Key takeaways
Comprehensive HNS liability regime
Introduces unified framework replacing fragmented international liability landscape.
Structured compensation mechanism
Implements strict shipowner liability with supplementary HNS Fund coverage.
Industry impact
Introduces mandatory insurance, contributions, and contractual risk reallocation.
Historically, the carriage by sea of Hazardous and Noxious Substances (HNS) has not been subject to an in-force comprehensive international liability regime. Previously, liability for HNS related damage was governed by a fragmented patchwork of rules, drawing on general maritime conventions such as the Hague-Visby Rules, Convention on Limitation of Liability for Maritime Claims (LLMC) and sector-specific regimes like the Civil Liability Convention (CLC)/Fund Convention for oil pollution.
This left significant gaps and inconsistencies across substances and types of damage. This is set to change with the introduction of the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS Convention).
The trigger conditions for the HNS Convention were met in May 2026 (see below), which means stakeholders have 18 months to prepare for the introduction of a new liability and compensation regime that is expected to significantly reshape the handling of hazardous cargo claims.
Background
The HNS Convention was originally adopted in 1996 by the International Maritime Organisation (IMO) to address a gap in the international maritime liability framework but struggled to gain ratification due to reporting complexities. While well established regimes exist for other liabilities such as oil pollution damage, namely the CLC and Fund Convention (among others), and wreck removal (Nairobi Convention), no equivalent comprehensive system has existed to govern incidents involving the wide range of hazardous and noxious substances that are regularly carried by sea.
The HNS Convention established a two-tier compensation system which applies to over 2,000 hazardous and noxious substances including chemicals, liquefied gasses such as LNG and LPG and bulk solids.
The 1996 Convention was revised by the 2010 Protocol in order to simplify and modernise its mechanisms and, in turn, to encourage states to accept it. Buoyed on by growing commercial and regulatory pressure relating to the carriage of HNS, four additional key maritime states deposited their ratifications in May 2026.
Entry into force
On 29 May 2026, the 12-state trigger condition was met with Belgium, Canada, Denmark, Estonia, France, Germany, the Kingdom of the Netherlands, Norway, Slovakia, South Africa, Sweden and Türkiye now all being Contracting States.
This paves the way for the HNS Convention to come into force 18 months later, from 30 November 2027.
Scope
The HNS Convention applies broadly to damage caused by HNS during their carriage by sea, whether in bulk or in packaged form (including containers). It covers damage occurring within a State Party’s territory, including its territorial sea and EEZ, as well as certain damage outside these areas where the ship is registered in a State Party.
The scope includes loss of life, personal injury (both on and off the vessel), property damage and non-pollution damage such as that resulting from fires or explosions. It also extends to the costs of preventive measures, regardless of where those measures are taken.
To enforce, the standard position is that claimants can only take legal action in the court of a State Party in whose territory or waters the damage occurred. However, different rules apply where damage occurs beyond territorial seas.
Two tier operation
Tier one – Shipowner
The HNS Convention will operate on a two-tier compensation structure. Under the first tier, shipowners will be subject to strict liability for damage caused by HNS incidents, subject to limitations based on a vessel’s gross tonnage.
These are:
10 million SDR for ships not exceeding 2,000 GT
1,500 SDR per GT for tonnage between 2,001 and 50,000 GT and
+ 360 SDR per GT for tonnage above 50,000 GT.
This means there will be a maximum liability cap of 100 million SDR for incidents involving bulk HNS, and 115 million SDR for incidents involving packaged HNS.
To ensure that funds are available, shipowners will be required to maintain insurance or another financial security to cover these liabilities, which must be evidenced by a state-issued HNS certificate. The certificate will have to be carried on board and may be subject to inspections, carrying the risk of delays or penalties where certification is not in place.
Tier two – HNS Fund
Where claims exceed the shipowner’s limit, an additional second tier of compensation is available from the HNS Fund, which is financed by contributions paid post-incident from receivers of HNS cargo in Contracting States.
The HNS Fund will be administered by States, and contributions will be based on the actual compensation required, however there will be no contributions by governments. This brings the total compensation available up to 250 million SDR per incident. The HNS Fund, therefore, provides protection where the shipowner or the insurer cannot compensate the full loss from the incident, or where the shipowner is exonerated from liability.
In order to claim against the HNS Fund, claimants will need to prove that there is a reasonable probability that the damage resulted from an incident involving one or more ships. This applies even if the particular ship which caused the damage cannot be identified.
However, the HNS Fund will not be liable to pay where the damage was caused by an act of war or where HNS is discharged from warships or state owned or operated ships, provided they are not operated commercially.
Impact on shipowners
The additional documentation and certification that is required will add to the operational burden for shipowners, increasing the importance of having accurate cargo information. There may also be increased insurance costs because of the compulsory insurance and strict liability under the HNS Convention. Additionally, there are likely to be changes in contractual risk allocation, as parties in the contractual chain seek to pass down risks associated with misdeclaration, improper handling or classification of HNS cargo.
There are only very narrow defences available to shipowners. They will be exempt from liability only in exceptional circumstances, such as war, natural disasters, intentional acts of third parties, navigational authority failures, or where damage results from undisclosed hazardous cargo (provided the owner could not reasonably have known). Liability may also be reduced where the claimant contributed to the damage.
Impact on cargo interests and charterers
Entities deemed to be ‘receivers’ of HNS cargo in Contracting States will be required to contribute to the HNS Fund. This may necessitate analysis of supply chains and contractual arrangements to determine who bears the contribution burden in practice.
There may also be increased contractual negotiation around cost allocation in the short and medium term while the industry establishes how to account for them.
Furthermore, charterers are likely to face increased scrutiny in respect of cargo declarations and compliance with HNS requirements.
Recommended steps for clients
Conduct a review of insurance and certification and engage early with P&I Clubs to ensure documentation is ready in advance.
Assess exposure to HNS Fund contributions under the second tier of the HNS Fund.
Review contractual documentation to address allocation of HNS liabilities and obligations, including responsibility for HNS fund contributions.
Conclusion
The HNS Convention represents a significant expansion of the maritime liability regime, bringing hazardous cargoes into a structured compensation framework. By the implementation of a ‘polluter pays’ principle, the HNS Convention puts the burden firmly on the shipping and HNS industries to compensate those who suffer loss or damage from HNS incidents.
In practice, however, this is underpinned by the second tier HNS Fund which gives a broader spread of risk across the supply chain. With this increased accountability comes a corresponding need for early action.
Now that the conditions have been met for the HNS Convention to come into force from 30 November 2027, industry participants should act early to prepare for the insurance, compliance and contractual implications on the horizon.
For any queries relating to the HNS Convention or any other maritime liability regime, please contact our Shipping experts to discuss how they can support.
This article was co-authored by Trainee Solicitor, Griff Gough-Walters.
