The HNS Convention [As Modified by the 2010 HNS protocol]

The HNS Convention [As Modified by the 2010 HNS protocol](see full pdf format)





Tonnage of ship (x 1 000 units)

SDR (millions)

The HNS Convention

The International Convention on Liability and Compensation for Damage

in Connection with the Carriage of Hazardous and Noxious Substances by

Sea, 1996 (HNS Convention) aims to ensure adequate, prompt and effective

compensation for damage to persons and property, costs of clean up and

reinstatement measures and economic losses resulting from the maritime

transport of hazardous and noxious substances (HNS).

The legal framework

The HNS Convention was adopted by an International Conference organised by the

International Maritime Organization (IMO) in London in May 1996 and is based on

the highly successful model of the Civil Liability and Fund Conventions which cover

pollution damage caused by spills of persistent oil from tankers. As with the original oil

pollution compensation regime, the HNS Convention will establish a two-tier system for

compensation to be paid in the event of accidents at sea, in this case, involving hazardous

and noxious substances, such as chemicals.

Tier one will be covered by compulsory insurance taken out by shipowners, who would be

able to limit their liability. In those cases where the insurance does not cover an incident, or is

insuffi cient to satisfy the claim, a second tier of compensation will be paid from a Fund, made

up of contributions from the receivers of HNS. Contributions will be calculated according to

the amount of HNS received in each Member State in the preceding calendar year.

By 2009, the HNS Convention had still not entered into force, due to an insuffi cient

number of ratifi cations. A second International Conference, held in April 2010, adopted

a Protocol to the HNS Convention (2010 HNS Protocol), that was designed to address

practical problems that had prevented many States from ratifying the original Convention.

Once the 2010 HNS Protocol enters into force, the 1996 Convention, as amended by the

2010 Protocol, will be called: “the International Convention on Liability and Compensation

for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea,

2010” (2010 HNS Convention).

What are Hazardous and Noxious Substances (HNS)?

The defi nition of HNS set out in the HNS Convention is based on lists of individual

substances identifi ed in a number of IMO Conventions and Codes, designed to ensure

maritime safety and prevention of pollution. HNS represent a wide array of chemical

substances of varying properties and hazards, which include both bulk cargoes and packaged

goods. Bulk cargoes can be solids, liquids, including both persistent and non-persistent

oils, and liquefi ed gases, such as liquefi ed natural gas (LNG) or liquefi ed petroleum gas

(LPG). Low hazard substances, such as coal and iron, are generally excluded from the HNS

Convention. There are a large number of substances covered by the Convention, such as,

the International Maritime Dangerous Goods Code (IMDG Code), which represents only

one of the Codes covered by the Convention and lists hundreds of substances which can be

dangerous when shipped in packaged form.

How much compensation will

be available?

Where damage is caused by HNS in bulk, the

shipowner will normally be able to limit his

fi nancial liability to an amount between

10 million and 100 million Special Drawing

Rights (SDR) of the International Monetary

Fund (approximately USD 15 million to

USD 150 million)*, depending on the gross

tonnage of the ship. Where damage is caused by

packaged HNS, the maximum liability for the

shipowner is SDR 115 million (approximately

USD 175 million). The HNS Fund will provide

an additional tier of compensation up to a

maximum of SDR 250 million (approximately

USD 380 million), including any amount paid

by the shipowner and his insurer.

* The unit of account in the treaty instrument is the Special Drawing

Right (SDR) as defi ned by the International Monetary Fund. Conversion

of currencies has been made on the basis of the rates at 1 September 2010

(on that day 1 SDR = £0.983971 or US$1.514720).

What types of damage will be covered by the HNS Convention?

The HNS Convention covers damage in the territory or territorial sea of a State Party to the

Convention. It also covers pollution damage in the exclusive economic zone (EEZ), or equivalent

area, of a Member State and damage (other than pollution damage) caused by HNS carried on

board ships registered in the flag of the Member State outside the territorial sea of any State.

The following types of damage will be covered:

• Loss of life or personal injury on board or outside the ship carrying the HNS

• Loss of or damage to property outside the ship

• Economic losses resulting from contamination, e.g. in the fishing, mariculture and

tourism sectors

• Costs of preventive measures, e.g. clean-up operations at sea and onshore

• Costs of reasonable measures of reinstatement of the environment

The HNS Convention does not apply to oil pollution damage from tankers, as defined

in the International Convention on Civil Liability for Oil Pollution Damage, nor for loss

or damage, as covered by the Bunkers Convention. Loss or damage caused by radioactive

materials is also excluded.

