The. Shipping Law. Review

Transcription

1 Tonnage Convention International Convention on the Tonnage Measurement of Ships 1969 UNCLOS United Nations Convention on the Law of the Sea 1982 Viña del Mar MoU Latin American Agreement on Port State Control of Vessels 1992 The ORGANISATIONS CAMP Paris Arbitral Chamber for Maritime Matters EU European Union IACS International Association of Classification Societies Ltd ICS International Review Chamber of Shipping ILO International Labour Organization IMO International Maritime Organization LMAA London Maritime Arbitrators Association SCMA Singapore Chamber of Maritime Arbitration SIAC Singapore International Arbitration Centre UNCITRAL United Nations Commission on International Trade Law Shipping Law Second Edition ABBREVIATIONS CIF cost, insurance and freight Editors DWT deadweight tonnage FOB James free on board Gosling and Tessa Huzarski FSU floating storage unit GA general average GRT gross registered tonnage GT gross tonnage LDT light displacement tonnage LOF Lloyd s Open Form LoU letter of undertaking MoA memorandum of agreement MTPA million tons per annum NRT net registered tonnage NVOC non-vessel operating carrier NVOCC non-vessel operating common carrier P&I protection and indemnity Ro-Ro roll-on, roll-off (vessels) RT revenue ton SDRs special drawing rights TEU twenty-foot equivalent unit VLCC very large crude carrier Law Business Research 658

2 The Shipping Law Review The Shipping Law Review Reproduced with permission from Law Business Research Ltd. This article was first published in The Shipping Law Review - Edition 2 (published in June 2015 editors James Gosling and Tessa Huzarski). For further information please Nick.Barette@lbresearch.com

3 The Shipping Law Review Second Edition Editors James Gosling and Tessa Huzarski Law Business Research Ltd

4 PUBLISHER Gideon Roberton BUSINESS DEVELOPMENT MANAGER Nick Barette SENIOR ACCOUNT MANAGERS Katherine Jablonowska, Thomas Lee, Felicity Bown ACCOUNT MANAGER Joel Woods PUBLISHING MANAGER Lucy Brewer MARKETING ASSISTANT Rebecca Mogridge EDITORIAL COORDINATOR Shani Bans HEAD OF PRODUCTION Adam Myers PRODUCTION EDITOR Timothy Beaver SUBEDITOR Janina Godowska MANAGING DIRECTOR Richard Davey Published in the United Kingdom by Law Business Research Ltd, London 87 Lancaster Road, London, W11 1QQ, UK 2015 Law Business Research Ltd No photocopying: copyright licences do not apply. The information provided in this publication is general and may not apply in a specific situation, nor does it necessarily represent the views of authors firms or their clients. Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of June 2015, be advised that this is a developing area. Enquiries concerning reproduction should be sent to Law Business Research, at the address above. Enquiries concerning editorial content should be directed to the Publisher gideon.roberton@lbresearch.com ISBN Printed in Great Britain by Encompass Print Solutions, Derbyshire Tel:

5 ACKNOWLEDGEMENTS The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book: A&L GOODBODY ABOU ALI LAW FIRM & P&I CORRESPONDENTS ADVOKATFIRMAET THOMMESSEN AS ALI BUDIARDJO, NUGROHO, REKSODIPUTRO BOSE & MITRA & CO BOWMAN GILFILLAN BURKE & PARSONS CHAPMAN TRIPP DABELSTEIN & PASSEHL ERSOY BILGEHAN LAWYERS & CONSULTANTS FENECH & FENECH ADVOCATES FOUNDATION CHAMBERS GORRISSEN FEDERSPIEL HAVIARAS & PHILIPPOU LLC HOLMAN FENWICK WILLAN IN LAW OFFICE JORQUIERA & ROZAS ABOGADOS JOSEPH & PARTNERS i

6 Acknowledgements KINCAID MENDES VIANNA ADVOGADOS ASSOCIADOS LEXCELLENCE LAW OFFICE MORGAN & MORGAN PALACIOS, PRONO & TALAVERA PRAMUANCHAI LAW OFFICE CO LTD RAJAH & TANN SINGAPORE LLP RUGGIERO & FERNÁNDEZ LLORENTE SABATINO PIZZOLANTE ABOGADOS MARÍTIMOS & COMERCIALES S FRIEDMAN & CO SAN SIMÓN & DUCH SEWARD & KISSEL LLP STEWART MCKELVEY STUDIO LEGALE MORDIGLIA VERALAW (DEL ROSARIO RABOCA GONZALES GRASPARIL) VGENOPOULOS & PARTNERS YOSHIDA & PARTNERS ii

