LS-307E
BILL S-4: AN ACT TO AMEND THE
CANADA SHIPPING ACT
(MARITIME LIABILITY)
Prepared by David Goetz
Law and Government Division
20 November 1997
LEGISLATIVE HISTORY OF BILL S-4
HOUSE OF COMMONS |
SENATE |
| Bill Stage |
Date |
Bill Stage |
Date |
| First Reading: |
11 February 1998 |
First Reading: |
8 October 1997 |
| Second Reading: |
23 February 1998 |
Second Reading: |
22 October 1997 |
| Committee Report: |
12 March 1998 |
Committee Report: |
12 December 1997 |
| Report Stage: |
2 April 1998 |
Report Stage: |
15 December 1997 |
| Third Reading: |
2 April 1998 |
Third Reading: |
16 December 1997 |
Royal Assent: 12 May 1998
Statutes of Canada 1998, c. 6
N.B. Any substantive changes in this Legislative Summary which have
been made since the preceding issue are indicated in bold print.
|
| |
|
|
TABLE OF CONTENTS
BACKGROUND
DESCRIPTION AND ANALYSIS
A.
General Maritime Claims: Implementing the Limitation of
Liability
Convention and Other Amendments
1.
Scope of Limitation Regime
a. Defendants
b. Types of Claims
c. Geographic Scope
2. Updating Liability Limit Levels
a. The New Limits
b. Future Amendment of Limits
3. Limits for Small Ships
4. New Limits for Owners of Docks, Canals and Ports
5. Passenger Claims
6. Application of Limits
a. Limits Represent Aggregate of Claims
b. Prioritization of Claims
c. Application to Set-Offs and Counterclaims
d. Stricter Standard for Setting Aside Limits
7. Limitation Funds and Other Procedural Matters
B.
Oil Pollution Damage Claims
1.
Extending the Scope of the Regime
a. Residual Oil and Other Pollutants
b. Internal Waters
c. Extra-Territorial Waters
d. New Liability for Environmental Reinstatement
2. Updating Liability Limit Levels
a. New Limits
b. Future Amendment of Limits
3. Application of Limits
a. New Method for Calculating Ships' Tonnage
b. Non-Convention Ships
c. Stricter Standard for Setting Aside Limits
4.
Changes to Liability Rules
5. Funding the International
Oil Pollution Compensation Fund
a. Obligation of Domestic Ship-source Oil Pollution
Fund
to Contribute to
International Fund
b. Exempting Small Shipments from the Ship-source Fund
Levy
c. New Powers for Ship-source Fund Administrator
d. New Penalty
6. Claims against the Ship-source Fund
a. Convention v. Non-Convention Ships
b. Limitation Period Where No Damage
c. Claims for Lost Income
7. Miscellaneous
COMMENTARY
BILL S-4: AN ACT TO AMEND THE CANADA SHIPPING ACT
(MARITIME LIABILITY)
BACKGROUND
Bill S-4, introduced in the Senate on 8 October 1997 (second
reading, 22 October 1997), would amend parts of the Canada Shipping Act,(1) which deal with liability for
maritime accidents and oil pollution damage.
Bill S-4 reintroduces amendments to the Canada Shipping Act
first introduced in the House of Commons as Bill C-58 on 19 September 1996. Bill C-58
completed committee stage amended as proposed by the Standing Committee on Transport in
its Report to the House of Commons on 11 December 1996. The bill died on the order
paper in April 1997 when the 35th Parliament was dissolved.
For the most part, Bill S-4 seeks to implement the Convention on
Limitation of Liability for Maritime Claims, 1976 (hereinafter, the Limitation of
Liability Convention) and its 1996 Protocol, as well as the 1992 Protocols to the
Convention on Civil Liability for Oil Pollution Damage, 1969 (hereinafter, the Civil
Liability Convention), and the 1971 Convention on the Establishment of an International
Fund for Compensation for Oil Pollution Damage (hereinafter, the Fund Convention). In
essence, these agreements aim to increase the amount of compensation available to public
and private claimants for general maritime damage and for oil pollution damage, while
preserving the basic policy of limiting shipowners’ liability.
