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Shipping & Transport
Parliament recently decided that Norway will ratify the Nairobi Wreck Removal Convention and that the convention will be given effect not only in Norway's exclusive economic zone, but also in its territorial waters. Parliament also adopted legislation to implement the convention into Norwegian law once ratified. The legislation will introduce a dual system where the national rules on wreck removal will continue to be in effect and the convention rules will be introduced as a parallel set of rules.
Quiet enjoyment letters are often used where a ship, rig or other unit being financed is subject to a long-term charterparty to govern the interrelationship between the owner, its financiers and the charterer. They provide the charterer with a right to the undisturbed use and enjoyment of the ship, independent of whether the owner in its capacity as borrower is in default of its obligations towards its lender under the loan agreement. But do quiet enjoyment letters have any benefit for lenders?
Unmanned ships are on the horizon and the Norwegian maritime sector is uniquely positioned to take a leading role internationally in the development and commercialisation of this technology. Autonomous shipping may be Norway's maritime equivalent of Project Apollo, but is the legal framework keeping pace?
The 2019 version of the Nordic Marine Insurance Plan 2013 recently entered into force. Among other things, the revisions introduce an arbitration clause as an option for insurances with Nordic claims leaders. Making arbitration the default position when there is a non-Nordic claims leader aims to align the plan with market practice. However, the change has also been brought about by the looming consequences of Brexit.
In a recent judgment in the Full City limitation fund proceedings, the Supreme Court clarified how a global limitation fund established pursuant to the Norwegian Maritime Code should be distributed. The court held that the interest component in the limitation fund should be distributed only on the claims for interest and not on the other claims filed in the fund because vessel owners' limitation of liability should remain the same regardless of whether a limitation fund is established.
In a landmark decision the Supreme Court has set aside a Court of Appeal decision which concluded that the Norwegian courts have jurisdiction under the Lugano Convention in a direct action concerning a ship collision in the Singapore Strait. The decision provides welcome clarification to liability insurers across Europe, as it sets out that the Lugano Convention is a self-contained and exclusive code governing matters relating to insurance.
In 2014 the European Free Trade Association (EFTA) Surveillance Authority commenced an audit of the Norwegian International Ship Register. Subsequently, the EFTA Surveillance Authority opened a case against Norway for a possible breach of the European Economic Area Agreement. The case concerned a geographical trade limitation applicable to ships flying the flag of the Norwegian International Ship Register.
When is a commercial agreement entered into for the provision of towage assistance to a distressed vessel?Norway | 25 July 2018
A recent Agder Court of Appeal decision regarding remuneration for towage of the vessel Kvitnos underscores that where commercial terms have been discussed, a party wishing to claim a salvage award should expressly reserve its rights to do so. The case also illustrates that oral agreements may give rise to disputes when parties have divergent impressions of what has been agreed, especially in distressed situations where time is of the essence and information is scarce.
Irrespective of how the construction of a vessel is financed, the shipyard and its financiers will require that the buyer pays a percentage of the contract price before delivery. This pre-payment may be lost to the buyer if proper security is not put in place. The provision of refund guarantees is the most common way in which this is achieved, but progressive title transfer may in some cases be an alternative method for securing the buyer's position.
The Baltic and International Maritime Council recently released Barecon 2017, which represents an important update of one of the most commonly used maritime contracts. While several new features have been included, the basic structure of the form remains the same. However, several of the simplifications, clarifications and other updates should make the form easier to use in conjunction with rider clauses crafted for a specific transaction.
In some transactions, a non-Norwegian company may wish to register its ship with the Norwegian International Ship Register. This can be done only if the ship is managed by a shipping company that has its head office in Norway. This requirement has a bearing on the contractual structures and financing schemes that can be put in place and also raises issues concerning enforcement.
The Supreme Court recently clarified a number of unsettled issues that will have an impact on other wreck removal cases, including whether vessel owners can use their right to limit liability as a defence against a wreck removal order. Among other things, the decision has clarified the highly disputed interpretation of the relationship between owners' duty to take action and their right to limit liability.
