Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 4 - Evidence, June 10, 2009
OTTAWA, Wednesday, June 10, 2009
The Standing Senate Committee on Transport and Communications, to which was referred BillC-7, An Act to amend the Marine Liability Act and the Federal Courts Act, and to make consequential amendments to other acts, met this day at 6:32 p.m. to give consideration to the bill.
Senator Lise Bacon (Chair) in the chair.
[English]
The Chair: The minister is here with us this evening. Welcome, again, Minister Baird, to this meeting on BillC-7, An Act to amend the Marine Liability Act and the Federal Courts Act and to make consequential amendments to other Acts.
You are here today with Mr.Tim Meisner, Director General, Marine Policy, Transport Canada; Mr.Jerry Rysanek, Director, International Marine Policy, Transport Canada; and Mr.Mark Gauthier, Senior Counsel, Legal Services, Transport Canada. Mr.Brian Jean will be with us soon, I believe.
We welcome you, minister. We will hear from you first and then we will ask our questions. The floor is yours.
[Translation]
Hon.John Baird, P.C., M.P., Minister of Transport, Infrastructure and Communities: Thank you very much, Madam Chair. It is indeed a pleasure for me to be here on such an important occasion.
[English]
I am pleased to be here to present for consideration BillC-7, to amend the Marine Liability Act and the Federal Courts Act and to make consequential amendments to other Acts. In Canada, as in all major economies, trade is a significant driver.
The Chair: Slowly, please; we have stenographers here.
Mr.Baird: In Canada, as in all major economies, trade is a significant driver of the economy. Given our geography, it should not come as a surprise that marine transportation plays a major role in our overall trading system. Today, ships carry one fifth of Canada's exports to the U.S. and 95percent of the value of Canada's exports to other countries.
The bill before us today, C-7, will modernize the Marine Liability Act to protect our environment from the risks of marine transport in the following ways: by further protecting taxpayers against the financial consequences of an oil spill, which can be quite devastating; by requiring shipowners to maintain insurance to protect the interests of passengers while onboard Canadian ships; by removing onerous provisions that threaten the viability of the marine adventure tourism sector; and by putting Canadian businesses that supply provisions on credit to ships on an equal footing with their American counterparts when it comes to securing that credit.
These amendments are important. While this government has advanced the safety of marine transport by making necessary amendments to safety regulations under the Canada Shipping Act, these actions alone cannot eliminate all the risks related to shipping. When things go wrong and when accidents happen, Canadians expect their government to ensure that their interests are protected by modern legislation that includes proper compensation. They expect, and their government is of the same opinion, that polluters must pay for the damages caused by a ship or its cargo.
Since 2005, Transport Canada has consulted with those engaged in the marine industry, maritime law and insurance, and maritime-related tourism. These stakeholders have expressed support for these amendments contained in BillC-7. They recognize the importance of modernizing the act to tackle some of the realities we face today. They understand that the act must continue to protect Canadians and harmonize Canadian law with various international conventions. The government has listened and acted on those concerns.
This bill makes five major changes. First, the proposed amendment will protect Canadians against the financial consequences of oil tanker spills. We all know that a spill can be devastating both to the environment and to the economy. While Canada has not had a major accident on the scale of the Exxon Valdez, these amendments will ensure that there is sufficient compensation available to deal with those oil spills. This would mean increased compensation for fishermen who see their fisheries closed and for coastal communities who see their local business and economies suffering as a result of an oil spill. These proposed amendments mean that the compensation would come from polluters and, most important, not from taxpayers.
Today, the Marine Liability Act has a regime that would provide about $500 million in compensation to victims of such an accident, including compensation from the International Oil Pollution Compensation Fund. We are also proposing amendments to protect Canadians against the financial consequences of bunker-fuel spills. The current Marine Liability Act requires only tankers to carry insurance to cover their liability for oil spills. However, most ships carry large supplies of bunker oil for propulsion — which can cause significant damage. BillC-7 will enable implementation of the Bunkers Convention and allow Canada's ratification, thus ensuring that coastal Canadians are afforded the same level of financial protection against bunker-fuel spills as the coastal residents in other countries.