Limitations on liability have traditionally been accorded to shipowners
in most maritime nations. Such limits have served to encourage investment in maritime
ventures and to enable shipowners to assess their potential liability more easily and seek
appropriate insurance coverage. The previous global standard for shipowner liability
limits, set in 1957, has come to be seen as inadequate, as have similar limitations on the
liability of owners of docks, canals, ports, and ship-repairers. Moreover, the provisions
covering these groups are not uniform.
The existing regime with respect to limits for general maritime claims
is set out in sections 574-84 in Part IX of the Canada Shipping Act and is
largely based on the International Convention Relating to the Limitation of Liability of
Owners of Sea-Going Ships, 1957. The limits on liability set out there have naturally lost
value as a result of inflation over the years. Enactment of the proposed amendments to
Part IX of the Act would bring Canadian liability limits into line with current global
standards, as reflected in the 1976 Limitation of Liability Convention and the 1996
Protocol, and would permit Canada’s accession to these two international agreements.
Specifically, Bill S-4 seeks to: substantially increase shipowners’ limits of
liability (by anywhere from over 300% to over 2600%, depending on ship tonnage); increase
the limits of liability for owners of docks, canals and ports; impose a more stringent
test for claimants seeking to get around the liability limits; introduce special
provisions regarding liability limits for small ships (less than 300 tons); introduce a
special provision on the liability of shipowners to their passengers; and affirm that the
maritime liability claims regime applies to ships sailing inland and internal waters.
With respect to oil pollution liability and compensation, the proposed
amendments to Part XVI of the Act would implement the 1992 Protocols to the Civil
Liability Convention and the Fund Convention. Specifically, Bill S-4 would: increase, from
about $120 million to $270 million, the maximum compensation available jointly
from shipowners’ liability under the 1969 Civil Liability Convention and the
International Compensation Fund to claimants in an oil pollution incident; allow
compensation for damage caused by ships with residual oil from previous cargo; allow for
recovery of costs incurred for preventative measures in anticipation of a tanker spill;
make shipowners liable for the costs of reasonable measures of environmental
reinstatement; and extend the geographic scope of the oil pollution liability and
compensation regime to the limits of the exclusive economic zone (i.e., the 200-mile
limit).
The bill would also significantly streamline the procedure for any
future adjustments in shipowners’ liability limits both for general maritime claims
and oil pollution damage. The "rapid amendment" procedures adopted in the 1992
and 1996 Protocols allow for the negotiation of new limits by a specified number of
Contracting States, rather than a full-scale diplomatic conference. The bill would then
allow the Governor in Council to declare such new limits in force, rather than requiring a
statutory amendment involving Parliament.
DESCRIPTION AND
ANALYSIS
A. General Maritime Claims: Implementing the
Limitation of
Liability Convention and Other Amendments
Clause 2 of the bill would repeal sections 574 to 584 in Part IX of the
Act and replace them with new sections 574 to 583, dealing with the "Limitation of
Liability for Maritime Claims."
Most notably, clause 2 would create a new section 575 declaring that
Articles 1 through 15 of the Convention on Limitation of Liability for Maritime Claims,
1976, as amended by the Protocol of 1996, had the force of law in Canada.(2) In the event of any inconsistency between Articles
1 to 15 of the Convention and the proposed new sections 576 to 583, the latter would
prevail.
1. Scope of Limitation Regime
a. Defendants
Article 1 of the Convention defines who is entitled to limit liability
under the Convention. Article 1 covers the same people as the current Act (i.e.,
shipowners, charterers, persons with an interest in the ship, persons in possession of the
ship, and managers, operators or agents of the ship),(3)
but extends the benefit to salvors not operating from a ship and to insurers of shipowners
and salvors. Article 1 also explicitly confirms that officers, servants or agents of the
shipowner or salvor are entitled to limit their liability under the Convention. The
Article also stipulates that a shipowner’s liability includes any in rem claim
against the ship.
