Hazardous cargo convention moves closer to becoming international law

South Africa positioned to participate

The international convention governing liability and compensation for damage caused by hazardous and noxious substances (HNS) carried by sea is edging towards entry into force after a milestone reached at the International Maritime Organisation (IMO) in London this month means the world's shipping nations may finally be on a fixed timeline to implementing one of the most significant gaps in the global maritime compensation framework.

International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (2010 HNS Convention) aims to ensure adequate, prompt, and effective compensation for those affected by incidents involving hazardous and noxious substances (HNS) carried on seagoing ships.

During the current session of the IMO Legal Committee, Belgium, Germany, the Kingdom of the Netherlands and Sweden deposited their instruments of ratification, bringing the total number of contracting states to 12. This is significant: the convention requires at least 12 states to formally consent to be bound by it before entry into force can be triggered. With this deposit, the numerical threshold has been met.

The convention also requires that at least four of the contracting states each have a minimum of 2 million units of gross tonnage. With five of the eight existing contracting states already meeting this threshold, and all four of the new states doing so as well, this criterion has also been satisfied.

South Africa, who acceded to the Protocol in 2019 as one of the first eight countries to do so, is also the only African country to have ratified the instrument, placing it among a small group of pioneering states that have shaped the path towards this moment.

Other early adopters included Canada, Denmark, Estonia, France, Norway, Slovakia and Türkiye. They all demonstrated confidence in the revised framework and positioned themselves as leaders in building the international consensus the convention requires.

Meeting the ratification headcount is necessary but not sufficient. The 2010 HNS Protocol has a third and final condition: the contracting states must, in aggregate, have received at least 40 million tonnes of cargo contributing to the HNS general account during a calendar year. It is only once this cargo threshold is confirmed that the 18-month countdown to entry into force officially begins.

Given the cargo volumes involved, the expectation is that the threshold will be met when the 2025 data is reviewed. That would mean the convention enters into force in late 2027, after more than three decades in development.

How the convention works

When it enters into force, the HNS Convention will establish a two-tier compensation system applicable to incidents involving a wide range of hazardous substances, including oils, liquid chemicals, liquefied gases, liquid substances with a flashpoint not exceeding 60 degrees Celsius, packaged dangerous goods and solid bulk materials with chemical hazards.

The first tier places strict liability on the registered owner of the ship carrying HNS cargo. Shipowners will be required to maintain insurance certified by their flag state, and it is estimated that approximately 65,000 vessels worldwide will need such certificates. The second tier is an HNS Fund, to be established and administered by contracting states, which will pay compensation once the shipowner's liability is exhausted. The fund will be financed through contributions levied on receivers of HNS cargoes after an incident occurs, based on actual compensation needs.

Total compensation available under the convention is capped at 250 million Special Drawing Rights (SDR) per event, equivalent to approximately USD 360 million at current exchange rates. The framework is built on the 'polluter pays' principle: the shipping and HNS industries bear the financial responsibility for incidents, not taxpayers or victims.

South Africa's position and what ratification means

As the sole African state among the 12 contracting parties, South Africa occupies a distinctive position. Its ports handle significant volumes of chemicals, bulk minerals and other hazardous substances, and its early ratification in 2019 reflected a considered assessment that the convention's framework serves the country's interests both as a maritime nation and as a potential victim of HNS incidents in its waters.

Once the convention enters into force, South Africa will be fully subject to its obligations. South African-flagged ships carrying HNS cargoes will be required to hold certified insurance. Receivers of HNS cargo at South African ports will be liable to contribute to the HNS Fund in the event of an incident requiring fund compensation elsewhere in the contracting-state network.

The practical implication is that the marine insurance and cargo-handling sectors in South Africa will need to plan for the new obligations. Regulators will need to establish or designate the authority responsible for certifying shipowner insurance and for liaising with the HNS Fund administration once it becomes operational.

For the rest of Africa, South Africa's ratification is a reminder that the treaty remains open for accession. Any state that handles chemical or bulk cargoes at its ports has an interest in a predictable compensation regime for HNS incidents, and the opportunity to join the convention before it enters into force remains available.

A long road to ratification

The roots of the HNS Convention stretch back to 1996, when an IMO conference in London adopted the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea. The 1996 convention was designed to do for hazardous chemicals, liquefied gases and packaged dangerous goods what earlier instruments had done for oil spills: ensure that victims of maritime accidents receive prompt and adequate compensation, regardless of the financial capacity of those responsible.

However, the 1996 convention never gathered sufficient ratifications to enter into force. The chief obstacle was a technical requirement that proved difficult for many states to fulfil: countries were required to submit data on the quantities of HNS contributing cargo received through their ports, but the mechanisms for collecting this information were poorly defined, and many states simply could not comply. As a result, by 2009, more than a decade after adoption, the convention remained dormant.

A second IMO conference was convened in 2010 to address these problems. The resulting 2010 HNS Protocol simplified and clarified the cargo-reporting obligations, making it a condition of ratification rather than an afterthought, and requiring annual submissions thereafter. States that fail to submit data are temporarily suspended from the agreement. These changes made the instrument more workable, and ratifications began to accumulate.

A framework whose time has come

The growth in seaborne trade in chemicals, liquefied natural gas and alternative fuels has made the absence of a functioning HNS compensation regime increasingly conspicuous. The conventions already in force for oil pollution, bunker fuel, wreck removal and passenger liability cover significant risks but leave a substantial gap for the broad category of hazardous and noxious substances. The 2010 HNS Convention fills that gap.

Namibian listing to boost O&G investment for the man on the street Ghana strengthens seafarer commitment