on the establishment and the administration of the International Fund; the fourth, again of a general nature, containing rules on claims and actions; the fifth on transitional provisions; and the sixth on final clauses. This commentary follows the structure of the Convention.

I — General Provisions

3 Scope of Application

The scope of application of the Convention is defined with reference to the nature of the damage, the substances that may cause the damage, and the area in which the damage is caused.

3.1 Nature of the damage

The following definition of damage is given in art. 1(6):

6 ‘Damage’ means:

(a) loss of life or personal injury on board or outside the ship carrying the hazardous and noxious substances caused by those substances;

(b) loss of or damage to property outside the ship carrying the hazardous and noxious substances caused by those substances;

(c) loss or damage by contamination of the environment caused by the hazardous and noxious substances, provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken; and

(d) the costs of preventive measures and further loss or damage caused by preventive measures.

Where it is not reasonably possible to separate damage caused by the hazardous and noxious substances from that caused by other factors, all such damage shall be deemed to be caused by the hazardous and noxious substances except if, and to the extent that, the damage caused by other factors is damage of a type referred to in article 4, paragraph 3.

In this paragraph, ‘caused by those substances’ means caused by the hazardous or noxious nature of the substances.

This definition, and consequently the scope of application of the Convention, is much wider than that in art. 1(6) of the CLC, since it includes, in addition to loss or damage by contamination of the environment and cost of preventive measures, loss of life or personal injury and loss of or damage to property caused by noxious or hazardous substances.

With respect to loss of life or personal injury the occurrence may be either on board the ship or outside, provided it is caused by the hazardous or noxious substances carried on the ship, and its character and the limits are the same as those of oil pollution damage under the CLC 1992.

With respect to loss of or damage to property, such property must be outside the ship, either at sea or ashore, while the Convention does not apply to claims in respect of loss or damage to property on board the ship caused by the hazardous or noxious substances carried on that ship and the rule on preventive measures mirrors that in art. I(6)(b) of CLC 1992.

With respect to loss or damage by contamination of the environment, the limits in respect of compensation for impairment of the environment other than loss of profit from such impairment are the same as those set out in art. I(6) of the CLC 1992 in respect of pollution damage.

It is on the contrary a new rule that where damage is jointly caused by hazardous and noxious substances and by other factors and it is not reasonably possible to separate damage caused by the hazardous and noxious substances from that caused by other factors, in which event all such damage shall be deemed to be caused by the hazardous and noxious substances. This presumption, however, does not operate where, and to the extent to which, the damage caused by other factors is damage of a type referred to in art. 4(3), wherein reference is made to pollution damage as defined in the CLC 1969 as amended and to damage caused by a radioactive material of class 7 either in the International Maritime Dangerous Goods Code, as amended, or in the International Maritime Solid Bulk Cargoes Code, as amended.⁷

The reason why the presumption does not operate is that pursuant to art. 4(2) the Convention does not apply to damage caused by such material. However, the question remains on the basis of which criterion the proportion of the damage caused by hazardous and noxious substances may be established, where separation of such damage from that caused by radioactive material is not possible.⁸ Perhaps the only reasonable criterion is that causation be apportioned equally: a criterion adopted in art. 4 of the 1910 Collision Convention when it is not possible to establish the degree of fault.⁹

3.2 Substances causing the damage

Art. 4(1) states:

This Convention shall apply to claims, other than claims arising out of any contract for the carriage of goods and passengers, for damage arising from the carriage of hazardous and noxious substances by sea.

The substances that may cause the damage, globally referred to as ‘hazardous and noxious substances’, are so defined in art. 1(5) followed by a comment when necessary:

5 ‘Hazardous and noxious substances (HNS)’ means:

6 any substances, materials and articles carried on board a ship as cargo, referred to in (i) to (vii) below:

Reference to substances carried as cargo indicates clearly that bunker oil is excluded from the scope of application of this Convention.

(i) oils, carried in bulk, as defined in regulation 1 of Annex I to the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, as amended;

Appendix I to Annex I to MARPOL¹⁰ consists of a ‘List of oils’ that includes asphalt solutions, oils, distillates, gas oil, gasoline blending stocks, gasoline, jet fuels and naphtha and, therefore, does not include the oils reference to which is made in art. 1(5) of the CLC.