b. Types of Claims
Article 2 defines the types of claims that are subject to liability
limitation under the Convention. They are:
a) claims in respect of loss of life or personal injury or loss of or
damage to property occurring on board or in direct connection with the operation of the
ship or with salvage operations, and any consequential damage;
b) claims for losses resulting from delayed arrival of cargo, passengers or their luggage;
c) claims for other losses resulting from the infringement of non-contractual rights
occurring in direct connection with the operation of the ship or salvage operations;
d) claims arising from the raising, removal, destruction or the rendering harmless of a
ship which has been sunk, wrecked, stranded or abandoned;
e) claims arising from the removal, destruction or the rendering harmless of the cargo of
a ship; and
f) claims in respect of measures taken in order to avert or minimize a loss which is
subject to limitation under the Convention.
Article 3 defines the types of claims that are not subject to
limitation under the Convention:
a) claims for salvage;
b) claims for oil pollution damage;
c) claims for nuclear damage where limitation of liability for such a claim is prohibited
by international convention or national legislation;
d) claims against the owner of a nuclear ship for nuclear damage; and
e) claims by servants of the shipowner or salvor under a contract of service where the law
governing the contract either does not allow for limitation of liability or allows it for
a higher level than is applicable under the Convention.
Pursuant to Article 15(5), the Convention does not apply to air cushion
vehicles (hovercraft) or to floating platforms constructed for the exploitation of natural
resources of the seabed or seabed subsoil.
c. Geographic Scope
Article 15(2)(a) permits a State Party to regulate the limitation of
liability for ships intended for navigation on internal and inland waters. Proposed
section 576 of the Act would extend the Convention regime to Canadian inland waterways, by
redefining the Convention terms "carriage by sea," "ship," and
"shipowner" (clause 2). These new definitions are consistent with the scope of
the current liability regime in Part IX of the Act.
2. Updating Liability Limit Levels
a. The New Limits
Article 6 sets out the limits of liability for any distinct occasion of
damage in respect of all claims covered by the Convention other than those for loss of
life or personal injury to passengers (these are governed by Article 7). In respect of
claims for loss of life or personal injury:
2 million units of account(4)
for ships with a tonnage not exceeding 2,000 tons; and for ships with a tonnage in excess
of 2,000 tons, the following additional amounts:
for each ton from 2,001 to 30,000 tons, 800 units of account;
for each ton from 30,001 to 70,000 tons, 600 units of account; and
for each ton in excess of 70,000 tons, 400 units of account.
In respect of any other claims:
1 million units of account for ships of up to 2,000 tons; and
for ships in excess of 2,000 tons, the following additional amounts:
for each ton from 2,001 to 30,000 tons, 400 units of account;
for each ton from 30,001 to 70,000 tons, 300 units of account; and
for each ton in excess of 70,000 tons, 200 units of account.
b. Future Amendment
of Limits
Clause 2 proposes a new section 579 to implement the new expedited
procedure adopted by Article 8 of the 1996 Protocol to the Limitation of Liability
Convention for future amendments to the liability limits for general maritime claims.
Future adjustments could be negotiated by a specific number of Contracting States and the
Governor in Council could then amend the applicable limits in the Act by order in council.
3. Limits for Small Ships
Article 15(2)(b) gives State Parties the right to make laws for the
limitation of liability for ships under 300 tons. The new section 577 of the Canada
Shipping Act proposed in clause 2 would limit the liability of such shipowners for
claims, other than those relating to the loss of life or personal injury of passengers
(which would be covered under the new section 578) to $1 million in the case of loss
of life or personal injury, or to $500,000 in respect of any other type of claim.(5)
4. New Limits for Owners of Docks, Canals and Ports
A new section 583 would update the liability limits of owners of docks,
canals and ports for damage or loss caused to ships or anything on board a ship. The
liabilities of the owners of such facilities and that of any persons for whose negligence
such an owner is responsible would be limited to the greater of $2 million or $1,000
multiplied by the tonnage of the largest ship that had used the dock, canal or port within
the previous five years. As is proposed for shipowners under this bill (see 6(d) below),
owners of docks, canals or ports would lose the benefit of this limitation if the loss or
damage in question was the result of their personal negligence where the damage had been
intended or where it had been known that the damage was probable.
