Canadian Maritime Law

Statutory changes increase liability exposures

Canadian Maritime Law

On June 22, 2023, Canada increased the statutory limits of liability of vessel owners and operators of vessels under 300 gross tonnage (GT) by 50% with respect to incidents in Canadian waters. Canada also broadened the responsibilities and liabilities for anyone who acts as the Authorized Representative (AR) of a Canadian flagged ship, especially with respect to safety on board and pollution.

These amendments were buried in Canada’s 2023 Budget Bill C-47.

Canada’s Marine Liability Act (MLA) governs the civil liability of vessel owners and operators for loss of life, personal injury, damage to property (including loss or damage to cargo) and damage to the environment. Canada applies the limits of liability contained in numerous international conventions to all vessels in Canadian waters. The MLA also contains a separate statutory limit for personal injury, death or property damage that is applied to vessels under 300 GT. It applies such limits to all vessels (including pleasure craft), operating in Canadian waters, which includes Canada’s many navigable lakes and rivers.

Claims for property damage are now limited to $750,000 and claims for personal injury or death are now limited to $1.5 million (plus interest from the date of the accident) if caused by a vessel under 300 GT. These increases are intended to reflect the inflation that has occurred since the original limits were set more than 20 years ago. The limits are considered virtually unbreakable.

Importantly, claims for wreck removal of a vessel are not subject to limitation and that exposure should be taken into account when a vessel owner is deciding on how much liability insurance to buy. The MLA incorporates a separate set of liability limits and liability insurance requirements for commercial vessels carrying passengers, provided that the Athens Convention applies.

In addition to amendments to the MLA, Bill C-47 also include significant amendments to the Canada Shipping Act 2001 (CSA), and the Wrecked, Abandoned or Hazardous Vessels Act (WAHVA).

The changes are stated to reflect the federal government’s ongoing investment in its Oceans Protection Plan, which attempts to address issues of safety and environmental protection in Canada’s waters. Most notably, Bill C-47 significantly increases fines for regulatory offences under the CSA and the persons who may be liable to pay the fines, and creates the Vessel Remediation Fund under WAHVA, creating a fund to manage end-of-life and hazardous vessels.

Many of the CSA’s and WAHVA’s obligations are directed to the AR of a vessel, as defined by the CSA. The AR is a very burdensome role with significant liability exposure.

Every Canadian vessel in waters must have an AR who is responsible under the CSA for acting with respect to all matters relating to the vessel that are not otherwise assigned by the legislation to any other person. The WAHVA also focuses on the role of the AR.

For Canadian vessels, the AR is its owner or bareboat charterer unless the owner has entered into an arrangement with a “qualified person,” under which they are responsible to carry out the role of AR. A “qualified person” is a Canadian citizen or permanent resident or a corporation incorporated under the laws of Canada or a province.

The responsibilities of an AR are extremely broad and focused on safety and compliance. The AR must ensure that the vessel and its crew are compliant with the CSA, including the development of safety programs and training and that they meet the obligations of WAHVA.

The owner of a vessel is bound by the acts or omissions of its AR in relation to compliance under the CSA and WAHVA. If any sort of casualty occurs, the AR will likely be called upon by the regulators to explain how they discharged their obligations under the legislation. If the owner of the vessel is not also its AR and charges are laid under the CSA or WAHVA, they are likely to be filed against the AR as well as its owner, even on a personal basis.

Bill C-47 increases the maximum monetary fine for certain offences under the CSA, which would also apply to the AR, from $10,000 to $25,000. As well, Bill C-47 makes the AR jointly and severally liable for these penalties alongside the owner of the vessel. So if a vessel has sunk and the owner is bankrupt, the AR may be the person left holding the bag.