Transport Canada; Policy; Marine

The Canadian legislation on salvage is based on the 1989 International Convention on Salvage. This Convention, which Canada ratified in 1994, provides a legal framework to ensure that salvage operations are undertaken in a professional manner and with due regard to environmental protection. The main provisions of the Convention deal with the duties of masters and shipowners to arrange for salvage and to cooperate with salvors; the criteria to be taken into consideration when fixing the salvage award; the possibility of special compensation in relation with efforts to prevent environmental damage; and, contribution to salvage awards by shipowners and cargo interests.

As noted earlier in this paper, one of the aims of the Marine Liability Act adopted in 2001 was to consolidate, in a single piece of legislation, all liability regimes and related subjects that were at the time located in several acts and regulations. Maritime salvage is one of those related subjects and therefore it is proposed to move existing provisions on salvage from the CSA to the Marine Liability Act.

The proposals concerning the reform of outdated common law rules set out in Part Two above would, if adopted, require new legislation to implement. It has been suggested that this could be done by creating a new statute on “maritime property”, or by incorporating the new legislation within the framework of the Marine Liability Act. The latter approach seems to be a more efficient and practical way of dealing with this new legislation but as it would extend the initial scope of the act beyond liability regimes and related subjects, it is proposed to introduce the new legislation in a distinct chapter of the Marine Liability Act, perhaps to be called the Marine Liability and Property Act.

[1] The provisions of this convention have been implemented in the Marine Liability Act in 2001, thus no new legislation would be needed if it is decided to ratify the convention at this time.

[2]The 1976 LLMC is in force in over 40 countries. The 1996 Protocol is now in force in the following countries: Australia, Denmark, Finland, Germany, Norway, Russian Federation, Sierra Leone, Tonga, United Kingdom.

[3] Document TP 11577

[4] grt refers to gross registered tonnage of a vessel.

[5] SDR - Standard Drawing Rights, are a unit of account derived from a basket of currencies by the International Monetary Fund (IMF). 1 SDR equals approximately 2 Canadian dollars. Current conversion rates can be found at www.imf.org.

[6] “Persistent oil” as presented in this paper is a commonly used term for “contributing oil” defined as either crude oil or fuel oil, in Article 1(3) of the 1992 IOPC Fund Convention.

[7] Currently 1 SDR equals approximately 2 Canadian dollars.

[8]The following states have ratified the Protocol: Denmark, Finland, France, Germany, Ireland, Japan, Norway and Spain.

[9] Environmental Emergencies Program, Environment Canada Summary of Spills in Canada 1984-1995, November 1998.

[10] Figures taken from the Exxon Valdez Oil Spill Trustee Council website.

[11] This Club, like others in the International Group of P&I Clubs, is a protection and indemnity association of shipowners or operators, offering mutual insurance, generally for third party liability risks and the defence of claims.

[12]Other countries that have signed, also subject to ratification, include: Australia, Brazil, Denmark, Finland, Germany, Italy, Norway, Sweden and the United Kingdom.

[13] grt refers to gross registered tonnage of a vessel.

[14] Currently 1 SDR equals approximately 2 Canadian dollars.

[15] As of December 1, 2004, seven countries have ratified the Convention: Russia, Angola, Tonga, Slovenia, Samoa, St. Kitts and Nevis, and Morocco. Furthermore, Japan, Netherlands, Denmark, New Zealand, Ireland, Italy, Singapore, Germany, Sweden, Finland, Norway, Greece, Latvia, Spain and UK have indicated their intentions to consider ratification. In addition, EU member states are expected to ratify the HNS Convention before June 30, 2006 if possible.

[16] Canadian Coast Guard Marine Pollution Incident Reporting System (CCG MPIRS).

[17] Currently 1 SDR equals approximately 2 Canadian dollars.

[18] International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk, 1983, as amended.

[19] International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk, 1983, as amended.

[20] Code of Safe Practices for Solid Bulk Cargoes (BC Code).

[21] Article 1(9) of the HNS Convention defines “carriage by sea” as “the period of time from when the hazardous and noxious substances enter any part of the ship’s equipment, on loading, to the time they cease to be present in any part of the ship’s equipment, on discharge. If no ship’s equipment is used, the period begins and ends respectively when the hazardous and noxious substances cross the ship’s rail.”

[22] grt refers to gross registered tonnage of a vessel.

[23]Compulsory insurance applies to seagoing ships registered in a state party and carrying HNS (with the exception of warships and other ships owned or operated by a state party and used only for the provision of government non-commercial services).

[24] Currently, Canada’s Ship-source Oil Pollution Fund pays all IOPC levies for Canadian contributors.

[25] The “designated national authority” (DNA) will be determined at an appropriate time to ensure smooth operation of the Convention.