5. Passenger Claims
Article 7 sets the limit for shipowners’ liability for claims by
or on behalf of passengers for loss of life or personal injury at 175,000 units of account
multiplied by the number of passengers that the ship’s safety certificate authorizes
it to carry.(6)
However, Article 7 applies only to such claims in relation to
ships that require a certificate under Part V of the Act (i.e., ships over 5 tons gross
tonnage capable of carrying more than 12 passengers(7))
and where there is a contract of passenger carriage (or where the person, with the consent
of the carrier, is accompanying a vehicle or live animals covered under a contract for the
carriage of goods). The new section 578, proposed in clause 2, would cover these
scenarios. For claims for the death or personal injury of passengers on ships that do not
require a certificate under Part V, the new section 578(1) would limit shipowners’
liability to: either 2 million units of account or the product of 175,000 units of account
and the number of passengers on board, whichever was greater. For passenger claims where
there was no contract of carriage, the proposed section 578(2) would limit
shipowners’ liability to 175,000 units of account multiplied by the number of
passengers that the ship was authorized to carry.
Clause 1 of the bill would repeal section 565(4) of the Act, which has
been relied on by shipowners to contract out of liability to their passengers. It is an
interpretive provision which stipulates that nothing in section 565 (which apportions
liability among vessels involved in collisions) is to be construed as affecting liability
under a contract or the right of anyone to legally limit their liability.
Clause 3 of the bill would repeal section 587 of the Act, which imposes
a special limit on shipowners’ liability (set at $200) for loss or damage to
passengers’ luggage.
6. Application of Limits
a. Limits Represent
Aggregate of Claims
Article 9 confirms that the liability limits set out in Articles 6 and
7 respectively apply to the total of all such claims arising on any distinct occasion.
This reflects the existing legislation (see section 577(2) of the Act).
b. Prioritization of
Claims
Article 6 allows for certain priorities among claims. To the extent
that claims for loss of life or personal injury exceed the liability limits for that type
of damage, these claims can share in the funds available for property damage under the
Convention. Furthermore, Article 6 allows State Parties to the Convention to provide in
their national law that claims for damage to harbour works, basins, waterways and
navigational aids have priority over other property claims.
c. Application to Set-Offs and
Counterclaims
Pursuant to Article 5, where a person entitled to limit liability under
the Convention has a counter-claim against the claimant arising out of the same
occurrence, the respective claims shall be set off against one another and the liability
limits will apply only to any balance owing by a person with limited liability under the
Convention.
d. Stricter Standard
for Setting Aside Limits
Article 4 describes conduct that will disentitle a person from taking
advantage of the liability limits under the Convention. For this to happen, the loss in
question must have resulted from the personal negligence of that person where the damage
had been intended or where it had been known that the damage was probable.
7. Limitation Funds and Other Procedural Matters
Article 10 confirms that it is not necessary for a defendant to
constitute a limitation fund in order to invoke the liability limitations in the
Convention, although State Parties are permitted to enact such a condition in their
national law.
According to Article 11, any person alleged to be liable for a claim
subject to limitation under the Convention may constitute a limitation fund with the court
of the State Party where legal proceedings are instituted. This is done by payment into
court, or production of an acceptable guarantee, of sums equivalent to the applicable
liability limits, according to Articles 6 or 7, plus interest from the date of the
occurrence to the date of the constitution of the fund. Where more than one co-defendant
is liable for the same breach (e.g., shipowner and shipowner’s servant), a fund
constituted by one of them, or that party’s insurer, is deemed to have been
constituted by all co-defendants.
Article 12 preserves and formalizes existing rules for distribution of
a limitation fund among claimants in proportion to their established claim against the
fund. It also specifies a right of subrogation for a person liable who has already paid a
claim to the right of the claimant with whom the settlement was made.
Article 13 prohibits claimants against a fund from seizing and claiming
against other assets of a person on whose behalf the fund has been constituted. This
Article also establishes a procedure whereby courts can release a ship or other property
seized where a limitation fund has already been constituted in another State Party.
