Evidence of meeting #13 for Transport, Infrastructure and Communities in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was ships.
A recording is available from Parliament.
4:10 p.m.
Conservative
Candice Bergen Conservative Portage—Lisgar, MB
Thank you for that. Were the shipbuilders consulted, though?
4:10 p.m.
Conservative
Candice Bergen Conservative Portage—Lisgar, MB
Overall, what is the reaction of the shipbuilders? I understand from what you've presented that they are generally pleased with this. What kinds of implications will it have on that industry, even specifically in regard to oil and cleaning up and making sure the pollution is taken care of?
4:10 p.m.
President, Canadian Shipowners Association
This is a bill that deals essentially with marine transportation, so I'm not sure that there is a huge linkage with shipbuilders, other than their relationship with shipowners. But in terms of the shipowner community and the kinds of issues the bill deals with, I think there is a general feeling that it is comprehensive and covers the various liability needs across the industry, from ship pollution to accidents, safety, and other things.
4:15 p.m.
Conservative
Candice Bergen Conservative Portage—Lisgar, MB
I see. So your comments are for shipbuilders as they relate to the shipowners--
4:15 p.m.
Conservative
Candice Bergen Conservative Portage—Lisgar, MB
--and how it's going to help them conduct their business.
4:15 p.m.
President, Canadian Shipowners Association
Yes. Our perspective is from the shipowners, not the shipbuilders.
4:15 p.m.
Conservative
Candice Bergen Conservative Portage—Lisgar, MB
Right. Thank you very much.
Mr. Barker, could you tell us if there are any international implications that would come forward from this amendment, and if so, what they would be?
4:15 p.m.
Chair, National Maritime Law Section, Canadian Bar Association
Do you mean the amendments in general for marine liability? The implications are that it would be a good thing and they would harmonize.
Shipping is a very international business, and the pollution parts of the bill.... The supplementary fund has an international focus and it would basically give Canada more money in the event of a spill if a convention ship or a tanker was involved. Given that international ships visit our shores on a regular basis, that's a good thing. Thankfully, in the 30 to 40 years that we've had environmental protection legislation in this country, we haven't had a big spill. The Canada Shipping Act talks of a 10,000-tonne response capability. We've never had a 10,000-tonne spill in this country. The Nestucca spill on the west coast back in the late eighties was an 800-tonne spill. The biggest spill, I think, was a 7,000-tonne spill when the Kurdistan broke its back in the Cabot Strait in the gulf in the late seventies. So we've never had a catastrophic spill here and, touch wood, we never will.
But to be party to the supplementary fund convention.... We're already party to the civil liability convention, the fund convention, the limitation liability for maritime claims convention, Athens--conventions that this bill embraces. The fact that we're harmonizing with the other shipping nations around the world is a good thing.
Maritime liens, as we heard on Tuesday, are a North American fix. They're slightly out of step with the international community with the maritime liens, and the proposal is to give Canadian ship suppliers the same footing as American ship suppliers in situations where priorities become important. I think that is to some degree a North American problem for us in that ships have been known to choose Canada as the place to go bankrupt because of our priorities order. The port of Vancouver was popular for a while there for a certain number of companies that would declare bankruptcy--priority hearings--and the difficult thing for Canadian suppliers is that they would always be at a disadvantage if an American supplier had a claim too.
I used to defend American suppliers when I lived in Vancouver, and it was always a lot better than if you were defending a Canadian supplier because you were guaranteed payment. That always struck me--other than the fact that I was getting paid--as being somewhat unfair to the Canadian, because it was his turf that we were arguing on and the American was getting the benefit of it.
So the proposal by the Canadian suppliers is to create some form of parity. I think that is a good thing, but as I said, if you are giving someone a privilege--and I believe you are by bumping them up the line--you have to put a few safeguards in place too. Charters cannot or should not be able to bind owners and have ships carry that lien around. That is a safeguard that is in the U.S. legislation and it's missing from ours, and I think ours needs to be tightened up as a result.
Is it a good thing to give Canadian ship suppliers a priority ranking? I believe it is. You should look after your own.
4:15 p.m.
Conservative
Candice Bergen Conservative Portage—Lisgar, MB
So obviously this is timely. I'm just wondering, and I'm not sure if you can answer this, but why has it taken so long for this to happen? When I hear you describe it, it seems as though it should have been created when this act came on in 2005. That's probably not an answer for you.
4:15 p.m.
Chair, National Maritime Law Section, Canadian Bar Association
You're correct, that's not a question I can answer. Things take many years for a whole bunch of reasons. Sister ship arrest is a good example. You'll find sister ship arrest provisions in this bill. Sister ship arrest is a tool that ship lawyers have in their armoury. You don't use it all the time, but when you do use it, it's a very effective tool.
