The Shipowner and Oil Pollution Liability
P. D. Lowry *
The shipowner’s civil and criminal liability for oil pollution in
Canadian waters, was, on September 21, 1971 substantially increased
by the promulgation of regulations 1 which effectively brought into
force some of the provisions of those amendments to the Canada
Shipping Act 2 that now constitute Part XIX thereof. His responsi-
bility to the Federal Government for the costs of remedying the
effects of an oil spill will become a matter of strict liability where
before it was limited to little more than moral obligation. In like
manner, damages suffered by individuals and private cconcerns
will become recoverable from the shipowner or his insurers by a
statutory right of action with provision for guaranteeing payment
where previously such claimants had only common law remedies on
which to rely. The maximum penalty which may be imposed for
the wrongful discharge of oil from a ship has been increased twenty
times to the sum of $100,000.00.
The purpose of this writing, after reviewing the circumstantial
and legislative background which led to the introduction of Bill C-2 8,
will be to consider the weight and practical effect of the liability for
marine pollution which Part XIX rests with the shipowner in light
of the statutory failings which the amendments purport to remedy.
Background
Almost immediately following
the grounding of the Torrey
Canyon in March of 1967, national governments around the world,
in an atmosphere of international concern, began principally for the
first time to seek legislative clarification of their powers to both
prevent and remedy the possible disastrous ramifications of oil spills
which could threaten the environment of their coast and territorial
waters. Most nations enacted statutory provisions which were
intended only as “stop-gas” measures and then joined with the
Of the Bar of British Columbia.
1 Canada Gazette, Part II, Vol. 105, No. 19, Sept. 21, 1971, P.C. 1971-2005,
SOR/71-495.
2 R.S.C. 1970 C.S.-9.
3Canadian Bill C-2.
McGILL LAW JOURNAL
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United Kingdom in requesting that The International Marine Con-
sultative Organization (IMCO) give consideration to an international
convention on the subject. Although the conference which met in
Brussels in November of 1969 adopted two conventions 4, which if
ratified by the various member nations would present a unified
front in legislative terms to what is clearly an international problem,
the flurry of unilateral activity which followed in the wake of the
117,000 tons of crude oil which were grounded and in large measure
spilled on the Seven Stones Reef has prevailed and presently re-
presents the inconsistent and largely unworkable body of interna-
tional law governing oil spills at sea with which the shipowner and
his insurers are confronted.
Like other nations Canada introduced new oil pollution legisla-
tion 5 at that time but Parliament chose, in effect, to put the matter
in abeyance pending the outcome of the Brussels Convention and
thereafter this country took an active part in the efforts made to
prepare the draft conventions. Canadian representatives were direct-
ly involved in the conference itself and the Minister of Transport
himself stated Canada’s position in addressing the Brussel’s assembly
on the first afternoon of the meeting. However it is perhaps of in-
terest to note that of the seventy-three votes cast by the forty-nine
member nations who adopted the two conventions, Canada’s single
vote was the only negative vote cast by any nation.
On February 4th, 1970 having been unable to persuade the
international forum toward the adoption of articles which the
Canadian government considered adequate to cope with the problems
of oil pollution and with only “stop-gap” or interim legislation in
force in this regard, Canada faced and suffered perhaps the worst
maritime environmental disaster in the country’s history. A royal
commission was convened to fully investigate and report on the
grounding on Cerberus Rock in Chatabucto Bay and perhaps the
wording employed by the Honourable Mr. Justice Hart, the Chairman
of the Commission, in his final report best describes the extent of
the environmental devastation which affected almost two hundred
miles of Canada’s eastern coast.
… (The oil) stuck to everything it touched like a coat of wet paint an
eighth of an inch thick. The shores once lined with rocks kept antiseptically
clean by the action of the sea were now lined with black rocks destined
4 International Convention Relating to Intervention on the High Seas in
Cases of Oil Pollution Casualties (Public Law).
International Convention on Civil Liability for Oil Pollution Damage
(Private Law).
