Hong Kong has recently enacted the Bunker Oil Pollution (Liability and Compensation) Ordinance. Under this Ordinance, shipowners will be held liable for the damage arising from contamination caused by the discharge or escape of bunker oil from ships or in respect of a threat of such damage. That said, shipowners will not be held liable unless the damage concerned is a loss of profits from the impairment of the environment or cost of reasonable reinstatement measures of the environment actually taken or to be taken.

Other persons, for example servants or agents of the shipowner, persons employed on board the ship or persons performing salvage operations and taking preventive measures, may also be held liable for such damage if they did an act or omitted to do an act intentionally to cause damage or recklessly knowing that the damage would probably be caused.

The Ordinance also provides that a ship is not allowed to enter or leave Hong Kong waters unless the ship has taken out insurance to cover liability for pollution damage and there is a recognized insurance certificate to that effect. Contravention of this requirement is an offence and both the master and the registered owner of the ship will be liable to pay a fine of up to HK$500,000. The master of a ship must also ensure that the insurance certificate is kept on the ship at all times and produce the certificate for inspection when requested by an enforcement officer. Failure to do so is also an offence punishable by fine.

Finally, it should be noted that directors, managers, secretaries, officers, etc. of a company may be held liable for offences under this Ordinance if it is proved that the offence was committed with the consent or connivance of that person or due to any neglect on the part of such person.

This Ordinance came into force on 22 January 2010.

For inquiries related to this Client Alert, please contact:

Geoffrey Chan (geoffrey.chan@mayerbrown.com)

Felicia Lee (felicia.lee@mayerbrown.com)