(ii) noxious liquid substances, carried in bulk, as defined in regulation 1.10 of Annex II to the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, as amended, and those substances and mixtures provisionally categorized as falling in pollution category X, Y or Z in accordance with regulation 6.3 of the said Annex II;

Regulation 1.10 of Annex II to MARPOL states:

Noxious liquid substance means any substance indicated in the Pollution Category column of chapter 17 or 18 of the International Bulk Chemical Code or provisionally assessed under the provisions of regulation 6.3 as falling into category X, Y or Z.

Regulation 6.3 of Annex II to MARPOL states:

3 Where it is proposed to carry a liquid substance in bulk which has not been categorized under paragraph 1 of this regulation,¹¹ the Governments of Parties to this Convention involved in the proposed operation shall establish and agree on a provisional assessment for the proposed operation on the basis of the guidelines referred to in paragraph 2 of this regulation.¹² Until full agreement among the Governments involved has been reached, the substance shall not be carried. As soon as possible, but not later than 30 days after the agreement has been reached, the Government of the producing shipping country, initiating the agreement concerned, shall notify the Organization and provide details of the substance and the provisional assessment for annual circulation to all Parties for their information. The Organization shall maintain a register of all such substances and their provisional assessment until such time as the substances are formally included in the IBC Code.

(iii) Dangerous liquid substances carried in bulk listed in chapter 17 of the International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk as amended, and the dangerous products for which the preliminary suitable conditions for the carriage have been prescribed by the Administration and port administrations involved in accordance with paragraph 1.1.6 of the Code.

The chapeau of chapter 17 of this Code states:

Mixtures of noxious liquid substances presenting pollution hazards only, and which are assessed or provisionally assessed under regulation 6.3 of MARPOL Annex II, may be carried under the requirements of the Code applicable to the appropriate position of the entry in this chapter or Noxious Liquid Substances, not otherwise specified (n.o.s.).

The substances enumerated in this chapter are published at pages 88–249 of the Code. The initial explanatory note relating to the ‘Product name’ may be of interest:

The product name shall be used in the shipping document for any cargo offered for bulk shipments. Any additional name may be included in brackets after the product name. In some cases, the product names are not identical with the names given in previous issues of the Code.

(iv) dangerous, hazardous and harmful substances, materials and articles in packaged form covered by the International Maritime Dangerous Goods Code, as amended;

Although this provision does not help very much in the identification of the substances, material and articles mentioned in the IMDG Code, it would appear that reference should be made to Chapter 4.1 of the Code on ‘Use of packaging, including intermediate bulk containers (IBCs) and large packaging’, in which specific packing instructions are provided in respect of specific categories of goods.

(v) liquefied gases as listed in chapter 19 of the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk, as amended, and the products for which preliminary suitable conditions for the carriage have been prescribed by the Administration and port administrations involved in accordance with paragraph 1.1.6 of the Code.

The IGC Code, adopted by resolution of the Maritime Safety Committee of IMO 5(48) of 17 June 1983, states in paragraph 1 of its Preamble:

The purpose of this Code is to provide an international standard for the safe carriage by sea in bulk of liquefied gases and certain other substances listed in chapter 19 of the Code,¹³ by prescribing the design and construction standards of ships involved in such carriage and the equipment they should carry so as to minimize the risk to the ship, to its crew and to the environment, having regard to the nature of the product involved.

(vi) liquid substances carried in bulk with a flashpoint not exceeding 60°C (measured by a closed-cup test),

(vii) solid bulk materials possessing chemical hazards covered by the International Maritime Solid Bulk Cargoes Code, as amended, to the extent that these substances are also subject to the provisions of the International Maritime Dangerous Goods Code in effect in 1996, when carried in packaged form.

The solid bulk cargos which may possess a chemical hazard during transport are the object of regulation in Section 9 of the IMSBC Code adopted by Resolution MSC.268(85) of 4 December 2008. They are included in the definition of HNS in art. 1(5)(a) of the HNS Convention and consequently subject to its rules only if they are subject to the provisions of the IMDG Code.

(b) residues from the previous carriage in bulk of substances referred to in (a)(i) to (iii) and (v) to (vii) above.

