Documents considered by the Committee on 21 July 2015 - European Scrutiny Contents


17 Carriage of Hazardous and Noxious Substances by Sea

Committee's assessment Legally and politically important
Committee's decisionNot cleared from scrutiny; further information requested
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.
Legal base(a) Articles 192 and 218(6)(a)(v) TFEU, consent, QMV

(b) Articles 81 and 218(6)(a)(v) TFEU, consent, QMV

DepartmentTransport
Document Numbers (a) (36950), 10248/15, COM(15) 304; (b) (36951), 10252/15 + ADD 1, COM(15) 305

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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