HL Deb 09 February 1971 vol 315 cc33-47

4.0 p.m.

House again in Committee.

LORD KENNET moved Amendment No. 3: Page 2, line 29, leave out paragraph (b).

The noble Lord said: This Amendment seeks to delete paragraph (b) in Clause 2, which says that if the person liable can prove that the damage was due to anything done or left undone by another person … with intent to do damage he is not liable. Of course, this, too, is in the Convention, as the noble Lord could tell the Committee; and I am sure that he will tell the Committee that it is a very reasonable exemption from liability. So it is, on the face of it, and if one were to think in terms of an analogy with one's own private life one could instance spilling petrol on the road, or a motor accident, and one would indeed think it right that one should not be held liable, if the harm was done with malice and intent by someone else.

When we are dealing with possible pollution damage on such a colossal scale as this, running into tens of millions of pounds and affecting several countries at the same time, I believe that it might be justifiable to look at it in a different light. This is a question of the mad bomber, or the mad person with a one-man torpedo, or plastic mine, which he sticks on the bottom of a tanker on purpose; or a mad lighthouse keeper who deliberately shuts off the light when a super-tanker is passing. We are dealing with madness. Is not the risk of such a mad action a very calculable one? I should have thought that it was.

Tanker owners and oil companies know perfectly well the incidence of such actions over recent years. They would be able to make a reasonable forecast of the probable extent in future and get perfectly good insurance cover against the risk for a not very greatly increased premium. If that is so, as it may very well be, there is no particular reason to leave this loophole in the liability under the law of a nation which has very much at stake in pollution matters, as we have.

I move this Amendment in the same tone of voice as I moved the other two; not, of course, intending to press them at this stage, but to ask whether the Government would not be prepared to go ahead with the Convention in this respect; whether they have consulted shipowners and the oil companies about the possibility of so doing; and whether we can come back to the matter at a later stage.

LORD HAWKE

I would not suggest for a moment that Her Majesty's Government should go beyond the Convention, but I do suggest that the Convention must be a pretty silly looking affair if you come to consider that this is not a Bill for punishment but a Bill for indemnification. To the people who suffer the pollution loss it does not matter whether the cause of the accident is one that the shipowner could have prevented or one that he could not possibly have prevented. They want to be indemnified and, of course, insurance is a method of indemnification. I should not think that it would add greatly to the insurance premium to cover these extremely rare or exceptional, inevitable and irresistible actions by parties not being a servant or agent of the owner "— and so on. It is a matter of calculation, and for the people damaged by the pollution it is a very unsatisfactory Bill because in all these events they are going to get no compensation whatsoever. Therefore I submit that the Convention, having arrived at this particular thing, has been muddling up punishment and indemnification and has produced a pretty daft result.

LORD DRUMALBYN

I certainly cannot complain of the logic of either of the noble Lords who have spoken, but I am afraid that again I must come back to the fact that we are here trying to pass preliminary legislation which will enable us to ratify a Convention. I am sure that the arguments put forward by my noble friend and the noble Lord, Lord Kennet, were rehearsed at great length in arriving at the Convention. But the Convention did arrive at these exceptions to the rule of strict liability, and it is very difficult to see how we can depart from them.

I think that the noble Lord himself recognises that these exceptions are, so to speak, pretty far-fetched. Apart from war, hostilities, insurrection and so on, the whole of the other exceptions are pretty far-fetched, so they are unlikely to affect us in any considerable manner, at any rate in this part of the world. There could be sabotage or madness—sabotage may be a form of madness, but it is pretty deliberate madness sometimes. That kind of sabotage would be more in line with civil war, an act of war, and hostilities and that sort of thing. I think one can justify this in our own terms—this particular exception, a deliberate act or omission by a third party with intent to cause damage. One can justify it in terms that it is close to what is known in law as the rule in Rylands v. Fletcher, which imposes a form of strict liability on the occupier of land for damage done by the escape of things he has brought on to the land. The exceptions there to that rule of law—that is, acts of God and the action of a third party—are practically the same as we have here in the Convention.