5 Canadian Bill S-23.
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THE SHIPOWNER AND OIL POLLUTION LIABILITY
579
to release a bit of their cover each time the temperature rose during the
years ahead…6
The principal cause of the Arrow’s grounding was established to
have been improper navigation on the part of the master who
brought his cargo of 16,000 tons of crude oil into unfamiliar but
well-charted waters at virtually full speed without taking the appro-
priate fixes sufficient to enable him to hold his plotted course7
However, the cause of the extent of pollution damage and the envir-
onmental devastation which flowed therefrom has been attributed
principally to the total lack of preventative authority and remedial
measures available both to the Federal government and to private
concerns.
With respect to the lack of legislation of a preventative nature,
the Commission found that government responsibility for oil spills
was limited to the regulations 8 made under the provisions of the
Canada Shipping Act 9 then in force which purported to adopt the
1954 International Convention for the Prevention of the Pollution of
the Sea by Oil. The Convention was designed to prevent or control
the deliberate or intentional discharge of oil into the sea and it did
not establish any standards of navigation, construction or equipment
nor did its adoption establish any authority for controlling the threat
of a major oil spill such as that which arose out of the grounding of
the Arrow.’0
The powers extended to what might be termed the “policing
force” (i.e. Steamship Inspectors) under the Oil Pollution Prevention
Regulations then in force were directed primarily at gathering
evidence to support prosecutions of ships’ masters and owners from
whose vessels there had been a wrongful or unlawful discharge of
oil. There was no provision for regulating the standards to be met
and maintained by vessels entering Canadian waters carrying large
quantities of pollutant substances or prohibiting their entry should
their condition be found to be sub-standard.
Final Report of the Royal Commission on Pollution of Canadian Waters
by Oil and the Formal Investigation into the Grounding of the Steam Tanker
“ARROW”. (Information Canada Catalogue No. 21-1970/2).
?Judgment of the Royal Commission Inquiry and Formal Investigation into
Grounding of the Steam Tanker “ARROW” (Halifax, July 1970).
8 Canada Gazette, Part. II, Vol. 102, No. 19, Sept. 17, 1968, P.C. 1968-1788,
9 R.S.C. 1952, c. 29 as amended by S.C. 1956, c. 34, s. 25 and S.C. 1968-69,
SOR/68-434.
c. 53, s. 23.
10 Op. cit., n. 6, at pp. 125 and 189.
McGILL LAW JOURNAL
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The condition of the Arrow, one of the oldest vessels in the
Onassis fleet, was found to be lacking both in terms of the naviga-
tional equipment carried on board and in terms of the operability
of significant pieces of the vessel’s auxiliary machinery 11. The Com-
mission cited these failings as having contributed both to the initial
grounding and to the extent of oil spillage. It recommended a new
international agreement governing the standards to be maintained
by vessels carrying pollutants on the high seas and the unilateral
promulgation of regulations in this regard for ships passing through
Canadian waters, as an interim measure, until such time as the
international forum could be convened 2 .
The obligation Canadian legislation imposed upon a master of
informing government authorities when there had been or was
likely to be a spill from his vessel was limited to reporting only
lawful discharges of oil which had occurred and were unavoidable
or intentionally made for the purpose of saving life or preventing
the immediate loss of the ship “.
When the Arrow grounded on Cerberus Rock at 0935 hours on
the morning of February 4th, 1970 there was no report made by
the master to any Canadian government authority until almost noon
and even then such was to the effect that neither the vessel nor any
of her cargo was in any immediate danger. In fact it was not until
after 1600 hours that the Arrow acknowledged her danger and
need for assistance
.4
The Commission viewed the time during which the Arrow twisted
and grated on the rocks, with her engines full astern in a vain hope
of being freed, as a loss of what are “crucial hours during a pollution
incident which may be perhaps the only time when some success-
ful avoiding action can be taken”. ” The final report insists that the
law must be changed in order that the decision as to whether or not
there is a potential hazard is not left to the master of the ship who
may very well tend to minimize his predicament.
In considering the efforts made to control the extent of pollution
and remedy the damage done both to the coastal environment and
11 Ibid., at p. 122. The radar set was malfunctioning and ought not to have
been used. The vessel was equipped with neither Loran nor Decca. The
emergency diesel generator had not operated for sometime prior to the
grounding.
