1. SHIP AND LIABILITY – an introduction to Norwegian Maritime Law
Andreas Meidell, partner, dr juris
3 September 2013

2. Overview Maritime law – characteristics and sources
Ship and liability – the issues most relevant for marine insurers
Case scenario – a typical ship collision case
General rules on liabiliy
Collisions and strikings
Pollution liability
Claims from passengers
Cargo claims
Limitation of liabilities
Marine accidents
Salvage and wreck removal
Claims Handling

3. Blogg

4. 1. Maritime law – characteristics and sources
Maritime law is a denotation encompassing the rules and regulations applicable to shipping activities, both private and public rules of law
Marine insurance is the cover of risks involved in shipping activities
Some characteristics of maritime law:
Seagoing vessels and their cargoes represent large movable values
Large seagoing vessels may cause severe damages to persons, property and the environment
Maritime legal issues will typically involve many parties from different legal jurisdictions
Maritime codes are by far based on international conventions, and international standard contracts are extensively used

5. 1. Maritime law – characteristics and sources, cont’d
The main sources of Norwegian maritime law are:
The Maritime Code of 1994 and the Ship Safety Act of 2007 (including preparatory works, international conventions, etc)
Published case law (including arbitral awards when published)
Commercial contracts (including standard forms)

6. Public authorities
Insurers
Class
Owner
Stevedores
(Bareboat
charterer)
Crew
(Time charterer)
Cargo
owner
Passengers
(Voyage charterer)
Injured parties
Manager
(Sub charterer)

7. 2. Ship and liability, the issues most relevant for marine insurers
Our focus here is on the parts of maritime law that are most relevant for marine insurers.
It is important to understand the liability exposures of the insured interests:
Hull & Machinery
P&I
Loss of Hire
Cargo
Defence

8. 2. Ship and liability, the issues most relevant for marine insurers, cont’d
There is a close link between the liability a shipowner may incur, and the liability insurance coverage:
Collisions
Third party damages
The scope of P&I cover similar to the scope of shipowners’ liability (”rederansvaret”)

9. 3. Case scenario – a typical ship collision case
A typical ship collision case normally involves many maritime legal issues:
Collision liabilities
Crew injuries
Third party damages (pollution)
Salvage
Marine accident responses
Cargo liability

10. 4. General rules on liability
Marine accidents leads to damages, which again leads to losses of various kinds
Shall ”the losses lie where they fall”, or can someone (tortfeasor) be held liable?
Three basic requirements for liability in tort:
Financial loss
Basis for liability
Causation between the basis for liability and the financial loss

11. 4. General rules on liability, cont’d
Basis for liability:
Culpa and the vicarious liability
Strict liability
Contractual liability
Culpa – negligence; general priciple in tort law
The vicarious liability:
MC sec 151
Strict liability:
E.g. pollution – MC sec 183

12. 4. General rules on liability, cont’d
Contractual liability regulation:
E.g. ”knock-for-knock” provisions
Financial loss:
Measure of damages in money
Causation:
Proximity of causes and contractual limitations

13. 5. Collisions and strikings
Rules found in the MC Chapter 8 (based on the Collision Liability Convention of 1910)
Convention has a wide international application, however, not ratified by the US
Basis principles:
The principle in MC sec 161 (1): The ”reder” is liable if he or his servants has acted negligently, thereby causing a loss.
The ”Rules of the Road” are the ”traffic rules” of the sea, adopted by the international regulation for preventing collisions at sea, Convention of 1972 with later amendments.
There is no room for strict liability in collision cases, see MC sec 162

14. 5. Collisions and strikings, cont’d
Both to blame collisions, MC sec 161 (2) and (3):
Liability ”pro-rata” for loss/damage to goods in a both-to-blame collision
Joint and several liability for loss of life/injury to persons (MC sec 161 (3 in fine))
Collisions with other structures, such as quay structures, floating objects etc are not covered by MC Chapter 8, and must be determined according to ordinary rules on liability and tort.
Some particular issues:
Prescription
Maritime liens
Insurance cover

