Bill C-15: An Act to amend the Canada Shipping Act and to make consequential amendments to other Acts(LS306E)

LS-306E

BILL C-15: AN ACT TO AMEND THE
CANADA SHIPPING ACT AND TO MAKE
CONSEQUENTIAL AMENDMENTS TO OTHER ACTS

Prepared by:
John Christopher
Science and Technology Division
13 November 1997

LEGISLATIVE HISTORY OF BILL C-15

HOUSE OF COMMONS		SENATE
Bill Stage	Date	Bill Stage	Date
First Reading:	30 October 1997	First Reading:	5 May 1998
Second Reading:	19 March 1998	Second Reading:	3 June 1998
Committee Report:	2 April 1998	Committee Report:	10 June 1998
Report Stage:	30 April 1998	Report Stage:
Third Reading:	30 April 1998	Third Reading:	11 June 1998

Royal Assent: 11 June 1998 Statutes of Canada 1998, c.16 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

BILL C-15: AN ACT TO AMEND THE CANADA SHIPPING ACT
AND TO MAKE CONSEQUENTIAL AMENDMENTS TO OTHER ACTS

BACKGROUND

Bill C-15, an Act to amend the Canada Shipping Act and to make consequential amendments to other Acts, was introduced in the House of Commons by the Minister of Transport on 30 October 1997. The Canada Shipping Act, which, enacted in 1936, is one of Canada’s oldest laws, is the principal legislation governing the operation of Canadian ships in waters under Canada’s jurisdiction. A piecemeal approach to shipping legislation had resulted in ad hoc amendments over the years. The government believes that fundamental reform of the Act is now required in order to simplify the legislative and regulatory framework, make the Act consistent with federal regulatory policies and contribute to the economic performance of the marine industry.

The reorganization of the Department of Fisheries and Oceans and the Department of Transport has led to a lack of clarity with respect to Ministerial responsibilities. Reform of the Canada Shipping Act would define the responsibilities of the Minister of Transport and the Minister of Fisheries and Oceans, and provide clear legislative authority for the operation of their departments.

Given the size and complexity of the Canada Shipping Act, the government decided that a complete overhaul in one bill would not be the most effective method of reform. Consequently, a two-track approach was proposed. In the first track, by virtue of Bill C-15, a new General Part (0.1) would be added at the beginning of the existing Act, followed by a revised Part I covering ship registration, ownership and mortgages. Work on the second track has already begun; it will entail an extensive review of the remaining parts of the Act, which deal with safety issues, certification and conditions of work, navigation, accident investigation, wrecks and salvage, environmental issues and economic matters. It is anticipated that the final set of reforms will be ready in 1999.

DESCRIPTION AND ANALYSIS

A. Key Provisions of the Bill

The roles and responsibilities of the Ministers of Transport and Fisheries and Oceans would be defined. Each of those Ministers would have the authority to enter into an agreement or an arrangement with respect to the administration of any provision of the Act as it related to his or her respective area of responsibility. The Minister of Transport would have emergency powers to respond quickly to marine emergencies.
All ships registered in Canada other than pleasure craft would be required to appoint an authorized representative to act in all matters relating to the operation of the ship.
The current Part I of the Act would be replaced with a new Part I which would modernize the registration system to reflect contemporary practice (e.g., certificates of registry would have an expiry date).
The Chief Registrar would be appointed by the Minister and would be responsible for managing the Canadian Register of Ships by appointing registrars and developing forms and policy.
Under certain conditions, foreign-owned ships, bare-boat chartered ships, and ships under a financing agreement would be eligible to register in Canada.
Regulatory authority to deal with new concepts such as "special purpose ships" and "special purpose personnel" would be added. These types of ships and crews would not fit into existing categories of ships under the current Act.
The Department of Fisheries and Oceans would be provided with broader authority to regulate pleasure craft, and to require oil-handling facilities to develop oil pollution responses and emergency plans and flexibility in dealing with wreckage.
Provision would be made for the delegation of ship inspections.
Provision would be made for modernizing the administrative and financial framework for the pension plan administered by the Corporation of Pilots for and below the Harbour of Quebec.

B. Clauses 1-2, Definitions

These clauses would modernize the definitions and delete those that are obsolete. Passenger safety would be enhanced by the elimination of the reference to "owner" or "charterer" in the current definition of "passenger," which in the past have allowed some charterers to circumvent passenger safety regulations.