12 Ibid., at p. 125.
13 Canada Gazette, Part. II, Vol. 102, No. 19, Sept. 17, 1968, P.C. 1968-1788,
SOR/68434, s. 6 (2).
14 Op. cit., n. 6, at p. 12.
1 Ibid., at p. 201.
No. 4]
THE SHIPOWNER AND OIL POLLUTION LIABILITY
581
to private interests, the Arrow Inquiry concluded that in addition
to the lack of experienced personnel at the site in the five or six
days immediately following the grounding there was as well an
absence of any firm authority properly empowered to direct and
co-ordinate the salvage and clean up operations.
On the second day following the initial impact section 495 (c) of
the Canada Shipping Act was proclaimed “. As such the section
empowered the Federal government to take charge of and if necess-
ary destroy the tanker in order to curtail the threat of pollution.
The proclamation was not conveyed to the government authorities
at the site until the following evening and by then such value as
there may have been in the government’s authority was for the
most part lost. The owners of the Arrow took advantage of the
Minister’s action to relieve themselves of the expense of salvaging
the vessel and her cargo which they had initially undertaken despite
the conflict in interest represented by potential claims for damage
to shore property. The charterer and owner of the cargo, although
fulfilling a moral obligation to render such assistance as they were
able with respect to abating and cleaning up that which had spilled,
was legally not in a position favourable to participating in deciding
the fate of the wreck.
Accordingly, the responsibility for the cost of his proclamation
fell directly upon the Minister, who having called the legislation into
force, found he had neither an agency prepared to deal with the
emergency nor the funds to finance such. The government had the
power it required but had little or no means of practically and
effectively implementing and exercizing its authority. As the Com-
mission points out, it was only through government intervention
that the people who lived and worked in the area could have some
say in the matter, but the government was not at the time in a
position to represent them “8; to do so would be to expend public
funds which Parliament had not at the time appropriated.
Although the government had a moral obligation to the inhabit-
ants of Canada’s east coast, it is doubtful that it had any legal right
of action against the owners of the Arrow. Curiously enough section
495 (d) of the Canada Shipping Act 19 had been proposed but never
enacted. The section would have made all expenses incurred by the
government in removing or destroying the vessel and cleaning all
16 Ibid., at p. 112
17 Ibid., at p. 39.
18 Ibid., at p. 114.
10 Ibid., at p. 121.
McGILL LAW JOURNAL
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property fouled as the result of the grounding a debt owed and due
the Crown by the owners.
However, the fact that the Arrow was for all intents and purposes
the principal asset of a Panamanian company would have made the
debt virtually uncollectable. Certainly the task of pursuing the
owners through the Panamanian courts would have rendered expen-
ses incurred by private concerns clearly unrecoverable.
It was then, in the aftermath of this environmental disaster
which occurred in circumstances of critical legislative deficiencies,
that the Government introduced Bill C-2 for debate in the House of
Commons. The resultant amendments to the Canada Shipping Act
have been enacted with a two-fold purpose: firstly, to provide broad
statutory powers directed toward the prevention of pollution by
vessels sailing in Canadian waters and, secondly, to ensure recovery
by both private and public concerns for costs and expenses incurred
in remedying the effects of pollution incidents and the damages suf-
fered therefrom.
Preventative Measures
The provisions of Part XIX relating to the prevention of oil
pollution and the regulations which have been promulgated
in
accordance therewith constitute a body of legislative prohibition and
control which to the shipowner represents the possibility of fines to
a maximum of $100,000.00 for each contravention or offence.
The previous lack of authority to regulate the flow and condition
of vessels carrying pollutants through Canadian waters has in large
measure been overcome by the provision for and appointment of
pollution prevention officers2O. The broad discretionary powers
extended to them under the Act 21 permit the control of both the
entry to and routeing through our waters of all vessels carrying
pollutants whether as cargo or only as fuel 22. Further, a pollution
prevention officer is entitled to require and be provided with in-
formation concerning the condition of the ship, its machinery and
equipment, the nature and stowage of the cargo and any other
2oCanada Shipping Act, R.S.C. 1970, c. S-9; An Act to Amend the Canada
Shipping Act, R.S.C. 1970, 1st Supp., c. 38; An Act to Amend the Canada
Shipping Act, S.C. 1970-71-72, c. 27, s. 740; Canada Gazette, Part II, Vol. 105,
No. 19, Sept. 21, 1971, P.C. 1971-2005, SOR/71-495.