15. 6. Pollution liability
Three various but similar liability regimes applicable to difference sectors:
Oil pollution from tankers
Bunker oil pollution
Liability for hazardeous and noxious substances
The international legal frame work:
Civil Liability Convention 1969
Fund Convention 1971
Civil Liability and Fund Conventions 1992
Bunker Oil Convention 2001

16. 6. Pollution liability, cont’d
MC Chapter 10: implements the 1992 and Conventions.
US Oil Pollution Act 1990 (OPA)
Scope of cover of the Convention based rules
Strict liability:
The starting point – Tankers: MC sec 191 (1)
– Bunker oil: MC sec 183 (1)
Exceptions in MC sec 192 (1); war, natural phenomenons, third party damage, lights and navigational aids etc.
Some remarks on contributory negligence

17. 6. Pollution liability, cont’d
Channeling of liability
The party strictly liable: the shipowner
Channeling the liability to the shipowner, thereby protecting other groups (MC sec 193 (2))
Protection broken if cause intentionally or grossly negligently with knowledge (MC sec 191 (2))
Protection also against indemnity claims from owner (MC sec 193 (3), but categories C and D)

18. 6. Pollution liability, cont’d
Compulsory insurance:
Ships carrying more than 2,000 tons of oil (MC sec )
Unconditional right of direct action (MC sec 200)
The international oil pollution compensation fund (MC sec 201)
Scope of cover
Liability for the fund
Limit of liability
Financing of the fund

19. 7. Claims from passengers
Basis of liability: culpa/negligence (MC sec 418)
Burden of proof (MC sec 421):
Claimant has the burden of proving basis for liability and causation.
If damage has arisen from or in connection with ship wreck, collision, stranding, explosion, fire, or a defect in the ship, the carrier has the burden of proving that no fault or neglect has occurred.
Contributor or negligence by passengers (MC sec 420)
Who can claim damages (MC sec 428)

20. 8. Cargo claims
Contracts for the carriage of goods: liner trade and general cargo:
Carriage of goods from one port to another
The transortation documents: Bills of Lading or Sea Waybills
Governed by MC sec IV Chapter 13
Chartering of ships:
The ship is contracted out on a voyage or timecharter and the charterer takes care of the commercial management.
The contracts: voyage or timecharter party
Governed by MC sec IV Chapter 14

21. 8. Cargo claims, cont’d Parties to the transportation contracts:
Carriage of general cargo/liner trade (MC sec 251)
Chartering of ships (MC sec 321)
Transportation documents/contracts:
Bills of Lading (MC sec 292/296)
Seawaybills (MC sec 308/309)
Voyage charters (MC sec 321)
Time charters (MC sec 321 (Offhire sec 392))
(Bareboat charters)

22. 8. Cargo claims, cont’d
Liabilities for damage, loss or delay of cargo:
Contractual freedom – mandatory provisions: MC sec 254
Conventions: Hague/Hague-Visby/Hamburg/Rotterdam
Basis for liability: MC sec 275
Fault/negligence
Reversed burden of proof
Carrier’s duty of care (MC sec 274)

23. Liability exceptions:
8. Cargo claims, cont’d
Liability exceptions:
Nautical fault and fire: MC sec 276
Fault by the injured party
Concurrent causes: MC sec 275(3)
Cargo on deck: MC sec 263
Live animals: MC sec 277
Dangerous cargo: MC sec 257 and 291
Norwegian domestic trade: MC sec 276(3) and 280

24. 8. Cargo claims, cont’d Delay: Carrier’s duties: MC sec 298 and 299(3)
Loss may occur in two ways:
The goods are damaged or destroyed because the transport takes too long: MC sec
The goods arrive too late, and in the meantime market conditions have changed: MC sec 277
Determining whether or not there has been a delay, and whether the carrier can be blamed
Liability for the information in the Bill of lading:
Carrier’s duties: MC sec 298 and 299(3)
Carrier’s liability: MC sec 300