I take the point, and I sympathise with the noble Lord's argument that in this case it is really on a much bigger scale, though that would not necessarily be so. One can think of examples where the rule of Rylands v. Fletcher might apply on a big scale within our own country. All the same, the fact that it is well precedented so far as our own law is concerned is in itself a justification for adhering to the Convention decision in this matter.

There is, perhaps, another reason that I ought to give to the Committee, because it may crop up again later on. It is that this is the sort of Convention where it is particularly important that the law of all the member countries should be identical because occurrences may affect more than one country, as it did in the case of the "Torrey Canyon". Proceedings may be taken in either of those countries. Wherever the deposit in respect of liability or security is made there the case will be heard. In the other country the result will be registered, and the funds will be distributed between the claimants in the two countries; and it will all be on the basis of one common law. So it really is important that we should stick to the terms of the Convention. Unless we do so, it will be difficult for us to ratify the Convention and get the benefit of it. I am sorry, but I am unable to accept this Amendment.

LORD KENNET

Between now and the next stage I will read Rylands v. Fletcher if the noble Lord, Lord Drumalbyn, will do something that I shall come to in a moment, which would make it "fair dos." I do not know the case, and it may be that what I am about to say is irrelevant; if so, I apologise in advance. But one must be careful about carrying over provisions in the law which are very appropriate when a man is doing something which he has to do because he earns his living in that way. If a farmer has a silo filled with some noxious substance and if a mad bomber comes and blows it up which inflicts damage on his neighbour, the law appropriate to that is one sort of law, because the farmer is a farmer, and that is the way he earns his living. The oil tanker companies, though they have to earn their living, do it on purpose. They exist for the sole purpose of carrying these vast quanties of oil. But they are not bound to carry these vast quantities around. They could very easily carry smaller quantities more frequently in smaller ships. It is solely their own choice, because it is more profitable for them to go round the world in supertankers. The Parliaments of the world therefore have to introduce legislation like this to cover what may happen if the tankers are wrecked.

The noble Lord said that the law in all Convention countries had to be identical on this point. Could he let us know at the next stage whether the United States and Canadian law allow these exemptions and is likely to continue to do so? I lay particular stress on Canadian law. If this is not so, then his argument about the necessity for uniformity in all Convention countries goes by the board and can no longer be adduced. If it is so, then I think that this is a powerful matter. Secondly, the noble Lord said that our ratification of the Convention could be challenged if our law went ahead of it in any respect. I wonder if that is so.

LORD DRUMALBYN

Perhaps I did not make myself quite clear. I said that it is not our practice to ratify unless our law is in conformity with the Convention. Of course, the same would apply to other countries. The United States, if its law was not in accordance with the terms of the Convention, could not ratify it and could only do so if it brought its law into line with it.

LORD KENNET

The noble Lord knows that there are penumbras in this matter and that it is very difficult to decide whether a given provision in national law will or will not lay one open to challenge by another party to a Convention on the validity of one's ratification thereof. I wonder whether the deletions I am suggesting here are such as to lay us open to the likelihood of challenge on the matter of our adhesion to the Convention itself by other member States. If the noble Lord says that that is so, then of course I will withdraw my Amendments, but if he is not yet, as I suspect he is not yet, in a position to state categorically that it is the fact, that there would be an appreciable risk of actual challenge by other Convention signatories if these deletions were to be made—

LORD DRUMALBYN

I did not say that. What I said was that we could not ratify—I mean ratify without reservations—unless our law was in accordance with the Convention. We can ratify with reservations, of course, but in order for the Convention to come into force at all a certain number of ratifications without reservation are required, and we are hoping that we will be able to ratify without reservation and so discourage other people from making reservations.

