17 Carriage of Hazardous and Noxious
Substances by Sea
| Committee's assessment |
Legally and politically important |
| Committee's decision | Not cleared from scrutiny; further information requested
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| Document details | (a) Proposal for a Council Decision on the ratification and accession by Member States on behalf of the Union to the Protocol of 2010 to the International Convention on Liability and Compensation for Damage in connection with the Carriage of Hazardous and Noxious Substances by Sea with the exception of aspects related to judicial cooperation in civil matters; (b) Proposal for a Council Decision on the ratification and accession by Member States on behalf of the Union to the Protocol of 2010 to the International Convention on Liability and Compensation for Damage in connection with the Carriage of Hazardous and Noxious Substances by Sea with regard to aspects related to judicial cooperation in civil matters.
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| Legal base | (a) Articles 192 and 218(6)(a)(v) TFEU, consent, QMV
(b) Articles 81 and 218(6)(a)(v) TFEU, consent, QMV
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| Department | Transport |
| Document Numbers | (a) (36950), 10248/15, COM(15) 304; (b) (36951), 10252/15 + ADD 1, COM(15) 305
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Summary and Committee's conclusions
17.1 Liability and compensation for damages arising from specific
types of shipping activity is regulated at international level
with a series of International Maritime Organization Conventions.
The 1996 International Convention on Liability and Compensation
for Damage in Connection with the Carriage of Hazardous and Noxious
Substances by Sea, which has not yet entered into force, has been
amended twice, most recently by a 2010 Protocol.
17.2 In November 2002 the Council adopted a Council
Decision on ratification of the Convention. This provided that
"Member States shall take the necessary steps to deposit
the instruments of ratification of, or accession to, the HNS Convention
within a reasonable time with the Secretary-General of the International
Maritime Organization and, if possible, before 30 June 2006".
17.3 The Commission considers that the 2010 Protocol
amending the Convention needs to form the subject of new Council
Decisions, taking into account developments in EU law since 2002,
in particular the Environmental Liability Directive. It is proposing
two new Council Decisions which would require all Member States
to ratify or accede to the 2010 Protocol "no later than two
years from the date of entry into force of this Decision".
One of the proposed Council Decisions would cover all aspects
with the exception of aspects related to judicial cooperation
in civil matters, which would be covered by the other proposed
Council Decision.
17.4 As for the substance of the proposals the Government
tells us of significant reservations about how the Convention
would work and, consequently, about the proposed Council Decisions.
It notes that its reservations are shared by other Member States.
17.5 The proposals also give rise to three legal
issues:
· whether
the EU has exclusive competence over any of the subject matter
of the 2010 Protocol. To the extent that it does the Member States
must act in accordance with authorisation by the EU. In the unlikely
event that there is no exclusive EU competence these proposals
become unnecessary;
· if the
proposals are necessary, whether Article 218(6)(a)(v) TFEU is
the appropriate procedural legal base; and
· whether
the UK opt-in is engaged in respect of the proposal relating to
judicial cooperation in civil matters, document (b).
17.6 We note that the Government is considering
its position on the substance of the proposed Council Decisions,
including in the light of problems about the Convention itself.
So we also wish to hear from the Government how consideration
of the implications of the proposals is developing in the Council
working group negotiations.
17.7 On the legal issues:
· we
await the Government's further consideration of the extent of
EU exclusive competence;
· we
consider that the judgment of the Court of Justice in Case C-399/12,
whilst not directly concerned with the use of Article 218(6)(a)(v)
TFEU, casts doubt on the use of this procedural legal base in
these circumstances. We therefore ask the Government to clarify
whether any Member State has raised objections or is likely to;
· we
support the Government's contention that the opt-in applies to
document (b).
17.8 Meanwhile the documents remain under scrutiny.
Full
details of the documents:
(a) Proposal for a Council
Decision on the ratification and accession by Member States on
behalf of the Union to the Protocol of 2010 to the International
Convention on Liability and Compensation for Damage in connection
with the Carriage of Hazardous and Noxious Substances by Sea with
the exception of aspects related to judicial cooperation in civil
matters: (36950), 10248/15, COM(15) 304; (b) Proposal for a Council
Decision on the ratification and accession by Member States on
behalf of the Union to the Protocol of 2010 to the International
Convention on Liability and Compensation for Damage in connection
with the Carriage of Hazardous and Noxious Substances by Sea with
regard to aspects related to judicial cooperation in civil matters:
(36951), 10252/15 + ADD 1, COM(15) 305.