21 An Act to Amend the Canada Shipping Act, S.C. 1970-71-72, c. 27, s. 740.
22 Ibid., s. 741 (c) and s. 741 (d).
No. 4]
THE SHIPOWNER AND OIL POLLUTION LIABILITY
583
information relating to the administration of this legislation 23,
providing his requirements are not unreasonable 4.
In the event that a spill does occur or a pollution prevention
officer receives information of the danger of such, he has the
authority to require all vessels within the area to report their
positions 25. As well he is empowered to order any ship to clean up
a pollutant whether or not that ship was responsible for the spill 26.
The Act does however provide that compensation will be paid by
the Crown for services rendered in compliance with such an order 27.
The regulations which came into force on September 21, 1971
were draw in accordance with two sections of the Act.28 The
first section relates solely to the authority of the Governor-in-
Council to make regulations prohibiting the discharge of pollutants
generally and the duty imposed on a master from whose vessel a
discharge does occur. The effect of the legislation in this regard is
clearly two-fold: first, to prohibit the discharge of oil or an oily
mixture2 9 subject to three very limited exceptions 30 and secondly,
to rest with the master of the vessel the heavy onus of notifying
government authorities of any pollutant which is discharged from
his vessel or even of the danger of such occurring 31. The maximum
fine of $100,000.00 which may be imposed on a master who fails to
report in contravention of the Act and regulations 3 2 in this regard
is of particular significance in view of the Royal Commission’s
criticism of both the prevailing statutory provisions and the conduct
of the master of the Arrow in not reporting his predicament sooner
than he did.
The second section of the Act under which the regulations of
September 21, 1971 were made makes broad provision under which
the Governor-in-Council can move to impose standards governing,
amongst others, the stowage, types and quantities of pollutants that
may be carried by vessels entering Canadian waters; the navigation-
al and handling equipment to be maintained by such vessels; the
number and qualifications of ship’s personnel and the procedures
23 Ibid., s. 741 (a).
24 Ibid., s. 763 (1).
20 Ibid., s. 741 (e) (i).
20 Ibid., s. 741 (e) (ii).
27 Ibid., s. 741 (2).
28 Ibid., s. 737 and s. 739.
29Ibid., s. 737 (1) and Regulation 5.
301bid., Regulation 6 (1).
3′ Ibid., s. 737 (2), s. 739 (1) (b) and Regulation 7.
32Ibid., s. 762 (1).
McGILL LAW JOURNAL
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and practices to be followed in loading, unloading, transferring and
carrying pollutants including methods of retaining oily wastes on
board. The section further provides for regulations prescribing the
classes of substances that are pollutants and the form of records
with respect to such that are to be kept on board all vessels to which
Part XIX applies.
At the time of this writing, however, the regulations in force
under this section, apart from classifying oil as a pollutant, prin-
cipally encompass and relate only to be provisions governing the
practices and standards to be followed with regard to the bunkering
and internal transfer of oil 4 and the records to be kept in respect
thereof 35.
The offence and penal aspects of this legislation are contained
in the Act itself. In order to enforce strict observance of the regula-
tions, the Canadian Parliament, in addition to imposing a maximum
fine of $100,000.00 for any unlawful discharge of oil 30, has also
imposed equivalent penal provisions for any contravention of those
regulations enacted for the purpose of preventing oil spills whether
or not a spill has occurred 37. Further, the same fine may be imposed
for failing to provide a pollution prevention officer with such infor-
mation as he may reasonably have required or to comply with any
order he was properly empowered to have made 8s.
Although there do not appear to have been any prosecutions
under Part XIX for other than actual oil spills, it is in passing
perhaps interesting to note that a charge can now be laid and a fine
imposed where a vessel is found to have internally transferred a
quantity of oil without plugging scuppers or, alternatively, without
placing a watch on the recipient tank even if there were no spill at
all 3. By the same token a master who fails to make a note of the
uneventful and routine transfer in the vessel’s oil record book could
be subject to the same penalty 40. On the face of the statute the fine
for either offence could be as high as $100,000.00.
