Bill C-7 (Historical)

An Act to amend the Marine Liability Act and the Federal Courts Act and to make consequential amendments to other Acts

This enactment amends Parts 3 and 4 of the Marine Liability Act to clarify certain rules of the limitation of liability of owners of ships for maritime claims and liability for the carriage of passengers, in particular the treatment of participants in adventure tourism activities.
It also amends Part 6 of that Act to implement the Protocol of 2003 to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 as well as the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001. The enactment continues, in Part 7, the Ship-source Oil Pollution Fund and modernizes its governance. With respect to Part 8, it includes general provisions relating to the administration and enforcement of offences under that Act and creates a maritime lien for Canadian ship suppliers against foreign vessels and establishes a general limitation period for proceedings not covered by other limitation periods.
Finally, this enactment amends the Federal Courts Act and makes consequential amendments to other Acts.

Transport, Infrastructure and Communities

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I have the honour to present, in both official languages, the third report of the Standing Committee on Transport, Infrastructure and Communities on Bill C-7, An Act to amend the Marine Liability Act and the Federal Courts Act and to make consequential amendments to other Acts.

[Mark Gauthier]

Yes, indeed. Thank you, Chair. I will certainly confine my comments to that. I may drift into some policy reasons on why one is one way and one is the other, of necessity, just to backfill.

But in my understanding, as I look at both L-3 and G-4, starting with L-3, it of course picks up on that point made by some of the witnesses that there ought to be a contractual nexus, if I can put it that way, right across the board, universally, with these claims by suppliers and either the owner or the owner's representative. That is picked up in the first words that appear in L-3, as proposed by Mr. Volpe.

That is absent, sir, in G-4. G-4 takes a different focus. It, too, recognizes that in the interests of transparency and to have perhaps a tighter lien, if I could put it that way, from a legal point of view, it picks up on the points that were also made by the witnesses, the industry witnesses, which was that the problem appeared to be with the provisions of two kinds of services: stevedoring and lighterage.

It was explained to the committee that stevedoring is basically--I think it's well known--moving cargo on and off a ship. Lightering is the same thing, but it's from a ship that's tied at a buoy, for example. You “lighter” it, or take cargo off and bring it to shore or move it to another vessel on a transshipment. But it's the same breed of service, if I could put it that way.

G-4 concentrates on that, so instead of putting the general exception of the contractual nexus into proposed subsection 139(2) as written, it chooses to put it in proposed subsection 139(2.1). That's difference number one.

There is another difference, which perhaps Mr. Volpe would assist us with in telling us about the choice of words that he has indicated in L-3 in proposed paragraph 139(2)(a) where it says “relating to goods” etc. Now, there is no amendment to that, of course, in G-4, as there was none intended, but if you look at the original text, that is to say, proposed paragraph 139(2)(a) as we now have it in Bill C-7, the language is “in respect of goods”.

First of all, I think there's a difference between something that relates to something, and something that's “in respect of”. That's my view. But in any event, I need to point out to the committee that proposed paragraphs 139(2)(a) and (b) very carefully pick up the language from paragraphs 22(2)(m) and (n) of the Federal Court Act, where what we call the necessaries, the mens provisions, are found, that is to say, the suppliers of goods, repairs, and vessels.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Bill C-7 would remove adventure tourism from part 4 of the act and it would still remain in part 3 of the act. Do you have any particular comments with reference to that?

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Thank you, Mr. Chair.

Thank you, Mr. Jones.

I would like to raise this question to you. How will the adventure tourism industry change because of the modifications to this liability law and Bill C-7?

[Christopher Jones, Vice-President, Public Affairs, Tourism Industry Association of Canada]

Thank you, Mr. Chair. I'm pleased to be here today on behalf of the Tourism Industry Association of Canada to provide our views on the amendments in Bill C-7 to the Marine Liability Act.

Let me begin by saying a little bit about the marine adventure tourism industry.

It's a little difficult to determine the number of water-based adventure tourism operators at the present time. As seasonal operators, they lack a national association, and a reliable and aggregated source of statistical data is unavailable. They have had different associations come and go in the provinces, but at the moment they lack a national outfit. However, the industry is growing and is particularly robust in British Columbia, Ontario, Quebec, and parts of the Northwest Territories.