While in the CLC reference to residues is made in the definition of ship in order to limit the application of the Convention to ships capable of carrying oil and other cargo performing a voyage following that with cargo on board to the existence during such voyage of residues of a prior voyage with cargo on board, in the HNS Convention they are included in the definition of hazardous and noxious substances. The reason for such difference is that while in the CLC the characteristics of the ships are a determinant factor for the application of the Convention, in the HNS Convention they are not as it appears from the following very generic definition of ship in its art. 1(1):

’ship’ means any seagoing vessel and seaborne craft, of any type whatsoever.

3.3 Area in which the damage is caused

Art. 3 states:

This Convention shall apply exclusively:

(a) to any damage caused in the territory, including the territorial sea, of a State Party;

(b) to damage by contamination of the environment caused in the exclusive economic zone of a State Party, established in accordance with international law, or, if a State Party has not established such a zone, in an area beyond and adjacent to the territorial sea of that State determined by that State in accordance with international law and extending not more than 200 nautical miles from the baselines from which the breadth of its territorial sea is measured;

(c) to damage, other than damage by contamination of the environment, caused outside the territory, including the territorial sea, of any State, if this damage has been caused by a substance carried on board a ship registered in a State Party or, in the case of an unregistered ship, on board a ship entitled to fly the flag of a State Party; and

(d) to preventive measures, wherever taken.

The nature of the damage to which the Convention applies varies according to the area in which the damage is caused and the flag of the ship that carries the substance that has caused the damage.

(a) Damage caused in the territory, including the territorial sea, of a State Party: the Convention applies to any damage covered by the definition in art. 1(6), namely loss of life or personal injury, loss of or damage to property, loss or damage by contamination of the environment.

(b) Damage caused in the Exclusive Economic Zone of State Party or area beyond and adjacent to the territorial sea of that State determined by that State: the Convention applies only in respect of damage by contamination of the environment.

(c) Damage caused outside the territory, including the territorial sea, of any State, by a substance carried on board a ship registered in a State Party or, in the case of an unregistered ship, on board a ship entitled to fly the flag of a State Party: the Convention applies only in respect of damage other than by contamination of the environment, such damage being either loss of life or personal injury or loss or damage to property.

3.4 Exclusions from the scope of application

3.4.1 Exclusions related to the basis of the claims

Art. 4(1) states:

This Convention shall apply to claims, other than claims arising out of any contract for the carriage of goods and passengers, for damage arising from the carriage of hazardous and noxious substances by sea.

The effect of the exclusion of claims arising out of any contract for the carriage of goods and passengers appears to be that the Convention does not apply to claims for damage to goods owned by a shipper caused by hazardous and noxious substances carried on board the ship.

3.4.2 Exclusions based on the character or the cause of the damage

Art. 4(3) states:

3 This Convention shall not apply:

4 to pollution damage as defined in the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended, whether or not compensation is payable in respect of it under that Convention; and

(b) to damage caused by a radioactive material of class 7 either in the International Maritime Dangerous Goods Code, as amended, or in appendix B of the Code of Safe Practice for Solid Bulk Cargoes, as amended.

The exclusion under (a) is obvious, since the HNS Convention aims to complement the CLC and the Fund Convention by covering damage caused by substances other than oil as defined in art. 1(5) of the CLC.

The reference in the exclusion under (b) to damage caused by a radioactive material of class 7 either in the International Maritime Dangerous Goods Code, as amended, or in the International Maritime Solid Bulk Cargoes Code, as amended is unclear, for in the Code Class 7 is not a specific class of radioactive materials, but rather is the class relating to radioactive materials: since there is in Chapter 2.7 of the Code entitled ‘Class 7 — Radioactive materials’ a definition of such materials, it is suggested that the meaning of that provision is ‘radioactive materials as defined in Class 7 of the IMDG Code’.

Class 7 of the IMSBC Code,¹⁴ is the class of radioactive materials defined in section 9.2.2.6:

The materials in this class are any materials containing radionuclides where both the activity concentration and the total activity in the consignment exceeds the value specified in 7.7.7.2.1 to 7.7.7.2.6 of the IMDG Code.