BillC-7 will also provide compulsory insurance for the protection of passengers. Every commercial airline today must have insurance to cover the liability for passengers. However, the same cannot be said for ferries and other commercial ships that carry passengers. Why should different rules apply? Our proposed amendments do change that.
The bill also ensures that the marine-adventure tourism sector, including whitewater rafting companies and sea- kayaking operations, will continue to be viable. Such marine-adventure tourism activities bring thousands of jobs and income to some of Canada's most rural areas — for example, in this part of country, outside of Ottawa, in Renfrew County. Today, the Marine Liability Act treats these participants in marine-adventure tourism as if they were passengers on any other commercial vessels, like large ferries that transport people and vehicles along the coastlines.
BillC-7 strikes the right balance, I believe. The proposed amendments will protect Canadian businesses that supply provisions to service ships. While shipping is an international industry, it can have a significant impact on local businesses. This is especially true for those Canadian businesses that supply goods and services to foreign ships that come to our ports from around the world. Most of these goods and services are sold on credit. When it comes to securing that credit, the Canadian ship supplier cannot rely on the maritime lien, even though an American competitor can enforce such a lien in a Canadian court. Often, the Canadian ship supplier cannot recover through a Canadian court even the smallest portion for the cost of goods supplied to a ship while an American firm can be paid in full. We have listened to the concerns of business that supply ships and we agree that this is simply unfair.
The bill has found support from all parties in the House of Commons. The Standing Committee on Transport, Infrastructure and Communities worked together to improve the bill after hearing from a number of stakeholders. The bill has broad support from stakeholders, and all those who are affected are pleased that it has become a priority for the government. The message they gave us was that we have struck the right balance.
I am pleased to be here before the committee and to answer any questions.
This issue of maritime law is an incredibly complex one. The department has well-versed experts in the field who conducted these consultations and have done a significant amount of work on marine law. I am pleased to have these experts with me today, along with Mr.Jean, my Parliamentary Secretary.
[Translation]
The Chair: Pursuant to clause12 of BillC-7, Canadian suppliers would be entitled to a maritime lien against foreign vessels in the event of unpaid bills. The Canadian Shipowners Association supports this provision, but is opposed to any amendment to BillC-7 that would allow a maritime lien against Canadian vessels. Do you intend to propose amendments to allow a maritime lien against Canadian vessels as well?
[English]
Jerry Rysanek, Director, International Marine Policy, Transport Canada: The provision in the bill specifically applies to foreign ships, and that was quite intentional, because the problem that the ship suppliers have with unpaid invoices involves largely foreign ships.
The Canadian Shipowners Association, to which you refer, is well aware of it and very concerned about any extension of that provision to Canadian shipowners. The reason it has not been done in the bill is that Canadian ship suppliers have many other means of enforcement if there is a case of unpaid invoices with respect to Canadian shipowners, and they do not have any problem. Hence, it applies only to foreign shipowners, and that is the intent.
The Chair: Members of the House of Commons Committee on Transport, Infrastructure and Communities amended the bill to add "stowaway'' to the classes of persons for which the limits of liability do not apply. That is in clauses 3 and 8.
Are stowaways a problem in Canada? Were there any disagreements in the past between companies and their insurance providers about stowaways?
Mr.Rysanek: I do not think there is an acute problem with stowaways. What we responded to in the bill was a potential misinterpretation of the bill, as the legislation did not distinguish between the treatment of stowaways and passengers. Passengers clearly are entitled to a very specific treatment. As the minister said, this has been done in aviation for a long time, and there is now a specific regime for liability with respect to passengers. However, the law was silent on trespassers and stowaways. To ensure that stowaways are not considered passengers and thus entitled to compensation as if they were passengers, the law now makes it clear that their entitlement is very limited and that they are not to be considered passengers, because they were on the ship illegally.
The Chair: Was there previously any problem with insurance providers about stowaways?
Mr.Rysanek: No, there was no specific problem to which we are responding, only to the absence of a clear provision in order to prevent future problems.
Brian Jean, Parliamentary Secretary to the Minister of Transport, Infrastructure and Communities: That was a clarification in response to a concern that was brought forward.
