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SHIP AND LIABILITY – an introduction to Norwegian Maritime Law

SHIP AND LIABILITY – an introduction to Norwegian Maritime Law. Andreas Meidell, partner, dr juris 3 September 2013. Overview . Maritime law – characteristics and sources Ship and liability – the issues most relevant for marine insurers

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SHIP AND LIABILITY – an introduction to Norwegian Maritime Law

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  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 – theissues most relevant for marine insurers Case scenario – a typicalshipcollision case General rulesonliabiliy Collisions and strikings Pollutionliability Claims from passengers Cargo claims Limitationofliabilities Marine accidents Salvage and wreckremoval Claims Handling
  3. Blogg www.obitermarine.no
  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 Codeof 1994 and theShip Safety Actof 2007 (includingpreparatoryworks, internationalconventions, etc) Published case law (includingarbitralawardswhenpublished) Commercial contracts (including standard forms)
  6. Public authorities Insurers Class Owner Stevedores (Bareboat charterer) Crew (Time charterer) Cargo owner Passengers (Voyagecharterer) Injuredparties Manager (Sub charterer)
  7. 2. Ship and liability, the issues most relevant for marine insurers Ourfocushere is onthe parts of maritime lawthatare most relevant for marine insurers. It is important to understand theliabilityexposuresoftheinsuredinterests: 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 betweentheliability a shipownermayincur, and theliabilityinsurancecoverage: Collisions Third party damages The scopeof P&I cover similar to thescopeofshipowners’ liability (”rederansvaret”)
  9. 3. Case scenario – a typical ship collision case A typicalshipcollision case normallyinvolvesmany maritime legal issues: Collisionliabilities Crew injuries Third party damages (pollution) Salvage Marine accidentresponses Cargo liability
  10. 4. General rules on liability Marine accidents leads to damages, whichagain leads to losses ofvariouskinds Shall ”the losses liewherethey fall”, or cansomeone (tortfeasor) be held liable? Three basicrequirements for liability in tort: Financial loss Basis for liability Causationbetweenthe basis for liability and thefinancial loss
  11. 4. General rules on liability, cont’d Basis for liability: Culpa and thevicariousliability Strictliability Contractualliability Culpa – negligence; general priciple in tort law The vicariousliability: MC sec 151 Strictliability: E.g. pollution – MC sec 183
  12. 4. General rules on liability, cont’d Contractualliabilityregulation: E.g. ”knock-for-knock” provisions Financial loss: Measureofdamages in money Causation: Proximityofcauses and contractuallimitations
  13. 5. Collisions and strikings Rulesfound in the MC Chapter 8 (basedontheCollisionLiability Convention of 1910) Convention has a wideinternationalapplication, however, not ratified by the US Basis principles: The principle in MC sec 161 (1): The ”reder” is liableif he or his servants has actednegligently, therebycausing a loss. The ”Rulesofthe Road” arethe ”trafficrules” ofthesea, adopted by theinternationalregulation for preventingcollisions at sea, Convention of 1972 with later amendments. There is noroom for strictliability in collision cases, see MC sec 162
  14. 5. Collisions and strikings, cont’d Both to blamecollisions, MC sec 161 (2) and (3): Liability ”pro-rata” for loss/damage to goods in a both-to-blamecollision Joint and severalliability for loss oflife/injury to persons (MC sec 161 (3 in fine)) Collisionswithotherstructures, such as quaystructures, floatingobjectsetcare not covered by MC Chapter 8, and must be determinedaccording to ordinaryrulesonliability and tort. Someparticularissues: Prescription Maritime liens Insurance cover
  15. 6. Pollution liability Three variousbutsimilarliability regimes applicable to differencesectors: Oil pollution from tankers Bunker oilpollution Liability for hazardeous and noxioussubstances The international legal framework: CivilLiability Convention 1969 Fund Convention 1971 CivilLiability and Fund Conventions 1992 Bunker Oil Convention 2001
  16. 6. Pollution liability, cont’d MC Chapter 10: implementsthe 1992 and 2001 Conventions. US Oil PollutionAct 1990 (OPA) Scopeof cover ofthe Convention basedrules Strictliability: The starting point – Tankers: MC sec 191 (1) – Bunker oil: MC sec 183 (1) Exceptions in MC sec 192 (1); war, naturalphenomenons, third party damage, lights and navigational aids etc. Someremarksoncontributorynegligence
  17. 6. Pollution liability, cont’d Channelingofliability The party strictlyliable: theshipowner Channelingtheliability to theshipowner, therebyprotectingothergroups (MC sec 193 (2)) Protection broken ifcauseintentionally or grosslynegligentlywithknowledge (MC sec 191 (2)) Protectionalsoagainstindemnityclaims from owner(MC sec 193 (3), butcategories C and D)
  18. 6. Pollution liability, cont’d Compulsoryinsurance: Shipscarrying more than 2,000 tonsofoil (MC sec 197-199) Unconditional right ofdirect action (MC sec 200) The international oil pollution compensation fund(MC sec 201) Scope of cover Liability for the fund Limit ofliability Financingofthe fund
  19. 7. Claims from passengers Basis ofliability: culpa/negligence (MC sec 418) Burdenofproof (MC sec 421): Claimant has theburdenof proving basis for liability and causation. Ifdamage has arisen from or in connectionwithshipwreck, collision, stranding, explosion, fire, or a defect in theship, the carrier has theburdenof proving thatnofault or neglect has occurred. Contributor or negligence by passengers (MC sec 420) Who canclaimdamages (MC sec 428)
