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A Protocol to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 (HNS Convention) was adopted on April 30, 2010 by the Diplomatic Conference convened by the International Maritime Organization (IMO).
The Diplomatic Conference took place from April 26 to 30, 2010 in London. The purpose of the Protocol, which was adopted by consensus, is to facilitate ratification and rapid entry into force of an international regime of liability and compensation for HNS damage.
Under the Protocol, if damage is caused by bulk HNS, compensation would first be sought from the shipowner (so-called first tier), up to a maximum limit of 100 million Special Drawing Rights (SDR), which corresponds to around US$150 million. Where damage is caused by packaged HNS, or by both bulk HNS and packaged HNS, the maximum liability for the shipowner is 115 million SDR, which corresponds to around US$172.5 million. As members will be aware this latter liability limit, representing a 15% increase compared to the HNS Convention, was discussed and agreed last week to counterbalance the potential increased exposure of bulk HNS importers to the HNS Fund.
Once these liability limits are reached, compensation would be paid from the so-called second tier, the HNS Fund, up to a maximum of 250 million SDR (US$375 million), which includes compensation paid under the first tier. The Fund will have an Assembly, consisting of all States Parties to the Convention and Protocol, and a dedicated secretariat. The Assembly will normally meet once a year.
The Conference agreed that the Protocol will enter into force 18 months after the date on which (a) at least twelve States, including four States each with not less than 2 million units of gross tonnage, have expressed their consent to be bound by it; and (b) the Secretary-General of IMO has received information that those persons in such States who would be liable to contribute have received during the preceding calendar year a total quantity of at least 40 million tons of cargo contributing to the general account.