Since the fine for wrongful discharge of oil has been raised from
$5,000.00 to its present maximum, the prosecutions in the Provincial
Court at Vancouver have resulted in fines ranging from a suspended
33Ibid., s. 739 (j) and (1).
34Ibid., Part III of the Regulations.
35Ibid., Part IV of the Regulations and Regulations 30 and 31.
36 Ibid., s. 761.
37Ibid., s. 764.
3SIbid., s. 763 (1).
39 Ibid., Regulation 20 and s. 764.
40 Ibid., Regulation 31 and s. 764.
No. 4]
THE SHIPOWNER AND OIL POLLUTION LIABILITY
585
sentence 41 for a spill which cost approximately $2,000.00 to clean
up to $10,000.00 42 for a spill which cost $840.00 to remedy. At least
in this jurisdiction there appears to have been very little consistency
thus far in the penalties imposed.
Unlike the Admiralty Court, the Provincial Court is without the
aid of assessors such that the shipowner must defend the charge
laid and speak to the sentence imposed before a judge who, for
the most part, is unable to appreciate the highly technical oper-
ations and workings of a ship’s engine room from where most oil
spills originate.
Fines tend neither to reflect nor relate to the cause or extent
of the spill but rather are imposed on general principles of “pun-
ishment and deterrent”. Again, without sufficient knowledge of the
world of commerce and insurance in which the shipping commu-
nity must operate, judges, in fixing penalties for relatively minor
infractions of the regulations, are being misled in the presumption
that the elements of punishment and deterrence are of any conse-
quence at all. In fact, it may well be argued that the imposition
of a fine for an accidental oil spill serves only to increase the cost
of clean up which is by and large a substantial penalty in itself.
The risk of small, inadvertent oil spills having relatively little
or no real detrimental effect is indeed great on even the newest
and best run vessels. The problem is one of international concern.
Shipowners and shipbuilders are endeavouring to reduce clean up
expenditures by taking such steps as they are able to minimize the
risk. Clearly, the imposition of fines in addition to the other ex-
penses which arise whenever a small spill does occur serves only
to add to the shipowner’s difficulties in an area where he has at
present only limited control.
It is perhaps of some significance that the penal provisions
of this legislation provide for the prosecution of either the person
responsible for the contravention of the regulations or the ship
itself.43 A ship may also be prosecuted for failing to provide in-
formation required by a pollution prevention officer or comply
with such order as he may have made.”‘
As such the statute appears to be the first instance in modern
jurisprudence where provision is made for the prosecution of an
inanimate object in the criminal courts. Matters of jurisdiction,
41 R. v. M. V. Turandot, Nov. 31, 1971.
42 R. v. M. V. Holly, Apr. 26, 1972.
43 Op. cit., n. 21, s. 761 and s. 764.
44Ibid., s. 763.
McGILL LAW JOURNAL
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service and appearance are covered by the Act 45 as well as the
procedure to be followed in proving an offence against a ship.40
However, evidentiary problems such as the admissibility of state-
ments made by the master and crew in a criminal or quasi-criminal
trial remain to be resolved by the courts.4 7
In large measure the Government’s concern for our coastal
environment which developed out of the Arrow’s grounding in
Chatabucto Bay has given rise to a body of legislation which if
properly utilized, should for the most part work effectively toward
the prevention of maritime pollution. However the criminal liabil-
ity of the shipowner for substantial fines which may be imposed
under the penal provisions of the Act for each contravention of
the regulations in the event of a minor accidental oil spill or in-
ternal misdemeanour where there has been no spill at all, may
well constitute unrealistic and largely unfair measures of approach-
ing one aspect of the problem for which the shipowner is presently
without solution.
Remedial Measures
The provisions of Part XIX relating to the remedies available to
both the Federal government and private interests following a pol-
lution incident or the threat of such arising have been drawn and
enacted with two considerations in mind. The first of these is the
provision of a clear right of action against the shipowner for dam-
ages suffered as the result of the carriage of a pollutant on board
his vessel and the second is the guarantee of payment should action
ensue.