  20. 8. Cargo claims Contracts for thecarriageofgoods: liner trade and general cargo: Carriage ofgoods from one port to another The transortationdocuments: Bills ofLading or SeaWaybills Governed by MC sec IV Chapter 13 Charteringofships: The ship is contractedouton a voyage or timecharter and thecharterertakescareofthecommercialmanagement. The contracts: voyage or timecharter party Governed by MC sec IV Chapter 14
  21. 8. Cargo claims, cont’d Parties to thetransportationcontracts: Carriage of general cargo/liner trade (MC sec 251) Charteringofships (MC sec 321) Transportationdocuments/contracts: Bills ofLading (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 delayof cargo: Contractualfreedom – mandatoryprovisions: MC sec 254 Conventions: Hague/Hague-Visby/Hamburg/Rotterdam Basis for liability: MC sec 275 Fault/negligence Reversedburdenofproof Carrier’sdutyofcare (MC sec 274)
  23. 8. Cargo claims, cont’d Liabilityexceptions: Nauticalfault and fire: MC sec 276 Fault by theinjured party Concurrentcauses: MC sec 275(3) Cargo ondeck: MC sec 263 Live animals: MC sec 277 Dangerous cargo: MC sec 257 and 291 Norwegiandomestic trade: MC sec 276(3) and 280
  24. 8. Cargo claims, cont’d Delay: Loss mayoccur in twoways: The goodsaredamaged or destroyedbecausethe transport takestoolong: MC sec 275-277 The goodsarrivetoo late, and in themeantime market conditions have changed: MC sec 277 Determiningwhether or not there has been a delay, and whetherthe carrier can be blamed Liability for theinformation in the Bill oflading: Carrier’sduties: MC sec 298 and 299(3) Carrier’sliability: MC sec 300
  25. 8. Cargo claims, cont’d Liability for wrongfuldeliveryofgoods Voyage charters: MC sec 347 Time chartering: Freedomofcontract: MC providesbackgroundrulesoflaw Cargo damageclaims Liability under Bills ofLading: MC sec 382(1) Recourseagainstthe time charterer
  26. 9. Limitation of liabilities General and speciallimitation regimes: Global limitation Limitationofoilpollutionliability Limitationof bunker oilliability Limitationof cargo liability Limitationof passenger liability The limitation regimes arebasedoninternationalconventionsbut not applicable in all jurisdictions. Whyallowlimitationofliability? The traditionalexplanation The catastrophviewpoint The insuranceviewpoint
  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 employeesofthe ”reder”, shipowner, etc The liabilityinsurer (P&I)
  28. 9. Limitation of liabilities, cont’d Scopeof global limitation (MC sec 172) The claim must relate to a specificship Basis for liability, in principle not relevant The claim must be covered by thecategories in MC sec 172 nos.1-4, typically loss oflife or injuries to persons, loss of or damage to property, damagesresulting from delays, etc.
  29. 9. Limitation of liabilities, cont’d The principleof single liability (MC sec 172 (2)): Certainclaimsexcepted from limitation (MC sec 173) Conductbarringlimitation (MC Sec 174) Limits ofliability (MC sec 175) Proceduralrules – establishment oflimitation fund (MC sec 177-179 and Chapter 12)
  30. 10. Marine accidents Types: Colllisions, groundings, fire, explosionsetc Causes: Machinery problems, navigationalerrors, weather/seaconditions, etc Authorities: Coastaladministration Police National Marine AccidentInvestigationBoard (”Havarikommisjon”) Flagstate Casualty investigation and report Forum Shopping
  31. 11. Salvage and wreck removal Salvage: MC Chapter 16 (basedonthe 1989 Salvage Convention) Overview: Four mainconditions for obtaining a salvageaward: Interestscapableofbeingsolved ”In danger” Usefulresult Salvage under contract (Lloyds’ Open Form (LOF) 2000) Salvage: Interestscapableofbeingsolved Vessel and property: MC sec 441 Persons: MC sec 445 Environmentaldamage: 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) physicaldamage Must thedanger be real? The degreeofdanger Salvage: Usefulresult No cure – nopay-principle: MC sec 445 But: Damage to theenvironment Unsuccessfuleffort: Special compensationequivalent to expenses(MC sec 449(1)) Successfuleffort: Special compensationequivalent to expensesplus 30-100% (MC sec 449(2))
  33. 11. Salvage and wreck removal, cont’d Salvage: Under contract Legal rulesmay be setaside: MC sec 443(1) A salvagecontractmay be annulled or modified: MC sec 443(3) LOF 2000 Assessmentofsalvageaward: MC sec 446 No preference for anyonefactoronthe list But: skill and effort in preventingdamage to theenvironmentspecificallymentioned Apportionmentbetweensalvors: Apportionmentbetween independent salvors: MC sec 448 Apportionmentbetweenowner, master and crew: MC sec 451 Apportionmentbetweentheowner and time charterer: MC sec 386(2)
  34. 11. Salvage and wreck removal, cont’d Wreckremoval: Public authoritiesmay order a wreckremoval Ports and FarewayAct sec 35 PollutionContractAct sec 7 and 37 Public authoritiesmayremovethewreck and claimcompensation from the ”responsible party” Liability for wreckremovalsubject to global limitation: MC sec 172 a), cf 175 a)
  35. 12. Claims handling Basis for liability/coverage? Is theliability limited? Differentlimitationamounts? (Forum Shopping) Short limitationperiods for many maritime claims: MC sec 501 Recourseclaims: Recourseagainstcharterer/shipowner? Are publicauthorities or otherthirdpartiesliable for the loss? Maritime lien – safeguardingcertainparties/persons Arrest Direct action Disputeresolution
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