Background
17.9 Liability and compensation for damages arising
from specific types of shipping activity is regulated at international
level with a series of International Maritime Organization (IMO)
Conventions, which rely on the same main principles, which are:
· strict
liability of the shipowner;
· mandatory
insurance to cover damages to third parties;
· a right
of direct recourse of persons suffering damages against the insurer;
· limitation
of liability; and
· in the
case of oil, a special compensation fund that pays for damages
when these exceed the liability limits of the shipowner.
17.10 Separate IMO Conventions have dealt with measures
to combat maritime pollution. At a 1984 IMO conference it was
recognised that none of these agreements covered hazardous and
noxious substances (HNS). This was addressed in 1996 by the International
Convention on Liability and Compensation for Damage in Connection
with the Carriage of Hazardous and Noxious Substances by Sea (the
HNS Convention). The HNS Convention, which has not entered into
force, was amended in 2000 by the OPRC-HNS Protocol,[ 167]
and then further amended by the 2010 HNS Protocol.[ 168]
17.11 In November 2002 the Council adopted Council
Decision 2002/971/EC on ratification of the HNS 1996 Convention.
This provided that "Member States shall take the necessary
steps to deposit the instruments of ratification of, or accession
to, the HNS Convention within a reasonable time with the Secretary-General
of the International Maritime Organization and, if possible, before
30 June 2006". Recital (2) of this Decision records, in effect,
that the EU has exclusive competence over the part of the Convention
that overlaps with Regulation 44/2001 on jurisdiction and the
recognition and enforcement of judgments (the then Brussels I
Regulation). This would indicate that the equivalent element of
the 2010 Protocol, at least, is a matter of exclusive EU competence.
17.12 The general principles of the HNS Convention
are based on similar principles used for the separate IMO Conventions
relating to oil pollution from shipping. In simple terms this
means that in the event of a major accident there are tranches
of payment of damages:
· to
start with, the ship owner/insurer pays, up to a certain amount
based on the size of the ship involved in the accident/incident;
· should
the incident be significant enough to go beyond the ship owners/insurers
coverage, the relevant HNS Fund, (there are four different HNS
Funds) would pay the remainder; and
· the
money in the fund would come from all those companies based in
countries across the world which have acceded to and ratified
the HNS Convention, and which import above a significant amount
of HNS each year, as specified by the HNS Convention.
17.13 The 2010 HNS Protocol is a revision of the
HNS Convention. It will enter into force 18 months after the date
on which the HNS Convention/Protocol is ratified by at least 12
(international) States, including four States that each have not
less than 2 million units of gross tonnage, and have received
during the preceding calendar year a total quantity of at least
40 million tonnes of cargo that would be contributing to the general
HNS account. So far eight States have signed the HNS Convention/Protocol:
Denmark, Canada, France, Germany, Greece, the Netherlands, Norway
and Turkey. None have ratified it as yet.
17.14 The Commission considers that the 2010 HNS
Protocol amending the Convention needs to form the subject of
new Council Decisions, taking into account developments in EU
law since 2002, in particular the Environmental Liability Directive,
Directive 2004/35/EC. It is proposing two new Council Decisions
which would require all Member States to ratify or accede to the
2010 Protocol "no later than two years from the date of entry
into force of this Decision". The proposed Council Decision,
document (a), would cover all aspects with the exception of aspects
related to judicial cooperation in civil matters, which would
be covered by the proposed Council Decision, document (b). The
latter proposal is accompanied by a declaration to be deposited
by Member States when ratifying or acceding to the 2010 HNS Protocol.
17.15 The proposed Decision relating to judicial
cooperation in civil matters includes a legal basis found in Title
V TFEU which would ordinarily engage the UK opt-in. However the
Commission and the Council Legal Service take the view that, as
the UK has opted into the Brussels I Regulation giving rise to
exclusive EU competence over this international agreement, the
opt-in no longer applies to any decision relating to it.
