House of Commons votes to mandate strict liability, pollution insurance for ship owners

The House of Commons passed Thursday a bill that —  if accepted by the Senate without amendments — would impose strict liability and compulsory pollution insurance on ship owners and also allow the federal government to indemnify airlines and other aviation firms against losses arising from acts such as terrorism, war and insurrection.

Bill C-3, the Safeguarding Canada’s Seas and Skies Act, passed third reading Thursday and is now awaiting first reading in the Senate. If passed into law, it would make a new law called the Aviation Industry Indemnity Act. It would also make changes to other laws — including the Aeronautics Act, the Canada Marine Act, the Marine Liability Act and the Canada Shipping Act, 2001.

It would “ensure that shipowners carry the appropriate amount of compulsory insurance for the risks associated with the cargoes they carry,” Transport Minister Lisa Raitt said May 8 when she tabled the bill for third reading. “In the case of an incident involving hazardous and noxious substances today, the shipowner is not held strictly liable. That means victims are required to prove fault or negligence on the part of the shipowner. These amendments would remove that burden and guarantee that compensation would be available.”

With Bill C-3, the feds are proposing to 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. That convention stipulates that the owner of a ship, 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” under certain conditions. Examples of hazardous and noxious substances include iron ore, coal, sulphuric acid, nitric acid, ammonium nitrate, chlorine and ammonia.

The HNS Convention “would provide roughly $400 million in compensation for a spill of hazardous and noxious substances, which is currently not available,” Raitt said May 8 in Ottawa. (Debate resumed June 17 and again on Sept. 18). 

“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  … currently, shipowners are not required to carry insurance for their liability in relation to a spill of hazardous or noxious substances. Should damages exceed the shipowner’s insurance coverage, the convention would provide access to an international fund that would pay compensation for pollution damage caused by such spills. The international fund, once established, will be paid into by cargo owners.”

Another provision of Bill C-3 would let the federal transport minister “undertake to 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 act defines “event” as either “an act of unlawful interference with an aircraft, airport or air navigation facility, including an act of terrorism” or “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.”

In its definition of “aviation industry participants,” Bill C-3 includes: air carriers; NAV Canada (Canada’s air traffic control service); contractors providing air navigation products and services; airport owners and operators. It also applies to suppliers who “directly support the operation of aircraft from an airport,” such as: freight forwarders; airport security organizations; contractors who maintain and clean aircraft; and contractors who load and unload passengers, baggage and cargo.

Members of the opposition New Democratic Party (NDP) expressed several misgivings about C-3 but indicated they would support it because it’s an improvement over the status quo.

“In a conflict situation, if airlines stop flying to certain regions for insurance purposes, humanitarian aid might be compromised, as it may no longer be able to get there,” said Christine Moore, NDP MP for Abitibi-Témiscamingue, Quebec, on Sept. 18. “It might take considerably longer for aid to get there when humanitarian workers have to land in countries that are much further away and travel the rest of the route by land. Providing compensation to the airlines might help keep certain flights to risk areas so that the people can continue to benefit from the humanitarian help they need.”

Some opposition MPs criticized the bill on the grounds that it does not impose on ship owners a higher amount of strict liability and for not amending the bill to prevent Canadian taxpayers from being on the hook for damages, from spills at sea, of greater than $500 million. The bill underwent hearings last March by the Standing Committee on Transport, Infrastructure and Communities, but was returned to the Commons with no amendments from the original version tabled in October, 2013.

“The liability scheme that was created for this talked about shipowners’ liability limited to $230 million,” said Glenn Thibeault, NDP MP for Sudbury, Ont. on Sept. 18. “Damages in excess of shipowners’ liability were to be paid by an international fund, which is that HNS fund, up to a maximum of $500 million.”