7 Chapter 11 CANADA William Moreira QC 1 I COMMERCIAL OVERVIEW OF THE SHIPPING INDUSTRY Canada s international maritime trade, both export and import, has three somewhat distinct components: the ports of the Pacific coast overall Canada s largest and busiest serve the Pacific Rim and are dominated by trade with Asia; the ports of the Atlantic coast serve trade with Europe and the Middle East and, to a lesser extent, with Africa, the Caribbean and to some degree southern Asia; and the St Lawrence River, the St Lawrence Seaway system and the Great Lakes the latter two shared with the United States and closed in winter principally extend the Atlantic trade routes into the industrial heartland of North America. In all three areas, trade through Canadian seaports serves both Canadian domestic markets and, to a great extent, the markets of the United States with which they are linked by extensive rail and road networks and by feeder shipping services. In addition, domestic water carriage throughout Canada is said to represent 70 million tonnes of cargo annually. 2 In 2012, Canada s 18 major ports handled some 300 million tonnes of cargo (domestic, import and export), said to represent 60 per cent of total port throughout in Canada in that year. Those same ports, in aggregate, are visited by 2 million cruise passengers annually. 3 The Canadian-flagged commercial fleet is overwhelmingly dominated by small ships that principally provide domestic services. According to searches of the national Registry of Shipping s online facility, 4 there are about 51,300 active registrations of Canadian-flagged ships. Of these, 16,500 are of fishing ships and 18,600 are of 1 William Moreira QC is a partner at Stewart McKelvey. 2 See generally Association of Canadian Port Authorities, 3 Ibid. 4 wwwapps.tc.gc.ca/saf-sec-sur/4/vrqs-srib/eng/vessel-registrations/advanced-search. 102

8 pleasure craft or non-commercial ships. Of the remainder, which are taken to be ships in commercial transportation service, 43 are identified as tankers of which 18 exceed 10,000 GRT, and 201 (excluding tugs and barges) are identified as cargo ships, of which 67 exceed 10,000 GRT. There is no public record of the number or size of ships owned or operated by Canadian businesses but flagged in other states. II GENERAL OVERVIEW OF THE LEGISLATIVE FRAMEWORK Canada is a federal state, under the Constitution 5 of which legislative jurisdiction is divided according to subject matter between the federal Parliament and the legislatures of each of the 10 provinces. Shipping and navigation is a subject assigned exclusively to the federal Parliament 6. Interpretation of this power in relatively recent jurisprudence has been to the effect that the subject matter includes all activities integrally connected to maritime matters within the modern context of commerce and shipping, 7 that federal laws regulating these subjects apply equally to commercial and recreational shipping and equally to both inland and tidal waters, 8 and that provincial laws generally do not apply to activities so governed. 9 Substantive maritime law of Canada, both statutory and non-statutory, is federal law, and uniform throughout Canada, including throughout its territorial sea. Important exceptions to this general inapplicability of provincial laws are in the areas of statutory workers compensation 10 and of maritime occupational health and safety 11 chiefly in, but not necessarily limited to, the fishing industry. In respect of workers compensation, provincial legislation has been determined to permissibly affect, but not to impermissibly frustrate, the federal jurisdiction over maritime torts; while in respect of occupational health and safety regulation in the fisheries, the courts have analysed the overall nature of the employer s business operation and have tended to determine that it is sufficiently local in character to attract valid provincial regulation. III FORUM AND JURISDICTION i Courts Each Canadian province has a superior court of general civil and criminal jurisdiction. Additionally there is the Federal Court, which, inter alia, has original jurisdiction over claims asserted under Canadian maritime law. 12 The jurisdiction of all these courts is 5 Constitution Act, 1867 (UK), 30 & 31 Vic. Chapter 3. 6 Ibid., Section 91(10). 7 ITO International Terminal Operators Ltd v. Miida Electronics Ltd, [1986] 1 SCR Whitbread v. Walley, [1990] 3 SCR Ordon Estate v. Grail, [1998] 3 SCR Marine Services International Ltd. v. Ryan Estate, [2013] 3 SCR R v. Mersey Seafoods Ltd, 2008 NSCA 67; Jim Pattison Enterprises Ltd v. British Columbia, 2011 BCCA Federal Courts Act, RSC 1985 Chapter F-7, Section