3.4.3 Exclusion of warships and ships owned or operated by States

Art. 4 states in paragraphs 4, 5 and 6:

1. Except as provided in paragraph 5, the provisions of this Convention shall not apply to warships, naval auxiliary or other ships owned or operated by a State and used, for the time being, only on Government non-commercial service.
   
2. A State Party may decide to apply this Convention to its warships or other vessels described in paragraph 4, in which case it shall notify the Secretary-General thereof specifying the terms and conditions of such application.
   
3. With respect to ships owned by a State Party and used for commercial purposes, each State shall be subject to suit in the jurisdictions set forth in article 38 and shall waive all defences based on its status as a sovereign State.

These provisions reproduce those in art. XI of the CLC, previously considered.¹⁵

3.4.4 Exclusions allowed to States Parties

Art. 5(1) states:

1 A State may, at the time of ratification, acceptance, approval of, or accession to, this Convention, or any time thereafter, declare that this Convention does not apply to ships:

(a) which do not exceed 200 gross tonnage; and

(b) which carry hazardous and noxious substances only in packaged form; and

(c) while they are engaged on voyages between ports or facilities of that State.

The conjunction ‘and’ between (a) and (b) and between (b) and (c) indicates that the requirements mentioned under (b) and (c) are cumulative to that under (a). Consequently the liberty granted to States Parties is restricted to ships which do not exceed 200 gross tons only where they carry the substances mentioned in (b) and perform the voyages mentioned in (c).

This is confirmed by the following wording of paragraph 2 that allows two neighbouring States to exclude the application of the Convention when the ships mentioned in paragraph 1 are engaged in voyages between ports and facilities of such States:

1. Where two neighbouring States agree that this Convention does not apply also to ships which are covered by paragraph 1(a) and (b) while engaged on voyages between ports or facilities of those States, the States concerned may declare that the exclusion from the application of this Convention declared under paragraph 1 covers also ships referred to in this paragraph.

However, the exclusion of its application is not global as the liability of the HNS Fund does not cease to exist except where the damage is caused in the State or States, reference to which is made in paragraphs 1 and 2. Art. 5(5) states:

5 The HNS Fund is not liable to pay compensation for damage caused by substances carried by a ship to which the Convention does not apply pursuant to a declaration made under paragraph 1 or 2, to the extent that:

(a) the damage as defined in article 1, paragraph 6(a), (b) or (c) was caused in:

(i) the territory, including the territorial sea, of the State which has made the declaration, or in the case of neighbouring States which have made a declaration under paragraph 2, of either of them; or

(ii) the exclusive economic zone, or area mentioned in article 3(b), of the State or States referred to in (i);

(b) the damage includes measures taken to prevent or minimize such damage.

II — Liability of the Owner

4 The definition of ‘Owner’

The definition of ‘owner’ in art. 1(3) is the same as that in art. 1(3) of the CLC 1992:¹⁶

1. ‘Owner’ means the person or persons registered as the owner of the ship or, in the absence of registration, the person or persons owning the ship. However, in the case of a ship owned by a State and operated by a company which in that State is registered as the ship’s operator, ‘owner’ shall mean such company.

Therefore, except in the situation mentioned in the second sentence, which at least at the time when the CLC was adopted was usual in socialist countries, only the registered owner is liable and, where a ship is chartered by demise, the charterer is not liable under the Convention, albeit its liability may exist vis-à-vis the registered owner, if so provided in the charter party.

The opinion that the HNS Convention should be based on a principle of shared responsibility between shipowners and cargo owners and that liability of shipowners should, as in the CLC, be strict had been supported by a large majority, but different views had been put forward in respect of the limits of shipowners’ liability.¹⁷

5 The Basis of Liability and the Allocation of the Burden of Proof

Article 7(1) states:

Except as provided in paragraphs 2 and 3, the owner at the time of an incident shall be liable for damage caused by any hazardous and noxious substances in connection with their carriage by sea on board the ship, provided that if an incident consists of a series of occurrences having the same origin the liability shall attach to the owner at the time of the first of such occurrences.

