Romanian Naval Authority
Dear Professor Erik Rosaeg,
Sorry to come again with some considerations. I just finished reading the Mr. David Bolomini’s letter, a person very much appreciated by me and who helped me significantly to understand the spirit of the HNS Convention.
This matter of
LNG cargo levies is more an exercise for me, because
I wish to express my opinion related to the interpretation of “the relevant quantities of contributing cargo”.
According to art.1 (10) of the HNS Convention, the definition of contributing cargo is:
10. ‘Contributing cargo’ means any hazardous and noxious substances which are carried by sea as cargo to a port or terminal in the territory of a State Party and discharged in that State. Cargo in transit which is transferred directly, or through a port or terminal, from one ship to another, either wholly or in part, in the course of carriage from the port or terminal of original loading to the port or terminal of final destination shall be considered as contributing cargo only in respect of receipt at the final destination.
In my opinion it is an inconsistency between this definition and the wording of the HNS Convention.
Actually, not any hazardous and noxious substances which are carried by sea as cargo to a port or terminal in the territory of a State Party and which are discharged in that State are cargoes for which the liable person to pay contribution pays levies in fact.
According to art.18 and 19 of the HNS Convention, only for the aggregate quantities of received/discharged HNS cargoes which exceeds the limits established in these articles, the persons liable to pay contributions have to pay annual levies.
In fact, only aggregate cargoes which exceed the limits are contributing cargo and would be considered as relevant quantities of contributing cargo in the approach of the art. 43 or art. 21(2) of the HNS Convention.
Also, the quantities of HNS cargoes, less than the limits, received by associated persons have to be considered as relevant quantities of contributing cargo.
According to the provisions of the HNS Convention, there are two categories of reports which have to be performed by the states parties:
I – according to art. 43 (with the meaning to establish the moment when the convention enters into force):
When depositing an instrument referred to in Article 45(3), and annually thereafter until this Convention enters into force for a State, that State shall submit to the Secretary-General data on the relevant quantities of contributing cargo received or, in the case of LNG, discharged in that State during the preceding calendar year in respect of the general account and each separate account.
This category of reports is directly connected with the provisions of art.46 (b) (entry into force)
(b) the Secretary-General has received information in accordance with Article 43 that those persons in such States who would be liable to contribute pursuant to Article 18(1)(a) and (c) have received during the preceding calendar year a total quantity of at least 40 million tonnes of cargo contributing to the general account.
II – according to art. 21 (with the meaning to provide necessary data to the Director of the HNS Fund to establish the amount of levy):
2. For the purposes set out in paragraph 1, each State Party shall communicate to the Director, at a time and in the manner to be prescribed in the internal regulations of the HNS Fund, the name and address of any person who in respect of the State is liable to pay contributions in accordance with Articles 18, 19 or paragraph 5 of this Article, as well as data on the relevant quantities of contributing cargo for which such a person is liable to contribute in respect of the preceding calendar year.
In both categories of reports, the States Parties have to take into consideration only the relevant quantities of contributing cargo.
From Mr. David Bolomini’s letter, I understood that: “we interpret to mean LNG received in the State only where the titleholder is also in the State Party.” And he concluded: “Otherwise it could not be construed to be “relevant”.”
I cannot agree with this interpretation, because it is not in line with the spirit of the HNS Convention. If the titleholder is not a person in the State Party, then for that quantity of LNG discharged in the port of the State Party, there is nobody liable to pay contributions to the HNS Fund?
For other types of HNS cargo discharged in the port of the State Party the receiver is liable to pay contributions.
If the receiver is not a national of the State Party where the HNS cargo was discharged, then the agent of this one, which is the physical receiver of the HNS cargo, is considered as the person liable to pay contributions to the HNS Fund.
If the agent represents a principal from another State Party, then the State Party where the HNS cargo was discharged has to include this principal in its report communicated to HNS Fund, as the person liable to pay contribution for its relevant quantities of HNS cargoes received.
Only the HNS cargo in transit through the port, in its carriage on the sea, is excepted to be included in the reports of the State Party where the HNS cargo was discharged, because this cargo will be taken into consideration at its final destination and the intention was not to produce a double taxation for the same quantity of the HNS cargo.
My conclusion is that, in the spirit of the HNS Convention is to collect levies for any relevant quantity of HNS cargo discharged in the ports or terminals of the States Parties. Therefore, I do not see the reason for which, in the case of LNG cargo, it is not to be considered as relevant quantities of contributing cargo, the quantities of LNG discharged in the port of a State Party of which the titleholder is not under the jurisdiction of the State Party.
My opinion expressed here is in line with the statements found in the document 92FUND/A/ES.12/9/1/Rev.1, paragraph 5.4.
If it will be considered as relevant quantities only the quantities of LNG cargoes whose titleholder is under the jurisdiction of the State Party, then it will be done a serious discrimination between the two categories of importers of LNG cargoes and it will be produced an imbalance in the trade of LNG and the free competitiveness will be affected.
In my understanding, the relevant quantities of contributing cargo means all kind of HNS cargoes which are discharged in a port or terminal of a State Party, considered as being their final destination, and whose quantities overreach the limits established in art.18 and 19 of the HNS Convention, or are received by associated persons.
In the case of LNG cargoes, the relevant quantities of contributing cargo means any quantity (no any threshold) of LNG cargo discharged in the State Party, if the port or terminal in the State Party is the final destination of it. In the report of the State Party, also shall be included the name and address of the person liable to pay contribution, respectively the titleholder, regardless of whether or not the titleholder is subject to the jurisdiction of the State Party where the LNG cargo was discharged or of another State Party.
Also, I wish to express my opinion related to the issue of the usage of the administrative funds of the HNS Fund.
On the issue of the usage of the administrative funds to cover any shortfall caused by non payment of levies I agree with Mr. David Bolomini’s opinion and other opinions expressed before, that any shortfall should not be made up from the HNS Fund's "Administrative costs", as this is not in the spirit of the Convention, and it is vital to ensure that cross-subsidisation between the accounts is avoided.
In my opinion, any arrears of contributions shall be analyzed by the Assembly of the HNS Fund and, if these arrears are considered as a loss because no any action is considered as viable to recover the respective amount, then Assembly to decide to increase the contributions of existing titleholders with a supplementary levy, which is able to cover the respective loss. In that way, the cross-subsidisation between the accounts is avoided, but the payment of compensations to the victims will be postponed.
Bucuresti, 31 July 2007