MARINE LIABILITY ACT
INSURANCE REQUIREMENTS FOR COMMERCIAL OPERATORS

The Marine Liability Act (MLA) deals with the liability of marine operators in relation to passengers, cargo, pollution and property damage. The intent is to provide a uniform method for establishing liability that balances the interests of shipowners and passengers, and provides limits on liability.

The Act establishes maximum liability for operators of $350,000 per passenger. It also prohibits the use of liability waivers, which were frequently overturned by courts, leaving operators open to unlimited liability. In addition, it establishes provisions for the apportionment of liability according to the degree of fault or neglect by the passenger. This framework is based on international conventions.

The Act came into force on August 8, 2001 and is applicable to all incidents governed by Canadian maritime law.

The MLA also provides for the introduction of compulsory insurance requirements for marine operators. While the Act determines the general principles, the specific requirements for compulsory insurance will be set out in regulations. The regulations have not yet been drafted and therefore operators are not yet required to carry insurance.

Over the coming months, Transport Canada will conduct extensive consultations with the marine, insurance and other interested industries to develop these regulations. The department will fully consider the insurance market situation before any new regulations are formulated. In addition, sufficient time will be allowed for a thorough analysis and consultations with all concerned parties.

Once a draft regulation is developed, it will be published in Part I of the Canada Gazette, which will be followed by a 90 day consultation period during which any interested party may submit written comments on the proposed regulation.

This builds on earlier consultation with industry that took place in developing the MLA. Transport Canada issued several notices to industry during the legislative process between March 2000 and August 2001, and before the MLA was introduced. In addition, notices were also posted through the Canadian Marine Advisory Council.

Transport Canada officials will continue to work closely with the marine and insurance industries in developing regulations under the MLA, and to ensure that the MLA is well understood by all stakeholders.

The MLA applies to the carriage of passengers by any vessel used for “commercial or public purpose”, but does not extend to “pleasure vessels”. For guidance on the differentiation of these two categories of vessels, see Transport Canada Guidelines and Ship Safety Bulletin 14/2000 at www.tc.gc.ca/MarineSafety/bulletins/2000/14_e.htm.

May 2006