As a niche tourism sector, marine-based adventure tourism is on the rise in North America, so let me say a few words about the Marine Liability Act of 2001 and its impact on marine tourism operators.

First, it subjected all marine operators to the same insurance regime. It set limits on liability at $350,000 per person, it promised the introduction of compulsory insurance requirements, and it subjected tourism operators to a presumption of fault in the case of the death or injury of a passenger. The onus was on the operator to prove otherwise. It also invalidated waivers of liability.

In terms of the reaction to the MLA of 2001, many marine adventure tourism companies and their insurance companies had been operating under the assumption that the MLA did not apply to them. The Marine Liability Act did not clearly define which marine tourism activities were subject to the act. As the legislation was conceived, the MLA applied wholly to vessels that are commercial in nature--largely ferries and cruise ships--and not at all to vessels used for pleasure purposes.

The confusion arose because marine adventure tourism companies were engaged in a commercial business, but the marine tourism sector offers a wide range of activities, all of which are undertaken for pleasure purposes. I might add that there are also instances in which the participant or passenger is often part of the propulsion of the vessel, or in some cases involved in the steering of the vessel or craft, which is an important distinction to make.

If the MLA's insurance regime were applied to marine adventure tourism, a number of consequences would result. The same liability regime would apply equally to marine adventure tourism operators and commercial passenger vessels such as ferries and cruise ships. Insurance would become unaffordable or unavailable to increased numbers of tourism operators.

To put the $350,000-per-person compulsory coverage into perspective, many rafting companies on the Ottawa River operate with 12-person rafts. At $350,000 per person, coverage would work out to $4.2 million just for one boat. Forcing operators to carry prescribed amounts of coverage adds to the regulatory burden on SMEs. The insurance regime envisaged in the MLA was not designed to apply to the participants in an adventure tourism excursion.

With respect to waivers and marine adventure tourism, the purpose of the waiver is to have the participants acknowledge and assume the risks that are inherent in this activity. Without waivers, adventure tourism operators cannot get insurance. Insurance companies are not willing to take on that kind of risk. Many operators would fold altogether. Passengers are still protected under tort law by being able to sue for negligence, and a court has the ability to set aside a waiver when the circumstance dictate.

I want to state on the record that TIAC supports Bill C-7 inasmuch as it seeks to amend the Marine Liability Act to specifically exclude marine adventure tourism from part 4 of the act, namely the sections dealing with the insurance regime and the restrictions on the use of waivers. TIAC supports this bill because, first, operators in the marine adventure tourism industry have experienced difficulties securing affordable liability insurance; second, because the bill reinstates and condones the practice of informed consent; and third, because safety standards for marine adventure tourism already exist and are distinct from those related to other commercial passenger vessels subject to the Marine Liability Act.

I want to just briefly go through some of the safety standards for marine adventure tourism that exist today.

The Canada Shipping Act currently regulates the marine adventure tourism industry through something known as the special-purpose vessels regulations. These set out mandatory regulations for the safe operation of commercial river rafting. They incorporate industry best practices and address such matters as vessel and safety equipment requirements, which cover helmets, life jackets, and the circumstances in which they must be worn. Second, they deal with operational requirements: guides and outfitters must possess first aid and CPR, they must give a safety briefing to participants, and guides must participate in a minimum number of runs before they are qualified to lead an excursion.

As well, the industry is now regulated under a new set of regulations called the small vessel regulations, also under the Shipping Act, which attempt to regulate the seaworthiness of a craft or vessel. These new inspection and registration rules are coming into force in 2009. In fact, they're in the Canada Gazette at the moment. These essentially determine what conditions of seaworthiness must apply. It is a self-regulation system. Obviously Transport Canada is not going to inspect every single pleasure vessel out there, but they have an element of self-inspection under a set of rules.

In addition, the insurance industry itself also imposes requirements on the operators. One eastern Canadian broker who is heavily involved in providing coverage to the operators on the Ottawa River tells me they have a risk management system and an on-site inspection system every second year as part of the requirements to obtain insurance.