[Translation]
The Chair: Certain provisions of BillC-7, specifically sections1, 10, 12, 14, 16 and 18, will come into force 90 days after the day on which the act receives Royal Assent. Other provisions, such as sections 11, 13, 17, 19, 23 and 24, will come into force on a day fixed by order. When to you plan to have the other provisions take effect, specifically those concerning the Ship-source Oil Pollution Fund? That is where the problem lies.
Mr.Baird: Our priority is to act as quickly as possible, while ensuring that the necessary work has been done. Mr.Rysanek can give you a more specific answer.
The Chair: Do you have some specific dates for us?
[English]
Mr.Rysanek: To add to what the minister said, the date is largely driven by a process of ratification of international conventions. That is the reason we have those provisions. I cannot give you a specific date, but the process will advance as quickly as possible.
Senator Johnson: What are the international implications associated with amending the Marine Liability Act?
Mr.Rysanek: They are very positive. The heart of the bill, as I call it, is in the amendments dealing with pollution, particularly pollution caused by oil tankers, and in that sense we are introducing amendments that will bring into force in Canada a new international convention, which is the improvement of an existing regime of which Canada is already a contracting state or state party. With the amendment, we will join the international community that is ahead of us and increase the level of compensation from about $500 million per incident to about $1.5 billion per incident should the incident occur in Canadian waters. It is a very positive amendment.
Mr.Jean: In fact, I believe it ratifies two international conventions.
Senator Johnson: Is there any overlap in the application of the Arctic Waters Pollution Prevention Act and this act, the Marine Liability Act? What other statutes are intended to protect waters from pollution damage?
Mr.Rysanek: There is no overlap in terms of liability for any polluting incident, whether it happens south of 60 or north of 60. In other words, the Marine Liability Act applies in all Canadian waters uniformly, so there is no overlap in that sense.
With regard to prevention of pollution, there are different statutes that deal with ships' safety, particularly the Canada Shipping Act, but this statute does not deal with it. Liability, however, is an incentive to safety.
Mr.Baird: We are conforming to international law and acting in concert with our major trading partners, whereas the Arctic bill, which I understand will be getting Royal Assent soon, deals with extending domestic laws in the North.
Senator Johnson: How are various compensation funds managed in government?
Mr.Rysanek: There are two funds involved in this legislation. We are already a member of the international fund, and by adopting the new convention we will become a member of the higher level fund. We have a domestic fund as well, the Ship-source Oil Pollution Fund, which has been in existence for many years. They operate in tandem to provide compensation in case of an incident.
Mr.Baird: The first one does not operate within government. The second one operates within government but in a separate account. It is separate from the Consolidated Revenue Fund. As you would expect, Finance is not big on this, but it is important because it is not part of that Consolidated Revenue Fund. It should be there in case of an emergency. That would ensure that taxpayers' dollars are not mixed, which I think is one of the centrepieces of polluter pays.
Mr.Jean: It is a $1.5-billion maximum, and the way it works is shipowner's liability first, then the International Oil Pollution Compensation Funds — IOPC — and then a supplementary fund.
Senator Mercer: I spoke in the Senate in favour of this bill, and I received a very good briefing from your officials, which I appreciated.
How will ferry providers, such as Marine Atlantic and BCFerries, the two largest ferry providers in the country, recover the cost of the insurance that we are asking them to have? I am particularly concerned about Marine Atlantic, being from Nova Scotia.
Will the costs be passed on to the users, in particular in Senator Cochrane's province, which relies so heavily on products coming across marine Atlantic to Newfoundland and Labrador?
Mr.Baird: We know from Pacific Canada with the B.C. ferry disaster how important insurance is.
Mr.Rysanek: It is important to take note at what the legislation that is before you is doing. It is not changing the exposure of the shipowners or changing the liability; they already have it in the law. The vast majority of them are already insured against that liability. That is what prudent owners would be expected to do. For them, this bill has no news. They have been liable for a long time to specific amounts. They are well covered and the insurance costs that they pay have been already handled by them.
This bill will address the small minority problem — that is, in the absence of compulsory insurance, some are perhaps not insured and are saving money on premiums because they may not be fully covered. There will be a certain impact for them as a result of the legislation; they will have to look at the insurance cost and will have to deal with it. That is what compulsory insurance is all about.
