What's Happening?
The International Maritime Organization (IMO) has announced that the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (2010 HNS Convention) will enter into force
on November 29, 2027. This treaty aims to close gaps in the international liability and compensation regime for shipping, particularly as the volume of chemicals and alternative fuels transported by sea increases. The treaty covers incidents involving over 2,000 hazardous substances, including chemicals, oils, acids, fertilizers, alcohols, LNG, and LPG. Shipowners will be held strictly liable for damages and required to maintain insurance or financial security. An HNS Fund will provide additional compensation once shipowner liability is exhausted, financed by contributions from receivers of HNS cargo in contracting states.
Why It's Important?
The entry into force of the 2010 HNS Convention is significant for the shipping industry, as it provides a comprehensive framework for liability and compensation related to hazardous cargo incidents. This treaty ensures that affected parties can access fair and timely compensation, offering legal certainty for industry and governments. The establishment of the HNS Fund, with a compensation cap of 250 million Special Drawing Rights (approximately USD 360 million), underscores the commitment to the 'polluter pays' principle. This development is crucial for enhancing environmental protection and economic stability in maritime operations, as it addresses the risks associated with transporting hazardous substances.
What's Next?
As the treaty is set to enter into force in 2027, contracting states will need to prepare for its implementation by ensuring compliance with the new liability and compensation requirements. Shipowners will need to secure HNS certificates of insurance or financial security, impacting approximately 65,000 ships. The IMO will continue to work with member states to facilitate the transition and ensure that the necessary infrastructure and regulatory frameworks are in place. Stakeholders in the shipping industry, including insurers and cargo receivers, will need to adapt to the new regime and assess its implications for their operations.