9 concurrent in maritime matters, and in personam litigation arising under maritime law may be validly commenced and determined in any of them. Only the Federal Court and the Superior Court of British Columbia permit in rem proceedings. In all courts jurisdiction in in personam litigation depends upon the defendant being resident or in business in Canada (or the province), the tort giving rise to a tort claim being committed within Canada (or the province) or the contract connected with a contract claim being made within Canada (or the province). 13 Even when jurisdiction is established based on these criteria, the courts retain discretion to decline to exercise that jurisdiction on grounds of forum non conveniens. ii Arbitration and ADR Canadian legislation and judicial policy generally support resolution by arbitration of disputes in shipping as well as in most other commercial matters, both domestic and international. There are two recognised maritime arbitration institutions in Canada the Association of Maritime Arbitrators of Canada based in Montreal but with national membership, and the Vancouver Maritime Arbitrators Association based in the city for which it is named. There are numerous other non-maritime Canadian commercial arbitration institutions, mostly based in Toronto. Under federal legislation Canada has adopted the UNCITRAL Model Law 1985 and declares it applicable to all arbitrations to which the national government is a party and also in relation to admiralty and maritime matters. 14 iii Enforcement of foreign judgments and arbitral awards Canada is a party to the New York Convention and generally recognises and enforces foreign arbitral awards without need for further proceedings on the merits of the underlying dispute. Grounds for non-recognition of awards are limited to those prescribed in Article 36 of the UNCITRAL Model Law For both foreign judgments and arbitral awards registration proceedings may be commenced in the Canadian Federal Court ex parte; however the Court may (and generally does) give directions requiring service of process on the foreign debtor, and in any event the order of registration presumptively must be personally served on the debtor following its issuance. 16 IV SHIPPING CONTRACTS i Shipbuilding The shipbuilding industry in Canada has long endured cycles of prosperity and adversity, and although diminished from its historic dimensions, shipbuilding continues on 13 Club Resorts Ltd. v. Van Breda, 2012 SCC Commercial Arbitration Act, RSC 1985, Chapter 17 (2nd Supp). 15 United Nations Foreign Arbitral Awards Convention Act, RSC, 1985, Chapter 16 (2nd Supp). 16 Federal Courts Rules, SOR/ Rules

10 Canada s east and west coasts, on the St Lawrence River and in the Great Lakes. Small to mid-size commercial ships and public ships (both civilian and military) are the mainstay of the larger Canadian shipyards. There are also a number of smaller, in some cases proudly artisanal, builders of small fishing ships and of pleasure craft. Shipbuilding contracts are not per se the subject of any statutory regulation in Canada. The private law of contract will usually govern any specific project, with terms negotiated according to the relative bargaining strengths of the builder and the customer. Elsewhere than in the province of Quebec the governing law (subject to any contractual choice-of-law stipulation) will be the common law of contract, which substantively forms part of Canadian maritime law and so would apply regardless of whether the shipbuilding contract is characterised as maritime or non-maritime in nature (an untested point in Canadian jurisprudence). The private law of Quebec (including the law of contract), uniquely among the Canadian provinces, is based on a civil code, which in some respects differs substantively from the common law. In case of newbuilding (or repair) contracts in Quebec, local counsel should invariably be consulted. As discussed below in the context of remedies (see Section V.ii, infra), Canada by statute affords maritime lien security for payment to Canadian suppliers to non-canadian ships. That statute does not apply to, and that security is not available in cases of, contracts for the new construction of ships. 17 ii Contracts of carriage Canada has adopted the Hague-Visby Rules as domestic law governing carriage of goods by water. 18 Subject to certain exceptions, the Rules apply to international and domestic carriage, on both tidal and inland waters. The exceptions to this general statement include domestic carriage under contracts of carriage 19 that are not bills of lading. 20 In such cases the carriage is governed exclusively by the contract and not by the Hague-Visby Rules unless specified otherwise in the contract. iii Cargo claims It is not uncommon in Canada for plaintiffs in cargo litigation to join as defendants not only the actual carrier and, in rem, the actual ship but also some combination of freight forwarders or other logistic providers with whom arrangements for carriage were made, inland pre-carriers or on-carriers if there is suspicion that damage occurred while goods were in their custody, and terminals or service providers if there is evidence of causative fault on their part. Both contractual and tort (including bailment) liability theories are generally asserted. The Hague-Visby Rules, where they apply, are most frequently the substantive basis of cargo interests recovery. 17 Comfact Corporation v. Hull 717 (Ship), 2012 FC Marine Liability Act, SC 2001 Chapter 6, Part 5, Schedule Including charterparties: Wells Fargo Equipment Finance Company v. Barge MLT-3, 2013 FCA Marine Liability Act, Section 43(2). 105

