Former Vessel Owner Not Liable To Ship-Source Oil Pollution Fund

A recent decision of the Federal Court of Canada provides helpful guidance to parties involved in the purchase and sale of a ship. It addresses the issues of whether a former shipowner can be liable for environmental contamination caused after title to the ship has passed to a new owner, and whether registration of the new owner is required for title to pass.

However, this case also raises unanswered questions about whether provincial sale of goods legislation applies to the purchase and sale of a ship.

Background

The Ship-Source Oil Pollution Fund (Fund) was established to pay certain claims arising from oil spills caused by ships, including where a shipowner is unable or unwilling to do so. However, the polluter pay principle applies regardless: if the Fund pays claims arising from the spill, the Fund can pursue the owner of the responsible ship to recover the amounts of paid claims.