A year and a half after the entry into force of the Nairobi International Convention on the Removal of Wrecks, the Ministry of Transport has completed a consultation process on a proposal to ratify the convention and implement it into Norwegian law. The ministry has suggested that the convention be implemented on a dual basis, alongside existing legislation.
Since arbitration requires agreement between the parties, a third party is not normally bound by, or entitled to invoke, an arbitration clause. However, there are exceptions to the rule. It is recommended, when drafting arbitration clauses, to take into account not only the position of the contractual parties, but also the position of possible third parties, since this may reduce or avoid the risk of difficult procedural questions that may arise if claims are later made by or against a third party.
The Supreme Court has handed down judgment in the long-running OW Bunkers case. The decision is unlikely to be welcomed by owners, which now face the prospect of having to pay twice for bunkers: once to their immediate supplier, which may be insolvent, and again to the physical supplier of the bunkers.
Norway and Brazil signed a memorandum of understanding in November 2015 to enhance cooperation within the area of maritime transport. The memorandum is in line with the Norwegian government's long-term cooperation strategy for Brazil and is intended to increase both public and private sector cooperation and awareness to create mutual economic opportunities and promote investment.
The civil law concept of force majeure is well established in Norwegian law, covering scenarios such as natural disasters, severe weather and war. It is recognised as both a statutory and contract term. However, although there is extensive practice and doctrine on force majeure clauses, a lack of clarity remains regarding what constitutes force majeure and what the effects of such situations are.
As the Norwegian aquaculture industry continues to grow, so does demand for well boats. These sophisticated vessels not only transport fish, but also undertake complex tasks such as delousing and sorting fish. Damage to or loss of the fish handled by these vessels can result in substantial losses. Therefore, owners and charterers of well boats should regulate the risks associated with such services in their charterparties.
Historically, cruise ships calling at Norwegian ports have not been allowed to be registered in the Norwegian International Ship Register. However, a recent change to the Norwegian International Ship Register Regulations has relaxed the trading limits and now allows such ships to be registered in the register if certain requirements are fulfilled.
The general rule regarding set-off under Norwegian law is that a party which disputes a declaration of set-off must initiate legal proceedings in order to establish that there is no basis for set-off and that its claim shall be paid in full. But what happens in a case where the two claims are subject to different limitation periods – such as cargo claims and freight claims?
Amendments to the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims recently entered into force, significantly increasing the limits of shipowners' liability. The Norwegian Parliament has passed legislation to implement the new limits, so the increased limits now apply in all cases where the limitation of liability is invoked for property claims or claims for loss of life or personal injury before a Norwegian court.
In recent years there has been a decrease in the number of vessels registered in the Norwegian International Ship Register due to strong competition from other registries. The government-appointed Trading Limit Committee has now proposed significant changes in order to make it more attractive for owners to register their vessels in the Norwegian International Ship Register.
The government recently proposed that the International Convention on Liability and Compensation for Damage in connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 be ratified and the Maritime Code be amended accordingly. The convention's liability and compensation regime will cover not only pollution damage from hazardous and noxious substances carried by ships, but also the risks of fire and explosion.
The Maritime Code states that a maritime lien becomes time barred one year from the date when the secured claim arose, unless the vessel is arrested and the arrest leads to a forced sale. A recent Supreme Court decision shed light on the level of activity that is required from a creditor after an arrest has been secured in order to maintain a maritime lien.
Cargo damage is sometimes caused by the packaging of the cargo being insufficient to prevent damage to the cargo during transportation. Whether the carrier is liable for such damage depends on the nature of the packaging and the care which is reasonably required to be exercised by the carrier.
A non-resident company that participates in business being carried out in, or managed from, Norway will be liable to pay tax. However, an exemption to this rule exists. The exemption results in non-Norwegian shipowners not being liable to tax in Norway on shipping income – even if the shipping business is managed from Norway – provided that certain conditions are met.
A financing bank will usually secure a loan by obtaining a mortgage for a vessel and seek to protect its interests in the mortgaged vessel by way of insurance. The bank has several options to ensure that its interests are protected by insurance, depending on the conditions under which the owner's insurances are placed, the degree of risk that is acceptable and the costs of taking out various insurance covers.