LORD KENNET

I am sure that the Committee will agree that we have been round this point quite enough at the moment. With leave of the House, I will withdraw my Amendment, with the the intention of coming back to it at the next stage, if I may be allowed to do so.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 agreed to.

Clause 4 [Limitation of liability under s.1.]:

4.15 p.m.

LORD KENNET moved Amendment No. 4: Page 3, line 15, leave out ("2,000 gold francs") and insert ("such amount as may be fixed by the Secretary of State under subsection (1A) below").

The noble Lord said: I would speak to Amendments Nos. 4 to 8 together, since they have one single effect. The effect is to leave the concept of a limitation of liability out of the Bill as it is drafted by taking the actual figure to which the liability is to be limited from the Bill and allowing the Secretary of State instead to prescribe from lime to time by regulation what that figure shall be.

If I may sketch in the background to the proposal, my reasons for doing this are as follows. This Convention, with its limit of 2,000 gold francs, was negotiated in 1969, and it bears a close relationship, which I should not like to define in any more detail, to an organisation, TOVALOP—that is, the tanker owners' voluntary system for insuring themselves against liability—which has set up a fund on which tanker owners can draw, if they have damages awarded against them, up to a certain limit, which is the same as the limit that is written into the Convention. So the process we see here is that the industry voluntarily agree to cover themselves up to a certain point—that is, normally about 85 per cent. of tanker tonnage of the world. The nations of the world then sign a Convention saying that that is the right level, which is compulsory for the remaining 15 per cent. This, in my opinion, is the right way to do it.

But the industry have gone beyond this Convention. They have set up a second fund, CRISTAL but this has been set up not by the tanker owners but by the oil companies, once again representing about 85 per cent. of the tonnage of oil carried by sea in the world. They agree to cover themselves against claims up to a very much higher limit than TOVALOP—namely, up to 30 million dollars per accident. I think I am right in saying that the Convention limit we have before us now is £5.8 million, or between 12 and 13 million dollars per accident.

If history proceeds as it has been going in the past, and I think we may all hope it will, IMCO will come up with another Convention in a year or two—indeed, it is already beginning on this—which will give, as it were, statutory international force to the higher level of 30 million dollars. When that happens, Her Majesty's Government will have to come before Parliament once again seeking approval of a complete new Bill, saying that progress has been made, that everybody is accepting his responsibilities making this double liability necessary. It may be that in future, if we get to million-ton tankers, there will have to be changes even in the 30-million dollar limit. One may imagine 20 or 30 years hence—though I hope it will not happen—the need for a liability of 100 million dollars per accident.

The purpose of my Amendments is simply to avoid having a new Bill every time. What I propose is that we take out the figure and let the Secretary of State prescribe by regulation, in the first place, the limit of £5.8 million—as I am sure the noble Lord would be able to tell us he would do, if he accepts the Amendment. Then if a new Convention was agreed by a sufficiency of States, he would be able to put the limit up to 30 million dollars without troubling Parliament again, except to the extent of laying an Order before it subject to the Negative Resolution procedure in either House. I regard it as given that such a Resolution would neither be carried nor even moved. The purpose of my Amendments is to avoid the difficulty of Parliamentary time, because under any Government, of any colour, it would be difficult to find a moment to get in a Bill simply to raise this limit to a new Convention level. I beg to move.

LORD DRUMALBYN

As the noble Lord said, the effect of these Amendments is twofold. First of all, it would exclude completely the ceiling contained in subsection (1)(b) of this clause, which is 210 million gold francs or £5.8 million. Secondly, it would leave the amount to which a shipowner might limit his liability by reference to the tonnage of a ship to be fixed from time to time by the Secretary of State by statutory instrument. There is a good argument for this on one assumption, the assumption that the noble Lord made; namely, that it is possible in the near future for the figures in the Convention to be altered. But I am afraid that there is very little chance of that. I think one has to bear in mind that, so far as the 1958 Convention is concerned, it was ten or eleven years before sufficient signatures were collected to the Convention to bring it into operation at all. It is not a common thing to have Conventions altered quickly. There is a procedure laid down for the Convention to be reconvened, on the demand of a certain number of signatories, but it is not very likely to happen in the near future.