The industry in Canada has committed to not only complying with the regulations but to exceeding many of the standards and requirements. Many require their excursion leaders to have passed courses in river rescue or to have had previous significant experience in a whitewater environment. In practice, a safety first philosophy governs the operations of the reputable rafting companies in Canada, with the result that the incidence of injuries in water-based adventure tourism operations is far lower than it is for alpine skiing.

That concludes my brief presentation. I'd be happy to attempt to take some questions on this subject.

[The Chair, Conservative, Merv Tweed]

Order, please.

Thank you, and good afternoon, everyone. Welcome to the Standing Committee on Transport, Infrastructure and Communities. This is meeting number 16.

Orders of the day are that pursuant to the order of reference of Monday, March 30, 2009, we will consider Bill C-7, An Act to amend the Maritime Liability Act and the Federal Courts Act and to make consequential amendments to other Acts.

Joining us today from the Tourism Industry Association of Canada is Mr. Christopher Jones. He's the vice-president of public affairs. We've already had a discussion. He's going to make his presentation, and then we'll go to the committee for questioning.

Please go ahead, Mr. Jones.

[Christopher Giaschi]

All Bill C-7 does is implement the international bunker convention. It implements the supplementary fund protocol and then modernizes some of the other aspects of the MLA in terms of the language of the ship-source oil pollution fund.

[Christopher Giaschi]

That's Bill C-7.

[Christopher Giaschi, As an Individual]

Thank you very much, Mr. Chairman.

I am a maritime lawyer. I am the west coast vice-president of the Canadian Maritime Law Association. The Canadian Maritime Law Association was established in 1951. We are an organization composed of both individual and constituent members. Most of our individual members are maritime lawyers who practise across the country. Our constituent members come from all facets of the Canadian marine industry.

The CMLA is Canada's representative to the Comité Maritime International, an organization that was established in 1897 and that is primarily concerned with international maritime law and the uniformity of maritime laws, not just through conventions but through various national associations such as the Canadian Maritime Law Association.

The primarily objective and interest of the Canadian Maritime Law Association is the establishment of effective and modern maritime laws and, in an international context, uniformity of those maritime laws, which we have come to know is absolutely essential when you're dealing with ships that move from place to place.

One of the things we are not is a lobby group for any particular maritime interest at all. We represent all maritime interests, and most of our lawyers have acted for all interests on both sides of the fence, as we say, both for and against ships. So we're not a lobby group; we're a broad-based group that's primarily interested in effective and modern law.

We have submitted a submission that I presume you all will have had. There are a few provisions of Bill C-16 that concern us, and those are the main points, the highlights, proposed paragraph 291(1 )(k) of CEPA and 16(1)(d) of the Migratory Birds Convention Act. These are the provisions that empower a court to order an offender to pay any person for the cost of cleanup, etc., following a pollution incident.

And in proposed section 274 of CEPA and proposed section 13.07 of the Migratory Birds Convention Act, there's a provision that provides for compensation for a new phrase, “non-use value”. We're particularly concerned about what that is.

The other provisions we're concerned about are proposed section 13.15 of the Migratory Birds Convention Act and proposed section 9 of the new Environmental Violations Administrative Monetary Penalties Act, establishing various levels of criminal liability for the master and the chief. Some of the my friends here today have expounded upon some of those concerns.

Our primary concern with respect to these various provisions is that they tend to violate or are inconsistent with current international conventions and current Canadian legislation in relation to marine pollution. The more important conventions are, first of all, UNCLOS, which was mentioned earlier. That's the United Nations Convention on the Law of the Sea. Article 230 of that convention--I'm not going to read the complete article to you--starts out: “Monetary penalties only may be imposed with respect to violations of national laws”. And this is in relation to pollution, monetary penalties only. It seems pretty clear that imprisonment should not be an option when you're dealing with something that comes under UNCLOS. It also provides in sub-article (3) of article 230:

In the conduct of proceedings in respect of such violations committed by a foreign vessel which may result in the imposition of penalties, recognized rights of the accused shall be observed.

Of course, recognized rights aren't defined there, but certainly in common law jurisdictions and also in civil law jurisdictions there are some basic rights afforded to any accused, one of which is the presumption of innocence, which I know the international shipowners have spoken on today, and they provided a number of briefs to you on that precise point. However, it is also arguably in violation of UNCLOS.

