Submission of the Maritime Law Association of Australia and New Zealand (MLAANZ) on the Maritime Transport Amendment Bill 2016 (200-1) 1 February 2017

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1 Submission of the Maritime Law Association of Australia and New Zealand (MLAANZ) on the Maritime Transport Amendment Bill 2016 (200-1) About MLAANZ 1 February MLAANZ is a not-for-profit organisation established in 1974 with the objects of: advancing reforms in maritime law and facilitating justice in its administration; furnishing a forum for the discussion and consideration of problems affecting the maritime law and its administration; and acting with foreign and other associations in efforts to bring about the unification of maritime law and practices of different nations. 2. The membership of MLAANZ is comprised of more than 500 members from Australia and New Zealand and from several other countries. This includes lawyers and judges, academics, representatives of major exporters, shipping companies, port operators, ship, cargo and liability insurers, and government and defence force representatives. 3. This submission is made on behalf of the New Zealand branch of MLAANZ. Executive Summary 4. MLAANZ would like to acknowledge the work the government, legislature and officials have done in the past few years to ratify international maritime conventions. Although there is still work to be done, this Bill shows an encouraging dedication to continuing the work that began post-rena to bring this country s law into line with widely-accepted global standards. 5. With respect to The Maritime Transport Act Amendment Bill 2016 MLAANZ: a. Does not support, in its current form, Clause 8(2), that proposes amendments to section 86 MTA, concerning claims that are subject to limitation of liability under the LLMC Convention and: i. Recommends that the exclusions for (a) claims in respect of the raising, removal, destruction, or rendering harmless of a ship that is sunk, wrecked, stranded, or abandoned, including anything that is or has been on board the ship ; and (b) claims in respect of the removal, destruction, or rendering harmless of the cargo of a ship are more clearly specified as only excluding claims involving public authorities exercising statutory powers (as is the case under the current 86(4)(a) MTA); ii. Recommends that the exclusion relating to claims for damage within the meaning of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 or of any amendment or protocol to that convention: be deleted until such time as New Zealand becomes a party to the HNS Convention and it enters into force internationally (preferred). b. Supports the provisions that will enable New Zealand s ratification of the Supplementary Fund Protocol: c. Supports the proposed change to the definition of ship in section 342 MTA (clause 11): d. Recommends, for clarity, the new paragraph at s 388(n) of the Act refer to the full title of the Ballast Water Convention, rather than just the convention (Sub part 2, clause 29). 6. Our reasons are set out below, along with some further general observations regarding the need for broader reform of the Maritime Transport Act

2 Discussion LLMC Reservations (clause 8, proposed 86(4)(a) and (b)and (c) MTA) 7. As an organisation supporting the uniformity of international maritime law, MLAANZ is supportive of the intention to formalise New Zealand s position at the international level in terms of reservations to the Convention on the Limitation of Liability for Maritime Claims (LLMC). However the reservations should not be implemented wholesale into domestic law, without consideration of the related policy issues. (a) Claims in respect of the raising, removal, destruction, or rendering harmless of a ship that is sunk, wrecked, stranded, or abandoned, including anything that is or has been on board the ship: (b) claims in respect of the removal, destruction, or rendering harmless of the cargo of a ship 8. The proposed new wording of s 86(4) (a) and (b) reflects directly the language of LLMC article 2 (d) and (e). This has its origins in earlier limitation conventions. The 1957 Convention extended the right of limitation to wreck removal expenses. This was mitigated by a reservation that restricted limitation in cases where those expenses had been incurred by harbour authorities in the exercise of statutory powers. This reflected the common law position under the Stonedale No. 1 [1956] AC 1. The position is maintained under LLMC 1976 and the Protocol of Article 18 permits State parties to make reservations excluding the application of Article 2(1) (d) and (e) which relate to claims in respect of the raising, removal, destruction or rendering harmless of a ship which is sunk, wrecked, stranded, including anything on board, and claims in respect of the removal, destruction, or rendering harmless the cargo of a ship. 9. Historically, New Zealand domestic law has only excluded limitation where that relates to the exercise of statutory powers where there are navigational hazards. For example, the current 86(4)(a) MTA provides that: a. This Part and Articles 2, 3, and 9 of the LLMC Convention do not limit or affect (a) section 33J, 33K, or 110 of this Act. 10. This is consistent with the common law position, and the position taken in other jurisdictions. For example, in the United Kingdom limitation under Article 2(1)(d) is only excluded in cases where provision has not been made for the setting up and management of a fund to be used for the making of payments to compensate harbour or conservancy authorities. 11. The proposed new wording of 86(4)(a) and (b) would expand the circumstances in which limitation of liability would be unavailable for claims involving wreck removal in two key ways: a. Rather than making an exception only for costs incurred by public authorities in the exercise of statutory powers for broader maritime safety purposes, this would exclude all claims falling under 2(d) and (e). The new wording would bring, for example, a claim by a private party for the removal of a wrecked vessel s cargo from a marina within the scope of the exclusion. It could also have unintended consequences where cargo owners have made payments for salvage or general average. This was not the intention of the reservations and would have the effect of elevating some classes of private claimants over others. For these reasons, MLAANZ does not support, in its current form, clause 8(2), that proposes amendments to section 86 (4)(a) and (b) MTA. It recommends the exclusion of limitation of liability in these cases be restricted to costs incurred by public authorities consistent with the UK position. 2