The noble Lord also referred to TOVALOP and CRISTAL, the two schemes. So far as CRISTAL is concerned, we very much hope that there will be an international conference in order to establish this fund on a compulsory basis. But if and when that happens, it will not in any sense be in replacement of the figures in this clause; it will be on top of them, because whoever is going to be responsible for funding this will be meeting compensation for damage over and above the damage with which we are concerned in this Bill. So that the figures in this Bill would not be altered. It would simply mean, as the noble Lord said, that the maximum compensation payable in the absence of fault or privity in the case of the shipowner under this Bill would remain at £5.8 million or £56 per ton, whichever is the less, and on top of that it would be possible from this other fund to get additional compensation. This is the way that it would work.

I think that the argument which the noble Lord had in mind—which is a perfectly sensible argument on his own premises—is really destroyed by the absence of any likelihood that there will be in the near future any variation to the figures in the Bill. It is not the first time that figures of limitation have been expressed in gold francs. They were expressed in gold francs, I think for the first time (it was altered from sterling), in the 1958 Act. I agree that it would be possible for us to adhere to the figures of the Convention and then not to put them in the Bill. That would be possible. But there is the danger that if we did so we might convey a false impression to other countries that were thinking of ratifying that we were going to fix limits according to our own sweet will without regard to the Convention. This would be a pity. There is really no advantage in not sticking to the figures in the Bill, and I therefore hope that the noble Lord will withdraw the Amendment.

LORD KENNET

I find this rather worse than I had expected, and indeed rather alarming. I had expected the noble Lord to say: "It is quite all right. Don't bother to take the figures out of the Bill because as soon as we get a Convention with a higher liability limit in it we shall without doubt—and I hereby give an undertaking—find Parliamentary time for a small Bill either to amend this one or to impose a new separate higher limit." But the noble Lord, far from saying that, has said: "Well, don't take this limit out of the Bill, because there is hardly any chance at all of our ever being able to raise it by international Convention."

LORD DRUMALBYN

In the near future.

LORD KENNET

We shall not be able to do it in the near future—the noble Lord corrects me. It was my understanding that IMCO were already working on the possibility, and were proposing to hold a conference this year to set up a fund which should cover the distance between 12 million or 13 million dollars per accident and 30 million dollars per accident; that when this fund was agreed there should be an international Convention about it and members of IMCO should be once again invited to ratify that Convention and to bring their domestic liabilities into line with it. The mere fact that it would be two funds as opposed to one fund, is I submit, neither here not there. If the total liability, which is what concerns the Parliament of the country, goes up from 12 million dollars to 30 million dollars—this is the point—whether it is done by one fund, two funds or thirty funds is neither here nor there. The issue between the court and the polluter is: how much can you pay? How much are we going to enforce upon you?

I will study what the noble Lord has said. It may be that I have misunderstood the drift of his argument, and if so, no doubt I shall understand it in Hansard to-morrow. But at first flush I regard this as a rather serious matter, because I take it to be a declaration that the Government are not going to press very hard for a second Convention raising the liability limit; that they do not believe that such a thing is likely; that if such a thing does come about the Government are not going to ratify it immediately, and if they do ratify they do not feel that they are going to be in any way hampered by the pre-existence on the Statute Book of a liability limit only half what the new one might be.

LORD DRUMALBYN

I must be very had at expressing myself to the noble Lord, because I know that he is a very intelligent man. We are here dealing with legislation to bring into operation an international Convention on civil liability for oil pollution damage, and Clause 1 puts the liability—which is a strict liability, but a limited one—on the owner. The next stage is going to be to say: who else can pay? The amount we are putting on the owner is the maximum for which he can obtain insurance, and we are limited by that. If the insurers will not insure for more than that, one will not get ratification of the Convention and the whole thing will fall down. One has to face these facts. It is precisely because one cannot put a greater liability on the owner and the insurer that these further compensations for the second tier, so to speak, which will equally be compulsory, is to be provided. But it will not come from the same sources. This is the point. I hope that I have now managed to make the point a little clearer, and I am sorry if I did not do so before.