25. 8. Cargo claims, cont’d Liability for wrongful delivery of goods
Voyage charters: MC sec 347
Time chartering:
Freedom of contract: MC provides background rules of law
Cargo damage claims
Liability under Bills of Lading: MC sec 382(1)
Recourse against the time charterer

26. 9. Limitation of liabilities
General and special limitation regimes:
Global limitation
Limitation of oil pollution liability
Limitation of bunker oil liability
Limitation of cargo liability
Limitation of passenger liability
The limitation regimes are based on international conventions but not applicable in all jurisdictions.
Why allow limitation of liability?
The traditional explanation
The catastroph view point
The insurance view point

27. 9. Limitation of liabilities, cont’d
Who has the right to limit his liability (MC sec 171)?
The ”reder”
The shipowner
The charterer
The manager
The salvor
The employees of the ”reder”, shipowner, etc
The liability insurer (P&I)

28. 9. Limitation of liabilities, cont’d
Scope of global limitation (MC sec 172)
The claim must relate to a specific ship
Basis for liability, in principle not relevant
The claim must be covered by the categories in MC sec 172 nos.1-4, typically loss of life or injuries to persons, loss of or damage to property, damages resulting from delays, etc.

29. 9. Limitation of liabilities, cont’d
The principle of single liability (MC sec 172 (2)):
Certain claims excepted from limitation (MC sec 173)
Conduct barring limitation (MC Sec 174)
Limits of liability (MC sec 175)
Procedural rules – establishment of limitation fund (MC sec and Chapter 12)

30. 10. Marine accidents Types: Causes: Authorities:
Colllisions, groundings, fire, explosions etc
Causes:
Machinery problems, navigational errors, weather/sea conditions, etc
Authorities:
Coastal administration
Police
National Marine Accident Investigation Board (”Havarikommisjon”)
Flag state
Casualty investigation and report
Forum Shopping

31. 11. Salvage and wreck removal
Salvage: MC Chapter 16 (based on the 1989 Salvage Convention)
Overview: Four main conditions for obtaining a salvage award:
Interests capable of being solved
”In danger”
Useful result
Salvage under contract (Lloyds’ Open Form (LOF) 2000)
Salvage: Interests capable of being solved
Vessel and property: MC sec 441
Persons: MC sec 445
Environmental damage: MC sec 449
Liability and loss of time in general: No

32. 11. Salvage and wreck removal, cont’d
Salvage: ”In danger”
MC sec 441
Risk of total loss or (extensive) physical damage
Must the danger be real?
The degree of danger
Salvage: Useful result
No cure – no pay-principle: MC sec 445
But: Damage to the environment
Unsuccessful effort: Special compensation equivalent to expenses (MC sec 449(1))
Successful effort: Special compensation equivalent to expenses plus % (MC sec 449(2))

33. 11. Salvage and wreck removal, cont’d
Salvage: Under contract
Legal rules may be set aside: MC sec 443(1)
A salvage contract may be annulled or modified: MC sec 443(3)
LOF 2000
Assessment of salvage award: MC sec 446
No preference for any one factor on the list
But: skill and effort in preventing damage to the environment specifically mentioned
Apportionment between salvors:
Apportionment between independent salvors: MC sec 448
Apportionment between owner, master and crew: MC sec 451
Apportionment between the owner and time charterer: MC sec 386(2)

34. 11. Salvage and wreck removal, cont’d
Public authorities may order a wreck removal
Ports and Fareway Act sec 35
Pollution Contract Act sec 7 and 37
Public authorities may remove the wreck and claim compensation from the ”responsible party”
Liability for wreck removal subject to global limitation: MC sec 172 a), cf 175 a)

35. 12. Claims handling Basis for liability/coverage?
Is the liability limited?
Different limitation amounts? (Forum Shopping)
Short limitation periods for many maritime claims: MC sec 501
Recourse claims:
Recourse against charterer/shipowner?
Are public authorities or other third parties liable for the loss?
Maritime lien – safeguarding certain parties/persons
Arrest
Direct action
Dispute resolution