Progress made in developing new draft HNS Protocol
The Legal Committee of the International Maritime Organization (IMO) made significant progress in developing a new 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), when it met for its 94th session.

There was broad agreement in principle on the need for a draft Protocol, however Member States agreed more time was needed to consider the draft and that this should take place at the next session of the Legal Committee (April 2009).

The new draft Protocol is designed to address practical problems that have prevented many States from ratifying the Convention which, despite being adopted in 1996, has, to date, only 13 ratifications and has not yet met its entry into force criteria.

The 1996 HNS Convention was based on the highly successful model of the Civil Liability and Fund Conventions. Like those instruments, it sought 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 would be covered by compulsory insurance taken out by shipowners, who would be able to limit their liability; compensation claims over that amount (i.e. tier two) could be paid from a fund, made up of contributions from the States Party to the Convention. Contributions would be calculated according to the amount of HNS received by each State.

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 declare the quantities of HNS received. The sheer range and diversity of hazardous and noxious substances that will be governed by the HNS Convention has made this a complex issue that is hard to resolve in practical terms. The draft Protocol, which was developed by a focus group established by the 1992 IOPC Fund Assembly, is intended to address this problem, as well as others thought to be acting as barriers to ratification of the Convention.

The IMO Legal Committee invited Member States to give further consideration to the issue with a view to finalizing the draft Protocol at the next session.

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

1. Problem: Setting up the reporting system for packaged goods was deemed to be too complicated for States to implement.

Proposed solution: Packaged goods have been excluded from the definition of contributing cargo and will not be liable for contributions to the HNS Fund. However, since incidents involving packaged goods will remain eligible for compensation by the HNS Fund, which will therefore be paid for by receivers of bulk goods, the shipowner's limit of liability for incidents involving packaged HNS would be increased to reduce the number of incidents involving the HNS Fund.

2. Problem: For LNG, under the 1996 HNS Convention, the person liable for contributions is the titleholder immediately prior to discharge rather than 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.

Proposed solution: Under the draft Protocol, the receiver, as defined in Article 1.4 of the Convention, would now be liable for annual contributions for LNG, except where the titleholder pays them following an agreement with the receiver.

3. Problem: There have been ongoing problems with submission of reports of contributing oil to the IOPC Funds and very few States have submitted reports of contributing cargo when ratifying the HNS Convention. However, non-submission of reports results in non-payment of contributions but not in withholding of compensation.

Proposed solution: The draft Protocol would deal with this in three ways.

In order to ratify the Draft Protocol, a State must submit reports on contributing cargo. IMO would not accept any ratifications which are not accompanied by such reports. The State must continue to submit reports annually thereafter until the Draft Protocol enters into force.

If a State fails to submit reports after ratification, the State would be temporarily suspended from being a Contracting State. The Draft Protocol would therefore not enter into force for any State which is in arrears with reports.

Once the Draft Protocol has entered into force for a State, compensation would 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.

Liability and Compensation regarding Claims for Death, Personal Injury and Abandonment of Seafarers
The Legal Committee took note of the reports of the seventh and eighth sessions of the Joint IMO/ILO Ad Hoc Expert Working Group on Liability and Compensation regarding Claims for Death, Personal Injury and Abandonment of Seafarers, and approved the terms of reference for the ninth session of the Joint Working Group, scheduled to take place from 2 to 6 March 2009, at the Headquarters of ILO, in Geneva. In particular, the group is tasked with agreeing on principles to facilitate the drafting of mandatory provisions for inclusion in an appropriate instrument or instruments.

Guidelines relating to financial security to cover claims from seafarers in cases of abandonment, personal injury and death were adopted by the IMO Assembly in November 2001 and the joint group has been monitoring the problem of abandonment of crew members/seafarers since then.

Delegations to the Legal Committee expressed their support for the development of draft mandatory provisions on abandonment of seafarers, with the form of such an instrument to be decided at a later stage.

It was emphasized that abandonment was a real problem, with humanitarian dimensions, and could become more frequent as a consequence of the negative impact on the shipping industry of the global financial crisis. It was important to find a solution, not only for humanitarian reasons, but also for the efficiency of the industry as a whole.

Draft single model insurance certificate
The Committee discussed the development of a model for a single insurance certificate, which may be issued by States Parties in respect of each and every ship under the relevant IMO liability and compensation conventions.

There was general consensus that a single insurance certificate would be desirable, since it could lead to a reduction in the administrative burden of States and shipowners/insurers when compared with the system prescribed by the various conventions.

The Committee decided to establish an informal correspondence group in order to progress intersessionally on the legal, technical and practical aspects of the consolidated model certificate, including issues relating to port State control and inspection.

The Committee agreed to retain this item on its agenda for its next session and noted that any decision whether to pursue the issue of the single insurance certificate would be taken on the basis of the work produced by the correspondence group.

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