Similar provisions exist in the current law (see section 583 of the Act).
The proposed sections 580 to 582 in clause 2 would deal with certain
procedural matters in relation to litigation in Canadian courts of claims covered by the
Convention.
The new section 580(1) would preserve the exclusive jurisdiction of the
Admiralty Court in relation to the constitution and distribution of limitation funds. The
proposed section 580(2) would confirm the right of a person entitled to limit liability
under the bill and the Convention to plead the limitation in any court of competent
jurisdiction in Canada.
The new section 581(1) to (4) would confirm the power of the Admiralty
Court to deal with the constitution and distribution of limitation funds; control persons
entitled to claim against the fund; set aside moneys from a fund for proceedings outside
Canada; control duplicate litigation; prevent maritime liens from interfering with the
distribution of limitation funds; and make rules of procedure. The proposed section 581(5)
would establish the interest rate payable on constituting a limitation fund, adopting the
rate payable by the Minister of National Revenue under the Income Tax Act in
respect of refunds of tax overpayments.
The new section 582 would deal with certain aspects of the release of
ships arrested in relation to general maritime claims covered by the bill and the 1976
Convention. Where a ship had been ordered released by the court because of the
constitution of a limitation fund, the person who applied for the release would be deemed
to have submitted to the jurisdiction of that court for the purposes of determining the
claim. On consideration of an application for release of an arrested ship or other
property, under the new section 582 the court would be required to disregard a limitation
fund constituted outside Canada unless it was satisfied that the country was a State Party
to the Convention. These provisions of the bill largely reflect the current law (see
section 583 of the Act).
B. Oil Pollution Damage Claims
The following proposed amendments relate mainly to Part XVI (Civil
Liability and Compensation for Pollution) of the Act and would essentially implement the
1992 Protocols to the 1969 Civil Liability Convention and the 1971 Fund Convention,
respectively.
1. Extending the Scope of the Regime
Clauses 4 and 5 of the bill would update and amend certain definitions
in Parts XV (Pollution Prevention and Control) and XVI (Civil Liability and Compensation
for Pollution). The changes, which are primarily consequential, would bring the
definitions into conformity with the 1992 Protocols to the 1969 Convention on Civil
Liability for Oil Pollution Damage.
a. Residual Oil and Other
Pollutants
The definition of "Convention ship" would be extended to
include ships with residues of oil from previous cargo and the definition of
"pollutant" would be amended to include "any aquatic organism and
pathogen."
b. Internal Waters
Clauses 4 and 5 would also amend the definition of "ship" to
make it clear that the term included vessels operating in the internal and inland waters
of Canada. Clause 6 would replace section 675 of the Act to extend the geographical
application of Part XVI (Civil Liability and Compensation for Pollution) in respect of
Convention ships to any area of actual or anticipated pollution damage in the internal
waters of Canada or of any other party to the Civil Liability Convention.
c. Extra-Territorial
Waters
Clause 6 would also extend the application of Part XVI to the exclusive
economic zone of Canada or that of any other party to the Convention. Where such a state
had not established an exclusive economic zone, application would be extended to any
waters adjacent to that state’s territorial sea, up to a distance of 200 nautical
miles. Such extensions would be in accordance with the 1992 Protocols to the 1969
Convention.
d. New Liability for
Environmental Reinstatement
Clause 7(3) of the bill would create a new section 677(2) to implement
a feature of the 1992 Protocols by establishing liability of shipowners for reasonable
measures of reinstatement in respect of environmental impairment caused by oil pollution.
2. Updating Liability Limit Levels
a. New Limits
Clause 10 of the bill would amend section 679 of the Act to increase
significantly the limits on liability of shipowners of Convention ships for pollution
occurrences, by implementing the limits adopted in the 1992 Protocol to the 1969
Convention. This would represent a 326% increase over the limits set under the 1969
Convention and a 125% increase over the recovery available under the 1971 Fund Convention.(8)
b. Future Amendment
of Limits
Clause 10 would also adopt the new "rapid amendment
procedure" for future amendments to the liability limits for oil pollution damage.