3 b. Redrafting of 86(4)(a) and (b) will also widen the potential scope for public authority wreck removal claims beyond those set out in ss 33J, 33K and 110 of the Act. A local authority might take an action in negligence, for example, seeking compensation for wreck removal costs incurred following the foundering of a vessel. In the absence of any policy rationale, MLAANZ does not take a particular stance on whether this change is desirable or not in policy terms. 12. Given the issues and potential sums at stake in the event of a limitation-related dispute, any changes to domestic law needs to be supported by a clear signal of the policy objective. In its current form the Bill broadens the types of claims that may be excluded from limitation of liability as a consequence of reflecting the wording of article 18 of the LLMC, but without any statement as to the policy objective in domestic law, or context for these reservations at international law. (c) claims for damage within the meaning of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 or of any amendment or protocol to that convention 13. MLAANZ notes that the proposed exclusion from liability for claims defined by reference to the Hazardous and Noxious Substances (HNS) Convention The drafting is unclear but the explanatory notes suggest it is intended to operate in advance of the HNS Convention. 14. This HNS Convention is not yet in force internationally, and New Zealand is not yet a party to it. 15. The LLMC does provide for a reservation for claims for damage within the meaning of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 or of any amendment or protocol to that convention. 16. This reservation was directed at making clear the relationship between the LLMC and the HNS Convention as these will operate alongside each other once the latter comes into effect. Namely, that once the HNS Convention comes into force internationally, claims will not be limited to the general fund established under the LLMC. The HNS Convention establishes a separate limitation of liability provision for HNS, a separate fund established by the ship-owners, and a further Fund (contributed to by HNS receivers) to provide a second tier of compensation. This is equivalent to how oil pollution claims from tankers are dealt with under the CLC, Fund and Supplementary Fund regimes. 17. Until the HNS convention comes into force these HNS pollution claims continue to be governed under the LLMC. Separately, as discussed below, this highlights the need for New Zealand to take steps to ratify the relevant HNS Conventions. 18. Incorporating and attempting to rely on this exclusion before the HNS Convention comes into effect will cause confusion in the event of a major disaster. It would not result in making more money available for these types of pollution claims, is inconsistent with the purpose of the reservation and the practice of other States, and would not support the goals of uniformity in international maritime law. 19. For these reasons, MLAANZ recommends that the exclusion relating to claims for damage within the meaning of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 or of any amendment or protocol to that convention: be deleted until such time as New Zealand becomes a party to the HNS Convention and it enters into force internationally. 3