All reasonable costs incurred by the Federal government in
repairing or remedying any condition that results from the dis-
charge of a pollutant from a ship 48 in addition to all actual losses
or damages suffered therefrom by either the Federal or Provincial
Crown or by any other persons,49 will by statute be recoverable from
451Ibid., s. 768.
46 Ibid., s. 766.
4 7 1n this regard the Provincial Court of British Columbia at Vancouver has
held in R. v. M. V. Aran, Feb. 2, 1972, (unreported) that in keeping with the
holding in The Soloway (1885) 10 P.D. 137, only statements made by a ship’s
master are admissible as evidence against the vessel’s owners and such must
be statements of fact, not opinion, (i.e.) what the master did, saw or ordered.
48 Op. cit., n. 21, s. 743 (1) (a) and (c).
49Ibid., s. 743 (1) (a) and (d).
No. 4]
THE SHIPOWNER AND OIL POLLUTION LIABILITY
587
the owner of the ship in an action in the Federal Court of Canada 0
if such is commenced within two years of the date of the discharge.
In keeping with the IMCO Convention 52 the shipowner’s lia-
bility will not depend on a proof of fault, but rather he will be
held strictly liable for both clean up costs and damages generally
unless he is able to establish one of four limited exceptions as
having been the cause of or given rise to the discharge: an act
of war or of God,53 an act or omission of a third party (for whose
conduct the shipowner is not responsible) done with the intention
of causing damage and the negligence of any person or govern-
ment in the improper installation and maintenance of navigational
aids.54 The only other exception will arise when the claimant is
by his own conduct responsible for the pollutant being discharged.5
While apart from these exceptions the shipowner will be subjected
to strict liability, the Act expressly does not preclude him from
maintaining and pursuing a right of recourse against a third party. 6
It is perhaps of some consequence that in preserving the Federal
government’s right to take charge of a potential pollution situation
and to remove or destroy the offending vessel and its cargo if necessa-
ry,57 having confirmed that the cost of such action shall be at the ship-
owner’s expense, 8 Parliament has seen fit not to afford any excep-
tions from strict liability for the costs incurred in this regard. The
result then is that if for any reason whatever a ship is deemed
a pollution risk, the Federal Crown may incur any reasonable
expense it considers necessary in dealing with the vessel and its
cargo (including the sale of such) and thereafter proceed against
the owner of the ship to recover its costs.
The IMCO Conference agreed to a limitation on liability related
to the tonnage of the vessel involved to a maximum of approxi-
mately $14,000,000.00 providing that the pollution incident was not
the result of the actual fault or privity of the shipowner.59 In like
5OIbid., s. 743 (3).
51 Ibid., s. 743 (4) (b). Article VIII of the IMCO Convention (private law)
prescribes a limit of 3 years.
52 Private Law Convention supra Article III.
53 0 p. cit., n. 21, s. 744 (1) (a) (i), “a natural phenomena of exceptional,
inevitable and irresistible character”.
54 Ibid., s. 744 (1) (b).
55 Ibid., s. 744 (1) (a).
56 Ibid., s. 744 (1).
57 Ibid., s. 738.
58 Ibid., s. 743 (2).
59 Private Law Convention supra. Art. V (1) and (2).
McGILL LAW JOURNAL
[Vol. 18
manner Part XIX makes the same provision,”0
the result being,
primarily, the insurable predetermination of the extent of a ship.
owner’s liability.
Having reviewed the nature and extent of the shipowner’s
statutory liability for pollution or for the threat of such being
attributable to his vessel, there remain two further significant
considerations in this regard, the first of which, for Canada, re-
presents a major step away from the agreement reached by the
IMCO Conference and thereafter incorporated in the Convention.
