Seatrade-Maritime: IMO hazardous cargo compensation rules move closer

A ‘polluter pays’ regime of liability and compensation for damage caused by Hazardous and Noxious Substances (HNS) carried by sea has come a step closer to entry into force as Belgium, Germany, the Kingdom of Netherlands and Sweden ratified the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 2010 (2010 HNS Convention).

The convention now has 12 contracting states, meeting the minimum number of states required for entry into force. The treaty also requires four of those states to have at least 2m tonnes of gross tonnage each, a threshold already met by five of the previous eight ratifying states.

IMO said the 2010 HNS Convention will cover oil and chemicals transported by sea, extending to pollution damage, risks of fire and explosion, including loss of life or personal injury as well as loss of or damage to property. Working on a ‘polluter pays’ principle, the convention will establish an HNS Fund to pay compensation beyond shipowner’s liability, financed through contributions paid post-incident by receivers of HNS cargoes.

Total compensation available under the convention will be capped at 250m IMF Special Drawing Rights per event, around $360m at current exchange rates. Shipowners are held strictly liable up to a maximum limit of liability established by the Convention for the cost of an HNS incident. Registered owners of ships carrying HNS cargoes have to maintain state-certified insurance and it is expected that some 65,000 ships will require HNS certificates of insurance or other financial security. 

The convention aims to ensure adequate, prompt, and effective compensation for those affected by incidents HNS carried on seagoing ships, said IMO.

The next check before entry into force for the HNS Convention involves total quantities of HNS contributing cargo liable for contributions received in ratifying states. The 2010 HNS Protocol will enter into force 18 months after ratifying nations have received at least 40m tonnes of cargo contributing to the HNS general account in the preceding year. 

In 2025, Belgium, Germany, the Kingdom of Netherlands and Sweden received almost 28m tonnes of HNS contributing cargo. The existing eight ratifying states received 22m tonnes of HNS contributing cargo in 2024, and if their level remains about 12m tonnes for 2025 when reviewed at the end of May, entry into force could come as early as 30 November 2027.