The definition of "British ship" would be eliminated.

The new term "authorized representative" is defined and would be introduced throughout the amendments.

The qualifications for owning a "Canadian ship" would be clarified by the definition of the term "qualified person" as meaning a Canadian citizen or permanent resident or a corporation incorporated under the laws of Canada or a province.

The term "special purpose ship" would be introduced for the first time in the Canada Shipping Act, thereby providing the department with the flexibility to deal with ships that did not fit into the normal classification.

C. Clause 2, Reference to Owner

Bill C-15 would introduce the concept that foreign-owned ships and bare-boat ships chartered to qualified persons could be registered or listed on the Register under certain conditions. It would require all references to "owner" in the Canada Shipping Act, other than in Part I, to include "authorized representative" and "bare-boat charterer." This clause makes clear that authorized representatives or charterers would share the responsibility of the owner

D. Clause 3, Proposed Section 6, Exemption for the Military

Proposed section 6 would continue the long-standing practice of exempting the military from the Canada Shipping Act. While the Act is intended to apply to all government ships, proposed section 6(2) would provide the Governor in Council with the flexibility to exempt them from certain parts of the legislation. This is made necessary by the specialized nature of some of the equipment on board military vessels. For example, government ships would be exempt from the current crewing regulations applying to all other ships.

E. Clause 3, Proposed Sections 7- 8, Ministerial Responsibility and Powers

Except as otherwise provided, the Minister of Transport would be responsible for the administration of the Canada Shipping Act (proposed section 7(1)). The Minister of Fisheries and Oceans would be responsible for all matters under the Act relating to safety and licensing of pleasure craft (proposed section 7(2)).

Proposed section 8 would outline the powers of the Ministers of Transport and Fisheries and Oceans that would allow them to:

establish consultative committees;
issue bulletins, guidelines and standards;
enter into agreements or arrangements respecting the administration of the Act.

Those Ministers would continue to have the authority to establish and streamline consultative mechanisms and committees and would in addition be able to influence marine safety through the issuance of advisory bulletins, guidelines and standards. In emergency situations, the Minister of Transport would be able to exempt a ship owner from specific provisions of the Act in the interest of public health and safety or in order to prevent damage to property or the environment.

F. Clause 3, Proposed Section 9, Authorized Representative

Proposed section 9 would require all ships registered in Canada, other than pleasure craft, to have an authorized representative to act with respect to all matters relating to the ship. The authorized representative would be required to be:

in the case of a Canadian ship : the owner of a ship or, in the case of a ship described in proposed section 18 : the bare-boat charterer of a ship;
in the case of a Canadian ship owned by more than one person : one of the owners;
in the case of a ship owned by a corporation incorporated under the laws of a country other than Canada : a subsidiary of the corporation incorporated in Canada; an employee or officer in Canada of a branch office of the corporation carrying on business in Canada; or a ship management company incorporated in Canada.

This section would ensure that every ship registered in Canada had a person in Canada with full authority to act in its interests.

G. Clause 3, Proposed Sections 12-22, Canadian Register of Ships and Registrars

The Minister would be empowered under the Act (proposed sections 12-15 ) to appoint a Chief Registrar, who, in turn, could appoint registrars and who would be responsible for establishing a Canadian Register of Ships. The Register would contain information in respect of a Canadian ship, including:

its name and description;
its official number;
its register tonnage;
the name and address of its owner; and
details of all mortgages registered in respect of it.

This would give Transport Canada full authority and responsibility for ship registration and related activities currently being performed by the Customs and Excise Division of Revenue Canada.

Proposed sections 16-20 would outline the types of ships that would be required to register in Canada and those that could do so. Every ship that exceeded 15 tons gross tonnage, was owned only by qualified persons, and was not registered in a foreign country, would have to be registered under the Act.

Proposed sections 17 and 18 would for the first time allow certain foreign ships and ships that were bare–boat chartered to a qualified person, to register in Canada.

Proposed section 19 would allow ships under construction in Canada to be recorded in the Register, thereby allowing them to obtain a builder’s mortgage. Proposed section 20 would give the Minister the authority to direct the Chief Registrar to refuse to list or register a foreign-built ship.