The CLC convention, which is an international convention related to oil pollution incidents and oil pollution damage, provides in article III:

4. No claim for compensation for pollution damage shall be made against the owner otherwise than in accordance with this Convention.

That specifically says that claims against the owner must be made in accordance with the convention. The next sentence says that the servants or agents of the owners, or members of the crew, are immune from any such claim. Keeping in mind that Bill C-16 empowers awards to be made against the owner and against the crew in sentencing, it's arguably in violation of the CLC.

Similarly, section 51 of the Marine Liability Act, which basically imports the CLC-type concepts into Canadian national law, provides that a shipowner shall be liable for the costs of the reasonable measures of cleanup actually undertaken. “Actually undertaken or to be undertaken” is the wording in the statute, which again would not provide for a non-use value type of award, which the new act is allowing for. That's not actually undertaken. That's something that's pulled out of the air.

Both the CLC convention and the Marine Liability Act provide for limitations of liabilities to shipowners and servants and agents in respect of oil pollution damage claims. In fact, Canada has a very sophisticated regime for compensating for pollution claims. It has multiple layers. Within Canada there is the ship-source oil pollution fund. Then there are the various fund conventions and the supplementary fund, which, in Bill C-7, we're just about to implement in Canada.

The current Bill C-16 doesn't take into account limitation of liability at all, and clearly it needs to. Essentially the problem is that in Bill C-16 we're disguising civil liability and civil compensation in quasi-criminal provisions, which is not fair and is not the right way to go. We're trying to do indirectly what we can't do directly.

Finally, I will say that we endorse the concerns that have been expressed about reverse onus, the test of the balance of probabilities, and the presumption of innocence. We have made a recommendation in our brief about at least one clause that can be put into the various pieces of legislation to ensure that international conventions that Canada has signed will have precedence whenever there is any conflict with any of these pieces of legislation.

Thank you very much.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Thank you, Mr. Chair.

I would like to welcome the panel members, and I would like to thank them for their valued input into this Bill C-7 legislation.

My question is to Mr. Barker.

Mr. Barker, you said that looking at the compulsory insurance for adventure tourism operators is getting us away from the real issue, which is whether the operators are operating safely or not. I want to understand why you feel there should be additional rules in the law needed to ensure that adventure tourism is safe.

[Bruce Bowie]

Certainly that question could best be answered by the government witnesses, if you get a chance. I believe the minister may speak to this. That would be a question for him.

My understanding of the consultation process is that Transport Canada determined that there was a need to review the Marine Liability Act. A number of issues had been identified by all stakeholders across the system with respect to the current legislation. They produced a position paper on all of the issues that they identified and that were identified by stakeholders such as the adventure tourism industry, shipowners, and ship suppliers. They then went out with that paper to a broad cross-section of stakeholders, sought their input, and as a result of that input, made recommendations to this committee in Bill C-7. So my understanding certainly is that although we had specific discussions about issues that were of interest to domestic shipowners, there was broad consultation, as I said, with ship suppliers, tourism interests, and others across the country.

[Simon Barker, Chair, National Maritime Law Section, Canadian Bar Association]

Thank you, Kerri.

Mr. Chairman and members of the committee, good afternoon, and thank you for giving us the time to speak to you.

Last night, instead of watching the results show on American Idol, I had the chance to spend two hours in front of the webcast and watch your deliberations on Tuesday. I must say I thought the Transport Canada submission to you was a very good one. I didn't see the slides that were presented, but I've seen some of them before, so I was able to follow that part of the discussion.

What I found more of interest was the question and answer session that you had as a round table afterwards. I put your questions and some of the answers that came from the department into three categories. One was oil pollution, which was described as the heart of the legislation; when you read the bill, it is clear that clause 11 is certainly the most substantive clause, and it is all about pollution. The other two were adventure tourism and maritime liens. I'll speak to both those this afternoon.

I appreciate that time is a precious commodity. We have put a three-page submission before you. I'm going to work on the assumption that you all have a copy of it.

The Canadian Bar Association's national maritime law section is, in general, supportive of Bill C-7. We don't find the oil pollution provisions in any way controversial. The supplementary fund protocol will increase the limits, and we believe it will better prepare Canada for an oil spill.

