Bills Digest No. 95 2002-03
Maritime Legislation Amendment Bill 2002
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
Maritime Legislation Amendment Bill
Date Introduced: 11 December 2002
House: House of Representatives
Portfolio: Transport and Regional Services
Commencement: The amendments increasing
compensation limits payable from tanker oil spills commence on 1
November 2003. The remainder of the Bill commences on the day after
- amend various pieces of marine pollution legislation,
especially so as to increase the amount of compensation potentially
payable from damage caused by tanker oil spills;
- clarify the application of
certain anti-competitive conduct provisions in the Trade
Practices Act 1974 to stevedoring companies; and
- repeal redundant legislation relating to a Commonwealth grant
to Tasmania for the purchase of the Spirit of Tasmania
Bass Strait ferry in the 1980s.
As a result of the disastrous oil spill
resulting from the Torrey Canyon(2) grounding
in 1967, members of the International Maritime Organisation
(IMO)(3) adopted a convention dealing with the civil
liability of oil tanker owners for pollution damage caused by oil
carried as cargo. The purpose of the 1969 International Convention
on Civil Liability for Oil Pollution Damage (the Civil Liability
Convention)(4) was to ensure that compensation is paid
to victims and the liability is placed on the shipowner.
Compensation is payable only for damage caused in waters out to the
outer limits of the 200 nautical mile Exclusive Economic Zone (EEZ)
of member States - thus damage to a fishery in international waters
is not covered.
The Civil Liability Convention is based on the
principle of strict liability. This means that the tanker owner (or
in practice, their insurer) is liable to pay compensation up to
liability limits regardless - with a few exceptions(5) -
of whether or not they were at fault for the oil spill in question.
The amount of compensation for which the tanker owner is
potentially liable increases with the size of the ship.
Even after the adoption of the Civil Liability
Convention, there was some concern that the compensation limits
were too low. This led to the adoption of the International
Convention on the Establishment of an International Fund for
Compensation for Oil Pollution Damage (the Fund Convention) by the
IMO in 1971. The Fund established by this Convention is derived
from levies from companies or other entities importing more that
150 000 tonnes of crude and/or heavy fuel oil a year. In cases
where pollution damage exceeds the compensation limit under the
Civil Liability Convention, the Fund 'tops up' the remaining amount
up to a certain maximum. The Fund will also pay compensation in
situations like if the tanker owner cannot be identified, is
uninsured(6) or insolvent or can otherwise invoke one
the exemptions to liability under the Civil Liability
The original Civil Liability and Fund
Conventions were both replaced with updated versions in 1992, when
liability limits in both were increased. Liability limits were
increased again by the adoption of amendments in 2000. The second
of these two increases is expected to come into effect on 1
November 2003. Australia is a member of both the (1992) Civil
Liability and Fund Conventions, hence the need for legislation to
reflect the new liability limits. The Government has stated that
any possible increases in shipowners insurance premiums resulting
from the new limits are 'likely to be
The current and new liability limits are shown
in the following table.
Current liability limits
Limits from November 2003
Up to 5 000 gross tons
5 000-140 000 gross tons
A$7.125 million plus A$1000 for each extra
$14.3 million plus A$1500 for each extra ton
Over 140 000 gross tons
Maximum compensation (shipowners share under Civil Liability
Convention plus 'top up' from the Fund).
Note: Convention liability
limits are actually expressed in International Monetary Fund
'special drawing rights (SDRs)'. The Australian dollar figures
shown above are approximate only and have been calculated for
reader's convenience according the exchange rates on 31 December
Compensation is available under both the Civil
Liability and Fund Conventions for loss of income as a direct
consequence of an oil spill. Preventative and clean up costs
incurred by governments and other bodies may also be claimed.
There have been relatively few spills from oil
tankers in Australian waters. In 1991, the Greek tanker
Kirki lost its bow off the West Australian coast,
resulting in the spill of about 17 000 tonnes of crude oil. Damage
to the environment was minimal, and no significant costs were
incurred by Government authorities responding to the spill. In
1999, around 300 tonnes of oil was spilled into Sydney Harbour by
the Italian tanker Laura D'Amato during transference to an
oil refinery. The spill was largely contained, but reportedly 'only
favourable weather prevented the slick from creating a major
catastrophe'.(9) In both of these cases, some claims
were paid out under the shipowners obligations under the Civil
Worldwide, the most costly oil tanker spills in
terms of compensation paid out through the Civil Liability and Fund
Conventions mechanisms have been the breaking up of the
Nakhodka in the Sea of Japan in January 1997 and the
Erika off the coast of Brittany in December 1999. In the
case of the Erika, over 6 000 claims for compensation have
been made to date for a total of almost A$350 million. About A$110
million has been paid out, with assessments of other claims still
pending. The total compensation and clean-up cost of the 1989
Exxon Valdez disaster in Alaska in 1989 was several
billion Australian dollars, but the United States is not a member
of either Conventions and thus compensation was not available under
those mechanisms. Compensation was however paid out to various
parties by Exxon after lengthy litigation in United States courts.
