Madam Speaker, I am pleased to speak at second reading of Bill S-17. The introduction of the marine liability act represents a monumental step in the modernization of Canadian legislation regarding liabilities arising from shipping activities.
Its new format and structure are setting a new standard in the way legislation should be implemented to better facilitate the adoption of future improvements and developments in this field.
The modernization of Canadian legislation does not end with the introduction of this bill. It is one of our ongoing policy objectives to ensure that the provisions of the new bill keep pace with a rapidly developing shipping industry and to ensure that the compensation provided by the various liability regimes keeps pace with growing economies.
I take this opportunity to bring to the attention of the House Canada's efforts on the international scene with regard to the modernization of two important liability regimes to better reflect the nature of modern shipping. I refer to the liability regimes for compensation for oil pollution, cleanup and damages, and to the liability for the carriage of goods.
On oil pollution liability, Canada is a party to the 1992 protocol to the international convention on civil liability for oil pollution damage, 1969, and the international convention on the establishment of an international fund for compensation for oil pollution damage, 1971. The purpose of these conventions is to provide adequate compensation to victims of oil pollution catastrophes.
On December 12, 1999 such a catastrophe occurred off the coast of France. The Malta registered tanker Erika broke in two in the Bay of Biscay, some 60 miles off the coast of Brittany. The bow section floated for several hours before finally sinking. Efforts to tow the stern section out to sea failed and the stern eventually sank approximately 10 miles from the location of the sunken bow section.
The Erika was carrying 30,000 tonnes of heavy fuel oil of which some 14,000 tonnes were spilled at the time of the incident. The balance of the cargo remained in the sunken wreck. Approximately 400 kilometres of coastline were devastated and the damage to the wildlife, fishing and aquatic industry is still being assessed.
At a very early stage in the cleanup operations it was recognized that the extent of damages was likely to reach the maximum amount of compensation that the international oil pollution fund was able to offer under its existing arrangement, an astonishing $270 million Canadian.
The realization that the fund could prove to be inadequate to compensate all victims of the incident prompted calls from many of the countries that are party to the fund for a review of the limits of available compensation.
A meeting of the contracting states was held in July of this year. It was agreed that there was sufficient support, including support from industry itself, for an increase in the limits of compensation.
From the outset Canada has been active in the discussions that led to a proposal to increase the limit to the maximum level permitted by the provisions of the international conventions. This proposal, to be submitted next month to the International Maritime Organization, is co-sponsored by Canada and will see the limit of the fund increased to approximately $405 million Canadian. As a result of these efforts Canadians will have an improved compensation scheme available to assist them in the event of such a tragedy occurring in our waters.
Under the title of cargo liability I would like now to turn to our initiative relating to the liability of shipowners for the carriage of goods. The existence of rules that clearly establish the rights of shippers and shipowners is critically important, especially in an era where trade is liberalized around the globe and where trading partners are pursuing initiatives to increase access to international markets.
Internationally Canada has always participated in transport related initiatives to harmonize shipping standards, rules and regulations with other countries. The current legislation governing the liability of the shipowner for damage to cargo during maritime carriage is governed by the 1993 Carriage of Goods By Water Act.
This act was first adopted in 1936 on the basis of a 1924 international convention known as the Hague rules, which were amended in 1968 by the Visby protocol. This amendment essentially increased the limit of liability per package and provided for claims on the basis of gross weight of the goods as an alternative to a per package limit.
In 1978 the United Nations adopted a new international convention on the carriage of goods by sea, commonly known as the Hamburg rules. These rules introduced substantial changes on the basis of liability, burden of proof and procedures for claims.
Prior to the so-called COGWA, 1993, that is the Carriage of Goods by Water Act, Transport Canada published a discussion paper recommending the adoption of the Hamburg rules by Canada. Shippers clearly preferred the adoption of the Hamburg rules and felt that these rules were more responsive to their interests than the Hague-Visby rules, especially in terms of the new approach to carriers' defences and increased limits of liability.