In addressing the assembly at Brussels in November of 1969
the Honourable Minister of Transport for Canada in stating this
country’s position said:
Canada takes the view that pollution results primarily from the nature of
the commodity and only incidentally from fault on the part of the carrier
in its transportation.6′
In keeping with this philosophy, presumably, despite such having
been rejected by the other member nations of the international
forum, Part XIX has been enacted to affix liability for pollution
damage (and for the threat of such) to the owner of the pollutant
cargo as well as to the shipowner . 2 The Act provides that con-
tingent upon the Governor-in-Council specifying by regulation the
class of vessels to which the provision shall apply, 3 the cargo
owner shall share liability with the shipowner on a joint and
several basis.
While such may be an unfortunate departure from the inter-
national scheme, it could well serve to make the oil industry
increasingly more cautious of the condition of the vessels em-
ployed to transport their cargo. To the shipowner, the provision
means that at least in Canadian waters one-half of the aggregate
burden of liability from marine pollution will be lifted from him
and his insurers.
The other aspect of liability which bears some consideration
is that in keeping with the articles of the IMCO Convention, 4
Part XIX appears to have stopped short of providing remedies
to either the Crown or private interests for costs and damages
60 Op. cit., n. 21, s. 744 (4) (c).
61 Minutes of the opening addresses of the member nations at Brussels Nov.
10, 1969.
02 Op. cit., n. 21, s. 743 (b).
63 At the time of this writing it would appear that no regulations having this
effect have yet been enacted.
64 Private Law Convention supra. Art. I (1).
No. 4]
THE SHIPOWNER AND OIL POLLUTION LIABILITY
589
to be suffered from the majority of oil spills by indirectly limiting
the shipowner’s liability to discharges from ships that carry pol-
lutants only “in bulk”. In effect the result is that the Federal
government will presumably be without any recourse to recover
the cost of cleaning up even a very large spill unless the offending
vessel is carrying a substantial quantity of a given pollutant.0 5
In that the majority of oil spills on our coastal waters do not
originate with tankers, private concerns will have to continue, for
the most part, to rely on their common law remedies of a suit
for damages framed either in nuisance or negligence which has
in the past proved largely ineffective and unworkable.
Unlike the preventative measures of this legislation which are
applicable to all deep sea vessels carrying pollutants through Ca-
nadian waters whether as cargo or as fuel, the remedial provisions
of Part XIX unfortunately appear limited to vessels transporting
pollutants in large quantity and as such the amendments to the
Canada Shipping Act fail to meet or come to terms with the whole
of the problem with which both the Federal government and pri-
vate enterprise are confronted.
It was earlier suggested that the remedial aspects of Part
XIX were enacted with two considerations in mind such that it
now remains to consider briefly the provisions relating to the
guarantee of payment to properly entitled claimants.
There are in this regard principally two measures which have
been incorporated in the Act. The first, although not yet in force, 6
is in accordance with the articles of the IMCO Convention,6 7 the
statutory obligation of a shipowner to have and maintain a form
of insurance or other financial guarantee sufficient to cover his
maximum liability within the limitations prescribed under the Act
(i.e. where the claim does not arise from a pollution incident which
was caused by the actual fault or. privity of the shipowner). 6s The
guarantee must be of such form as will permit a claimant to pro-
65 Op. cit., n. 21, s. 743 (1). Although the term “in bulk” appears not yet to
have been defined as provided by regulation (s. 739 (1) (p)) with respect to
this section it is significant that the regulations relating to the Maritime
Pollution Claims Fund have defined the term as being a quantity of pollutant
in excess of 1000 Tons (Canada Gazette, Part. II, Vol. 106, No. 4, Feb. 3, 1972,
P.C. 1972-185, SOR/72-33, Regulation 2 (2).
66 Canada Gazette, Part II, Vol. 105, No. 14,’July 28, 1971, SOR/71-321, An
Act to Amend the Canada Shipping Act, 1970-71, c. 27, Proclaimed in force
July 1, 1971 with the exception of s. 745 thereof.
07 Private Law Convention Art. VII (1), op. cit., n. 4.
68 Op. cit., n. 21, s. 745 (1).
McGILL LAW JOURNAL
[Vol. 18
ceed directly against the guarantor 69 who presumably may avail
himself of all defences available to the shipowner with the ex-
ception of the shipowner’s bankruptcy.
