George Naumof

Senior inspector

Romanian Naval Authority




Dear Professor Erik Rosaeg,




I come again with some considerations. I just finished reading the GIIGNL’s letter explaining about the two possibilities of delivery of LNG cargo and when the titleholder is the seller and when the titleholder is the buyer. Also, I noted the GIIGNL’s availability for the enforcing the titleholder to set up a security or submit to the jurisdiction to a State Party.


As you know, I expressed my concerns about the bank guarantee or insurance for an unknown amount of money and an unknown date of execution of these financial security instruments. However, these instruments bring additional costs to the titleholder and a lot of complications to the States Parties and HNS Fund.


As we know, according to the provisions of art.19 (b), the annual contribution to separate account of LNG shall be made in respect of each State Party by any person (the titleholder) who in the preceding calendar year, or such other year as the Assembly may decide, immediately prior to its discharge, held title to an LNG cargo discharged in a port or terminal of that State.


I wish to draw your attention on the interpretation of the expression “or such other year as the Assembly may decide”.


I understand that the Assembly may decide upon preceding calendar year or other calendar year, (which could be not a preceding one).


The HNS Fund learns about the amount for compensation, of course, after the incident occurred and after the claimants present their claims (established by the competent court) to the HNS Fund. To establish the levy, expressed like SDR/tonne of LNG, the Assembly needs the total amount of compensations which must be paid in a calendar year (the current year) and the total quantity of LNG discharged in the States Parties in a calendar year.


Actually, the total amount for compensation, which must be paid in a calendar year by HNS Fund, has no any link with the total quantity of LNG discharged in the preceding calendar year, because it is very probably, that in the respective year, to aggregate compensations from different incidents which happened in different preceding years.


Therefore, in my understanding, the Assembly has the freedom to establish the levy (SDR/tonne of LNG) as big is necessary to cover all the established claims for each incident, keeping responsible the titleholders of LNG discharged in States Parties in a calendar year, also, established by the Assembly decision.


If the Assembly, at the end of one year, could establish the levy (SDR/tonne of LNG) taking into consideration the known total amount for compensation which must be paid in the next calendar year and also, the forecasted quantity of LNG which is expected to be discharged in the next calendar year, then will become possible to learn the amount of the contribution for each LNG cargo, before this cargo to be discharged. Thus, before discharging a LNG cargo, the titleholder has to ask to HNS Fund to pay the contribution to the LNG account and after presenting the evidence that he paid the contribution, to be permitted by the State Party the discharge of LNG cargo.


With this way of enforcement the refusals/arrears of titleholders belonging to non States Parties to pay later on the contributions to LNG account will be avoided/eliminated. Also, this mechanism is for the benefice of the titleholders, because they will know from the very beginning their costs and they will be able to negotiate their prices accordingly. The contribution will be not more an unpleasant surprise for titleholders.


Generally speaking, this mechanism is similar with the customs system. It will be permitted the discharge of LNG cargo, only after the contribution is paid.


If this mechanism is in line with the spirit and wording of the HNS Convention, then such an interpretation could be adopted by IMO, to be generally implemented by States Parties and to be adopted from the very beginning by HNS Fund’s Assembly




Best wishes,

George Naumof

Bucuresti, 13 August 2007