11 Canadian legislation 21 purports to override forum-selection clauses in certain contracts of carriage by declaring that litigation or arbitration may be commenced in Canada where any of the port of loading, the port of discharge, the defendant s residence or the defendant s or its agent s place of business, or the place at which the contract of carriage was made, is in Canada. Canadian jurisprudence under this section is to the effect that the Canadian court nonetheless retains discretion to decline jurisdiction on grounds of forum non conveniens, based on consideration of all factors relevant to the exercise of that discretion. 22 iv Limitation of liability Canadian law governing limitation of liability is the 1976 London Convention on Limitation of Liability for Maritime Claims as amended by its 1996 Protocol 23 (LLMC 96). In addition, conventions with subject-matter specific limitation provisions that have been adopted into Canadian law are the Hague-Visby Rules 24 (carriage of goods), the 1974 Athens Convention as amended by its 1990 Protocol 25 (carriage of passengers) and the Civil Liability Convention 1992 as amended in (carriage of persistent oil in bulk). The Supreme Court of Canada has affirmed that the intent and the effect of Article 4 of LLMC 96 is to establish a virtually unbreakable limit on liability and further that knowledge of the probability of loss, as used in that Article, engages a wholly subjective analysis of the defendant s belief, even if that belief itself is the result of a reckless error. 27 In respect of ships of less than 300 GRT, Canadian statute prescribes limitations of liability of C$1 million for loss of life and personal injury and C$500,000 for other claims, except in cases of passengers for whose death or personal injury the limit is the greater of C$2 million and SDR 175,000 multiplied by the number of passengers on board or that the ship is authorised to carry. 28 In addition there is Canadian statutory limitation of liability available to owners of any dock, canal or port in respect of loss caused to a ship or to any cargo or other property on board a ship. Liability of those entities in respect of such damage is limited to the greater of C$2 million or C$1,000 per GRT of the largest ship to have called at the applicable dock, canal or port within five years preceding the loss Ibid., Section Mazda Canada Inc. v. Cougar Ace (The), 2008 FCA 219. See also Magic Sportswear Corp. v. Mathilde Maersk (The), 2006 FCA 284, 2004 FC 1165; 2003 FC 1513 (Proth) and see in related proceedings in England, OT Africa Line Ltd. v. Magic Sportswear Corporation & Ors, [2005] EWCA Civ 710; [2004] EWHC 2441 (Comm). 23 Marine Liability Act, Part 3, Schedule Ibid., Part 5, Schedule Ibid., Part 4, Schedule Ibid., Part 6 Division 1, Schedule Peracomo Inc v. TELUS Communications Co, 2014 SCC 29, at paras 23 and Marine Liability Act, Sections 28 and Ibid., Section

12 Canadian statute 30 empowers the federal Cabinet, by regulation, to amend limits of liability contained in LLMC 96 or in the non-convention statutory limitation provisions discussed above. It is probable that following the coming into force internationally in 2015 of amendments to LLMC 96 as to amounts, Canada will adopt regulations to implement the revised amounts in Canadian law. V REMEDIES i Ship arrest Canada is not a party to either the 1952 or 1999 Arrest Conventions. In litigation commenced in Federal Court (throughout Canada) and in the British Columbia Supreme Court (in that province only) a claim may be asserted in rem against any ship, cargo or other property that is the subject of the action, provided that the owner of the ship or property is liable in personam in respect of the same claim and provided also that the ship or property is within the territorial jurisdiction of the court at time of service. Release from arrest is a matter of right upon provision of satisfactory security for the claim in respect of which the ship or property was arrested. Private arrangements for security are permitted and are generally respected by the court; in the absence of the parties agreement, bail, as it is called, may be provided to the court in form of cash, a bank guarantee or insurance company bond, or a bail bond in prescribed form executed by two sufficient sureties. The amount of security is based on the plaintiff s best reasonably arguable case plus an allowance for pre-judgment interest and costs. Canada permits arrest of sister ships, the governing legislation speaking in terms of any ship that, at the time the action is brought, is owned by the beneficial owner of the ship that is the subject of the action. 31 It is clear that two ships that have a common registered owner are exposed to arrest for each other s liabilities beyond that there has been substantial controversy in the jurisprudence as to the nature and degree of the relationship between the owners of the ship that has incurred the maritime obligation and the ship that is sought to be arrested that will be held to be sufficient to support this right of arrest. It has been made clear in Canada that when multiple sister ships are exposed to arrest, only one of them may be arrested in respect of a single claim against any of them. 32 ii Court orders for sale of a vessel Judicial sale may be ordered in Canada in any case in which in rem proceedings are validly commenced against a ship or other property, and in which that ship or property was in fact served with initiating process in that litigation. 33 It is most frequently the case that judicial sale will actually proceed if the shipowner is insolvent or the claim itself is not adequately covered by insurance. 30 Ibid., Section Federal Courts Act, Section 43(8). 32 Westshore Terminals Limited Partnership v. Leo Ocean, SA, 2014 FCA Keybank National Association v. Atchafalaya (Ship), 2010 FC