Senator Mercer: I am not a big fan of insurance companies. I sometimes think it is legalized extortion. However, if we are going to force people to have insurance who might not have insurance now, how do we protect them against insurance companies who will take the opportunity, because now this is being forced, to inflate the rates for coverage?
Mr.Baird: With the relevant superintendent of financial institutions, depending on the provincial or federal level where it is regulated, and depending on the kind of shipping there is to insure, there is relative consumer protection. The existing consumer protection we think is fairly decent.
Mr.Rysanek: I would agree with that. It exists already in aviation; it applies to all airlines, small or large. The insurance markets are fairly competitive and competition will take care of it. There are no bones about it. Compulsory insurance means you must have it to operate.
Senator Mercer: My comment is on the protection of suppliers — which is an excellent provision. In my hometown, there are big suppliers to shippers. This is an excellent coverage for them. We appreciate that being in the bill.
Going back to the chair's question on stowaways, her question, which did not get answered, was whether stowaways are a problem in Canada. You answered another technical aspect, but you did not answer the question about whether we have a stowaway problem. On occasion, I know we have; in my hometown of Halifax, we have had that problem. Is it seen generally by the department as an ongoing problem?
Mr.Baird: We do not see it as a huge one. The stowaway issue came up in committee from one witness, so I think the standing committee in the house decided to clarify the issue in its amendments. It was a government amendment that was brought forward. I do not know whether we keep records in terms of the number of stowaways. We can look into that and respond back.
This specific part deals not so much with stowaways but rather with passenger liability, and it is not a bad amendment to clarify who is and is not a passenger. Obviously, if someone is illegally aboard a ship it is difficult for the carrier.
Senator Mercer: I appreciate that. It was more for information than anything else.
Mr.Baird: We will get a note back to the committee.
Senator Cochrane: The marine adventure tourism industry is thriving in my province of Newfoundland and Labrador. We have whale watching, sea kayaking and boat tours that are important attractions, especially during the summertime.
How will this legislation affect this industry? What will be its impact on the people who participate in this industry? I am also thinking about the owners, the operators and the clients.
Mr.Baird: There is probably a big fundamental difference between a passenger, for lack of a better word, and, I will say, a participant, in the three examples you cited. For whale watching or boating, an individual is a passenger, whereas in kayaking, one of your other examples, as well as in whitewater rafting as I discussed, the individual is very much a participant — neither an employee nor a passenger; the individual would fall in the middle. This is huge, not just in Newfoundland but also in Eastern Ontario where I hail from, and it has been a significant source of concern.
Mr.Jean: I can advise the committee that we heard evidence particularly that, if we did not exclude this particular group of individuals running businesses, they would not be able to continue in business. We heard that it would absolutely devastate the community of tourism.
Mr.Baird: An individual would assume a significantly greater amount of liability as a participant versus a passenger. That is why it is called adventure tourism — in other words, extreme tourism. There is a difference between going on a plane and being a skydiver. There is a difference between being a passenger on a tour boat and being a participant in kayaking. We hope this will send a message to that sector that they will have greater certainty for long- term viability.
We do not pay enough attention, in my judgment, to tourism. We have great potential, whether in Newfoundland, in Eastern Ontario or up in Nahanni, where we just expanded the park. There is great potential and hopefully this will allay some of the fear the industry legitimately had.
Senator Cochrane: Have you heard from the operators and owners of the tourism industry?
Mr.Baird: Yes. In this regard, they seemed to be pleased and supported this part. I would be dishonest if I did not say that they did not have a number of other concerns at Transport Canada, but in terms of liability issues, this was just changed about eight years ago, where it caused a problem.
Senator Cochrane: What about oil spills? We have had a lot of problems in my area with oil spills over the years. An oil spill results in the death of birds; it does all kinds of damage. I do not think anyone admits they are doing it. There has not been much of a force put on to prevent it from happening.
Mr.Rysanek: There is civil liability for oil spills, and the provisions are not new in terms of Canadian law. We have had this legislation for a long time.
The changes are raising the level of compensation for any oil spills, including any cost of environmental damage, so in that sense there will be more money. However, it is not safety legislation. This is liability legislation.
