The International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS Convention) was adopted by the IMO in May 1996. It aims to ensure adequate, prompt and effective compensation for damage that may result from shipping accidents involving hazardous and noxious substances.
The Convention entitles claimants to compensation for loss or damage to persons, property and the environment caused by incidents involving cargoes of oil, gases and chemicals, plus other substances which are hazardous in packaged form. Pollution damage caused by persistent oils already covered by the CLC and Fund Convention is excluded, as is damage caused by radioactive materials and coal.
The HNS Convention is modelled on the CLC and Fund Convention. Thus, the shipowner (and his P&I insurer) is strictly liable to pay the first tier of compensation whereas the second tier comes from a fund levied on cargo receivers in all Contracting States on a post-event basis.
Shipowner liability ranges from SDR 10 million (about US$ 16 million) for ships up to 2,000 GT, rising linearly through SDR 82 million (about US$ 134 million) for ships of 50,000 GT, to a maximum of SDR 100 million (about US$ 164 million) for ships over 100,000 GT. It is compulsory for all ships over 200 GT to have insurance to cover the relevant amount.
An HNS Fund (which will most likely be administered by the secretariat of the IOPC Funds) provides compensation up to a total of SDR 250 million (US$ 383 million), inclusive of shipowner liability but irrespective of ship size. The HNS Fund will comprise four separate accounts for oil, LPG, LNG and a general account for other HNS substances such as bulk solids and chemicals. Each separate account will meet claims attributable to the relevant cargo without cross subsidisation and will be funded in proportion to total receipts of relevant cargoes in Contributing States.
The HNS Convention will enter into force 18 months after ratification by 12 flag States, including four States each representing 2 million GT and Port States importing an annual aggregate of 40 million tonnes of chemicals and other solid bulk materials which are hazardous in packaged form. As at 1 April 2008, the HNS Convention had been ratified by 10 states.
Full text of HNS Convention (IOPC Correspondence Group)