13 The sale process is variable and discretionary, depending on the perceived market for the ship; the most usual methods are sealed tender, public auction or generally with higher-value ships for which there is an enlarged geographic market marketing by a specialist broker. Price as determined in any of these manners is usually subject to the court s approval. Judicial sale in Canada conveys title free of any liens under Canadian maritime law 34 and, invariably as a matter of provision in the order for sale, is otherwise on terms as is, where is, with all existing faults, without any allowance for deficiencies or errors of description whatsoever and without any legal or contractual warranties, or words to like effect. Sale is completed by execution and delivery of the bill of sale by a marshal, acting under court order to do so, and payment of the purchase price into court or other ordered account for the credit of the action in which the sale order was granted. Priorities of claims and associated payments out of the sale fund are invariably the subject of hearing and order following completion of the sale itself. Admiralty priorities in Canada are in theory determined in an equitable manner and in such a way that a just result is achieved in the specific case 35 but in practice the court almost invariably follows the normal scheme of Admiralty priorities in Canada under which, following reimbursement of expenses of sale and of custody during arrest, maritime liens (and if applicable possessory liens) enjoy priority superior to that of mortgages, which in turn have higher priority than other creditors holding only rights in rem. Because it is in this context that Canadian law s treatment of maritime liens most frequently arises, certain specific points are noted in respect of maritime liens in Canada. First, and directly contrary to the English law position under The Halcyon Isle, 36 Canada has long recognised and enforced as a substantive right maritime liens accruing to ship suppliers under foreign law, including particularly the maritime lien rights of suppliers in the United States. 37 Second, and as a matter of policy a partial response to the competitive disadvantage of Canadian suppliers relative to those in the United States, under statutory amendment enacted in 2009 Canadian suppliers of necessaries (including repair services but not including shipbuilding services) to a ship that is neither Canadian flagged nor a pleasure craft are secured for payment by a maritime lien against that ship. 38 Finally, as a matter of distribution of proceeds of a Canadian judicial sale, by the interaction of multiple statutes, 39 there is a system of priority rankings among maritime liens inter se, as follows in descending order of priority: 34 Federal Courts Rules, Rule 490(3). 35 Fraser Shipyard & Industrial Centre v. Expedient Maritime Co, (1999) 1 FTR [1981] AC Todd Shipyards Corp v. Altema Compania Maritima SA, [1974] SCR 1248; Marlex Petroleum Inc v. Har Rai (The), [1987] 1 SCR Marine Liability Act, Section 139, enacted by SC 2009 Chapter Canada Shipping Act, 2001 SC 2001 Chapter 26 Section 86; Canada Marine Act SC 1998 Chapter 10 Section

14 a b c d e salvage claims; crew and master s wages; statutory liens in favour of Canadian port authorities or the St Lawrence Seaway Management Corporation; the master s lien for disbursements; and all other maritime liens. As an alternative to judicial sale as outlined above, creditors secured by statutory mortgages on Canadian-registered ships possess, subject to any contrary contractual terms set out in the mortgage, a statutory power of sale of the mortgaged ship. 40 The exercise of this power does not require judicial proceedings and so may be an efficient remedy for the mortgagee, but it is not a judicial sale and so engages no cleansing from title of encumbrances, particularly including superior maritime liens. VI REGULATION i Safety The Canada Shipping Act, authorises the adoption in Canada by regulation, and the application according to their terms to Canadian ships, of the principal technical international conventions including SOLAS 1974 (as amended by its 1978 and 1988 Protocols), the Load Lines Convention 1966 (as amended by its 1988 Protocol) and the Tonnage Convention In respect of ships to which these Conventions do not by their own terms apply, Canada requires inspection and certification for compliance with applicable safety requirements and authorises Transport Canada to restrict geographic use of the ship, depending on its intended service and its construction, equipment, stability and design. 42 The Canada Shipping Act, 2001 also creates and empowers 43 the Marine Technical Review Board to which application may be made for exemptions from technical requirements, generally based on an equivalency criterion. ii Port state control Canada is a party to both the Paris and Tokyo Memoranda of Understanding. According to the 2013 annual reports of those two organisations, in that year Canada performed in total 1,306 inspections resulting in 42 detentions. The basis in domestic law for Canada s actions in port state control is Canada Shipping Act, 2001 Section 222(2), which in summary requires Canadian safety inspectors to detain any ship if the inspector believes on reasonable grounds that the ship is unsafe, is unfit to carry passengers or crew or that its machinery or equipment are so defective as to expose persons on board to serious danger. Under domestic law this 40 Canada Shipping Act, 2001, Section Ibid., Section Vessel Certificates Regulations SOR/ Sections