A recent study of case law confirms that courts will place significant weight on evidence arising from or collected in the immediate aftermath of an incident. Parties facing a potential dispute should take care to collect all relevant documentary evidence and be cautious when issuing preliminary reports or other documents until all relevant facts are identified.
Norway has now implemented EU Directive 2009/20/EC, which obliges shipowners to take out liability insurance for all claims covered by the Convention on Limitation of Liability for Maritime Claims 1996. Vessels are required to carry onboard a certificate as proof of insurance. The directive has been implemented in the Norwegian Maritime Code 1994.
In Norway, as in most other jurisdictions, there are separate rules governing the time bar of maritime claims. It is crucial not only to be aware of these rules and the claims to which they apply, but also to keep in mind that the general time-bar rules may supplement the special maritime rules.
The Borgarting Court of Appeal recently considered the applicable time bar for claims for damages caused by delay of goods carried by sea. The court held that claims for delay are subject to the same limitation period as claims for damage to or loss of the goods, and consequently are time barred one year after the cargo has been or should have been delivered.
In the existing financial climate, there is an emerging trend for yards to provide their buyers with a new form of sellers' credit – by participating with equity in the project companies that are ordering newbuilds. The choice of corporate entity and its jurisdiction can have both favourable and detrimental tax consequences for the different participants.
It is becoming increasingly common for charterers to place their own specific equipment on board the vessels that they charter. For example, in the offshore sector, seismic and pipe-laying equipment is often owned by charterers. As this kind of equipment is valuable, it is important for charterers to protect their legal rights to the equipment.
Where a seller grants a buyer the right to defer payment of part of the purchase price, the seller is in effect giving the buyer a credit for the part of the purchase price which is deferred. Seller's credit is commonly used in the sale of goods in shipping and offshore construction contracts. Although versatile and functional, the use of seller's credit may give rise to legal challenges which are best addressed at an early stage.
The Nordic Marine Insurance Plan 2013 recently entered into force. While the plan is largely based on its predecessor, some important changes have been introduced. These amendments will better facilitate use of the plan in other Nordic countries, as well as in the international market. The plan will no doubt provide greater certainty to both insurers and assureds as to the extent of insurance cover.
In 2012 Norway and Poland ratified an amendment protocol to the Polish-Norwegian Tax Treaty 2010, which aimed to restore former tax exemptions for Polish workers on Norwegian ships. The Norwegian shipping market has shown little enthusiasm for the change, as there appears to have been limited take-up of the restored tax exemptions. As the amended protocol will not become effective until 2014, its impact remains to be seen.
In a recent case a Singaporean shipbroker commenced proceedings in Norway against a Norwegian shipowner. Singapore is not a party to the Lugano Convention, which regulates questions of jurisdiction and enforcement in international disputes. The Supreme Court had to decide whether the convention applies where the claimant is domiciled in a non-member state. The outcome is surprising and warrants attention.
In Norway, a pilot is considered the servant of a shipowner, and the shipowner is held responsible for any loss or damage arising as a result of the pilot's negligence. Notwithstanding this general principle, some grey areas exist where the rationale for holding the shipowner responsible can be called into question. A recent court decision concerning state liability for pilotage failed to provide certainty in this area.
In Norsk Tillitsmann ASA v Silvercoin Industries AS the Supreme Court dealt with the distinction between an ordinary guarantee triggered by the principal debtor's default and an on-demand guarantee. The Supreme Court confirmed the long-held view that the guarantor's liability is triggered by the principal debtor's default, unless there is a reasonably clear basis for a different interpretation.
Ensuring that adequate insurance is in place is essential for a vessel under construction as the losses can be substantial if a peril strikes. Shipbuilding contracts will invariably address which of the parties is required to take out insurance cover, and will often specify the standard insurance terms to be used.
The Norwegian tonnage tax regime stands out as one of the most favourable and competitive in the world today. It provides a stable and attractive option for ship owners and operators. Their growing confidence is demonstrated by the fact that the Norwegian tonnage tax regime currently has more vessels registered than any other regime.
