National HNS Reporting NS Reporting RequirementsRequirements

David Baker David Baker UKUK

Some practicalities - the UK experienceSome practicalities - the UK experience to to datedate

Convention RequirementsConvention Requirements

Article 21 – requires Contracting State to identify Article 21 – requires Contracting State to identify persons liablepersons liable

Article 43 – requires that Article 43 – requires that when ratifyingwhen ratifying the the Contacting State submits to the IMO details of Contacting State submits to the IMO details of quantities of HNS in preceding yearquantities of HNS in preceding year

The national legislation should :The national legislation should :

Provide for introduction of the reporting Provide for introduction of the reporting system system prior toprior to ratificationratification

identify the principal receivers and (as identify the principal receivers and (as applicable) physical receivers, the different applicable) physical receivers, the different HNS receipts and the quantitiesHNS receipts and the quantities

provide a means to determine annual provide a means to determine annual fluctuations, eg set a national thresholdfluctuations, eg set a national threshold

Industry concernsIndustry concerns

““The financial obligations will prove a costly The financial obligations will prove a costly burden on storage companies”burden on storage companies”

““Storage companies are generally just third parties Storage companies are generally just third parties with no responsibility for carriage by sea”with no responsibility for carriage by sea”

””Most HNS stored will come from non states Most HNS stored will come from non states parties or will be destined for such states”parties or will be destined for such states”

““Liable companies will fragment to avoid financial Liable companies will fragment to avoid financial obligation”obligation”

Further industry concernsFurther industry concerns

Practicalities of passing on the financial Practicalities of passing on the financial obligations to principal receiversobligations to principal receivers

Lack of contracts with principal receivers, eg port Lack of contracts with principal receivers, eg port authorities authorities

Liability when the principal receiver is not located Liability when the principal receiver is not located in a contracting statein a contracting state

Various scenariosVarious scenarios

The following scenarios focus especially on the financial responsibilities when HNS is handled through intermediaries

which raises the most complexities under the Convention

ScenariosScenarios

Receiver based in a State Party

Principle based in a non-State

PartyAgent is liable

HNS

Receiver based in a State Party

Principle based in a State Party

Principle is liable

HNS

CARGO PHYSICAL PHYSICAL RECEIVERRECEIVER

DESIGNATED DESIGNATED PRINCIPLEPRINCIPLE

LIABILITYLIABILITY

Scenarios continued...Scenarios continued...

CARGOCARGO PHYSICAL PHYSICAL RECEIVERRECEIVER

DESIGNATED DESIGNATED PRINCIPLEPRINCIPLE

LIABILITYLIABILITY

Receiver based in a non-Statte

PartyPrinciple basedbased

in any State

Convention does not apply:

No liability

HNSHNS

ReceiverReceiver based in a State Party

Principle based in any StateState

Owner of LNG prior to

discharge is liable

LNG

Final ScenarioFinal Scenario

The physical receiver of HNS in a contracting state is unable to identify the principal receiver, eg a

port authority without a contract:

The physical receiver becomes liableThe physical receiver becomes liable

In practiseIn practise

Storage companies should be able to pass on the Storage companies should be able to pass on the liability and, if necessary, apply liability on the liability and, if necessary, apply liability on the principal receiver by contractprincipal receiver by contract

The liability only arises when the HNS is received The liability only arises when the HNS is received from ships in a contracting statefrom ships in a contracting state

The level of liability will arise only after incidentsThe level of liability will arise only after incidents The shipowner’s level of liability should cover The shipowner’s level of liability should cover

many incidents – a minimum of 10 million SDRmany incidents – a minimum of 10 million SDR

Practicalities of reportingPracticalities of reporting

It will be necessary for national rules to applyIt will be necessary for national rules to apply : :a statutory obligation to a statutory obligation to reportreport on the initial on the initial

or intermediate receivers as well as the or intermediate receivers as well as the obligation on the principal receivers to obligation on the principal receivers to paypay levieslevies

This will provide the ‘audit trail’ to monitor This will provide the ‘audit trail’ to monitor transhipments and to apply the financial transhipments and to apply the financial obligations on the ultimate receiverobligations on the ultimate receiver

SummarySummaryThe state will have toThe state will have to:: determine the national regulations best suited to determine the national regulations best suited to

the trading pattern, the trading pattern, provide a practical regulatory system which will provide a practical regulatory system which will

ensure equity and certainty of meeting its reporting ensure equity and certainty of meeting its reporting obligations, and obligations, and

ensure the Fund is able to raise levies against the ensure the Fund is able to raise levies against the appropriate receiversappropriate receivers

Summary (continued)Summary (continued)

Finally, the state should consider:

Applying the simplest practical definition of Applying the simplest practical definition of ‘receiver’ to avoid prolonged audit trails‘receiver’ to avoid prolonged audit trails

Implementing a statutory reporting system with Implementing a statutory reporting system with lower threshold than those set in the Convention.lower threshold than those set in the Convention.