The cost of the oil spill from the Prestige, which sank
off the Spanish coast in November 2002, is still to be
Sections 45 and 47 of the Trade Practices
Act 1974 (TPA) contain general prohibitions against
corporations engaging in certain arrangements or practices that may
restrict competition. Part X of the TPA, which deals with
international cargo shipping, provides some exemptions from these
prohibitions in order to allow shipping companies to collaborate as
liner 'conferences' in setting shipping charges. Part X was
substantially amended in 2000 by the Trade Practices Amendment
(International Liner Cargo Shipping) Act 2000.(10)
This followed a review of Part X by the Productivity
Commission.(11) It is worth noting that the Australian
Consumer and Competition Commission does not support the exemptions
contained in Part X.(12)
The 2000 amendments inserted a new section
10.24A into the TPA. This provided that that the prohibitions in
section 45 and 47 not apply to the negotiation and carrying out of
stevedoring contracts. According to the Explanatory Memorandum to
the 2000 Bill,(13) the insertion of section 10.24A was
intended to reflect the fact that stevedoring arrangements were
part of the normal terminal-to-terminal services provided by
conference lines and the collective negotiation with stevedores by
conference lines was established practice in the industry. However,
according to the Second Reading Speech to the 2002
Section 10.24A of part X could possibly be
interpreted as allowing stevedoring operators to collude in
determining the terms and conditions of a stevedoring contract to
be negotiated with a shipping conference. The amendments made by
Schedule 2 will explicitly state that the exemptions that apply to
liner shipping in relation to negotiating stevedoring contracts
under section 10.24A do not apply to stevedoring operators.
In other words, shipping companies may act
collectively, but stevedoring corporations may not. Note that
currently there are only two major stevedoring corporations in
Australia: Patricks and P&O.
Under the Bass Strait Sea Passenger Service
Agreement Act 1984, the Commonwealth provided financial
assistance to Tasmania, mainly for the purchase of the Spirit
of Tasmania ferry.(15) The Act no longer has any
function and so is being repealed.
Items 1-3 collectively amend
the Protection of the Sea (Civil Liability) Act
1981 to incorporate the new liability limits outlined in the
background of this Digest into the Act. An example of the practical
effect of this will be that oil tankers will be required to
increase their insurance cover to the extent they are ships covered
by the Act. The Act also provides that compensation claims can be
made against shipowners or their insurers according to the
provisions of the Civil Liability Convention. The amendments will
increase the maximum amount of these claims.
Items 4-6 collectively amend
the Protection of the Sea (Oil Pollution Compensation
Fund) Act 1993 to incorporate the new liability limits
outlined in the background of this Digest into the Act. The Act
provides that compensation claims can be made against the Fund
according to the provisions of the Fund Convention. The amendments
will increase the maximum amount of these claims.
Items 7-9 amend the
Protection of the Sea (Prevention of Pollution from
Ships) Act 1983. This Act implements Australia's obligations
under the main international convention on ship-sourced pollution,
MARPOL 73/78. Notably, item 7 will tighten the
prohibition against the disposal of the plastics at sea by banning
disposal of incinerator ashes from plastic products where they 'may
contain toxic or heavy metal residues'.
Item 1 inserts a new
subsection 10.24 (3A) into Part X of the Trade
Practices Act 1974. The amendment explicitly states that the
Part X exemptions from anti-competition arrangements and practices
do not apply 'to any dealings between stevedoring operators'.
Item 1 repeals the Bass
Strait Sea Passenger Service Agreement Act 1984.
Items 2-28 convert penalties in
the Protection of the Sea (Prevention of Pollution
from Ships) Act 1983 from monetary amounts to penalty units.
This conversion leaves the value of the penalties unchanged.
- Much of the background material for schedule 1 is an edited
form of information contained on websites of either to IMO or the
International Oil Pollution Compensation Fund.
- The oil tanker Torrey Canyon ran aground while
entering the English Channel. The ships tanks ruptured, spilling
her entire cargo of 120,000 tons of crude oil into the sea. This
resulted in the biggest oil pollution incident ever recorded up to
- The IMO, established under the auspices of the United Nations,
is the organisation responsible for developing international
standards for shipping safety, navigation and maritime pollution
issues. It has almost universal membership, with 162 States being
members. Australian joined in 1952.
- The Convention was updated in 1992 and is generally known as
the International Convention on Civil Liability for Oil Pollution
- Amongst other things, the tanker owner is not liable under the
Civil Liability Convention for pollution damage caused by: acts of
war or hostilities, third party acts or omissions intended to cause
damage, a 'natural phenomenon of an exceptional, inevitable and
irresistible character', negligence on the part of government or
other authorities responsible for navigation aids.
- The Civil Liability Convention requires tanker owners to take
out insurance or have some other form of financial security
specifically to cover liability for pollution damage.
- As is the case for the Civil Liability Convention, the Fund
only provides compensation or damage caused in waters out to the
outer limits of the EEZ.
- The Hon Mr Wilson Tuckey, House of Representatives
Debates, 11 December 2002, p 10084.
- 'Harbour oil spill costs culprit $5.5 million', Sydney
Morning Herald, 17 March 2000.
- According to the Bills
Digest for the Act, the main purposes of the 2000 amendments
were to 'extend to Australian importers a similar level of
protection to that enjoyed by Australian exporters in negotiating
with liner conferences and increase the power of the Minister to
deal with concerns about activities of shipping conferences which
may substantially lessen competition'.
- International Liner Cargo Shipping: A Review of Part X of the
Trade Practices Act 1974, Inquiry Report, 15 September
- 'The Commission s attitude towards Part X is well known. The
Commission does not consider that the arrangements permitted under
Part X are appropriate for the liner shipping industry or indeed
other sectors of the economy.' Excerpt from speech by Alan Fels to
Australian Shipping Pty Ltd, 22 July 2002.
- Explanatory Memorandum, p 25.
- The Hon Mr Wilson Tuckey, House of Representatives
Debates, 11 December 2002, p 10084.
- According to the Agreement contained the Act, the Commonwealth
provided a grant of $26 million.
31 January 2003
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