The HNS Convention was adopted in 1996 to make it possible for up to 250 million SDR to be paid out in compensation to victims of accidents involving HNS, such as chemicals. The Convention is based on the two-tier system established under the CLC and Fund Conventions. However, it goes further in that it covers not only pollution damage but also the risks of fire and explosion, including loss of life or personal injury as well as loss of or damage to property.
HNS are defined by reference to lists of substances included in various IMO Conventions and Codes. These include oils; other liquid substances defined as noxious or dangerous; liquefied gases; liquid substances with a flashpoint not exceeding 60°C; dangerous, hazardous and harmful materials and substances carried in packaged form; and solid bulk materials defined as possessing chemical hazards. The Convention also covers residues left by the previous carriage of HNS, other than those carried in packaged form.
The Convention defines damage as including loss of life or personal injury; loss of or damage to property outside the ship; loss or damage by contamination of the environment; the costs of preventative measures and further loss or damage caused by them.
The Convention introduces strict liability for the shipowner and a system of compulsory insurance and insurance certificates.
A lack of ratifications meant that the 1996 Convention was failing to come into force and as a result, a Protocol was developed to address practical problems that had prevented many States from ratifying the original Convention.
The 2010 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 by consensus by a Diplomatic Conference convened by IMO in April 2010.
Limits of liability under the 2010 Protocol
Under the 2010 Protocol, if damage is caused by bulk HNS, compensation would first be sought from the shipowner, up to a maximum limit of 100 million Special Drawing Rights (SDR).
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.
Once this limit is reached, compensation would be paid from the second tier, the HNS Fund, up to a maximum of 250 million SDR (including 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.
Entry into force criteria for the Protocol
The 2010 Protocol will enter into force eighteen months after the date on which the following conditions are fulfilled:
- (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 has received information in accordance with article 20, paragraphs 4 and 6, that those persons in such States who would be liable to contribute pursuant to article 18, paragraphs 1(a) and (c), of the Convention, as amended by this Protocol, have received during the preceding calendar year a total quantity of at least 40 million tonnes of cargo contributing to the general account.
"2010 HNS Convention"
The 1996 convention, as amended by the 2010 Protocol, shall mutatis mutandis constitute and 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).
It has generally been agreed that it would not be possible to provide sufficient cover by the shipowner liability alone for the damage that could be caused in connection with the carriage of HNS cargo. This liability, which creates a first tier of the Convention, is therefore supplemented by the second tier, the HNS Fund, financed by cargo interests. The Fund will become involved:
- because no liability for the damage arises for the shipowner. This could occur, for example, if the shipowner was not informed that a shipment contained HNS or if the accident resulted from an act of war;
- because the owner is financially incapable of meeting the obligations under this Convention in full and any financial security that may be provided does not cover or is insufficient to satisfy the claims for compensation for damage, or
- because the damage exceeds the owner's liability limits established in the Convention.
Contributions to the second tier will be levied on persons in the Contracting Parties who receive a certain minimum quantity of HNS cargo during a calendar year. The tier will consist of one general account and three separate accounts for oil, liquefied natural gas (LNG) and liquefied petroleum gas (LPG). The system with separate accounts has been seen as a way to avoid cross-subsidization between different HNS substances.
The Fund will have an Assembly consisting of all States which are Parties and a Secretariat headed by a Director. The Assembly will normally meet once a year.
HNS and the CLC/Fund Conventions
The HNS Convention excludes pollution damage as defined in the International Convention on Civil Liability for Oil Pollution Damage and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, to avoid an overlap with these Conventions.
However, HNS covers other damage (including death or personal injury) as well as damage caused by fire and/or explosion when oils are carried.
Special Drawing Rights Conversion Rates
The daily conversion rates for Special Drawing Rights (SDRs) can be found on the International Monetary Fund website at http://www.imf.org/