The obvious purpose of this measure is to overcome the prob-
lems faced by all claimants both public and private when forced
to claim against a “one asset shipowner” whose ship is a total or
unsalvageable loss.
The second means of guaranteeing payment contained in the
provisions of Part XIX is designed to provide relief where either
the pollutor is unidentified or his liability exceeds the limitations
of the guarantee he maintains. The newly constituted Maritime
Pollutions Claims Fund (the Fund) 70 is by regulation 7’ promul-
gated under the Act 72 to be built and maintained by a levy (pre-
sently 15) 73 on each ton of oil imported to and exported from
Canada. In keeping with Canada’s philosophy of resting the re-
sponsibility for preventing pollution at least in part with the oil
industry, the burden of the levy is to be borne by the owner of
the cargo and, of course, ultimately by the consumer.
When a claimant, whether he be the Crown or a private con-
cern, has employed his best efforts to the satisfaction of the
Administrator of the Fund in determining the identity of the pol-
lutor and recovering to the extent that he is able, he shall be
entitled to receive full compensation from the Fund in considera-
tion of his assigning his right of action or judgment as the case
may be.74
The remedial measures contained in Part XIX combine these
two forms of guarantees to overcome the primary obstacles of
jurisdiction, solvency and identity, which in the past have pre-
cluded claimants from pursuing their right to compensation for
damages and incurred costs and expenses which have been related
to and arisen from pollution incidents. The principal drawback
however stems from the express provisions ” that recovery under
these schemes is to be contingent upon the claimant being in a
position to maintain a right of action under the terms of Part
XIX. In other words, again both the Federal government and pri-
vate enterprise will be limited in relying upon these measures of
09 Ibid., s. 745 (2).
701bid., s. 746 (1).
71 op. cit., n. 65.
72 Op. cit., n. 21, s. 757 (1).
73 Op. cit., n. 65, Regulation 3.
74 Op. cit., n. 21, s. 745 (2) and s. 753.
75 Ibid., s. 750.
No. 4]
THE SHIPOWNER AND OIL POLLUTION LIABILITY
591
guaranteed payment to instances where their claim is against a
shipowner whose vessel was carrying a pollutant in bulk. Regret-
tably, Parliament has not seen fit to extend even the relief avail-
able under the Fund to cover and include the substantial portion
of pollution damages suffered by both persons and industry on
the coasts of this country.
In summary, it might be said that while at least in some
instances the preventative measures enacted as part of this amend-
ed legislation appear to rest with the shipowner criminal liability
of unjustifiable weight, the remedial measures stop short of af-
fixing civil liability sufficient to provide adequate relief to properly
entitled claimants in the majority of pollution incidents. The fish-
erman whose boat, net and equipment are fouled by a substantial
discharge of oil not being carried in bulk will now be in no better
position legally to recover any damages or expenses he has suf-
fered than he was under the previous legislation. The costs in-
curred by the Crown in cleaning up such a spill will under this
legislation in its present form be no more the concern of the
shipowner than such were recoverable from the owners of the
Arrow. However, the fine which may be imposed for even the most
minimal and accidental discharge, regardless of the absence of
any deterimental effects, is a meaningless burden and governed
only by the penal views of the particular judge before whom the
offending vessel appears.
Apart from this significant inconsistency and the hardship
worked on both shipowner and claimant thereby, the preventative
and remedial measures of the Canada Shipping Act as amended
with respect to the liability of the shipowner for oil pollution
appear for the most part an effectcive means of dealing with a
problem of international magnitude and concern on a unilateral
basis. However to the shipowner and his insurers the enactment
of Part XIX diminishes appreciably the advantages of interna-
tional legislative consistency which would have followed from the
ratification of the IMCO Convention by even a substantial number
of the member nations. In that the United States has also enacted
independent oil pollution legislation 76 it may well be that despite
Canada having adopted several of the articles of the Convention,
this country’s unilateral statutory provisions may well discourage
other nations from accepting the international format for prevent-
ing and remedying maritime pollution such that the shipowner will
continue to be confronted with a patchwork of legislation govern-
ing his liability in this regard.
76 Water Quality Improvement Act Pub. L. No. 91-224, (April 3, 1970).