Many ship owners, their insurers, cargo insurers and legal experts strongly favoured the adoption of the Hague-Visby rules because they believed the Hamburg rules would have a major impact on shipping costs and litigation costs as the new regime would need to be tested in the courts since previous case law would no longer hold.
Extensive consultations with the various industry groups on these two options have not resulted in a consensus on the adoption of either of these two international regimes. Eventually a compromise solution was reached with the adoption of a staged approach to both regimes.
This approach involved the immediate implementation of the Hague-Visby rules with provisions to bring the Hamburg rules into effect at a later date when a sufficient number of Canada's trading partners had ratified them. The staged approach would therefore ensure that Canadian law is always in step with that of our trading partners.
It also resulted in the adoption of a provision in the 1993 COGWA, which requires the Minister of Transport to conduct a periodic review of the act to determine whether the Hague-Visby rules should be replaced by the Hamburg rules.
This approach reflected Canada's intention to accept the Hamburg rules when it was proven that they would provide a viable basis for new liability conditions for international trade. In the intervening period the government committed itself to promote the Hamburg rules and to pursue with Canada's trading partners the possibility of a co-ordinated action that would lead to wider acceptance of the Hamburg rules at the international level.
As I mentioned previously, to fulfil the legal requirement contained in the Carriage of Goods by Water Act, 1993, and as part of the first review period, the Minister of Transport submitted a report to parliament in December of last year in which he concluded: first, the Hague-Visby rules should be retained in the current Carriage of Goods by Water Act until the next review period ending January 1, 2005 and, second, Transport Canada should continue to make efforts in consultation with industry and in co-operation with like-minded countries with a view to developing practical options for a new international regime of liability for the carriage of goods by sea, which would achieve a greater uniformity than the Hague-Visby rules.
The outcome of this review was driven by the developments in international law on cargo liability, the stagnant position of the Hamburg rules internationally and their minimal impact on Canadian seaborne trade.
Progress to achieve uniformity of international law suffered considerable setback in recent years resulting from the proliferation of regional or unilateral approaches to the modernization of domestic laws which have attempted to address real or perceived difficulties in the international conventions. Divergent rules on cargo liability now apply in many countries. There is a danger that other countries might pursue a similar path of unilateral solutions.
A concrete example of such independent action is the proposed amendments to the U.S. carriage of goods by sea act, 2000. The U.S. act, if adopted in its current form, would add to the proliferation of divergent regimes thus impeding international uniformity.
Canada and a number of countries and industry organizations have raised concerns about the significant departure of the proposed U.S. legislation from prevailing international law. The uniformity of international law remains a key objective of Canadian policy. The outlook for achieving this objective is improving with the ongoing interest of several international organizations on this subject.
Many of these organizations agreed to undertake important work in a consistent manner by avoiding duplication of efforts and by consulting with other international bodies interested in cargo liability such as the International Maritime Organization, the United Nations Economic Commission for Europe, United Nations Commission on International Trade Law, and Comité Maritime International.
Currently the subject of cargo liability is on the agenda of the OECD maritime transport committee. The committee recognized that there was sufficient interest internationally to consider measures that would improve the current situation.
UNCITRAL and CMI have undertaken to review current practices and laws on the international carriage of goods by sea to determine why countries cannot reach consensus in this area. As part of this commitment UNCITRAL and CMI have established a working group to gather information, ideas and opinions as to the problems that arose in practice and possible solutions to those problems.
Canada will continue to pursue, in co-operation with trading partners, the objective of a uniform international law on carriage of goods by water and will assist UNCITRAL and CMI in their current efforts. Canada will support any new initiative at the international level that would have a realistic chance at success in achieving this objective. These are just two of the things that Canada wishes to do when it comes to the matter of proving the international liability regimes for the carriage of goods around the world.