15 statutory mandate is unqualified by the provisions in both SOLAS Regulation 19(f) and Tokyo MoU Article 3.12, which require avoidance of undue detention or delay. 44 iii Registration and classification The national Canadian shipping registry exists under the Canada Shipping Act, 2001, which requires all Canadian-flagged ships, regardless of size, operated for a commercial purpose to be registered. 45 There are restrictions on entitlement to register such ships under the Canadian flag they must either be owned by qualified persons, which are, in the case of individuals, Canadian citizens or permanent residents; or in other cases corporations incorporated in Canada or any of its provinces, or they must, regardless of the nationality of the owners, be managed by a Canadian corporation 46. Registration under this system provides a public record of asserted ownership of the vessel, and of all registered mortgages in statutory form that have been presented to the registry in respect of that vessel. Other encumbrances against title may not be registered. Canada has no second registry of commercial shipping on the European model. However, in some cases ships registered under a foreign flag may obtain temporary re-flagging (called listing ) in Canada 47 if bareboat chartered to a person qualified to own a Canadian ship, limited to the duration of the bareboat charterparty and subject to conditions that include the consent of any mortgagee and the agreement of the primary flag to suspend its registration for the duration of the temporary listing in Canada. Ships physically under construction in Canada may be made the subject of a recording entry on the Canadian registry, 48 the principal advantage of which is to support registration of a builder s mortgage giving security to lenders in the incomplete ship. There is no statutory requirement that Canadian-registered ships be classed. There is provision for certain classed ships statutory inspections to be performed by specific approved classification societies. 49 Registration under the system summarised above is optional (although often used) in the case of recreational vessels. If not so registered, recreational vessels must be licensed through a central office at Ottawa. 50 Licensing includes identification of asserted owners but contains no record of mortgages or other financial security instruments. Lenders security interests in recreational vessels are generally the subject of public filings under provincial personal property security legislation, which can be problematic if vessels (or their owners) move between provinces, and also may be of questionable constitutional validity. 44 Budisukma v. Canada, 2005 FCA 267, rev g 2004 FC Canada Shipping Act, 2001, Section Ibid., Section Ibid., Section Ibid., Section Classed Ships Inspection Regulations, 1988 SOR/ Small Vessel Regulations, SOR/ , Part I. 110

16 iv Environmental regulation Canada Despite the exclusive application of federal laws to navigation and shipping as discussed at the outset, all of Canada s provinces and territories have sophisticated and vigorously enforced environmental protection laws, which by their terms apply to pollution, including ship-source pollution, of the province or territory s internal waters. Even, however, where those statutes purport to apply, federal anti-pollution laws apply to shipping in both tidal and non-tidal waters throughout Canada and, in the case of tidal waters, within both the territorial sea and the exclusive economic zone. 51 A general prohibition against the discharge of pollutants exists under a variety of Canadian federal legislation and enforcement of that prohibition takes many forms. The Canada Shipping Act, 2001 prohibits 52 discharge of any pollutant from a ship, and exposes to administrative monetary penalties (AMPs), or in serious cases to prosecution and fines and, theoretically, even imprisonment of individuals, the ship itself and any person on board the ship who caused or contributed to the discharge. In addition to this general prohibition, Canada has adopted in domestic law MARPOL 1973/78, as amended by its 1997 Protocol, and violation of any of its many prescriptions is, again, punishable by AMP or by prosecution. There is a strictly enforced requirement that any ship-source discharge of any pollutant be immediately reported to the authorities by the master. 53 Tankers of more than 150 GRT and other ships of more than 400 GRT, except for ships only in transit, are required to be party to arrangements with a certified Canadian response organisation. 54 Further prohibitions against pollution of the marine environment are enacted federally under the Fisheries Act 55 and the Migratory Birds Convention Act, Additionally, the Canadian Environmental Protection Act, 1999, 57 among many other matters, adopts in Canada the London Anti-Dumping Convention. Other legislation, some exclusively federal and some jointly federal and provincial, regulates environmental protection in the offshore oil and gas industry Canada Shipping Act, 2001, Section 186(1). 52 Ibid., Section Vessel Pollution and Dangerous Chemicals Regulations, SOR/ Section 132(1). 54 Canada Shipping Act, 2001, Section 167; Environmental Response Arrangements Regulations, SOR/ RSC 1985, Chapter F SC 1994, Chapter SC 1999, Chapter Canada Oil and Gas Operations Act, RSC 1985, Chapter O-7; Canada Newfoundland and Labrador Atlantic Accord Implementation Act, RSC1987, Chapter 3 (Canada); RSNL 1990 Chapter C-2 (Newfoundland and Labrador); Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, RSC 1988, Chapter 28 (Canada); SNS 1987 Chapter 3 (Nova Scotia). 111