Some international ship registries do not require ship mortgages to specify the amount being secured by the underlying obligations. However, in Norway, a ship mortgage is required not only to identify the property to be mortgaged, but also to specify the maximum amount which is secured under the mortgage. Is a foreign-registered mortgage, without a specified amount for security, enforceable under Norwegian law?
The Supreme Court recently rendered a decision that may increase shipowners' liability where claims are made by cargo interests based on the master's nautical errors during the voyage, by limiting owners' right to rely on the nautical faults exception in the Maritime Code.
The Baltic and International Maritime Council recently issued an updated version of the sale form - the standard contract most commonly used for the sale and purchase of second-hand vessels. The changes include new definitions, a rearranged layout of Clauses 5 and 6, new trigger provisions for payment of a deposit and a new provision permitting delivery against a price reduction when the diver's inspection reveals damage.
To meet the increasing threat from pirates operating in the Gulf of Aden and the Indian Ocean, Norway has adopted new rules applicable to Norwegian registered ships and drilling units. The rules set out when force can be used in self defence, and allow the use of armed guards and firearms on board ships and units when they are operating in certain geographic areas.
The Agder Appeal Court has delivered its final judgment in the criminal case following the grounding of the Full City off Langesund in 2009. The court acquitted the third officer and reduced the master's sentence to six months' suspended imprisonment. The judgment showed a far greater understanding of the maritime industry as compared with the earlier district court judgment.
The Ministry of Trade and Industry has proposed amendments to the Maritime Code regarding casualty investigations. Changes include an increased investigative duty for the Accident Investigation Board, a duty to secure evidence after an accident for anyone involved and a 12-month time limit for issuing casualty reports.
The general rule under Norwegian law is that a mortgagee seeking to enforce a ship mortgage is not entitled to take over, sell or otherwise dispose of a mortgaged vessel without first commencing proceedings before a Norwegian court. In order to file a petition for enforcement in Norway, a mortgagee must establish the validity of the claim and the basis of enforcement.
The 2007 overhaul of the Norwegian tonnage tax regime proved controversial, with lawsuits following the government's decision to tax retrospectively income that was previously tax exempt. A 2010 Supreme Court ruling that this should be reversed has since restored confidence in the regime. All in all, the Norwegian tax package has become very competitive and shipowners are showing increased interest as a result.
Before a closing meeting for the sale and purchase of second-hand vessels takes place, the sequence of steps to be taken for payment of the purchase price and delivery of the seller's documents must be agreed, as well as whether the buyer or the seller should take the first step. Identification of the most suitable solution at an early stage will assist in achieving smooth delivery of the vessel.
The Court of Appeal recently overturned a first instance judgment for owners' liability for cargo damage, in a case regarding the grounding of a general cargo ship off Orkney in January 2007. The appeal court decided in favour of the vessel's owners, judging that they had taken reasonable precautions to ensure the safety of the vessel and its cargo. The cargo interests have appealed the decision.
Recent maritime accidents in Norway have led to the extensive seizure of property and documents by the police and the Accident Investigation Board. Although such seizures may be a necessary part of the investigative process, they are also an interference with property, and may cause delay to vessels and result in other problems, in particular with regard to civil claims.
The Nedre Telemark District Court's sentence for the master and third officer of the tanker Full City, which grounded off Langesund in July 2009, has heightened concern that Norway is following an unfortunate international trend of increased criminalisation of seafarers. The court found both the master and the third officer guilty of violating the Pollution Act due to their failure to take adequate measures to prevent pollution.
In a recent decision by Oslo City Court, a boycott instigated by the Norwegian Maritime Union to raise wage levels on foreign-flagged vessels was held to be illegal. The court held that the interest in protecting Norwegian seafarers' employment onboard vessels operating on the continental shelf did not outweigh the clear need for a shipowner to maintain its competitiveness by employing seafarers from other countries.
The Norwegian Marine Insurance Plan is a comprehensive set of insurance conditions developed by insurers, shipowners and average adjusters. The plan is supplemented by an extensive commentary; both are revised at regular intervals by the Standing Revision Committee. This update provides a review of the most significant changes in the 2010 version.