LORD KENNET

I will not detain the Committee longer, except to say that it is of course possible to impose on somebody a higher liability than he can obtain insurance for. If you do that, he will cease carrying out that activity in an uninsurable way and will commence carrying it out in an insurable way. This comes back to my earlier point: that it is entirely the choice of the tanker owners to use 250,000 ton ships instead of the 50,000 or 100,000 ton ships which are insured. Having said that, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [Limitation actions]:

On Question, Whether Clause 5 shall stand part of the Bill?

LORD KENNET

I will be as brief as I can. The noble Lord was kind enough to imply that I was not below average intelligence, but I cannot understand Clause 5 (4). I will not detain the Committee by asking for an explanation now, but if the noble Lord can understand it, will he explain it in Report stage?

LORD DRUMALBYN

If that will be for the convenience of the Committee I will certainly do that.

Clause 5 agreed to.

Clauses 6 to 9 agreed to.

Clause 10 [Compulsory insurance against liability for pollution]:

4.30 p.m.

LORD KENNET moved Amendment No. 9: Page 6, line 42, leave out from ("State") to end of line 44.

The noble Lords said: We come now to the kind of certificate which shall be taken as evidence of a shipowner having accepted the liabilities imposed by this Bill and therefore entitling him now to enter and leave the ports of this country. My Amendment is intended to delete one type of certificate. It would leave a certificate given by the British Government for a British registered ship. That is all right. It would leave a certificate given by another Convention Government for one of their own ships. That is all right. It would leave a certificate given by the British Government in respect of particular ships registered in non-Convention countries. This Amendment and Amendment No. 10 would take away the right of the British Government to make blanket regulations certifying and permitting the entry of ships registered in non-Convention countries, and would also take away the right of the British Government to recognise in a blanket way a class of certificate in respect of many ships issued by non-Convention Governments. My purpose is not to make life difficult for the Government in any way, but to remove what, it seems to me, might be an incentive to certain Governments not to join the Convention.

I should like this Parliament to pass a Bill which has this effect: "If we want to trade in and out of Britain we have to become Convention countries. They are going to make life really difficult for us if we do not do so." If we empower the British Government to give blanket exemptions to ships registered in non-Convention countries, I submit that that is making life easier for them than we need to do. It would leave the Secretary of State with the power to issue a certificate in respect of single ships registered in non-Convention countries. That is enough relaxation of pressure from Britain to join the Convention. For the rest, I believe that we should keep up the maximum pressure.

LORD DRUMALBYN

I have some sympathy with the noble Lord in this matter, and indeed it is a difficult problem. The Convention lays down that Convention countries must issue the certificates for these ships if they are going to operate; that is to say, a ship can operate only if it has a certificate from a Convention country. The difficulty is: what is to happen in non-Convention countries? All I can do is to put some of the considerations before your Lordships, because if we were to insist that only a certificate from the Secretary of State will enable tankers registered in a non-Convention country to come to this country, there would be two disadvantages. First, there is the practical point of the sheer physical disadvantage of not being able to get the certificate on board that ship before it came to this country, in which case the law would not be complied with. The other disadvantage is that other countries might insist on doing exactly the same thing; each country, Holland, Sweden, and all the rest, would insist that no tanker came to their country unless it had a certificate from the authority of the country to which it was going. This would be awkward.

It would be a mistake not to leave this power in the Bill. This is not a mandatory power; it is a permissive one. I do not doubt for one moment that it will need a good deal of preparation. The object of it must be to ensure that certificates are worth while; that they are given by countries which are able to appreciate the creditability of the insurer or of the person giving the security. It seems to us that it would be a mistake to deny the Government this power, and we think that by putting in this kind of power it will make the negotiations for the establishment of a viable system of certificates that much easier.