17 Concerning private liability for pollution, Canada is a party to the Civil Liability Convention 1992 as amended in and to the Bunkers Convention It must be noted that in the case of both these Conventions, Canada has adopted by legislation an expanded definition of preventive measures such that the Canadian Coast Guard may recover from shipowners its preventive and monitoring costs in any case in which discharge of oil, contrary to either of these Conventions, has occurred or is considered likely. 61 In addition to adoption of these Conventions, Canada has a purely domestic liability regime that applies to any actual or likely ship-source discharge of any pollutant to which neither of the Conventions applies. 62 These provisions empower the national government to undertake and to recover costs of removal of wreck in any case in which the wreck is considered likely to discharge pollutants (see subsection v, infra). Finally, the Arctic Waters Pollution Prevention Act, 63 enacted in 1970, applies only to Canadian waters north of 60 N latitude and, substantively, imposes a less onerous liability and compensation regime than exists under the Conventions or statutes summarised above, all of which apply in the Arctic as well as more southerly Canadian waters. Although still relevant to the technical and operational regulation of Arctic shipping, this legislation tends not to be used in support of pollution liability claims. v Collisions, salvage and wrecks Canada is a party to the Convention on Prevention of Collisions at Sea Collision litigation in Canada generally follows English case law on allocation of liability based on relative degrees of each ship s causative fault. 65 As regards scope of recoverable damages, English precedent is persuasive, with the possible but important exception of recovery under the negligence theory of pure economic losses. The leading Canadian case on the subject 66 arose from a shipping casualty, albeit one in which the moving ship damaged a bridge. The principal user, though not the owner, of the bridge was a railway, which recovered from the ship for its re-routing costs during the time that the bridge was out of service. A very complex analysis involving foreseeability, proximity and policy was mandated by the Supreme Court, leaving open the possibility of expanded scope of recovery in collision cases by parties other than owners of damaged property. Canada is a party to the Salvage Convention 1989 and that Convention is adopted verbatim as substantive law on the subject. 67 There is relatively little modern 59 Marine Liability Act, Part 6 Division 1, Schedule Ibid., Part 6 Division 1, Schedule Ibid., Sections 51 and 71; Cf Canada Shipping Act 2001, Section Marine Liability Act, Part 6 Division RSC 1985, Chapter A Collision Regulations, CRC, Chapter Marine Liability Act, Part 2, Section 17(1). 66 Canadian National Railway Co v. Norsk Pacific Steamship Co, [1992] 1 SCR Canada Shipping Act, 2001, Section 142, Schedule

18 jurisprudence from Canadian courts concerning salvage attributable no doubt to the prevalence of London arbitration to determine Article 13 awards under the Lloyd s Open Form of agreement, and to the propensity for Article 14 awards to be the subject of settlement by P&I clubs under applicable special compensation P&I club clauses in those agreements. Concerning wreck removal, Canada has not yet adopted the Nairobi Convention 2007 nor made any announcement whether, or when, it intends to do so. Canadian domestic law governing liability for wreck removal is the Navigation Protection Act, 68 which applies to scheduled waters, all of which are internal or within Canada s territorial sea, and which imposes on the shipowner liability for cost to remove any wrecked or stranded ship or part of a ship that obstructs or impedes navigation or renders it more difficult or dangerous. It is noteworthy that this statutory regime applies only to physical impediments to navigation; removal of wrecks that represent threats to the marine environment is governed by the Canada Shipping Act, 2001 and the Marine Liability Act discussed in subsection iv, supra. Additionally, Canada Shipping Act, 2001 Part 7, 69 Wreck, creates the office of Receiver of Wreck, requires reporting to that office of wreck of unknown ownership found in or brought into Canada and empowers that office to dispose of or destroy unclaimed wreck. These provisions are very seldom resorted to in practice. vi Passengers rights Canadian laws governing passenger compensation and liability, if not unique in the world, are certainly atypical. Canada has adopted as domestic law the Athens Convention, 1974 as amended by its 1990 Protocol. 70 In very brief summary, the liability regime is fault-based, with carrier s fault presumed in cases of shipwreck, collision, stranding, explosion or fire or defect in the ship, but otherwise with the burden of proof of fault falling on the injured passenger. For ships greater than 300 GRT, liability is limited to SDR 175,000 per passenger per carriage. This regime applies to both international and domestic contractual carriage, but does not apply at all to non-commercial ships, 71 to sail trainees 72 or to any carriage in the adventure tourism 73 industries. Canadian courts will generally recognise and enforce choice-of-law provisions in passenger contracts, and so the liability regime described above will not necessarily apply to international carriage. Canadian conflict-of-laws rules respect contractual choice of law provisions in both commercial and consumer (such as passenger) contracts, subject in the latter case to reasonable steps having been taken to bring the provision to the consumer s attention RSC, 1985, Chapter N Sections Marine Liability Act, Part 4, Schedule Ibid., Section 37 (2)(b). 72 Ibid., Section 37.1(2). 73 Ibid., Section 37.1(1). 74 Roy v. North American Leisure Group, (2004) 73 OR (2d) 561 (CA). 113