The Chief Registrar would be given the authority to establish the criteria for applying for registration (proposed section 21), and would be required to approve the name of a ship (proposed clause 22). The Minister would have the authority to order that ship to be renamed if he or she considered that its name would prejudice the international reputation of Canada (proposed clause 22(4)). These proposed sections would modernize and clarify the language of the Act.

H. Clause 3, Proposed Section 23, Ownership of Ships

For the purposes of registration, a ship is divided into 64 shares; most maritime nations (the United States being an exception) follow this custom, which is variously attributed, for example, to the fact that ships traditionally had 64 ribs or the fact that under Queen Victoria ship owners were taxed 36% and left with the remaining 64%.

As a result of the Canada Shipping Act requirement for a vessel to be divided into a maximum of 64 shares, this number has become the norm for ownership in various legal documents. A share in a registered ship can serve as security for a loan or other consideration, and is thus a matter of concern for legal and banking concerns internationally. During consultations on Canada Shipping Act reform, elimination of the 64-share provision was proposed; the proposal was rebutted through representations by the Canadian Maritime Law Association (CMLA) on the grounds that any changes to the benchmark 64 shares would risk creating confusion in the banking system, and in effect, create an unnecessary second regime for vesting full ownership. As no strong opposition was expressed, the requirement for 64 shares would be kept in the Act.

I. Clause 3, Proposed Sections 24- 33, Certificates, Markings, and Registry Procedures

Proposed sections 24 to 26 would outline the minimum information to be put on a certificate of registry (name and description of the ship, its official number, and name and address of the owner, etc.); provide for the issuance of a provisional certificate in certain cases; and state the requirements for obtaining a replacement certificate when a certificate was lost.

Proposed section 27 would continue the current requirement that all ships registered in Canada be marked, and that the markings be maintained.

Proposed sections 28-29 would provide that the owner would have to notify the Chief Registrar of changes made to information filed with that official, who would be allowed to correct any errors in the information contained in the Register.

Proposed sections 30 to 32 would outline the circumstances in which the registration of a Canadian ship could be cancelled, suspended or reinstated. These would include: improper markings, expiration of the certificate of registry; and a ship’s loss, wreck or removal from service.

According to proposed section 33, the certificate of registry would have to be on board a ship in order for the ship to operate.

J. Clause 3, Proposed Section 34, Rights and Obligations

Proposed section 34 would give a Canadian ship the right to fly a Canadian flag. Where a Canadian ship was shown on a foreign register as a bare-boat chartered ship, the Chief Registrar could suspend its registration in respect of the right to fly the Canadian flag.

K. Clause 3, Proposed Sections 35- 47, Ship Tonnage, Mortgages, and Transfer of Shares

Under proposed sections 35 and 36, the Minister would continue to appoint persons as tonnage measurers to calculate ships’ tonnage.

Proposed sections 37 to 44 would allow ship owners and ship builders to continue to mortgage their ships and have that mortgage placed on the Register.

Proposed sections 45-47 would require a Canadian ship’s owner to notify the Chief Registrar whenever there was a change in ownership. In the event that an unqualified person acquired a Canadian ship, an application for redress could be made to a court.

L. Clause 3, Proposed Sections 48 – 53, Regulations, Entries and Documents,
Offences and Punishment, Transitional

Proposed sections 48 and 49 would set up the regulation-making authority with respect to registration of ships and regulatory powers for the proper administration and the enforcement of the licensing of vessels under 15 tons that were not compelled to be registered.

Proposed sections 50 and 51 would continue the right of an individual to examine the Register and set out the documents that would be admissible as evidence in court (e.g., a computer printout of information).

Proposed section 52 would clarify the offences (e.g., failure to mark a ship, failure to register a ship, operation of a ship without a certificate on board) and punishments (e.g., fines up to $50,000 and/or imprisonment for up to two years) applicable to proposed Part I of the Act.

Proposed section 53 would provide for the smooth transition between the current provisions and the proposed provisions. For example, proposed section 53(1) would ensure that no ships were removed from the Register because of a change in law unless the ownership of the ship changed; in this case this ship would become subject to the proposed provisions. Currently, a certificate of registry does not expire. Proposed section 53(2) would keep certificates in place for up to three years in order to provide a transitional period during which the ships could be brought under the new rules.

