Briefing

The 2010 HNS Convention and LNG: What happens when LNG spills at sea?

After a long wait, the 2010 HNS Convention¹ is set to come into force on 29 November 2027. In this article, we explain how it will work, consider what impact it will have on dealing with LNG spills at sea – whether in the form of cargo or bunker fuel – and look at what steps parties should be taking to prepare.

How will the HNS Convention work?

At the IOPC General Funds governing bodies meeting in May 2026, it was announced that the requirements for entry into force of the 2010 HNS Convention relating to Contracting States and gross tonnage had been met and the 18-month period before the entry into force of the Convention had begun².

Accordingly, from 29 November 2027, the 2010 HNS Convention will provide an international liability and compensation regime covering clean-up and compensation for pollution damage, as well as the risks of fire and explosion, arising from the spillage of hazardous or noxious substances during maritime transport from or within the territory of a State Party. This will include LNG when carried as cargo but not LNG in use as bunker fuel.

The 2010 HNS Convention is a two-tier system:

Tier one: compulsory insurance taken out by shipowners, capped at certain levels of liability based on the gross tonnage of the polluting vessel.
Tier two: the HNS Fund, made up of contributions from those classified as “receivers” of HNS. These contributions are based on the total amount of HNS received in each Member State in the preceding calendar year.

A number of provisions in the 2010 HNS Convention, such as strict liability of shipowners, limitation of liability and channelling, are closely modelled on the CLC regime³. The HNS Fund will pay compensation (up to 250 million SDR including the amount paid by the shipowner/its insurer) where the total admissible claims exceed the shipowner’s liability.

The HNS Fund will be separated into four accounts: General, Oil, LNG and LPG. Each account will be attributable to damage arising from an incident involving that type of product; there will be no cross-subsidisation between different accounts.

What are the risks of LNG spills and what would be the consequences?

To date, LNG spills at sea have been thankfully rare. As the demand for LNG grows and is met by an increase in the number of LNG vessels, the volume of LNG shipped and the number of operators in the market, alongside the growth in the use of LNG as a form of bunker fuel, more incidents may occur going forward. Further, the development of a Russian shadow fleet of LNG carriers is cause for increased concern around vessel safety.

The consequences of an LNG spill are likely to be very different from those arising in the context of an oil spill, because of its nature and characteristics⁴. Together with a risk of asphyxiation, the main risks arise from LNG’s flammability and cryogenic temperature. LNG is insoluble which means that it will not mix into seawater like non-persistent oil. Instead, it may form a shallow pool on the surface of the water (causing ice patches which could cause damage to aquatic life) before vaporising. It may also form a gaseous “LNG cloud”, which hovers above the sea and/or the vessel.

Environmental damage is expected to be short term and acute rather than long term and persistent. Personal injury and damage to wildlife or property are likely to be as a result of fire or freeze damage. Economic loss could arise from fire damage to property or structures or from fishing bans (more likely as a result of the lack of information about the impact of an LNG spill than because of actual damage). Any harm to the tourism industry is expected to be shorter term than in the case of an oil spill.

Will the 2010 HNS Convention respond to LNG spills?

The 2010 HNS Convention will respond to spills of LNG when carried as cargo but not LNG in use as bunker fuel. It will cover pollution damage caused by LNG cargo spills in the exclusive economic zone, territory or territorial sea of a State Party to the Convention. It will also cover non-pollution damage caused by LNG cargo carried on board ships registered in, or entitled to fly the flag of, a State Party outside the territory or territorial sea of any State.

Currently, thirteen States have ratified the 2010 HNS Convention: Belgium, Canada, Denmark, Estonia, France, Finland, Germany, the Netherlands, Norway, Slovakia, South Africa, Sweden and Türkiye. Many of these are EU countries with LNG import terminals.

The 2010 HNS Convention will cover the following types of damage:

loss of life or personal injury
loss of or damage to property
economic losses
costs of clean-up and preventative measures
reasonable measure of reinstatement of the environment.

It is worth noting that whereas the 1992 CLC and Fund Conventions⁵ exclude liability for both damage resulting from fire or explosion and personal injury, these will be covered under the 2010 HNS Convention.

It is also worth noting that the 2010 HNS Convention will not cover damage that arises out of: (i) an intentional act to cause harm by a third party; (ii) an act of war or hostilities; or (iii) a failure by the shipper or any other person to provide relevant information in respect of the HNS cargoes. Therefore, were spills to occur as a result of attacks on shipping arising from the Russia-Ukraine war or the conflict in the Straits of Hormuz, these are unlikely to be covered.

What about LNG used as fuel?

As set out above, the 2010 HNS Convention will not cover spills of LNG being used as a fuel on board a vessel. Neither is LNG as fuel covered by the Bunkers Convention⁶ because it is not hydrocarbon mineral oil. It is possible that the LLMC Convention⁷ may apply.

There is a potential grey area for LNG bunker tankers as to whether the LNG on board would be classed as “cargo” or “fuel”. Logic would suggest it is “cargo” until it is stemmed into the receiving vessel’s fuel tanks as “fuel”.

The spillage of alternative fuels which are not covered by the Bunkers Convention is a known gap in the current international maritime regulatory framework.⁸ This issue is under active review by the IMO Legal Committee and a formal correspondence group coordinated by Canada was established at the end of LEG 113⁹ to explore potential solutions.

What if there is a spill of LNG being carried as both cargo and fuel (e.g. from a dual fuelled LNG carrier)?

In these circumstances, the HNS Fund Assembly may adopt a proportionate approach by assessing the facts arising from the spill and deciding the relevant percentage based on advice from the IOPC Funds’ Secretariat and the relevant insurer of the polluting vessel. By way of comparison, in 1992 Fund Convention spills of persistent oil, the Secretariat would typically enlist experts to determine the origin of the leak and to assist in apportioning the source of the spill between bunkers and cargo.

What steps should parties be taking to prepare?

Shipowners should be aware that the 2010 HNS Convention mandates that the owner of a vessel carrying HNS (which includes LNG) must possess the requisite insurance, or maintain other acceptable financial security, to cover any liability under the 2010 HNS Convention. This will take the form of a certificate which must be presented upon the ship’s entry into port of any State which is party to the Convention. The certificates will be issued by the State of the vessel’s register or, if that State is not party to the Convention, by a State Party.

It is likely that there will be delays whilst States introduce the necessary mechanisms to issue certificates, as well as delays whilst certificates are issued. Shipowners should therefore make arrangements to obtain certificates as soon as possible before the entry into force in late 2027. Similarly, charterers wishing to transport HNS cargoes, including LNG, should ensure that a vessel has the relevant certificate before engaging it, in order to avoid delays.

Shippers should note the requirement to provide adequate information regarding HNS substances. Failure to provide this information may cause the shipowner to seek compensation to indemnify them for any liability suffered in respect of an HNS incident.

HFW comment

With the expansion of the LNG market, it is timely that the 2010 HNS Convention will enter into force relatively soon, providing an international liability and compensation regime to cover spills of LNG cargoes. Given the increase in the use of LNG as a marine fuel, often in conjunction with other fuels where vessels have dual fuel capacity, the IMO Legal Committee may also seek to close the gap in the distinction between LNG as a cargo and as a fuel.

The geographic scope of the 2010 HNS Convention is set to be limited, given the number of contracting States thus far and the current concentration of those States in Europe (many with LNG import terminals). However, we expect the number of States acceding to the Convention to continue to rise now that the entry into force has been announced.

Footnotes