International maritime conventions



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parts 8 and 9 of the Canada Shipping Act are completely different from civil liability (s. 183).
Any person or vessel that discharges pollutants commits an offence (s. 191).

  • The penalty for this offence is a $1M fine or up to 18 months in prison.

  • Discharge of pollutant can include more than just oil.

The Oil Pollution Prevention Regulations reiterate s.191 in that no discharge of oil is permitted under Canadian jurisdiction (s. 28-29). There are three exceptions to this strict penal liability:

- If a ship is sinking, polluting to save lives is ok (but civil penalties under CLC or Fund will still apply) you won’t be prosecuted unless you fail to exercise good seamanship. Furthermore, even if you polluted in person but it was to save the lives of your crew you won’t be prosecuted. Human life above any pollution.

- If there is an accident and the crew did not act outside the ordinary practices of seamen.

- Unavoidable underwater activities, such as releasing oil as a lubricant for the propeller.

- For scientific research



So if you do something reckless, you will be prosecuted, subject to s. 31-34 (don’t worry too much about these: they outline the type of oil that may be discharged and the conditions under which it may be discharged during machine use).
If assessing risks, have to bear in mind both sides (fine, liability). To determine whether someone gets a fine, look to regulations.

    • Both are strict liability.

    • There are defences available in both systems, though different.

    • Beyond the defences on both sides you are in trouble and will be liable civilly up to your limit, and criminally up to the limit of the fine (up to 1 M)

    • Though it is strict, look to Sault Ste Marie which stands for due diligence defence. Sault Ste Marie only applies to criminal cases.


MARPOL (Marine Pollution Convention, enacted in the Canada Shipping Act, parts 8 and 9) is the convention for criminal liability. Speaking in criminal law, it is a strict liability offence (only have to prove actus reus). The ship is sued directly, is personified and can be prosecuted as a fiction of the law. In some cases, individuals can also be prosecuted and fined or sent to jail. There is an additional defence of due diligence (Sault Ste Marie) beyond the regulation (p. 381, s. 28 and 29), for ex. conscientious maintenance. In Canada, there may be criminal liability for any type of oil.
R v. Sault Ste Marie (1978), p. 395
It only applies to criminal cases. This was pollution of water in Ontario. The question was whether statute that created strict liability was lawful? Yes. According to the SCC, it is a public welfare offence. Can’t prove why there was pollution, so if you have to prove mens rea you’d never win. So it’s fair to have strict liability in this case. However, wherever there is strict liability there is the defence of due diligence.
This was decided before Charter, and in 1991 the first case went to SCC on this (Wholesale Travel). A minority felt it was unconstitutional then. Not back in the SCC yet, and when it comes back it is possible that it will be held to be unlawful.
March 22
Enforcement
Part 11 of the Canada Shipping Act (Enforcement) applies to a certain number of offences, including pollution. S. 233 (p. 397) gives the Crown opportunity to impose administrative penalties using a panel. This circumvents courts, it is a new system expected to be used for small events. O’Connor thinks that this will be roughly equivalent to courts doing the work. There is now a Transportation Appeal Tribunal of Canada (rail, air and marine), but s. 15 of that act imposes only balance of probabilities as opposed to reasonable doubt. So the accused is at somewhat of a disadvantage, according to O’Connor this is wrong, as the Crown will have less of a burden. Note that s. 236 says that it is not an offence, just a violation.

Topic Seven: Marine Insurance and Average
Maritime shipping is the origin of insurance. Marine insurance is probably a spin off of general average. Today, risk is spread around professional underwriters, who accept risks in exchange for premiums.
Constitutionally, provinces have jurisdiction over insurance, each has a statute (in the CC in Quebec). In 1983, the SCC decided shipping insurance is federal. Most of the provincial laws are now inoperative but not necessarily completely moot. Prior to 1983, there was no federal statute on this question (Triglav v. Terrasses Jewellers (1983), p. 309). So they enacted the Marine Insurance Act (1993, p. 296), which is a near-copy of the 1906 UK act (often incorporated in contracts). This act will not be directly on the exam, but general principles may be.
S. 56 and 57 define loss: actual (ships blows up) and constructive (ship grounded and it would cost more to retrieve it than its value). Constructive loss is particular to maritime insurance, it requires the ship be abandoned to the insurer (offer must be made), who will be giving it back right away (liability).
S. 61 defines partial loss and s. 65 defines GA loss. Loss may also include efforts to avoid part of the loss (s. 79: “sue and labour clause”), ex. refloating a boat, for which the insurer may have to pay beyond the policy.
On the Lloyd’s market, underwriters take a small portion of the risk in exchange for a correlative part of the premium. Hull and cargo insurers have the same system and may be the same companies, but don’t insure the same risk (ship, what it carries). P&I is very different, it covers things such as SCOPIC payments, liability (damage to the bridge, dock, wetted cargo third-party property), wreck removal, sole payer of pollution cleanup costs, personal injury. Hull insurance covers a small part of liability (formerly the “running down clause” before the invention of P&I, now the “collision clause”) which only applies in collisions, it will pay ¾ of net hull liability to the other party. That created a vacuum which is covered by P&I (the remaining ¼). The only other extension of hull insurance is the “Inchmaree clause”, which covers damage for negligent operation (pre-Inchmaree, only peril of the sea, before P&I).





Collision

Salvage

General average

Pollution

Ship

Other ship

LOF

SCOPIC

Contri-bution

Defence (fault)




Damage

Injury

Damage

Injury

Hull

X hull




¾




X hull




X hull







Cargo

X cargo










X cargo




X cargo







P&I

*

X

¼

X




X




X cargo

X

*Will pay for damage to cargo under a contract of carriage, not otherwise.
Note that P&I can pay for cargo damage if the cargo insurer can successfully go after the ship (ex. lack of adequate preparation, but not error of navigation under Hague-Visby Rules). There’s another twist to P&I. It is mutual insurance, unlike hull and cargo which are underwritten. In P&I, everyone chips in according to losses and value insured, mostly ex post. Those who have bad records are made to pay more. P&I clubs are basically non-profit, there are 12 in the world (one in Japan, one in the US, three in Scandinavia, the rest in the UK (London and Newcastle)). They have their own rules. One of those is the “pay to be paid” rule. P&I clubs do not pay victims, cleanup, liability, etc., they reimburse after payment (in case of bankruptcy, no direct liability). This rule is contested as unfair. In the UK, there is the Third Parties (Rights Against Insurers) Act, 1930 disallowing this for hull. For P&I, this clause was contested in The Fanti and the Padre Island (1991), p. 316, the House of Lords decided that this was legal (fear that would shake the system). There was the same conclusion in Canada (Conohan v. Cooperators (2002), p. 319). Although P&I clubs sometimes pay directly if they don’t anticipate bankruptcy. There is an exception for pollution from Convention ships, where insurers are directly liable.



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