This would allow the Governor in Council to amend the limits in accordance with those
agreed to by a specified number of Contracting States in the manner set out in Article 15
of the 1992 Protocol to the 1969 Convention.
3. Application of Limits
a. New Method for Calculating
Ships’ Tonnage
Clause 10 would change the method of calculating a ship’s tonnage
for the purposes of the oil pollution liability limits. In future, tonnage would be the
gross tonnage established in accordance with the 1969 International Convention for the
Tonnage Measurement of Ships.
b. Non-Convention Ships
The term "Convention ships" refers essentially to ships that
carry oil as bulk cargo.(9)
Clause 10 would adopt new liability limits in respect of oil
pollution damage for non-Convention ships. For such ships up to 300 tons, the limits would
be those set out in clause 2 for general maritime claims (where loss of life or personal
injury was involved, $1 million, otherwise, $500,000, exclusive of any claims for
losses by passengers). For non-Convention ships in excess of 300 tons, limits would be
those set out in the Article 6 of the Limitation of Liability Convention (see 2a in Part
A, above).
c. Stricter Standard
for Setting Aside Limits
Clause 10 would restrict the conditions in which claimants could
circumvent the liability limitations by proving shipowners’ personal negligence.
Currently, section 679(1) deprives shipowners of the benefit of the liability limits where
there has been "actual fault or privity" on their part. Under the new section
679(2) proposed in clause 10 of the bill, in order to prevent application of the liability
limits in respect of their claim, plaintiffs would have to show not only personal fault on
the part of the shipowners, but also an intent to cause pollution damage or at least
reckless conduct with the knowledge that such damage was a probable consequence.
4. Changes to Liability Rules
The 1969 Civil Liability Convention and the 1971 Fund Convention direct
liability for an oil spill to the shipowner and prohibit claims against servants or agents
of the shipowner. This is referred to as "channelling" of liability. In
accordance with the 1992 Protocols, clause 12 of the bill would replace section 681(2) of
the Act so as to extend channelling to preclude claims against: a ship’s pilot; a
charterer; a person performing salvage operations with the consent of the shipowner or on
the instructions of a competent public authority; any person taking measures to prevent
oil pollution damage from the ship; and any servant or agent of such persons. These
persons would, however, be exposed to personal liability where damage was the result of
their personal conduct undertaken with the intent to cause damage or through recklessness,
knowing that the damage would probably result.
Clause 12 would also add section 681(3) to the Act, to impose joint and
several liability for damages caused by two or more Convention ships where such damages
were not reasonably separable between or among them. This would implement a provision of
the 1969 Civil Liability Convention which is substantially carried forward in the 1992
Protocol.
5. Funding the International Oil Pollution Compensation
Fund
The International Fund was established by the 1971 Fund Convention and
is designed to cover claims in excess of the shipowners’ liability limits. Canada
also has a domestic fund, the Ship-source Oil Pollution Fund, which is designed to cover
claims not recoverable from persons liable or the International Fund.
a. Obligation of Domestic
Ship-source Oil Pollution Fund to
Contribute to
International Fund
Clause 17 would replace section 701(1) of the Act. The clause would
preserve the obligation in that section for the payment of contributions to the
International Fund from the domestic Ship-source Oil Pollution Fund, in accordance with
Articles 10 and 12 of the Fund Convention. Contributions to the International Fund are
made on the basis of contributing oil (oil shipped to or from a member country as bulk
cargo) reported in each member state.
Clause 17 would also maintain the existing provision in section 701(1)
requiring the Administrator of the Ship-source Fund to communicate to the Director of the
International Fund the names and addresses of persons receiving contributing oil and the
quantities received, in accordance with Article 15 of the Fund Convention. Clause 17 would
add, however, that the Administrator of the Ship-source Fund would be liable to the
International Fund for any financial loss occasioned by failure to fulfil these reporting
requirements. This provision would respond to a new provision in Article 15 of the Fund
Convention which imposes liability on member states for losses to the International Fund
in such cases. Clause 18 would amend section 702 of the Act to allow the Administrator to
pay any such liability out of the Ship-source Fund.
b. Exempting Small Shipments from the Ship-source Fund
Levy
Clause 22 of the bill would amend section 716(1) of the Act to
establish a threshold for the Ship-source Oil Pollution Fund levy, which, when it is in
effect, is to be collected on oil shipped to or from Canada as bulk cargo. The purpose of
the levy is to help fund the Ship-source Fund and, indirectly, the International Fund.