Mr.Baird: I hope the link is strong, such that if the liability is greater, it means you will have a direct cost or the insurance for your operation will be more, recognizing the risk. I hope we are being clear with respect to liability and raising the amount of compensation that can be claimed. No amount of money can compensate for the damage done to the environment. We can only try to do our best to tackle the challenges caused by it.
Senator Cochrane: Do you not agree that there should be more surveillance?
Mr.Baird: Sure.
Mr.Jean: I had the opportunity to travel to Nova Scotia and visit one of the navy bases there, to see exactly what technology was available. This was several years ago. My understanding at the committee level as well is that the technology is moving forward rapidly in relation to Canada having the ability to discover oil spills. They can see it from satellite or from other aircraft, and there is some ability to share that information from the United States as well. We are moving forward quickly with that kind of technology in the navy.
Senator Cochrane: Is there more enforcement then?
Mr.Jean: There is more ability to observe and, as a result of investments by this government, more helicopters and ships that will be on the waters to patrol the area and catch up to the people causing these problems.
Senator Cochrane: Are you saying that that is already there?
Mr.Jean: I am saying the technology is moving forward. They do have the technology — I was able to observe that first-hand at one of these navy bases. We invested in some frigates and helicopters in the North and in other parts of Canada to be able to observe and catch those people responsible for a spill afterwards. That was one of the difficulties in the past. Even if a spill was observed, they were not able to follow through and find these people.
Senator Cochrane: I will be watching for that. Thank you.
Senator Wallace: It is good to have you here, Minister Baird. You have become a weekly guest. We are always happy to see you.
I would like to comment on the proposed amendments to the Marine Liability Act — in particular, the two international conventions on liability and compensation that relate to marine oil pollution damage — to see what your reaction to that might be.
First, looking at the first convention, which deals with the supplementary fund protocol of 2003, etcetera, it is dealing with increasing the current level of compensation for oil pollution damage by tankers in Canada from $405 million to $1.5 billion. When I look at that, it has particular meaning and relevance to me, being from Atlantic Canada, from New Brunswick, Saint John, for that matter, on the Bay of Fundy. We have in Saint John the largest oil refinery in the country, and all the crew that arrives at the refinery arrives by ship, by tanker. In Newfoundland, with the offshore crude wells, a number of crude ships are in that area as well.
That provision, to me, is highly relevant, and I compliment you for that amendment. We all know the problems that can arise from oil pollution. Having adequate coverage is absolutely essential.
My understanding is that by agreeing to become part of this convention, it would put us in the right place in relation to other countries and what they are doing in response to having adequate funding in place for compensation.
That is my reaction to it. I am wondering if there is anything you wish to comment on.
Mr.Baird: An additional $985 million in compulsory liability can only be positive. It is important now in Saint John. They are building a new refinery there, which will even make it more important.
Senator Wallace: Yes. I think many of the corporations have insurance that would be perhaps up to those levels, but for those who do not, that is very important.
Mr.Baird: With respect to environmental damage, you can try to put a dollar amount on it, but in many cases you cannot put a dollar amount on it. There was an oil pipeline rupture in Burrard Inlet in Burnaby, in British Columbia. When you have visited an agency that deals with the effects on wildlife and have seen a duck soaked in oil, there is not a dollar amount you can put on that. It is outrageous, not to mention the shoreline and fish habitat.
Senator Wallace: Certainly moving it up to $1.5 billion is a huge step in the right direction.
Mr.Baird: It raises the bar.
Senator Wallace: The other convention I would comment on as well is the one that deals with pollution that can result from the bunkers on ships. There now will be compulsory insurance in place that requires the shipowner to have the coverage in the event of a bunker spill. I was thinking of your appearance two weeks ago when we talked about expanding the boundaries of our Arctic marine areas and about global warming. There is no question that, as time goes on, there will be more tankers, not crude tankers but tankers and ships in the Arctic, and probably not only more of them but larger ones. There is no question that the amount of bunker fuel that is on any ship can be a huge issue in itself. It struck me that this provision ties in very nicely with that piece of legislation and provides not only protection in all waters of Canada, but also will be very relevant in the Arctic.