19 vii Seafarers rights Canada Canada is a party to the Maritime Labour Convention 2006, with effect from 15 June Canada specifies, for purposes of Standard A4.5(2) and (10) of that Convention, sickness benefit, unemployment benefit, old-age benefit, employment injury benefit, family benefit, maternity benefit, invalidity benefit and survivors benefit as the branches of social security for which provision must be made for Canadian seafarers. 75 Maritime labour certificates are required to be held by Canadian ships of 500 GRT or more engaged in international voyages. 76 Mention has been made above of statutory workers compensation coverage for Canadian seafarers. In many cases, particularly in the fishing industry but also in industries in which the operation of ships is ancillary (such as aquaculture) or where the maritime employer s base of operations is in a specific province, coverage is provided under that province s generally applicable statute. In other cases, seafarers compensation is governed by the federal Merchant Seamen Compensation Act, 77 which applies only to seafarers on ships registered in Canada or, in some cases, operated by a Canadian resident, and in either case only applies if the seafarer is not entitled to claim compensation under any statute or law that provides similar benefits 78 (that is, under the provincial workers compensation statute). Under this federal regime the compensation is payable by the seafarer s employer 79 who is required to maintain insurance in respect of exposure to that liability. 80 VII OUTLOOK Discussion of the future in Canada must commence with consideration of Arctic shipping. Although it is improbable that in the foreseeable future the Northwest Passage through the straits of the Canadian Arctic archipelago (which are claimed by Canada as internal waters) 81 will support inter-ocean transit to the degree already being experienced in Russia s Northern Searoute, the increasing retreat of summer sea ice in these waters will cause growth, both in numbers of ships and in length of season, in destinational navigation within the Canadian Arctic by cargo, passenger and recreational ships. It is probable that Canada will revise or replace its Arctic Waters Pollution Prevention Act, the private liability elements of which are outdated by modern standards, and the technical and operational prescriptions adopted under which 82 may need to be revised to accord 75 INSTRUMENT_ID: Marine Personnel Regulations, SOR/ , Section RSC 1985 Chapter M Ibid., Section 5(b). 79 Ibid., Section Ibid.,Section Territorial Sea Geographical Coordinates (Area 7) Order, SOR/ Arctic Shipping Pollution Prevention Regulations, CRC Chapter 353; Arctic Waters Pollution Prevention Regulations, CRC Chapter

20 with SOLAS and MARPOL amendments to come into force in 2017 under IMO s Polar Code. As an Arctic coastal state, Canada faces challenges in the establishment and maintenance of public services to support increased shipping in the north, including particularly pollution response and search and rescue capabilities. Canada has adopted legislation 83 to implement in part the 2010 version of the Hazardous and Noxious Substances Convention, but this legislation is not yet in force nor has there been any announcement on when its coming into force is to be expected. Canada has made no announcement on whether it intends to adopt the 2002 Protocol to the Athens Convention. Concerning carriage of goods, Canada is not yet a signatory to the Rotterdam Rules No official announcement of Canada s intentions regarding this Convention has been made but it is widely believed that if as sometimes rumoured the United States, Canada s largest trading partner, ratifies the Rotterdam Rules, Canada will have little option but to do so also. Should these events occur, implementation of the Rotterdam Rules in Canadian law may require legislation, a process generally taking years (as opposed to months) from start to finish. 83 Safeguarding Canada s Seas and Skies Act, SC 2014 Chapter 29, Part

21 Appendix 1 ABOUT THE AUTHORS WILLIAM MOREIRA QC Stewart McKelvey Will Moreira is a partner in the Halifax, Nova Scotia office of Stewart McKelvey. He has practiced for more than 35 years in admiralty and commercial litigation and public law litigation, appearing before all levels of court in Nova Scotia, the Federal Court, the Federal Court of Appeal and the Supreme Court of Canada, and serving as counsel and as an arbitrator in domestic and international arbitrations. Will is former president ( ) of the Canadian Maritime Law Association, former chair of the Canadian Bar Association s national maritime law section, a titulary member of Comité Maritime International, a fellow of the Chartered Institute of Arbitrators, and former chair of the Maritime and Energy Law Committee of the International Association of Defense Counsel. He is co-editor of the second edition of Canadian Maritime Law (Irwin Law, Toronto), publication expected in He is a part-time faculty member in the Marine and Environmental Law Institute of Dalhousie University s Schulich School of Law and a former chair of the Mission to Seafarers, Halifax. STEWART MCKELVEY Upper Water Street Halifax, Nova Scotia B3J 3N2 Canada Tel: Fax: wmoreira@stewartmckelvey.com 617