George Naumof

Senior inspector

Romanian Naval Authority

gnaumof@rna.ro

 

 

 

Dear Professor Erik Rosaeg,

 

 

 

After reading your letter on 17 August 2007 and the annexes I try to express my opinion as concise as I am able to do.

 

The correspondence group has to present solutions, applicable by every State Party, in order to ensure that each titleholder of LNG cargoes discharged in a State Party, which is not subject to the jurisdiction of a state Party, pays its contribution to the HNS Fund.

 

In my opinion the solutions must be based on the spirit and the wording of the HNS Convention.

 

I suggest that could be three solutions based on the spirit and the wording of the HNS Convention.

 

The first solution.

 

The invoice for the contribution is issued by the HNS Fund having at the base the list of persons liable to pay contributions drawn by the Director of the HNS Fund (art.21(1)). This list comprises the information about the persons liable to pay contributions (in the case of LNG, the titleholders) provided by the States Parties (art.21(2)), respectively, the name and address of the person and the relevant quantities of HNS cargoes received by it in the preceding calendar year (in the case of LNG the total quantity of LNG discharged in the ports and terminals of the State Party).

 

The list drawn according to art.21(1) shall be prima facie evidence of the facts stated therein art.21(3).

 

What means prima facie evidence? Literally means "at first view." It refers to evidence which is, according to law, sufficient to establish or prove a point, unless successfully rebutted by other evidence. In other words, the list shall comprise only irrefutable information on persons liable to pay contributions, respectively the titleholders in the case of LNG.

 

What it is happened if the information on titleholder is not correct or not complete and this fact has results in a financial loss for the HNS Fund? The respective State Party shall be liable to compensate the HNS Fund for such loss art.21(4).

 

Therefore, the State Party has to be very interested in providing correct and complete information on titleholder of LNG discharged. How to obtain this irrefutable information? In the simplest mode, directly from the titleholder, as a condition to discharge the LNG cargo. The State Party has the possibility in the implementation law to put this condition and also, to request the titleholder to sign a commitment for paying the contribution to the HNS Fund when this one will issue the invoice for the levies. The commitment will be opposable in the jurisdiction of the respective State Party and in every other jurisdiction.

In practice, will be possible that a titleholder to present at the beginning of the year one declaration&commitment including all cargoes for the next calendar year and the State Party to watch each LNG cargo discharged and to verify when the aggregate cargoes attain the level of the quantity from the initial commitment.

 

The second solution.

 

The second solution I suggest is based on art. 19(1)(b):

(b) in the case of the LNG account, by any person 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;

If the preceding calendar year means the calendar year immediately before the year of the budget of the HNS Fund, then the alternative such other year means another calendar year, which could be the year for which the budget is approved or, in other words, the current year.

 

The levy (SDR/ton of LNG) is also established by the Assembly of the HNS Fund. The amount of the levy could be established by the Assembly for the current year taking into consideration the forecasted total quantity of LNG cargoes and could also be communicated to all States Parties and other stakeholders.

The States Parties could put in the implementation law the condition that a LNG cargo to be discharged only if the titleholder presents the evidence that he paid the contribution for the respective LNG cargo to the HNS Fund.

 

Applying this method, it will not appear the possibility to have arrears or refusals for paying the contribution to HNS Fund.

 

The third solution.

 

The third solution I suggest is based on art.23.

In paragraph 1 it is written:

1. Without prejudice to Article 21(5), a State Party may at the time when it deposits its instrument of ratification, acceptance, approval or accession or at any time thereafter declare that it assumes responsibility for obligations imposed by this Convention on any person liable to pay contributions in accordance with Articles 18, 19, 20 or Article 21(5) in respect of hazardous and noxious substances received or discharged in the territory of that State. Such a declaration shall be made in writing and shall specify which obligations are assumed.

 

The last sentence indicates that a state could assume not all the obligations and not the obligations of all persons liable to pay contributions. Therefore, the State Party could assume only the obligations of the titleholders of LNG cargoes discharged in its ports and terminals. To not introduce a discriminatory regime between the titleholders under the jurisdiction of a State Party and the titleholders under the jurisdiction of a non State Party, it is recommended to be assumed the obligations for both categories of titleholders.

 

Such a State Party which assumes responsibility for obligations imposed by the HNS Convention for persons liable to pay contributions in accordance with article 19(1)(b) – the titleholders of LNG cargoes – will introduce a special due for the LNG discharged in its ports and terminals which must be paid by the titleholder before the discharge of LNG cargo. The collected dues will be transferred to the HNS Fund quarterly. Consequently, the State Party will not include this category of persons liable to pay contributions in the reports transmitted to the Director of the HNS Fund, to avoid a double taxation.

 

If this solution is applied by a State Party, then HNS Fund has to communicate to that state the amount of the levy (SDR/ton of LNG) which will be used by the State Party as the amount of the due. This fact is necessary to not introduce a discriminatory regime between the titleholders which pay contribution directly to the HNS Fund and titleholders which pay dues to a State Party which assumed the obligations of the titleholders of LNG cargoes discharged in its ports and terminals.

 

If this solution is generally applied, then it will not appear the possibility to have arrears or refusals for paying the contribution to HNS Fund.

 

 

All this solutions do not distortion the spirit of the HNS Convention. It is kept the principle: pays the person liable to pay contributions to the HNS Fund LNG separate account and, also, the principle of the proportionality of the contribution with the quantity of LNG discharged.

 

The solutions presented in your paper (to oblige via implementation law the title holder to have a surety or to force the physical receiver of the LNG cargo to become a surety for the titleholder), firstly are not in line with the spirit of the HNS Convention (because the person liable to pay contributions is replaced by other person which is not an actor of the convention) and, secondly complicate the implementation of the convention with strange elements as criteria to accept an insurer/surety etc.

 

Also, to ask to a person liable to pay contribution a security (which has no support in the HNS Convention) for an unknown amount of SDR and an unknown time span of the security seems to be not a viable solution, but a costly one, for sure.

 

For the reasons mentioned before, and the others included in my previous letters, I do not share the recommendation no. 1 from the Draft Resolution you presented for the debate of the Correspondence Group.

 

Best wishes,

George Naumof

Bucuresti, 21 August 2007