Mr.Baird: This comes full circle to the comments that Senator Cochrane made. The effect of an oil spill on an oil tanker is gigantic, because that is the commodity. Bunker fuel, of course, is exponentially more likely to be a problem. That relates to the concerns that Senator Cochrane raised. An extra $100 million hopefully will send a strong signal that there will be greater public liability and that, as a participant in the marine industry, you have to step up to the plate with insurance.
Senator Wallace: Adjust to the times as they change, which clearly this is doing.
Mr.Baird: It does not replace the need for prevention efforts.
Senator Fox: There is some change to the governance of the Ship-source Oil Pollution Fund. I would like to know how the contributions to the fund are determined and whether the amount currently held in the fund gives you comfort. The obvious question in this day of asset-backed commercial paper is this: Have the fund's assets been well managed to date?
Mr.Rysanek: The Ship-source Oil Pollution Fund was established a long time ago, in 1973, right before Canada joined the international convention. Right from the beginning, it was decided that the funding will come from oil companies, not from taxpayers, and the seed money was provided through a levy imposed on oil imported, or received in Canadian ports, and it was paid by all companies who imported the oil.
The collection of the levy was stopped in 1976, when the amount reached about $36 million and there were no claims. Since then, the seed money, the basic amount collected from industry, has grown through accrued interest to the current level of about $360 million, largely because, fortunately, the fund has not been used or has not been exposed to too many claims over the years.
The fund is administered by an administrator appointed by cabinet, who reports to Parliament through the Minister of Transport. The Ship-source Oil Pollution Fund is located in Ottawa and it submits annual reports, through the minister, to Parliament.
Senator Fox: Has the fund been well managed to date? Have you had any problems? Many other funds, from university funds to endowments, have had a lot of problems. Has this fund survived the turmoil?
Mr.Rysanek: There have been no problems over the years. The changes in governance were thought necessary. There has not been any change to the governance of the fund since it was established in 1973. Some improvements are introduced in this bill, particularly regarding filing of annual reports and financial statements and regarding audit of the statements. Its funds are in a special account in the Consolidated Revenue Fund, and the fund is not investing its money in any way, shape or form. It is not exposed.
Mr.Baird: We will provide the full financial performance of the fund, senator. It is a fair question.
Senator Fox: Looking at the stakeholder reaction in the Canadian Bar Association, National Maritime Law Section, I see that they had proposed that a new criterion be added to one of the sections requiring the adventure tourism industry to have a seaworthy ship at the commencement of the voyage. That seems to be very reasonable. You were talking about the tourism industry before. We want to have more tourists here, but having a guarantee or an undertaking that the adventure tourism ship is seaworthy at the commencement of the voyage seems to make sense.
Mr.Baird: When you are dealing with whitewater rafting, you are dealing with an inflatable raft, at least in Eastern Ontario, in large measure.
Mr.Jean: Actually, the committee considered this particular aspect thoroughly and determined from evidence from the largest adventure tourism operator in Canada, which is not far from the capital, that indeed they would not be operating unless they were seaworthy, and that the ability to get insurance for them, I think was the actual testimony of this particular gentleman, would be impossible if they were not operating on that basis. He actually gave evidence that the group to which they belong ensures that each and every adventure tourism operator has seaworthy vehicles, because if they did not, they not would not be able to qualify for the insurance in the first place. That was more or less our evidence.
The other problem is how to determine seaworthiness and enforce on that on a particular basis. The groups themselves seem to be taking care of that issue. I could find more information, but we did spend considerable time on that. If you would like, senator, I can find the blues and forward them to the committee chair for distribution.
Senator Fox: My last question is on limits of liability to passengers. Why did you choose $350,000? Is that an international norm? Why not leave it to tort law under Canadian law to determine the value of an individual's death or injuries for an accident occurring in these circumstances?
Mr.Baird: It is probably a matter of balancing off insurance, much like we do in the auto insurance sector, by capping liability. We have a mandate for insurance. You have to cap the liability; otherwise, it would be tremendously difficulty to get it, much like when you have auto insurance.
Mr.Rysanek: I have a small addition. We were inspired by aviation, which has uniformity of limits and uniformity of applications.
Senator Fox: Are the limits comparable to the Warsaw Convention limits for air travel?