Maritime accidents which cause damage or injury to people, the environment or property are often followed by a police investigation. The master and crew of a vessel are frequently considered suspects and, as such, have certain procedural rights. As the entire crew is a defined group of persons that may have contributed to the accident, everyone within that group may be considered a suspect in particular circumstances.
The new Harbours and Fairways Act recently entered into force, replacing the earlier Harbour Act. Owners of vessels which operate in Norwegian coastal waters may find themselves more likely to become subject to a wreck removal order as Section 35 of the new act increases the grounds on which the authorities can issue wreck removal orders.
In NH Sunvictor the vessel's machinery stopped working as the cooling water intake became clogged with ice. The vessel grounded and suffered damage. The vessel sustained further damage during the refloating operation. The Supreme Court regarded the sequence of damage as having resulted from the same peril and decided that only one deductible applied.
In 2008 Norway implemented a new investigation system which separated the safety and criminal aspects of accident investigation. Following an international trend, the new rules gave the Accident Investigation Board the authority to investigate accidents to identify the circumstances of importance to improve overall safety at sea. The investigation of the grounding of Full City was the first test for the new system.
Faced with plummeting freight rates and the possibility of more vessels on hand due to early redeliveries from charterers, many owners have already decided to lay up some of their tonnage. Laying up a vessel is a last resort. All other commercial ways of employing the vessel should be explored before taking such a step.
The Ministry of Justice has issued a consultation paper requesting views on whether Norway should sign the Rotterdam Rules at the signature ceremony on September 23 2009. Signing the rules will not oblige Norway to comply with them, since a subsequent ratification will be required. However, a signature will have a symbolic effect, showing that the government supports the adoption of the convention.
In turbulent times it becomes even more necessary to balance properly the liability for design errors between buyers and shipyards. Whether it is time to return to the solution in the 1981 Standard Shipbuilding Contract regarding design liability is something that the industry must decide, but the fact that attention is again being given to the issue of design liability could prompt new regulation on this issue.
Five years after the Rocknes ran aground after hitting an unmarked shoal, the claimants filed a lawsuit against the government claiming compensation for losses incurred. The Norwegian First Instance Court heard the case in February and March 2009. The principal issue was the standard of duty of care that was to be applied with respect to the state's liability.
As a consequence of the challenging times that the shipping industry faces, an increasing number of requests are being made regarding the procedure for arrest and forced sale of vessels. While arrest, or even the threat of arrest, may be a tempting way for a claimant to get the debtor's attention and hopefully receive payment, it may not be equally tempting to embark upon a forced sale procedure to collect the debt.
An arrest is normally obtained to provide security for a claim against the vessel owner, but it is also an effective way to press for a quick settlement of undisputed claims. The fact that vessels constantly change locations and continuously incur debt and liability means that an arrest, or the threat of an arrest, is an important tool for suppliers and other creditors to ensure payment of claims.
The decline of the shipping market has had an unprecedented impact across the full reach of the industry. More than 500 vessels or rigs are on order for Norwegian interests at a time when shipyards and buyers are facing severe financial challenges. This update looks at some of these challenges and discusses, from the buyer's perspective, some strategic considerations which may be of use when renegotiating terms.
A buyer that has entered into a contract with a shipyard for the construction of a vessel often wishes to utilize the value of the shipbuilding contract as part of its financing scheme during the construction period by mortgaging it. This update looks at the questions this raises, as well as the relevant legislation and conflicts which may arise.
The Maritime Logistics Chains and the Environment Project, which commenced in October 2008, is a bold, progressive project focusing on how international sea transport may be optimized to reduce fuel emissions. Heavyweight DNV Maritime is the project owner and major players such as Höegh Autoliners, StatoilHydro and MARINTEK are involved.
The term 'warranties' refers to conditions under which the insurer is discharged from liability in case of non-compliance, irrespective of whether there is fault on the part of the assured or causation between the breach and the loss. However, it is disputable whether such warranties are valid in marine policies governed by law in cases where there is no causation between the breach of the warranty and the loss.