[26] grt refers to gross registered tonnage of a vessel.

[27] The Athens Convention stipulates that the limit of liability of 175,000 Special Drawing Rights (SDRs). The average value of 1 SDR equals approximately 2 Canadian dollars.

[28] Marine Liability Act, S.C. 2001, c.6.

[29] Ordon v. Grail [1998] 3 S.C.R. 437.

[30] The negotiations that led to the 1993 Maritime Liens and Mortgages Convention addressed this issue only in part, relying on national laws to define the rights of ship suppliers. As a result of inconclusive industry-wide consultations, Canada did not ratify this convention. Moreover, it has not come into force internationally.

[31] An action in rem is one taken directly against the vessel; an action in personam is one take against the owner of the vessel.

[32] 46 U.S. Code Section 31342.

[33]An American maritime lien for ship supplies ranks ahead of a U.S. ship mortgage only when the lien arises prior to the recording of that mortgage. Conversely, such a lien ranks ahead of foreign ship mortgages (when such a mortgage is not guaranteed under Title XI of the Merchant Marine Act, 1936).

[34] Under the American doctrine of ownership “pro hac vice”, the bareboat charterer becomes subject to the duties and the responsibilities of the owner.

[35] 46 U.S.C. 31341 (a) and b).

[36]See above footnote 32 for further details on the ranking of maritime liens and mortgages in the United States.

[37]Hollandsche Aannaming Maatschappij v. The Ryan Leet (1997), 135 F.T.R. 67.

[38] Norcan Electrical Systems Inc. v. The FB XIX, 2003 F.C.T. 702 (hereafter FB XIX) and Royal Bank of Scotland. v. Golden Trinity (Ship), 2004 FC 795 (hereafter Golden Trinity).

[39] “Sistership arrest becomes fairly clear if one keeps in mind that its purpose was to prevent an owner from improperly insulating assets by putting each ship into a separate company in which the overall owner held all the shares” in the FB XIX, paragraph 13.

[40] Mount Royal/Walsh Inc. v. Jensen Star (The), [1990] 1 F.C.199, paragraphs 14 and 15.

[41] Common management can, “in some instances, merely be the result of overlapping factional minority ownership”, the later (factional minority ownership) not giving rise to a sistership relationship. Royal Bank of Scotland v. Golden Trinity (ship) 2004 FC 795.

[42] Royal Bank of Scotland v. Golden Trinity (ship) 2004 FC 795.

[43] Royal Bank of Scotland v. Golden Trinity (ship) 2004 FC 795 based on Ssangyong Australia Pty Ltd. V. Looierstgracht (The), [1994] F.C.J. No 1553.

[44] [ 1988 ] 3 S.C.R. 437.

[45] The Supreme Court of Canada in Ordon v. Grail held that the common law part of Canadian maritime law ought to recognize the right of the estate of a deceased person to recover personal injury tort damages suffered by the deceased during his or her lifetime, but the issue whether estates could sue for a deceased person’s losses generally, was not before the court.

[46] Ontario Trustee Act RSO 1990 c. T.23 s. 38, Ontario Courts of Justice Act RSO 1990 c. C.43, s. 122, Ontario Mercantile Law Amendment Act RSO 1990 c. M.10 s. 3.

[47] British Columbia Law and Equity Act RSBC 1996 c. 253, s. 60, Ontario Family Law Act RSO 1990 c. F-3 , s. 64.

[48] BC Law and Equity Act s. 36, Ontario Conveyancing and Law of Property Act RSO 1990 c. C.34, s. 53.

[49] BC Law and Equity Act, s. 30, Ontario Mercantile Law Amendment Act RSO 1990 c. M.10 s. 6.

[50] BC Law and Equity Act s. 34, Ontario Mercantile Law Amendment Act, s. 2.

[51] Ontario Conveyancing and Law of Property Act, s. 36.

[52] BC Law and Equity Act s. 62.

[53] Ontario Courts of Justice Act, s. 98.

[54] Ontario Courts of Justice Act, s. 99.

[55] BC Law and Equity Act s. 43, Ontario Mercantile Law Amendment Act s. 16.

[56] BC Law and Equity Act ss, 4,5, 31, 44, Ontario Mercantile Law Amendment Act s. 15.

[57] Quebec law now recognizes charges over moveable.

[58] Ontario Personal Property Security Act RSO 1990 c. P.10, Part V and s. 67.

[59] Canada Shipping Act. R.S.O. 1985 c. S.9 ss. 46, 47 and 453-465.

[60] FBDB v. Finning (1989) 34 BCLR (2d) 235.

[61] BC Law and Equity Act, s. 37, Ontario Courts of Justice Act, s. 100.