NS Reporting Requirements David Baker UK Some practicalities - the UK experience to date National HNS Reporting Requirements David Baker UK Some practicalities - the UK experience to date

Convention Requirements Article 21 – requires Contracting State to identify persons liable Article 43 – requires that when ratifying the Contacting State submits to the IMO details of quantities of HNS in preceding year

The national legislation should :  Provide for introduction of the reporting system prior to ratification  identify the principal receivers and (as applicable) physical receivers, the different HNS receipts and the quantities  provide a means to determine annual fluctuations, eg set a national threshold

Industry concerns  “The financial obligations will prove a costly burden on storage companies”  “Storage companies are generally just third parties with no responsibility for carriage by sea”  ”Most HNS stored will come from non states parties or will be destined for such states”  “Liable companies will fragment to avoid financial obligation”

Further industry concerns  Practicalities of passing on the financial obligations to principal receivers  Lack of contracts with principal receivers, eg port authorities  Liability when the principal receiver is not located in a contracting state

Various scenarios  The following scenarios focus especially on the financial responsibilities when HNS is handled through intermediaries  which raises the most complexities under the Convention

Scenarios Receiver based in a State Party Principle based in a non-State Party Agent is liable HNS Receiver based in a State Party Principle based in a State Party Principle is liable HNS CARGO PHYSICAL RECEIVER DESIGNATED PRINCIPLE LIABILITY

Scenarios continued... CARGO PHYSICAL RECEIVER DESIGNATED PRINCIPLE LIABILITY t Receiver based in a non-State Party based Principle based in any State Convention does not apply: No liability HNS Receiver Receiver based in a State Party State Principle based in any State Owner of LNG prior to discharge is liable LNG

Final 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 liable

In practise  Storage companies should be able to pass on the liability and, if necessary, apply liability on the principal receiver by contract  The liability only arises when the HNS is received from ships in a contracting state  The level of liability will arise only after incidents  The shipowner’s level of liability should cover many incidents – a minimum of 10 million SDR

Practicalities of reporting It will be necessary for national rules to apply :  a statutory obligation to report on the initial or intermediate receivers as well as the obligation on the principal receivers to pay levies  This will provide the ‘audit trail’ to monitor transhipments and to apply the financial obligations on the ultimate receiver

Summary The state will have to:  determine the national regulations best suited to the trading pattern,  provide a practical regulatory system which will ensure equity and certainty of meeting its reporting obligations, and  ensure the Fund is able to raise levies against the appropriate receivers

Summary (continued) Finally, the state should consider:  Applying the simplest practical definition of ‘receiver’ to avoid prolonged audit trails  Implementing a statutory reporting system with lower threshold than those set in the Convention.