Following an accident involving a bulk carrier in 2007, the government realized that the existing limitation of liability amounts for wreck removal and other clean-up costs related to maritime accidents were insufficient to give full compensation in all imaginable cases. Therefore, it recently submitted a bill to Parliament proposing to double the limitation amounts for liability.
The Ministry of Trade and Industry has proposed amendments to the Maritime Code that would make it possible to register and perfect mortgages in the Norwegian Shipping Registry on hulls that are built abroad and towed to Norwegian yards for completion.
The Supreme Court has extended the protection for shipowners that establish a limitation fund with a European court against enforcement proceedings in Norway, irrespective of whether Norway and the European country in which the fund has been established are parties to the same maritime limitation of liability conventions.
In the event of a marine casualty the shipowner may be ordered to remove the shipwreck or to cover the costs of having the wreck removed. If the shipowner is unwilling or unable to remove the wreck or to cover the wreck removal costs, the question arises as to whether the government may bring a claim for the wreck removal costs directly against the relevant protection and indemnity club.
The phenomenon of pitting corrosion in tanker vessels carrying crude oil products has been recognized for decades, but has significantly increased since the shift to double hull tankers. Pitting can require repairs that disrupt the commercial operation of a vessel, potentially create a risk of pollution and jeopardize the safety of the vessel and crew.
The new system for investigating maritime casualties grants the Norwegian Accident Investigation Board - a professional, independent and permanent body - authority to investigate all maritime casualties that occur within Norwegian jurisdiction and any that occur outside Norwegian jurisdiction but involve Norwegian vessels.
In its ruling on the Rocknes Case, the Supreme Court delivered a rap on the government's knuckles for its over-eagerness to implement the higher limitation amounts on claims set out in the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims.
One of a shipowner’s greatest fears when ordering a newbuild is cash-flow problems at the shipyard. If such a situation arises, the shipowner can protect its interests in various ways depending on whether its main concern is to have the instalments returned or to have the vessel completed.
Since 1987 EU Block Exemption Regulation 4056/86 has allowed liner conferences to fix prices and regulate capacity under certain conditions. This will cease on October 18 2008, following which the slightest violation of the competition rules may trigger dawn raids, investigations and penalties, including significant fines and criminal liability.
Hull insurance operates with two kinds of compensation: compensation for total loss and compensation for damage. Disagreements between the insured and the insurer call for clear-cut rules in order to avoid disagreement. For hull insurance provided on the basis of the Norwegian Marine Insurance Plan, the line between total loss and damage is drawn by the condemnation rules in Chapter 11.
Norwegian ship managers can reduce the potential risk of having to pay for goods or services ordered for the ship by specifying both that orders are made on behalf of a named owner and that orders are to be governed by Norwegian law and jurisdiction. Procedural conflicts and the uncertainty that often follows may be avoided by having explicit internal instructions regarding contractual procedures.
Existing international liability and compensation regimes covering oil spills do not include bunker oil spills from vessels other than tankers. This significant gap is set to be closed with the entry into force of the Bunkers Convention. Provisions in the Norwegian Maritime Code incorporating the convention will enter into force on the same day that the convention enters into force internationally.
It has been predicted that most Norwegian shipping companies will enter the country’s new tonnage tax regime but will leave at an opportune time. It will require companies to pay deferred taxes, which will cost the industry NKr21 billion ($3.9billion). A number of law firms are already considering challenging the government through the legal system.
Before the final entry into a floating production, storage and offloading vessel lease contract there is a long and often complicated process of preparations and negotiations. Decisions made and positions taken in this pre-contractual phase may have an important impact on the final risk allocation and thereby, directly and indirectly, the net income of the project.
Exhaust from ships is a major contributor to air pollution. The approach of the International Maritime Organization has been to adopt Annex VI to the International Convention for the Prevention of Pollution from Ships, which sets limits for sulphur oxide and nitrogen oxide emissions. However, several interests in the shipping business would like to see Annex VI amended to open up for emissions trading.
Many shipowners around the world have faced action by the International Transport Workers' Federation (ITF) in the form of boycott actions. Several of the Norwegian maritime unions are affiliated with the ITF and regularly undertake action in Norwegian ports on its behalf. This update addresses how Norwegian law provides for boycott actions initiated by the ITF.