17.16 The legal base issue involves Article 218(6)
TFEU. This provision sets out the procedure for the Council to
conclude an international agreement. The question is whether this
also applies to any decision authorising Member States to enter
into an international agreement. This matter has not been directly
considered by the Court of Justice, but in case C-399/12, it decided
that Article 218(9) TFEU — the procedure to establish an
EU position with a body created by an international agreement
— was an appropriate legal base for the EU to authorise
Member States to take a position where the EU could not accede
to the international agreement and therefore was not itself a
member of the body. In doing so, at paragraph 54 of its judgment,
it contrasted Article 218(9) with the preceding provisions of
Article 218 which "have as their object the negotiation and
conclusion of agreements by the European Union".
17.17 The Commission notes that no States have ratified
the 2010 HNS Protocol, which it believes to be because of the
requirement for the submission of data on the total quantity of
contributing cargo received during the calendar year preceding
ratification.
The Government's view
17.18 In his Explanatory Memorandum of 8 July the
Parliamentary Under-Secretary of State, Department for Transport
(Mr Robert Goodwill) comments first that:
· the
Government is considering its position on whether these proposals
fall within an area of exclusive EU competence, as claimed by
the Commission;
· in particular,
along with other Member States, it has concerns about the extent
of EU competence over Chapter IV of the HNS Convention particularly
with regards to articles 37, 41 and 42;
· more
generally, there are questions around the overlap of the Environmental
Directive (which was very limited in scope) with the HNS Convention
(which was much broader); and
· the
Government will provide further information on these considerations
in due course.
17.19 Turning to the question of judicial cooperation
in civil matters the Minister says that:
· it
is the view of the EU institutions that in matters of exclusive
external competence the UK's Opt-in Protocol does not apply;
· the
proposed Council Decision, document (b), therefore includes text
in Recital 15 stating that the UK and Ireland are bound by Regulation
(EU) No 1215/2012[ 169]
and are therefore fully taking part in the adoption and application
of the proposed Council Decision;
· however,
as the proposal cites a legal base in Title V of Part III TFEU,
the UK's JHA opt-in applies, in accordance with Protocol No 21
annexed to the TFEU; and
· the
Government will seek to have Recital 15 amended to reflect the
UK position.
17.20 The Minister continues that:
· the
date of publication of the last language version of the proposal
was 24 June;
· the
date by which the UK must notify the Commission of its opt-in
decision will therefore be 24 September 2015;
· in the
light of this, it would be helpful to have our view on whether
the UK should opt into this proposal by 19 August 2015.
17.21 The Minister tells us that the Government is
considering its position on whether or not to opt in and that
it is committed to taking all opt-in decisions on a case-by-case
basis, putting the national interest at the heart of the decision-making
process. He explains that, in making the opt-in decision on this
proposal, the Government will have particular regard to:
· whether
it is in the best interests of the UK and UK business to sign
and ratify the HNS Convention, specifically taking into account
consideration of the potential impacts and cost for UK business
and potential claimants;
· the
likelihood that the proposals will be amended during negotiations,
and that in particular the compulsory timeframe for ratification
or accession will be removed; and
· whether
the Government accepts that the EU has competence to act in the
manner proposed by the Commission.
17.22 Finally on the JHA issue the Minister says
that:
· whilst
the UK's JHA opt-in is triggered by the proposed Council Decision,
document (b), the opt-in will not extend to the other proposed
Council Decision, document (a); and
· the
UK will therefore be bound to ratify the key components of the
HNS Convention if the non-JHA proposed Council Decision is adopted
even if the UK does not opt into the JHA proposed Council Decision.
17.23 On the substance of the proposals the Minister
says that:
· the
Government currently has no plans to ratify the Convention/Protocol
and is considering its position on both of the proposed Council
Decisions;
· it appreciates
the importance of a robust regime for liability and compensation
for damages, and recognises that some countries, including some
Member States, are frustrated by the lack of progress in bringing
the HNS Protocol into force;
· there
is little likelihood of progress in doing so either internationally
or in the EU unless the HNS Convention/Protocol comes into effect
across all Member States simultaneously;
· the
Government understands that the Commission has brought its proposals
forward in response to these concerns, so that no Member State
would be disadvantaged by ratifying the Convention/Protocol before
its EU neighbour;
· this
would mean, however, that Member States would be at a competitive
disadvantage in comparison to non-Member States where the Convention
would not apply;
· the
fact that the Convention has been amended twice by two different
Protocols, and the fact that it has never entered force, indicates
how difficult this particular subject is to implement across the
world's nations;
· the
mechanics of how the compensation regime would be administered
have yet to be tested; and
· the
IMO is attempting to address the difficulties by providing advice
in the forum of an existing working group.