Mr.Rysanek: They are comparable, although in our case, they are inspired by the international convention on marine transport, not aviation transport. They are more or less comparable.
Senator Fox: I always have trouble with the limitation on liability. If there is a wrongful death due to gross negligence, the operator should pay whatever the value of that life is.
Mr.Rysanek: I could defer to our counsel. There are provisions in the law that allow for breaking of the limit under certain circumstances.
Mr.Jean: Indeed, the Supreme Court of Canada has indicated a particular limit from time to time on tort law. I believe that $250,000 was the maximum, except the loss of facilities, etcetera. The Supreme Court has limited it so that we do not become like the United States, in essence, with their tort system.
Senator Housakos: Minister, can you tell us what laws are already in place that would prevent oil spills from happening in the first place?
Mr.Baird: There are a considerable number of domestic and foreign conventions. I will turn it over to Mr.Rysanek.
Mr.Rysanek: Canada is one of the early members of a very important convention adopted by the International Maritime Organization called the International Convention on Oil Pollution Preparedness, Response and Co- operation (OPRC), 1990. There are established centres across Canada with contingency plans prepared to deal with major pollution. They have the equipment, the know-how and the expertise. Canada is well advanced in terms of its capability to respond to pollution.
Of course, another part of pollution is the application of safety regime to the ships, and we follow fairly vigorously international conventions adopted by international maritime organizations. My safety colleagues would be better able to deal with that question.
Senator Housakos: With regard to the maritime lien against foreign vessels, how big has this problem become for Canadian suppliers to supply foreign vessels? As well, how would this help the Canadian supplier attract payment from foreign vessels in a timely manner? I know the Americans have had a similar law for a long time. For example, if a company is seized in a port in Boston or New York and is taken to court because it has been delinquent in respect of a supplier and not paid for materials or services and the ship is impounded, what happens? How would this law apply in protecting Canadians in the U.S. or other jurisdictions?
Mr.Rysanek: There are legal and policy aspects to your questions. I would suggest that the legal aspect be taken by Mr.Gauthier.
Mark Gauthier, Senior Counsel, Marine Law Secretariat, Legal Services, Transport Canada: Thank you, senator. In effect, this particular provision will achieve a form of reciprocity with the Americans. In the situation that you have described, under current law the American courts would look to whether there is a recoverable lien under Canadian law and they would apply it. They would find under today's law that there is no such lien and, therefore, the Canadian supplier would be disadvantaged.
However, once this bill passes and there is a recognized maritime lien for ship suppliers, the reciprocity or the equivalency will be established between a matter arising in a court in the United States or in Canada.
Mr.Rysanek: From a policy point of view, why has this protection been brought forward? The ship suppliers have made the case for many years that this imbalance between the American and Canadian law causes them to lose when an action is pursued by American ship suppliers on the same ships in Canadian courts. The principal reason was to fix the imbalance. The actual losses they suffered vary. We were given evidence that it ranges from fairly small claims to amounts in the millions of dollars when there has been a long-standing or large purchase made by shipowners.
No one is keen to provide evidence of being taken to the cleaners, if you will pardon the expression. Certainly, it was a serious problem, in particular because they were not treated in the same way as their U.S. counterparts.
Mr.Jean: If I may say, senator, we heard evidence that this would give great comfort to those people who are honest and doing proper business; those people who are not will no longer deal with Canada. We do not want them anyway, so it provides security to the marketplace.
Senator Housakos: What happens to the shipping companies and the passenger ship lines that come to Canadian ports that do not have the proper documentation and liability insurance? What will be the repercussions?
Mr.Rysanek: Under our safety regimes, they should not be here. We have provisions through vessel traffic management that the ship certificates and other documents should be provided. If they arrive and on evidence it shows that they did not have, for example, the compulsory insurance certificates, penalties will be levied. Mr.Gauthier may deal with that in detail.
The Chair: Minister, it is 7:15 p.m.
Mr.Baird: Thank you for the Senate's consideration. I am certainly available any time after the committee if any senator has a specific concern. At the wish of the committee, I will return.
The Chair: Other questions, senators?
Thank you, Mr.Jean and officials from Transport Canada.
(The committee adjourned.)