The claimant, therefore, has the burden of proving the loss or damage and that such loss or damage has been caused by hazardous or noxious substances as defined in art. 1(5) in connection with their carriage on board a ship of which the defendant is the owner. ‘In connection with the carriage’ does not restrict the liability of the owner to the time when the goods were on board the ship: the loss or damage may have occurred before loading, provided the substances were under the control of the shipowner or after they had left the ship following an event occurred during transportation as well as following their discharge, provided they were still under the control of the shipowner.

The liability of the shipowner, which is exclusively governed by the provisions of the Convention,¹⁸ is strict, but not absolute. Art. 7(2) states:

2 No liability shall attach to the owner if the owner proves that:

(a) the damage resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character; or

(b) the damage was wholly caused by an act or omission done with the intent to cause damage by a third party; or

(c) the damage was wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function; or

(d) the failure of the shipper or any other person to furnish information concerning the hazardous and noxious nature of the substances shipped either

(i) has caused the damage, wholly or partly; or

(ii) has led the owner not to obtain insurance in accordance with article 12; provided that neither the owner nor its servants or agents knew or ought reasonably to have known of the hazardous and noxious nature of the substances shipped.

The exclusions under (a), (b) and (c) are the same as those in art. III(2) of the CLC and reference is made to their analysis under that article.¹⁹ The exclusion under (d) originates from art. 5(4)(c) of the Convention on Civil Liability for Damage caused during Carriage of Dangerous Goods by Road, Rail and Inland Navigation Vessels of 1989.

Art. 7(3) states:

if the owner proves that the damage resulted wholly or partly either from an act or omission done with intent to cause damage by the person who suffered the damage or from the negligence of that person, the owner may be exonerated wholly or partially from liability to such person.

This exception originates from the CLC and reproduces its art. III(3) verbatim. The first alternative is obvious, but very unlikely to occur. The second — negligence of the person who suffered the damage — may occur, for example, if the package of HNS, although properly made, had been broken by other goods that instead had shifted in the hold owing to their inappropriate packaging or, if following a collision, fire broke out in bulk HNS and extended to the colliding ship, liable for the collision.

6 The Rule on the Channelling of Liability

Art. 7 states in paragraphs 5 and 6:

5 Subject to paragraph 6, no claim for compensation for damage under this Convention or otherwise may be made against:

(a) the servants or agents of the owner or the members of the crew;

(b) the pilot or any other person who, without being a member of the crew, performs services for the ship;

(c) any charterer (howsoever described, including a bareboat charterer), manager or operator of the ship;

(d) any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority;

(e) any person taking preventive measures; and

(f) the servants or agents of persons mentioned in (c), (d) and (e); unless the damage resulted from their personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.

6 Nothing in this Convention shall prejudice any existing right of recourse of the owner against any third party, including, but not limited to, the shipper or the receiver of the substance causing the damage, or the persons indicated in paragraph 5.

Although the provisions in paragraph 5 existed already, in identical terms, in art. III(4) of CLC 1992, they originate from a draft of this Convention. Their history, as well as the analysis of each of its sub-paragraphs, have already been the object of a commentary in connection with the CLC 1992.²⁰

7 The Limitation of Liability of the Owner

7.1 The limits of liability

In its original text, art. 9(1) stated:

The owner of a ship shall be entitled to limit liability under this Convention in respect of any one incident to an aggregate amount calculated as follows:

(a) 10 million units of account for a ship not exceeding 2,000 units of tonnage; and

(b) for a ship with a tonnage in excess thereof, the following amount in addition to that mentioned in (a):

for each unit of tonnage from 2,001 to 50,000 units of tonnage, 1,500 units of account;

for each unit of tonnage in excess of 50,000 units of tonnage, 360 units of account; provided, however, that this aggregate amount shall not in any event exceed 100 million units of account.

It was, however, deemed more appropriate to adopt different limits according to whether the HNS were in bulk or packaged and to increase the limits in respect of packaged HNS, such increase being of 15 per cent.