We don't believe the bunkers convention will have much impact in Canada. We've had a bunkers regime for a number of years. Canada, I'm happy to say, has always been in the forefront of oil pollution legislation worldwide. From 1970 on, we've had a very strong oil pollution provision in the legislation, starting with the Canada Shipping Act. Then in 2000-01, it was consolidated into the Marine Liability Act. So there aren't going to be any changes there. As I said, I don't believe it's going to be controversial in any way. The harmonization of international law is always a good thing, so to see Canada ratify conventions is a plus.

Our concerns, like those of the committee on Tuesday, touched upon two areas: adventure tourism and maritime liens. I would direct you to page 2 of our submission. The two areas touch upon two clauses in your bill: clause 1, the definition of the term “passenger”, and clause 12, which is where you'll find reference to the maritime lien, plus the general maritime limitation period, which I'll comment on as well.

Instead of getting into some of the nitty-gritty detail of clause 1 and the problem with the definition of the term “passenger”, let me approach it by saying that we're coming into summer season here in Canada, and most of us will go to a cottage, either our own or a friend's. As you're walking down the dock to the boats, let us suppose that on your left you have a boat with a motor and on the right you have a canoe. If you pass the bill as it currently reads, I would encourage you to get into the canoe, because the way the text currently reads, if you are injured as a passenger in a canoe, you will get substantially more money if liability is founded than if you get into the motorboat with the engine.

I think that is an anomaly that appears in the drafting. I think it was not intended by the department when it was drafting the bill, and I think it needs to come out.

Right now under the Maritime Liability Act, if you are injured in a boat, no matter how it is propelled, there's a limit of a million dollars for a vessel under 300 tonnes, and most small vessels in Canada fall into that category. In clause 1, you have a definition of the term “passenger”, and proposed paragraph (c) will in effect expose a passenger in a canoe to a higher limit. That may be fair for the person in the canoe, as I said to you, when you have the choice, but it will be very unfair to the person in the motorboat. Harmonization would suggest that we should all, as we do today, have a limit of a million dollars, and paragraph (c) should be removed from clause 1 in the definition of “passenger”.

The other point, which I think is a little bit more interesting, is the one noted by Mr. Volpe on Tuesday afternoon when talking about proposed section 37.1, which is where you find the definition of marine adventure activity.

If we go back to the transport discussion paper in 2005, the initial thought was to try to find a way to get adventure tourism out of part 4. Part 4, as you will recall from your deck on Tuesday, is pretty much about the Athens Convention, and the Athens Convention relates to big ship passenger vessels that are seagoing. We don't have that many seagoing passenger vessels in Canada.

If we do have passenger vessels, Mr. Volpe, in Toronto Harbour, they're cruise lines, but they're not seagoing. They're lake-going, but the fact is the same.

I think we're trying to find a way to pick up on the thought that the honourable member for Pembroke had on Tuesday, of keeping the good operators out of the structure and making sure the bad operators stay in the structure. The trick is to differentiate between the two.

Initially we started out by defining the term “ship”. That was felt to be not workable, and so through the consultation process with Transport Canada and the stakeholders, the idea of an activity came up. If you could put parameters around what was the activity, then that would get the good out and keep the bad in.

The point that you made, Mr. Volpe, on Tuesday was on ship safety standards. There was reference to the Canada Shipping Act and the standards for ship safety in that piece of legislation and enforcement by Transport Canada.

The point that the Canadian Bar Association national maritime law section wanted to make is on one of the criteria that appear in proposed section 37.1. If you put in another criterion requiring the adventure tourism industry to have a seaworthy ship at the commencement of the voyage, properly crewed, it will ensure that you have good operators coming out of part 4, staying in part 3. The bad operators will always be in part 4, because if at the start of the voyage the ship is unseaworthy, they won't be able to invalidate the waivers, they won't be able to get out of the structures of part 4, and the rules that you have in part 4 will continue to apply.

