Legislation before Senate proposes compulsory pollution insurance for Canadian-flagged ships, foreign ships in Canadian waters

A bill before Canada’s senate would, if passed into law, require all Canadian-flagged ships – as well as foreign ships operating in Canadian waters – to have insurance covering the liability for pollution damage caused spills of hazardous and noxious substances, a Transport Canada official said recently.

Bill C-3, the Safeguarding Canada’s Seas and Skies Act, proposes to implement, in Canada, the provisions of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, also known as the HNS Convention.

“What the convention does is it imposes a compulsory insurance requirement on all ships that are flagged in the states that are members of the convention, as well as all ships that are calling at ports in those same states,” said Francois Marier, Transport Canada’s manager for international marine policy and liability. “So if Canada were to become party to the convention, all Canadian-flagged ships would have a requirement to carry the adequate amount of insurance and all foreign ships that call at Canadian ports would have the same requirement to demonstrate evidence of insurance which is certified by a state party.”

Marier was answering a question from Conservative Senator Don Plett during a hearing Nov. 25 before the Senate Standing Transport and Communications Committee.

If passed into law, Bill C-3 would make a new call called the Aviation Industry Indemnity Act. It would also make changes to the Aeronautics Act, the Canada Marine Act, the Canada Shipping Act, 2001 and the Marine Liability Act.

The changes to the Marine Liability Act would “fill a gap in the currently liability regime for ships and to ensure that Canadians and the environment are well protected from certain risks of marine transport namely from hazardous and noxious substances,” said Daniel Hache, Transport Canada’s director of international Marine Policy, during the Senate committee hearing.

The compulsory insurance proposed in Bill C-3 is for the “risks associated with the cargoes they carry,” Transport Minister Lisa Raitt said in May when she tabled C-3 for third reading in the House of Commons.

Bill C-3 would also provide Canadians with access to an international fund.

“Through these amendments and by joining the convention, businesses that could be directly impacted by a spill would have access to compensation from the polluter,” Raitt told the House of Commons in May. “This includes the fishing and tourism sectors that are usually the most affected economically. It would also see that compensation would be available for environmental restoration.”

Compensation would also be available for loss of life and personal injury, Raitt said at the time, noting ship owners would have strict liability for spills.

“In the case of an incident involving hazardous and noxious substances today, the shipowner is not held strictly liable,” Raitt said in May. “That means victims are required to prove fault or negligence on the part of the shipowner.”

The amount of liability would be determined by tonnage, Hache told the Senate Transportation and Communications Committee Nov. 25.

“After that the compensation fund would kick in, up to a total of about $400 million so it’s a shared responsibility between the ship owner and the shipper, or the one that owns the cargo on the ship,” Hache said, in reply to a question from Senator Art Eggleton. “If there is a spill of hazardous or noxious substances and it goes beyond the limit of liability of the ship owners, then there would be a levy of all the countries that contributed to this convention in order to supplement that level of compensation, up to a total of about $400 million.”