Clause 22 would exempt shipments of oil of up to 300 tons from the levy as collection on
small shipments is considered uneconomical.
c. New Powers for Ship-source Fund
Administrator
Clause 17 would give new powers to the Ship-source Fund Administrator
to verify and obtain information relating to the receipt and reporting of contributing
oil. Specifically, clause 17 would add section 701(1.2) to the Act in order to give the
Administrator the power to:
enter any premises at any reasonable time in the belief, on
reasonable grounds, that they contain records that relate to the receipt and reporting of
contributing oil;
examine, take away or copy any such record; and
require an owner, occupant or person in charge to give all reasonable
assistance in connection with the examination; to answer all proper questions; and, for
that purpose, to require such a person to attend at the premises with the Administrator.
Moreover, clause 17 would add section 701(1.3) to the Act to prohibit
the obstruction or hindering of the Administrator in the exercise of the above powers. The
new section would also prohibit the making of a false or misleading statement to the
Administrator exercising those powers.
Proposed section 701(1.4) would have certain restrictions to ensure
that, where the premises to be entered were a dwelling-house, the Administrator would
first have to obtain the consent of the occupant of that dwelling-house or a warrant
issued under the proposed section 701(1.5). This new provision would allow a justice of
the peace to sign and issue a search warrant where he or she was satisfied that:
there were reasonable grounds to believe that there were records in
the dwelling-house relating to the receipt and reporting of contributing oil;
entry into the dwelling-house was necessary for the
Administrator’s compliance with the above reporting requirements vis-à-vis the
International Fund; and
entry into the dwelling-house had been refused or there were
reasonable grounds to believe that it would be refused.
d. New Penalty
Clause 25 would amend section 725(2) of the Act to provide a penalty
(on summary conviction, a fine of up to $100 a day for each day of default) for failing to
file information with the Minister of Transport regarding oil shipments as required by
regulations issued under section 719(c) of the Act. This section deals with information
necessary for the Administrator of the Ship-source Fund to comply with the payment and
reporting requirements in section 701 with respect to the International Fund. Section
725(2) already provides for the same penalty for failing to file information returns with
the Minister pursuant to regulations under section 719(b) with respect to oil shipments
subject to the Ship-source Fund levy under section 716.
6. Claims against the Ship-source Fund
a. Convention v.
Non-Convention Ships
Clause 19(1) would replace section 709(c) of the Act with a new
provision differentiating between the Ship-source Oil Pollution Fund’s liability for
claims for Convention ships and other ships. With respect to Convention ships, clause
19(1) would maintain the Ship-source Fund’s liability for claim amounts in excess of
shipowners’ maximum liability under Part XVI (but as amended by this bill) which
are not recoverable from the International Fund. With respect to non-Convention ships,
liability would be imposed on the Ship-source Fund for claim amounts that exceeded the
owner’s maximum liability under the new general maritime liability limitations in the
clause 2 amendments to Part IX of the Act (see 2 in part A, above).
b. Limitation Period
Where No Damage
Clause 20(2) of the bill would replace section 710(1)(b) of the Act,
which currently requires a claim for loss, costs or expenses to be filed with the
Administrator of the Ship-source Fund within one year in cases where there has been no oil
pollution damage (e.g., where claim is for preventative measures only). Clause 20(2) would
extend this period to five years, thereby providing greater harmony with the six-year
limitation period for claims against shipowners under section 677(10)(b), while still
leaving one year for the Ship-source Fund to exercise its right to make a subrogated claim
against the shipowner.
c. Claims for Lost
Income
Section 712 of the Act governs claims against the Ship-source Oil
Pollution Fund for loss of income by certain persons (i.e., those who are dependent on the
waters for their livelihood). Clause 21 would attempt to clarify this provision and to
harmonize it with those for other types of claims, as well as to facilitate such claims.