Norway has recently acceded to the International Convention for the Control and Management of Ships' Ballast Water and Sediments. The convention was adopted by the International Maritime Organization in 2004 and introduces strict regulations on the control and management of ships' ballast water. Norway was among the first countries to join the convention.
One consequence of the international aspect of shipping and ship financing is that a number of contracts and related documents are drafted in English. This can often lead to confusion between the parties involved, due to differences in interpretation of the terms and expressions used.
The concept of the limitation of shipowners' liability was introduced in Norway by Fredrik II's Maritime Code in 1561. For cargo vessels, two limitation regimes often operate in parallel: the unit and weight limitation and the global limitation. This update reviews some of the pitfalls that shipowners should consider when organizing their activities.
Parliament has enacted new legislation proposed by the Ministry of Trade and Industry enabling Norwegian marine insurance companies to exchange information on sub-standard ships with other insurance companies, classification societies and flag state authorities, among others, without the approval of the insured.
The Norwegian Marine Insurance Plan is revised at regular intervals by the Permanent Revision Committee, which was jointly established by the insurance market and the Norwegian Shipowners' Association. This update reviews some of the novelties introduced by the 2007 version of the plan.
After adopting the Protocol to the Convention on Limitation of Liability for Maritime Claims in 2000, Norway denounced the convention in 2005. Norway made a reservation for claims for removal of wreck and cargo, and incorporated a new limitation regime for such claims. The limitation amounts for passenger claims and damage caused by oil platforms were increased with effect from the same date.
The system for the protection of mortgagee interest under the Marine Insurance Plan has remained largely unchanged since the 1964 edition of the plan. Among other things, the interest of mortgagees is automatically co-assured under the owner's insurances. Notification of the mortgage by the mortgagee to the insurer is not required in order for automatic co-insurance to take effect.
The committee appointed by the government to assess the tonnage tax regime has made two general recommendations: to abolish the tax incentives under the tonnage tax regime and extend the controlled foreign companies (CFC) legislation. However, the countereffect of an extension of the CFC legislation would be limited, as shipping investors could still achieve a beneficial tax position in the European Union.
The Standard Form Norwegian Shipbuilding Contract 2000 is now widely used inside and outside Norway. This update explains the reasons for its success and comments on the benefits of using Norwegian shipbuilding contracts.
Following a three-year insurance battle, a court has held that the engine of the Helene was defective before the casualty and was thus not covered by insurance under the Marine Insurance Plan. The court criticized the shipowner for withholding information on the seriousness of the cracks. The decision shows that the Norwegian courts will not look lightly on attempts to withhold evidence in insurance disputes.
Shipowners seeking additional tonnage are increasingly looking for second-hand vessels to be converted to meet their demands. Moreover, owners must convert their vessels to meet new regulatory requirements (eg, the phasing out of single-hull vessels). Conversion projects give rise to a host of risks for shipowners, yards and financing banks, which must be considered when preparing a conversion contract.
The adoption of the International Convention on Civil Liability for Bunker Oil Pollution Damage is expected to fill a gap in the international regime for compensation of victims of bunker oil spills. The convention imposes strict liability for pollution damage caused by bunker oil onboard or originating from ships. It is expected that Norway will ratify the convention in 2007.
Norway leads the way in the floating production, storage and offloading (FPSO) sector. This update focuses on the legal and practical challenges in a typical FPSO conversion project, and highlights issues that could be useful for risk assessments by owners and banks.
An increasingly common trend among Norwegian shipyards is to build hulls in low-cost countries. The hull is then towed to the Norwegian yard. Financing banks usually require as security a mortgage on the vessel under construction. Problems may arise from the fact that a mortgage registered in the Shipbuilding Register is not effective until the hull is brought to the Norwegian yard's premises.
A Mexican company has unsuccessfully brought a claim in Norway against a Russian shipowner. The Supreme Court held that an insurance agreement with a Norwegian company did not constitute a sufficient connection with Norway. The key issue was whether membership in such a company could be regarded as an asset where the member had no claim against the insurer. However, the court's answer was unclear.