4 Supplementary Fund (clauses 11-30) 20. MLAANZ supports New Zealand s ratification of the Supplementary Fund Protocol, and in particular the proposed use of the definition of ship from the CLC convention itself in clause 11, which is wider than the existing definition in s This remedies an existing defect in the law that, as currently drafted, may limit recovery in New Zealand in the event of an oil spill from a tanker not registered to State Party to the CLC and Fund Convention. Miscellaneous (clause 29) 22. For clarity the new paragraph at s 388(n) of the Act should refer to the full title of the Ballast Water Convention, rather than just the convention. General Comments 23. As above, MLAANZ would like to acknowledge the work the government, legislature and officials have done in the past few years to ratify international maritime conventions. However, piecemeal changes of the kind found in this Bill add yet more layers to an Act that is already a confusing patchwork of older provisions, later amendments, repealed sections, and cross-references. 24. New Zealand s domestic maritime law, and the liability and compensation provisions Maritime Transport Act 1994 in particular, are badly in need of a more comprehensive review. Some specific examples are set out below. Wreck provisions 25. The further provision on wreck removal claims in s 86(4)(a) and (b) underscores the need to address the issue of wreck removal in a more comprehensive manner. Even where New Zealand claimants, including public authorities, are able to make claims following a wreck without confronting a limitation of liability, there is still no guarantee of recovering any money from the ship-owner or their insurer (the liability insurer could insist on the pay to be paid clause found in maritime Protection and Indemnity Club rules. 26. New Zealand law has no right of direct action against the insurer in this context. This is a matter addressed by the Nairobi Convention on the Removal of Wrecks 2007, a further international liability-related agreement that has entered into force via the International Maritime Organization, and which might provide New Zealand with a strong basis for ship owners compulsory insurance for wreck removal. MLAANZ wrote to the Minister of Transport on this subject on 11 October 2016: (a copy of this letter is attached for the Committee s information). HNS 27. MLAANZ notes that ratification of the Supplementary Fund Protocol will mean that New Zealand will be a party to the complete suite of international conventions that deal with oil related matters. 28. This includes those conventions that deal with preparedness and response for oil spill pollution (OPRC), powers of intervention (The Intervention Convention) liability for pollution for both bunkers (Bunker Convention) and spills from oil tankers (CLC), and the additional layers of compensation available through the Fund and Supplementary Fund regimes. This is to be commended, but highlights the gaps in the HNS space. 4

5 29. For example, of the HNS related conventions, New Zealand is only Party to the 1973 Protocol to the Intervention Convention. New Zealand is not party to: a. OPRC HNS: This means that unlike oil spill response, there is no clear planning around New Zealand s response to an HNS pollution incident. It is not clear which agency would have responsibility for dealing with an HNS oil pollution incident. b. The HNS Convention (not yet in force): The HNS regime introduces a stand alone strict liability system for shipowners, alongside compulsory insurance and a direct right of action, against the insurer (as is common in the suite of liability agreements that has been developed through the International Maritime Organization in recent decades), and the establishment of a separate fund to provide for a second tier of compensation when the ship-owners liability is insufficient to meet claims. Effective Implementation 30. The need for the change to the definition of ship in section 342 MTA emphasises the importance of effectively implementing international conventions into domestic law. This is a matter that requires a more comprehensive reform of the Maritime Transport Act 1994, and Part 25 in particular. 31. For example, the Part 25 liability regime mixes the oil tanker-related CLC convention, the ship s fuel-related Bunkers Convention 2001, older provisions sourced from New Zealand s Marine Pollution Act 1974, and more recent additions. 32. This hybrid regime duplicates some requirements, and in other cases paraphrases provisions and introduces new definitions that do not align with the international regimes (e.g. harmful substances). In the event of another major disaster Part 25 of the Act could result in difficulties in effective recovery for New Zealand claimants. Conclusion 33. The international regimes enjoy the support of the maritime industry, providing for uniformity and certainty in international law. 34. The NZ branch of MLAANZ appreciates the work that has been and is being done to consider and ratify relevant international conventions. This bill goes some way to resolving oil related issues, subject to the comments above. MLAANZ urges that this work be continued, more generally, to ensure the domestic regime as a whole takes advantage of the relevant international conventions in a coherent manner, aligning with international practice, and therefore ensuring the best protection for New Zealand interests. A review of the Act should occur before, not after, the next Rena-type incident. Kerryn Webster Chair, MLAANZ (New Zealand Branch) Attachment: Letter from MLAANZ to Minister of Transport, 11 October

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