Civil Liability Insurance for Ships

From: Transport Canada

The Marine Liability Act (MLA) is the principal legislation dealing with the liability of shipowners and ship operators in relation to passengers, cargo, pollution and property damage. Its intent is to set limits of liability and establish uniformity by balancing the interests of shipowners and other parties.

The International Maritime Organization's (IMO) International Convention on Civil Liability for Oil Pollution Damage, 1969 (1969 CLC), which was replaced by its 1992 Protocol and the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunkers Convention) were created to ensure that adequate compensation is available to cover ship-source oil pollution damage resulting from maritime casualties.

These conventions establish the liability of the principal party responsible for oil pollution damage – the shipowner – who is held strictly liable and is required to carry insurance based on the size of their ship. The 1992 CLC applies to all seagoing vessel carrying oil in bulk as cargo, whereas the Bunkers Convention applies to oil used in the propulsion or operation of the vessel.

The 1992 CLC is also the first tier of compensation under the International Oil Pollution Compensation (IOPC) Funds, to which Canada is a member state of both the 1992 Fund and the Supplementary Fund. The Bunkers Convention, however, is solely a liability convention and does not have additional international compensation funds similar to the IOPC Funds. In Canada, the Ship-Source Oil Pollution Fund provides additional compensation for a spill of any oil from any type of ship above the shipowner’s liability. More information on these compensation funds can be found here: Compensating for Response Costs.

Civil Liability for Wreck Removal

As part of the Wrecked, Abandoned or Hazardous Vessels Act (WAHVA), the Nairobi International Convention on the Removal of Wrecks, 2007 (Wreck Removal Convention) is given force of law in Canada. The Wreck Removal Convention provides a set of uniform international rules aimed at ensuring the prompt and effective removal of wrecks that are the result of a maritime casualty and may cause a hazard to safety, navigation, property, communities and the marine environment. It also provides a regime for strict liability and compulsory insurance for wrecks and requires vessels over 300GT to carry proper insurance or financial security, as well as the right for claimants to recover their losses through direct action against the insurer.

Marine Oil Pollution Liability and Compensation

Compensation for damage resulting from oil pollution from ships is currently addressed by a variety of mechanisms. Visit this page for further information on Marine Oil Pollution Liability and Compensation.

Application Process

Please refer to the Application Process page for details on how to apply for Civil Liability Convention, and Bunkers Convention and Wreck Removal Convention certificates.

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