M. Clause 4, Section 273, Special Purpose Personnel

Currently, section 273 prohibits employment of persons under 15 years of age on any ship except in certain circumstances, some of which relate to obsolete jobs in connection with steamships. The bill would amend section 273 to allow for training persons aboard special purpose ships (e.g., sail training ships), regardless of age. Any regulations pursuant to this section would be consistent with the various International Labour Organization Conventions dealing with the employment of young persons.

N. Clause 5, Proposed Section 314.1, Regulations for Other Than
Safety Convention Ships

A new section 314.1 would be introduced to allow for the application of the International Safety Management (ISM) Code to be extended to include domestic shipping as well as international shipping.

O. Clause 6, Proposed Sections 317.1 – 317.3, Inspection by Others

This clause would allow for certain ship safety inspections now undertaken by the government to be transferred to the private sector. Such delegation of authority would be subject to Transport Canada audit, quality assurance and consultation with the marine industry.

P. Clause 8, Proposed Sections 338(1) (c.1),(c.2) and (m), Personal Flotation Devices

Clause 8 would authorize regulations for the construction, servicing and repair of life–saving equipment and personal flotation devices as well as regulations for who would have to use them and when they were to be worn.

Q. Clause 9, Proposed Section 379.1, Special Purpose Ships and Special Purpose Personnel

Proposed section 379.1 would provide for the authority to regulate certain ships that do not fit into any of the existing categories of ship regulated under the Act ( passenger ship, cargo ship, fishing vessel and pleasure craft). The bill would therefore add a fifth category, the "special purpose ship." The provision would permit the Minister to designate a ship as a "special purpose ship"; examples would be sail training vessels and scientific research ships. Classes of persons on board such ships could be designated as "special purpose personnel."

R. Clause 11, Section 406, Exemption from Annual Inspections and Regulations

Currently, section 406 exempts from certain annual inspections ships not in excess of five tons gross tonnage, carrying no more than 12 passengers, and that are not pleasure yachts. The bill would amend section 406 to raise the limit for this exemption to ships not in excess of 15 tons gross tonnage. Inspectors would be able to conduct spot checks on these vessels.

S. Clause 12, Proposed Section 421.1 Regulations

Proposed section 421.1 would amend Part V of the CSA to clarify the authority of the Governor in Council with respect to small vessels, whether they were pleasure craft or commercial small vessels. The bill would also provide for offences and penalties in this respect. At present, Part V of the CSA governs mostly large vessels; it does not take into account, for example, the fact that small vessels are constructed by individual owners and manufacturers outside the structured regulatory framework applying to larger vessels. For such vessels, it would be appropriate to have regulations requiring that manufacturers, importers and retailers, as well as owners, comply with construction and manufacturing standards.

T. Clause 18, Section 657(1), Regulations Relating to Pollution; Clause 19,
Section 660.2(4) and (7), Oil Pollution Prevention Plan

The bill would amend section 657 to grant the Governor in Council the power to make regulations to prevent pollution resulting from the discharge of ballast water and thereby reduce the risk of spills in Canada’s waters, including the Arctic. The United States currently has the authority to make such regulations.

The proposed amendment to section 660.2(4) would extend the current need for ships to have on board oil pollution prevention plans, to require all shore-based loading and unloading facilities to do so.

U. Clause 20, Lower St. Lawrence Pilots’ Pensions

Unlike other organizations, the rights and powers of the Corporation of Pilots for and below the Harbour of Quebec have not evolved or benefited from new statutory provisions covering pension funds. Accordingly, retired members of this fund find themselves subject to an Act over 100 years old and to the antiquated internal rules of the Corporation.

Changes under this clause would redefine the Pilot Fund, recognize the plan as a registered pension plan, make the Pension Benefits Standards Act, 1985 apply in respect of the pension plan, define the status of the plan with regard to the Income Tax Act, and allow the Governor in Council to make regulations for carrying out the purposes of the proposed new Part XVI.I of the Canada Shipping Act.

COMMENTARY

Bill C-15 would make several amendments to the Canada Shipping Act. Among the more important would be amendments to modernize Part I of the Act, which concerns the registration of ships and mortgages, and the addition of a Part dealing with matters of general application. The bill would also amend the Act to take into account technological, social, statutory and administrative developments in the shipping field.