I hope the noble Lord will not press this Amendment. If he wishes we can have another look at it. I hope that the system will work out, and I think he should at least give us a chance to work it out.

LORD KENNET

I am very glad indeed that the Government will have another look at this matter. Of the two reasons which the noble Lord gave for maintaining this power, it seems to me that one is quite misconceived and the other cuts in the opposite direction, in favour of the Amendment. The noble Lord said that if the British Government did not have power to issue blanket certificates in respect of ships registered in non-Convention countries, this might be troublesome if other signatories to the Convention were to do the same thing. It would not be troublesome to us, because we should be a Convention country. So we need not worry about that.

The noble Lord spoke of the physical inconvenience of getting an individual certificate from the Secretary of State on board each separate ship registered in a non-Convention country before it came here. This is just the point. The inconvenience would be to the shipowner concerned. He could then take two courses: he could either re-register his ship in a Convention country (which I hope he would), or he could press the Government of the non-Convention country where it is currently registered to join the Convention. And I hope that non-Convention countries will do that, too. It seems to me that the physical inconvenience generated by the Amendment, such as it is, is good for the sake of getting the Convention adopted. How ever, I will not press the Amendment at the moment, but hope that the noble Lord will consider these two arguments before the next stage. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 10 shall stand part of the Bill?

LORD KENNET

Once again I have to ask for a clarification to be made at the next stage. I am puzzled by the relationship between subsection (6) and subsection (7) of Clause 10. In subsection (6) we have the ship that enters or leaves, or attempts to enter or leave, in contravention of this section. If it does that, the master or owner is liable to a fine of up to £15,000. But, under subsection (7), if the master of the ship fails to produce a certificate as required then he is liable only to a fine of £200. But when is it intended that he shall be asked to produce a certificate, except on the occasion of entering or leaving, or attempting to enter or leave, a British port? If he fails to produce a certificate, and continues to attempt to enter or leave, he is then liable to a fine of £15,000, which seems a great deal more than the £200 fine. Does this clause imply that we are to go charging around the High Seas demanding sea certificates in case people attempt to enter and then, if they fail to produce the certificate, and do not attempt to enter, the fine is only £200? If not, why is that minor provision there? Perhaps the noble Lord can enlighten us at the next stage.

LORD DRUMALBYN

I do not think it is necessary to wait for the next stage. The essential point here is that the offence has been committed in not having a certificate. The offence is not that of not being insured, because if it were so it would be a very difficult task for magistrates to decide whether a person was insured and fully covered within the terms set down in the Schedule to the Convention. Therefore it was felt that it was necessary to make the certificate the point of action, so to speak. The question is whether there is a certificate on board. It may be that the master, for one reason or another, may not produce it although it is on board. If so, it is not a very serious offence. The really serious offence is not to be insured and therefore not to have the certificate, which is the touchstone so far as the courts in this country will be concerned. This is a very serious offence because of the risk the ship would be running, in case of any accident, of doing very considerable damage.

It was felt that this was in line with the very heavy penalty that is coming along in the next Bill to which my noble friend Lord Sandford will be referring—£50,000. But this £15,000 for not having a certificate was felt to be the right figure. With all these penalties, and the fact that the ship is going to be arrested, if necessary, for non-production of the certificate, if the master of the ship does not produce the certificate for any reason other than that he had not got it, it is not felt that he will go on maintaining that attitude for very long. Nevertheless, it is felt that this was a justifiable distinction—the £200 being quite clearly on the master himself, and the £15,000 being obviously on the owner, although it might be the master who has to pay for it.

LORD KENNET

I quite follow that and thank the noble Lord very much for his full and courteous explanation.

Clause 10 agreed to.

Remaining clauses agreed to.

House resumed: Bill reported without amendment.