We've had a dispute in the private bar for many years as to how to resolve sister ship arrest. Harmonizing the French text and the English text is something we all agree on. That's a no brainer, if I can put it that way. With other proposals, we've had some debate over the years. Why has it taken 15 years to come here? Maybe that's just the way the system works. Consultations take a while. Canada ratifies conventions at certain times for a whole bunch of different reasons.
So that's a question I don't even think a minister could answer, to some degree.
4:20 p.m.
Liberal
Joe Volpe Liberal Eglinton—Lawrence, ON
Thank you once again, Mr. Chair.
Mr. Barker, Mr. Bowie, thanks again for your presentation.
Mr. Barker, you've anticipated a lot of the questions by your explanation, but I wonder if you could spend just a moment on your item on page 2 with respect to the contractual link between supplier and the owner of the ship, which you just raised again. You think that particular link needs to be strengthened in order to arrive at a more equitable treatment for those Canadian suppliers that you've identified as some of your former clients and who appear to be getting short shrift.
What is it specifically that you would suggest we do or that this committee consider in order to improve the proposed legislation to bring about that desired effect?
4:20 p.m.
Chair, National Maritime Law Section, Canadian Bar Association
Mr. Volpe, what I believe the section is proposing to the committee is that of all the parties that are involved in supplying a ship when it arrives in a port, depending on the contractual arrangement between a shipowner and a charterer—it can be a time charterer for a specific period of time, or it could be a voyage charter for a specific voyage, or it could be what we know as a bareboat charter, which is basically the use of the boat for a period of time for whatever purpose--the master can speak on the behalf of the charter at times, and he can speak on behalf of an owner at times. The stevedores, the ship suppliers—which is a general term, and if I can use Venn diagram type of discussion, they are a big set as opposed to a subset.... Different suppliers will have different contractual relationships with the owner and the charterer. The position the section has is that if you're going to contract on behalf of the owner and you're speaking as a representative of the charterer, there should be some form of notice provision that you give the supplier to say you're speaking on behalf of the charterer, and this is the owner. The notice provision appears in the U.S. Maritime Lien Act, and I also believe it also appears in the maritime liens convention.
What the section can do, if it so pleases the committee, is provide you with specific words for the safeguards. I know you have a week between now and the next appearance of witnesses, and we can supply some specific words so you can look at them, if that would be helpful.
4:20 p.m.
Liberal
Joe Volpe Liberal Eglinton—Lawrence, ON
It would be very helpful. Thank you.
Mr. Bowie, I wonder if I can come back to you for a moment, because you raised an issue that had not been contemplated in our assessment of this bill. That is the issue that's been raised by my colleague Monsieur Laframboise, the issue of eliminating the excise tax on ships acquired abroad.
I'd like you to pursue the particular business model a little further, because my colleague indicated, of course, that the initial tax was designed to protect Canadian manufacturing, and yet you have indicated that there hasn't been significant shipbuilding, or at least construction of ships that you and your association would utilize, since 1985. I'm wondering about the business model that says we can forgo paying 25% of the overall cost abroad, but if we put that amount towards acquiring some equipment here, that capacity would actually be available to us.
4:20 p.m.
President, Canadian Shipowners Association
I'm sorry, I didn't mean to put a bit of a red herring in the discussion of this bill, because the duty policy is not a part of this bill at all. I simply wanted to make the point that anything that further impedes the ability of Canadian shipowners to finance a fleet that is aging and that needs to replaced, if we're going to continue that economic activity in Canada, we would not support. It was in the context of potentially applying a lien against Canadian ships, which would mean that lenders would charge more for financing and that sort of thing. I just wanted to put that in the context of this bill.
4:25 p.m.
Liberal
Joe Volpe Liberal Eglinton—Lawrence, ON
That's fine. Mr. Bowie, I compliment you on your ability to generate a discussion on an item that really isn't part of the bill. I acknowledge that, and I compliment you on your ability to raise the issue, especially in front of the government members.
Having now raised that issue and having put forward a business model for protecting Canadian commerce, would you again address my question, which is that, given all of the millions of dollars you would be asking government members to forgo or relinquish if that excise tax were eliminated, would you not recoup those moneys by having Canadian shipbuilders invest in the equipment necessary to provide you with the product you purchase abroad?
4:25 p.m.
President, Canadian Shipowners Association
In terms of the future of the Canadian shipbuilding industry, I really don't think it lies with the commercial markets. And I think that's the issue you're raising: can we generate a commercial market in the Canadian shipbuilding industry through the use of the duty and that sort of thing?
Essentially the capacity for shipbuilding in Canada, as I'm sure you know, has gone down over the last couple of decades. Yet, as I said, we have a pressing requirement to utilize that capacity for some very important safety and security needs of this country in terms of replenishing the coast guard and the navy fleet. To me, that is where government and Parliament should focus in terms of providing a steady stream of government procurement instead of a peaks and valleys type of approach, to provide a steady stream of Canadian procurement to the Canadian shipyards so they can continue to operate a viable business.