17.24 The Minister continues that individual Member
States have contributed directly to this wider debate and should
be allowed to continue to do so rather than through an EU line.
He says that a number of countries, including the UK, are seeking
clarification within the IMO on five areas of the HNS Convention
and Protocol, as follows:
Optional implementation
· the
HNS Protocol allows Member States to choose how they implement
the Convention;
· this
means that implementation can vary from State to State and the
cost implications could vary;
· the
implementation process requires each country to identify the receiver
of HNS so that the receiver can pay contributions to the HNS Funds
— the receiver could be the terminal where the HNS was delivered,
or an agent;
· these
concepts are left open to interpretation and could have an effect
on which country pays for the impact of any HNS accident;
Cost to business
· Member
States, including the UK, are parties to a number of other IMO
Conventions including those relating to oil pollution;
· these
Conventions have shown that the burden of payment for any accident
falls almost entirely with a few major nations — for example
in the case of oil pollution there are 117 nations covered by
the relevant Convention but nearly all of the money comes from
just eight countries of which the UK is one;
· if the
UK should accede to and ratify the HNS Convention then the Government
estimates that the UK would be the single biggest contributor
to the Fund and so the UK businesses would be taking on a huge
financial burden;
Transhipment
· transhipment
is the process of the product arriving at a port of one country
and being transported overland to another country — it is
not addressed properly by the Convention;
· ports
in some Member States would have a huge advantage over UK ports
as they operate a lot of transhipment movements every year —
as the UK is an island, UK ports do not benefit from transhipment
movements and so their costs relating to HNS imports would be
a lot higher;
New substances
· new
HNS substances are being created every week, and even though the
Convention covers thousands of current products, there is always
the chance that an accident will take place involving a new product
that the Convention, at the time of the accident, does not cover;
Reporting of imports
· the
HNS Convention currently requires the reporting of the import
of 2914 different substances — this is a huge amount of
data that Member States would have the responsibility of compiling
each year; and
· currently,
in UK central government there is not the resource available to
compile and hold this information.
17.25 The Minister says that:
· if
the Council Decisions were agreed with their current wording,
Member States would have two years to complete all the work to
accede to and ratify the HNS Protocol;
· however,
part of the ratification process is to undertake one year of reporting
on contributing cargo, meaning that in practice there would only
be one year to complete and have in place all the legislative
and reporting procedures;
· all
Member States would have to ratify within the same time frame,
two years after the Council Decisions were agreed;
· this
would mean that the HNS Convention/Protocol would come into effect
18 months afterwards, in the countries that had ratified it, as
it would have reached the minimum amount, 12, of the necessary
signatories and met the other conditions required for it to come
into effect; and
· once
ratified, all UK firms importing more than 20,000 tonnes of any
HNS substance would be required to pay contributions to the HNS
Funds.
17.26 On the financial implications of the proposals
the Minister says that:
· if
simultaneous implementation of the Convention/Protocol occurred
across the whole of the EU, from three years and six months after
the Council Decisions are agreed, all EU firms importing more
than 20,000 tonnes of any HNS substance would be required to pay
contributions to the HNS Funds;
· as the
UK has a large chemical industry and is an island, it is one of
the biggest importers of HNS by sea in the world; and
· as such
the UK would almost certainly pay the biggest contributions to
the Funds and would therefore be subject to the biggest financial
implications within the EU.
17.27 Finally the Minister tells us that:
· other
Member States are also considering their positions on the proposals;
· however,
an initial working group discussion on 6 July indicated that many
Member States have concerns over the compulsory time-frame and
the feasibility of such a deadline, given that 12 months of data
would have to be provided as part of the ratification process;
and
· several
Member States also consider that clarification is needed over
the competence claims in the proposals.
Previous Committee Reports
None.
167 Protocol on Preparedness, Response and Co-operation
to pollution Incidents by Hazardous and Noxious Substances, 2000. Back
168 Protocol of 2010 to the International Convention on Liability
and Compensation for Damage in Connection with the Carriage of
Hazardous and Noxious Substances by Sea, 1996 Back
169 Regulation (EU) No 1215/2012 of the European Parliament and of
the Council of 12 December 2012 on jurisdiction and the recognition
and enforcement of judgments in civil and commercial matters Back
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