Article 9(1) was consequently amended by keeping the original text in force in respect of bulk HNS and adopting a new paragraph in respect of packaged HNS, such new limits applying where the damage is caused both by bulk and packaged HNS where it is impossible to determine whether the damage originates from bulk or packaged HNS. The amended art. 9(1), adopted by the Protocol of 2010, consequently provides as follows:

The owner of a ship shall be entitled to limit liability under this Convention in respect of any one incident to an aggregate amount calculated as follows:

(a) Where the damage has been caused by bulk HNS:

(i) 10 million units of account for a ship not exceeding 2,000 units of tonnage; and

(ii) for a ship with a tonnage in excess thereof, the following amount in addition to that mentioned in (i):

for each unit of tonnage from 2,001 to 50,000 units of tonnage, 1,500 units of account;

for each unit of tonnage in excess of 50,000 units of tonnage, 360 units of account;

provided, however, that this aggregate amount shall not in any event exceed 100 million units of account.

(b) Where the damage has been caused by packaged HNS, or where the damage has been caused by both bulk HNS and packaged HNS, or where it is not possible to determine whether the damage originating from that ship has been caused by bulk HNS or by packaged HNS:

(i) 11.5 million units of account for a ship not exceeding 2,000 units of tonnage; and

(ii) for a ship with a tonnage in excess thereof, the following amount in addition to that mentioned in (i):

for each unit of tonnage from 2,001 to 50,000 units of tonnage, 1,725 units of account;

for each unit of tonnage in excess of 50,000 units of tonnage, 414 units of account;

provided, however, that this aggregate amount shall not in any event exceed 115 million units of account.

A comparison between the limits adopted in the 1992 CLC and the 2010 HNS Convention may be of some interest:

–

* Figures in SDRs.

The ceiling under the CLC is equal to the limit for a tanker of 140.118 GT, whereas the ceiling under the HNS Convention 2010 is equal both for bulk and packaged HNS to the limit for a ship of 100,000 GT.

7.2 The limitation fund

7.2.1 Where the fund may be constituted

Art. 9(3) states:

1. The owner shall, for the purpose of benefiting from the limitation provided for in paragraph 1, constitute a fund for the total sum representing the limit of liability established in accordance with paragraph 1 with the court or other competent authority of any one of the States Parties in which action is brought under article 38 or, if no action is brought, with any court or other competent authority in any one of the States Parties in which an action can be brought under article 38. The fund can be constituted either by depositing the sum or by producing a bank guarantee or other guarantee, acceptable under the law of the State Party where the fund is constituted, and considered to be adequate by the court or other competent authority.

Similarly to the CLC, and differently from the LLMC Convention, the constitution of the limitation fund is a condition precedent to the right of the owner to invoke the benefit of limitation.

As regards the jurisdiction in which the fund may be constituted, the scheme of art. 9(3) of the HNS Convention mirrors that of the CLC. As under art. V(3) of the CLC, there are two alternatives. The first is that actions have already been brought and the second that no action has yet been brought. In the first case, the owner has a choice in that he may constitute the fund in any one of the courts in which actions have been brought; this implies that if only one action has been brought he has no choice: he must constitute the fund in the court in which the action has been brought. The second (although it makes reference, as art. V(3) of the CLC, to the provisions on the jurisdiction in respect of actions for compensation) differs because the jurisdictions under art. 38 of the HNS Convention differ from that in the corresponding provision of the CLC: while art. IX(1) of the CLC considers only incidents causing pollution damage in the territory, including the territorial sea or the EEZ or equivalent area of Contracting States, art. 38 of the HNS Convention also considers damage caused outside all such areas.²¹

7.2.2 How the fund may be constituted

The ways in which the fund may be constituted are the same as those indicated in art. V(3) of the CLC: it may be constituted either by depositing the full amount or by producing a bank or ‘other’ guarantee acceptable under the law of the State Party where the fund is constituted. The requirement of acceptability under the law of the relevant State Party applies both to the bank guarantee and to the ‘other’ guarantee: it can refer, inter alia, to the financial responsibility of the bank or other guarantor, to their being authorised to operate in the State in which the fund is constituted and to the conditions under which the guarantee may be enforceable, such as the mere enforceability of the order on the distribution of the fund or its finality.

7.2.3 The distribution of the fund

The basic rule in all limitation conventions is that the fund must be distributed among the claimants in proportion to their established claims.²² That means ‘established’ in the limitation proceedings by the court or other competent authority with which the fund has been constituted. This is confirmed by the reference in the French text of all conventions to ‘creances admises