The other concern we have is over maritime liens, which you will find in clause 12. A maritime lien is a privilege claim. You heard discussion about it on Tuesday afternoon. The thing to remember in the discussion is that a maritime lien as a privilege claim generally ranks in priority above other claims against maritime property, be it mortgages or unsecured creditors, and the discussion of priorities always comes up in the context of a bankruptcy or a ship arrest if someone's arguing over a limited pot.

Ship suppliers have a lien today. The department officials on Tuesday described it as a statutory lien. That is lower down the ranking than a maritime lien. What, in effect, the ship suppliers are asking is to allow them to go higher up the ranking and put themselves on parity with the U.S. suppliers.

As a Canadian sitting before you, albeit with a strange accent, I would tend to agree that that's a good thing. However, what you have to do if you give someone a privilege claim is make provision for the traditional safeguards. I think some of the safeguards that are in the U.S. Maritime Lien Act are missing from our lien provision.

There was talk on Tuesday of a “made in North America” type of fix. It seems that there has been a little bit of cherry-picking going on, and some of the good parts have been taken out of the U.S. legislation and some have not.

The best analogy I can make is that you heard comments on Tuesday afternoon of an owner, a ship's master, a ship's agent. I didn't hear any comments on the webcast of a charterer. If I put it into a landlord-tenant type of analogy, the owner of the ship is like the landlord and the charterer of a ship is like a tenant. The issue that you have to come to terms with is this: is it fair for a tenant to be able to bind the landlord to charges on his property if the owner doesn't know anything about it or the landlord doesn't know anything about it? Right now in the bill you have a provision, which is a good provision, but it needs some safeguards put into it.

The last point is that a general limitation period has been proposed. That is a good thing. It harmonizes federal law across the country and that should be encouraged.

The one thing that is missing is what we call a “tolling agreement”. A tolling agreement is a mechanism that allows parties to extend the limitation period by agreement, if they so choose. Today, tolling agreements are allowed in the province of British Columbia, for example. They are not allowed in the province of Ontario. If you're going to have maritime law uniform across the country, then things that make sense and work, as tolling agreements do in British Columbia, should be extended across the country and put into a general maritime provision.

Those are my comments. I'm going to open the floor to the committee for questions. I'll take as many as you want to throw at me. Those I can't answer I'm going to deflect to Mr. Bowie.

Thank you for letting me speak to you this afternoon.

[Kerri Froc, Lawyer, Legislation and Law Reform, Canadian Bar Association]

Thank you, Mr. Chair. The Canadian Bar Association is very pleased to appear before this committee today on Bill C-7.

The Canadian Bar Association is a national association with about 38,000 members across the country. The primary objectives of the organization are improvements in the law and improvements in the administration of justice, and it is in this light that we've made our written submission, which has been circulated to you in advance, and make our comments to you today.

The CBA has been engaged in consultation with the government on marine liability amendments since at least 2005 and we are pleased to see progress made on this issue. I'm going to ask Mr. Simon Barker, who is the chair of the maritime law section, to make substantive comments about the bill.

[Bruce Bowie, President, Canadian Shipowners Association]

Thank you very much, Mr. Chair and honourable members, for the opportunity to provide the perspective of the Canadian Shipowners Association on Bill C-7.

The Canadian Shipowners Association represents the interests of the Canadian companies that own and operate Canadian-flag vessels on the Great Lakes-St. Lawrence waterway. We also operate in the Arctic and on the eastern seaboard of the United States and Canada. As such, we are one of the key stakeholder groups impacted by this legislation.

In 2008, the 67-vessel fleet handled about 62 million tonnes of bulk commodities, essentially coal, grain, iron ore, aggregates, salt, petroleum products, and general cargo. We provide Canadian primary industries and communities with reliable economical and environmentally sustainable transportation services.

The CSA fleet is dedicated to operating mainly in Canadian waters, providing uninterrupted service to customers through long-term commitment to shippers in the steel, agriculture, mining, construction, power, and petroleum industries.

The current Marine Liability Act, which has been in force since August 2001, is the principal legislation that deals with the liability of shipowners and ship operators in relation to passengers, cargo, pollution, and property damage. The intent of the legislation is to set limits of liability and to establish uniformity by balancing the interests of shipowners and other parties.

