Bill proposing compulsory insurance for ship owners reaches next stage

Federal politicians debated last week a bill that would, if passed into law, make ship owners strictly liable for damage caused by hazardous or noxious substances and require them to maintain insurance for such losses.

“The proposed amendments to the Marine Liability Act will fill an important gap in the current liability and compensation regime for ships, because they protect Canadians against the financial consequences of hazardous and noxious substances and spills from ships,” Transport Minister Lisa Raitt said, in the House of Commons May 8, of Bill C-3.

“They will also ensure that shipowners carry the appropriate amount of compulsory insurance for the risks associated with the cargoes they carry.”

Bill C-3 is an omnibus bill that, if passed into law, would implement 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) in Canada. First introduced Oct. 18, Bill C-3 was returned to the Commons in March by the Standing Committee on Transport, Infrastructure and Communities, without amendments. It has yet to be passed into law. Raitt moved May 8 for third reading but the time for government orders expired before a recorded vote was held.

The HNS Convention stipulates that a ship owner “shall be liable for damage caused by any hazardous and noxious substances in connection with their carriage by sea on board the ship.” There are exceptions, such as war, an “act or omission done with the intent to cause damage by a third party” and “failure of the shipper or any other person to furnish information concerning the hazardous and noxious nature of the substances shipped.”

In Canada, Bill C-3 “would provide roughly $400 million in compensation for a spill of hazardous and noxious substances, which is currently not available,” Raitt said. “It would establish strict liability for the shipowner and would introduce compulsory insurance for the liability for the pollution damage caused by a spill of hazardous and noxious substances from a ship. This is a major improvement over the current regime as, currently, shipowners are not required to carry insurance for their liability in relation to a spill of hazardous or noxious substances.”

Some New Democratic Party members expressed concerns.

“The HNS convention establishes a liability scheme that limits shipowners’ liability to approximately $230 million,” said Fin Donnelly, the NDP MP for New Westminster-Coquitlam, B.C., in the Commons. “Damages in excess of shipowners’ liability are to be paid by an international HNS fund, up to a maximum of $500 million. My concern is that in the event of a spill of hazardous and noxious substances, the cleanup bill is likely to exceed these limits.”

But Donnelly added he intends to vote in favour of the bill because, he said, “a modest improvement in marine security is better than no improvement at all.”

Bill C-3 also proposes to add a new federal law — dubbed the Aviation Industry Indemnity Act — which would let the federal transport minister “indemnify one or more aviation industry participants — or one or more classes of aviation industry participant — against their loss or damage, or liability for loss or damage, that is caused by an event.”

The law would define an event as “an act of unlawful interference with an aircraft, airport or air navigation facility, including an act of terrorism.” An event could also be “an act or omission in the course of armed conflict, war, invasion, hostilities, civil war, revolution, rebellion, insurrection, an application of martial law, a usurpation or attempted usurpation of power, a civil commotion or a riot.”

The indemnity provided by the government would be limited to “loss, damage or liability, or any portion of it, that is not insured or otherwise indemnified,” and for “loss, damage or liability that is not solely with respect to a loss of income.”

Bill C-3 also proposes changes to other laws, including the Aeronautics Act, the Canada Marine Act and the Canada Shipping Act, 2001.