If that could be achieved, that would fully use the capacity available in this country to build ships. At the same time, it would certainly be good for Canadian shipowners, in the sense that we will have yards that are practised in building modern technology. Clearly what the coast guard and the navy offer in terms of new technology to shipyards is far superior to what we could provide. The shipyards would then have the ability to provide excellent maintenance services, which we need to keep a Canadian fleet going as well.
4:25 p.m.
Bloc
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Thank you, Mr. Chair.
Mr. Barker, I would like to come back to my previous question regarding the new criteria that you would like to add for adventure tourism specifically seaworthiness and proper crew. I would not want to see an amendment leading to confusion and which would force operators to carry much higher insurance. That's the problem.
If we add the seaworthiness and proper crew requirement, one of your 38,000 members might, in case of an incident, accuse the operator of not having had a seaworthy ship and a proper crew. Don't you think that adding that criterion might lead to an increase in litigation and insurance cost for operators?
4:25 p.m.
Chair, National Maritime Law Section, Canadian Bar Association
No, sir, I don't believe it would.
The phrase “to provide a seaworthy ship at the commencement of the voyage and one that is properly crewed” is a term we've had in maritime law since the days of the Lloyd's Coffee House in the 17th century--the idea of sailing ships leaving London to go into the far reaches of the empire to bring home all the plunder. You can never guarantee a ship will be seaworthy during the voyage--or if you watch the Johnny Depp movies, Pirates of the Caribbean, at the end of the voyage--but you can certainly guarantee that it will be seaworthy at the start of the voyage.
In clause 9, proposed paragraph 37.1(b), you talk about “safety equipment and procedures”. That's something you have to have in place at the start of the voyage. Safety equipment goes to the seaworthiness of the vessel. And with respect to procedures, in fact I think they're talking about safety briefings before the voyage that are very similar to aircraft, when you have the briefings as to where the exits are and the emergency lighting and all the rest.
Putting in a new paragraph (e), in effect requiring that the adventure tourism activity meets the condition of seaworthiness and that it is properly crewed at the start of the voyage, does not cause the good operators in the marine tourism activity any problems whatsoever--or it shouldn't. It will cause the bad operators a problem, and those are the types of operators you need to be legislating against. The good operators will still be able to get insurance because they have seaworthy vessels.
4:30 p.m.
Bloc
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Yes, but it seemed to me that that whole section of the bill dealt specifically with the question of insurance. I stand to be corrected, but I thought that the industry, particularly that of adventure tourism, wanted to go back to the previous regulation regime precisely because of insurance. Am I wrong?
4:30 p.m.
Chair, National Maritime Law Section, Canadian Bar Association
It's right in that they want to go back to the old, because as I understand it, they couldn't get the insurance, compulsory insurance, at the limits that were required by the Athens Convention and by part 4. This proposal in the bill is to take adventure tourism, as an activity, out of part 4 and out of the requirement to have compulsory insurance and out of the requirement to have a strict liability regime and put it back in the position it was in before, which is getting insurance in the normal marketplace without the increased limits. Getting insurance in the marketplace for the activity is based upon a number of different risk factors by which underwriters will rate the operation: the seaworthiness of the operation, the seaworthiness of the vessels, the risk factors. There's a whole slew of them the insurance industry will look at in rating a premium for insurance. The insurance companies will require these operators to provide waivers, to give briefings.
The bottom line is that the people who go to these activities are looking for risk. When you're a passenger on a vessel, whether it's in the Saguenay looking at the whales with your son, whether it's in Toronto Harbour on one of the cruise ships that go out at night, whether it's in Vancouver, you're not looking for risk as a passenger, you're looking for carriage from A to B. I think that's the difference: when you go looking for risk, you would like to get some risk. You want to find the rocks because you want the whitewater that's close to the rock.
When you go shopping, you're looking for a good operation that has all the equipment painted the right colour, has got all the nice brochures, has seaworthy vessels, and gives you a nice experience, so then you can go back and recommend it to your friends. Those are the people who will have insurance, whether you make it compulsory or not.
Athens has a compulsory system and has increased limits, because with those increased limits and with that compulsory system comes a strict liability regime that is very hard for you to get out of. You have to prove certain things in the normal negligence action. You don't have to prove a number of things in a strict liability regime. That's the trade-off part 4 has.
The adventure tourism people, as I understand it, are saying, “Take us out of part 4, but we're still caught by the normal liability rules and we'll still try to protect ourselves by waivers. We'll still risk manage with insurance. Because there won't be as high a limit, we'll be able to get better premiums that we can afford and we'll be able to run better operations.”
That's why I believe, to go back to Mr. Volpe's point on Tuesday, that a standard is important. You're trying to come up with a minimum safety standard for these people for this activity, and you can do that through the Canada Shipping Act, and I believe you can also do that through this piece of legislation.