The proposed amendments to the Marine Liability Act contained in Bill C-7 result largely from the maritime law reform discussion paper released by Transport Canada in May 2005 and the subsequent consultations that took place with many stakeholders in all sectors of the marine community. CSA participated fully in this consultation process. Bill C-7 is largely the legislative response to the discussion and debate surrounding the Transport Canada paper.

CSA has worked closely with government officials and other stakeholders in the Canadian maritime industry. As I said, we have met on several occasions with Transport Canada regarding Bill C-7. I would like at this point to commend the Government of Canada, and in particular Transport Canada, for their excellent work in developing this important policy and legislative initiative leading to amendments to the Marine Liability Act. CSA is in agreement with most of the provisions in Bill C-7. Although the bill imposes significant obligations on domestic marine carriers, there is nothing that we, as responsible carriers in the domestic regime, cannot live with.

The bunkers convention is one of the international conventions that are brought into Canada through this bill. It deals with oil pollution from the bunkers of all ships other than tankers. Departmental officials, in presentations earlier this week, pointed out that ratification of this convention will enable Canada to rely on the compulsory insurance provisions introduced in the convention as a means of ensuring that the shipowner has the necessary coverage in the event of a bunker oil spill. CSA does not object to this new provision, and members will comply with the new requirement.

Bill C-7 also creates a maritime lien against foreign vessels for Canadian ship suppliers as security for unpaid invoices. CSA again supports this provision and wishes to go on the record as not being in support of any changes to Bill C-7 that would extend the maritime lien to Canadian vessels. The purpose of the lien provision is to protect Canadian suppliers against foreign-flag vessels that do not meet their obligations.

This has been a problem, because foreign vessels and their owners do not have ties to Canada and can thus ignore their obligations to suppliers. This is not the case for Canadian-flag vessels. With corporate offices in Canada, suppliers have no difficulty getting paid by Canadian vessel owners. There is no evidence of a failure on the part of Canadian shipowners to pay ship suppliers such that a lien in their favour against shipowners and operators should be created. When claims have been asserted against Canadian shipowners by ship suppliers, either the threat of vessel arrest or a simple action in rem has been sufficient to ensure prompt settlement of any outstanding claim.

So a proposal to include a lien for Canadian ships would have significant adverse impact on the financing of our fleet. There's no question that financing costs would increase if the lenders were rendered subordinate to liens in favour of ship suppliers and CSA could not support a proposal that would increase costs with no discernible benefit for taxpayers, particularly in the current economic climate.

On the topic of the current economic climate, I would like to add that the core of the CSA fleet, which is the bulkers and self-unloaders that operate in the St. Lawrence and the Great Lakes, are currently averaging in age about 35 to 40 years old and they must be replaced. There's a pressing need to renew these vessels with modern, efficient, and environmentally green ship solutions. However, when new vessels are imported into Canada for use in the coasting trade--coasting trade is within domestic waters--they are subjected to a 25% duty under the customs tariff, resulting easily in a duty of $10 million or more per vessel when they come in. This is not only a tax on Canadian shipowners but also on the end users of marine transportation.

So the duty needs to be removed immediately for the health of the nation's manufacturing and resource-producing sectors that depend upon marine transportation and to facilitate the renewal of Canada's domestic flag fleet. The addition of a ship supplier lien on Canadian vessels would be an unnecessary action that would create undue hardship on the ship financing problem that we already have in Canada in terms of renewing our fleet.

That's our submission. Thank you very much for your attention.

[The Chair, Conservative, Merv Tweed]

Good afternoon, everyone. Welcome to the Standing Committee on Transport, Infrastructure and Communities. This is meeting number 13. The orders of the day are that pursuant to the order of reference of Monday, March 30, 2009, we are considering Bill C-7, An Act to amend the Marine Liability Act and the Federal Courts Act and to make consequential amendments to other Acts.

Joining us today from the Canadian Shipowners Association is Mr. Bruce Bowie, president. Joining us from the Canadian Bar Association are Mr. Simon Barker, chair, national maritime law section, and Ms. Kerri Froc, lawyer, legislation and law reform. We welcome you today.

I understand you have been given some directions from Maxime, our clerk, on your time.

Mr. Bowie, please go ahead. Then we'll go to the second presentation and then have questions from committee members. Please begin.