Claims under the HNS Convention will be assessed according to criteria that will be

established by the Governments of HNS Fund Member States.

The shipowner

Under the HNS Convention, the shipowner will have strict liability for any damage caused by

HNS, i.e. the shipowner will be liable even without fault on the part of the ship or its crew. The

shipowner will be obliged to maintain insurance to cover his liabilities under the Convention.

This insurance will normally be provided by protection and indemnity (P&I) insurers.

The HNS Fund

The HNS Fund will be established once the HNS Convention enters into force. States

which ratify the 2010 HNS Protocol will become Members of the HNS Fund. The HNS

Fund will provide the second tier of compensation and will be administered by a Secretariat

and headed by a Director.

The HNS Fund is expected to function similarly to the International Oil Pollution

Compensation Funds (IOPC Funds) and will be governed by an Assembly composed

of Government representatives from its Member States. The HNS Fund will also have a

Committee to address claims for compensation, which will be similar to the IOPC Fund’s

Executive Committee.

Financing of the HNS Fund

The HNS Fund will be financed by contributions paid by receivers of HNS, or titleholders

for LNG cargo in some cases, that have been transported by sea to the ports and terminals of

Member States.

The HNS Fund will have up to four accounts, with separate accounts for oil, LNG and LPG

and a general account for bulk solids and other HNS. However, until the quantities of HNS

received in all States Parties reach the established thresholds, as shown in the table overleaf,

all accounts will be managed out of the general account.

Contributions by individual receivers to the separate accounts and sectors will be in

proportion to the quantities of HNS received, provided that the quantities are above the

established thresholds.

Whereas the total contributions to the general account will be divided amongst the sectors,

according to the level of claims in each sector, the separate accounts will only meet claims

resulting from incidents involving the respective cargoes, i.e. there will be no cross-subsidisation.

As part of the changes agreed in the 2010 HNS Protocol, packaged goods will no longer be

considered as contributing cargo to the HNS Fund. However, compensation for incidents

involving packaged HNS will continue to be covered under the general account.

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The role of the IOPC Funds

The IOPC Funds are responsible for implementing the provisions of the Fund Conventions.

Given the Organisations’ long experience in managing the oil pollution compensation system

and, as requested by the International Conference that adopted the HNS Convention, the

IOPC Funds’ Secretariat has been tasked with assisting the IMO Secretariat in setting up the

HNS Fund and with making preparations for the first session of the HNS Assembly.

Entry into force of the HNS Convention

The 2010 HNS Protocol will enter into force 18 months after the date on which it is ratified

by at least twelve States, including four States each with not less than 2 million units of gross

tonnage, and having received during the preceding calendar year a total quantity of at least

40 million tonnes of cargo that would be contributing to the general account.

Reporting requirements

Even before the HNS Convention enters into force, States are obliged when they ratify the

Convention, and annually thereafter, to report the total quantities of contributing cargo,

for each account and sector, which were received in that State in the preceding year. Failing

to comply with the reporting requirements could lead to a suspension of the status of a

Contracting State or to withholding of compensation in relation to the State concerned.

Further information

Further information on the HNS Convention and the 2010 HNS Protocol can be found at

Establishment Contributions to

of account account/sector

General account 40 million tonnes*

• Bulk solids 20 000 tonnes

• Other HNS No minimum quantity 20 000 tonnes

Separate accounts

(or Sectors within the general account)

Oil account 350 million tonnes

• Persistent oil 150 000 tonnes

• Non-persistent oil 20 000 tonnes

LNG account 20 million tonnes No minimum quantity

LPG account 15 million tonnes 20 000 tonnes

*Condition for entry into force

HNS Protocol, April 2010

International Level National Level

Timeline: from adoption

to entry into force

Open for signature

1st November 2010

to 31st October 2011

The HNS Convention will

come into force 18 months

following the date when

12 States have ratified

– Four of which with not less than

2 million units of gross tonnage

– The volume of contributing

cargo for the general account must

be of at least 40 million tonnes

HNS Protocol enters into force

Member State

Develop National Legislation

Regulatory Authorities’ Approval

Implementation into National Law

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