Clause 21(1) of the French version of the bill, clause 21(2) of the
English version, and clauses 21(4) and 21(5) in both official languages would amend
sections 712(1) and 712(8) of the Act to clarify that a plaintiff claiming lost income
from the Ship-source Fund for an oil pollution incident would not have to exhaust all
other legal remedies before filing a claim with the Fund Administrator.
Clause 21(3) would add section 712(3.1) to the Act to make it clear
that a claimant for loss of income under that section would not have to satisfy the
Administrator of the Fund that the pollution occurrence giving rise to the claim had been
caused by a ship. It would be sufficient that the Administrator was not convinced that the
pollution was from some other source. An identical provision already exists with respect
to other claims against the Fund (see section 710(5)).
7. Miscellaneous
Clause 16 of the bill would repeal section 700 of the Act, which,
enacted in accordance with Article 5 of the 1971 Fund Convention, had envisioned extra
costs (particularly insurance costs) to shipowners as a result of the compensation
guaranteed to claimants under the 1969 Civil Liability Convention, which extra costs
should be indemnified by the Fund. Subsequent experience has apparently not borne out the
need for this provision, however. The provision on shipowner indemnification for extra
costs was dropped from the 1992 Protocol to the Fund Convention.
COMMENTARY
Groups affected by this proposed legislation would include: shipowners,
general cargo owners, oil cargo owners, passengers, marine insurers and the marine law
community. While most of these stakeholders agree that the existing liability limitations
should be revised, smaller operators have expressed concern that their insurance costs
would be significantly increased as a result. Specifically with respect to the oil
pollution damage provisions, the Canadian oil industry favours Canadian accession to the
1992 Protocols; however, it feels that contributions to the International Oil Pollution
Compensation Fund should be made out of the Ship-source Oil Pollution Fund as it exists,
rather than through another levy.
With respect to the bill’s proposed amendments to Part XVI, there
may be particular cause for urgency. Any delay in the transition from the 1969-1971 regime
to that of the 1992 Protocol would expose states remaining in the 1971 Fund to higher
contributions for any claims falling under that regime.
(1)
R.S.C. 1985, c. S-9, Parts IX and XVI, as amended.
(2) Under clause 2 of
the bill, Article 7 – which deals with claims for loss of life or personal injury of
passengers – would have the force of law in Canada only upon the coming into force of
the new section 578, which is also proposed in clause 2. Under clause 31 of the bill, the
new section 578 would only come into force on proclamation by the Governor in Council,
whereas the rest of clause 2 (and the other provisions of the Limitation of Liability
Convention) would come into force 90 days after Royal Assent.
(3) See sections 575
and 577 of the current Act.
(4) Article 8 defines
the unit of account in which the liability limits in the Convention are now to be valued.
Units of account are equivalent to special drawing rights under the International Monetary
Fund (IMF) and are to be converted into the appropriate national currency in accordance
with the method used by the IMF. In 1997, such a unit of account would be worth
approximately $2.
Article 8(2) establishes a method of calculating the value of the
liability limits for states that are not members of the IMF and whose laws do not permit
the use of the above unit of account formula; this does not apply in the case of Canada.
Under the current Act, the limitations are expressed in "gold franc."
(5) However, under the
proposed section 577(3), until the coming into force of the new section 578 (see clause
31), which deals specifically with claims for the death or personal injury of passengers,
the proposed limits in the new section 577(1) would apply in relation to ships under 300
tons and those in Article 6 of the Convention (which would be given the force of law by
the proposed section 575(1)) would apply in respect of ships in excess of 300 tons.
(6) These are dealt
with in Part V of the Act.
(7) See section 406 of
the Act.
(8) The new limits
would be as follows. For ships up to 5,000 tons: 3 million units of account; for ships
that exceed 5,000 tons: the lesser of (a) the aggregate of 3 million units of account for
the first 5,000 tons and 420 units for each additional ton and (b) 59.7 million units of
account.
(9) Section 673 of the
Act. |