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Shipping & Transport
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?
A recent High Court decision will provide comfort for vessel owners and serve as a reminder to charterers of the importance of documentary obligations within a bareboat charter. The court held that where a vessel is on bareboat charter, the obligation on charterers to keep the vessel with unexpired class certificates at all times is an absolute obligation and a condition of the contract.
International conventions and local regulations combine to create a complex legal regime, which is often overlooked. The sale of a ship or rig to an intermediate buyer, which then sells the asset on to a shipbreaking facility, will not necessarily insulate the original owner from future liability or reputational damage. This article addresses a number of frequently asked questions which owners and other parties involved in transboundary movements of marine assets for recycling may find helpful.
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 charterparties where no expected time of arrival or readiness to load at the loading port is stated, the question will be whether an equivalent can be identified which can be used as the basis for an absolute obligation requiring the owners to proceed to the loading port by a particular time. The Court of Appeal recently held that the itinerary for an intermediate voyage was such an equivalent.
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.
A 2017 Commercial Court judgment clarifies the concept of barratry and confirms that there is no qualification to fire when seeking to rely on the fire defence under the Hague or Hague-Visby Rules (assuming that the vessel is seaworthy and that the fire was not caused by the actual fault or privity of the owner). It also confirms that, absent fire, an owner cannot escape liability for deliberate wrongful acts of the crew under the Hague or Hague-Visby Rules even if there is no actual fault or privity on its part.
The High Court recently considered the wording "exposure to sanctions" and ruled that the underwriters of a marine insurance policy could not rely on that wording to avoid a claim on the basis of a "risk of exposure" to the US-Iran sanctions. Rather, for underwriters to do so, there would need to be an actual prohibition on paying the claim in question. This latest judgment deals with a number of key points for drafting effective sanctions exclusion clauses in commercial maritime agreements.
Court of Appeal decision confirms that Article IV(5) of Hague Rules does not apply to bulk and liquid cargoesUnited Kingdom | 05 December 2018
A recent Court of Appeal decision concerned a claim by charterers against disponent owners in respect of contaminated fish oil in bulk carried on board a tanker. The owners accepted liability for the damaged cargo, but argued that they were entitled to limit their liability under Article IV(5) of the Hague Rules. However, the court confirmed that Article IV(5) does not apply to bulk and liquid cargoes; therefore, a carrier cannot limit liability for such cargoes under the Hague Rules.
In a recent case concerning the enumeration of units for the limitation of containerised cargo, the Court of Appeal was asked to determine whether the Hague-Visby Rules are compulsorily applicable if a bill of lading is not issued, what constitutes a 'unit' under the rules and what enumeration of cargo is required under Article IV.5(c) of the rules. The claim arose following damage to a cargo of frozen bluefin tuna packed into three refrigerated containers, which had occurred during carriage from Cartagena to Japan.
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.
The Aconcagua Bay was voyage chartered for the carriage of cargo from the US Gulf. While the vessel was loading, a bridge and lock were damaged and the vessel could not leave the berth for 14 days. The owners claimed damages for detention from the charterers for the period of delay. The main issue was whether a warranty in a voyage charter that the berth is 'always accessible' means that the vessel can always enter and leave the berth.
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.
The Court of Appeal recently provided important clarification in relation to the apportionment of liability for cargo claims as between shipowners and charterers under the Inter-club Agreement. The issue before the Court of Appeal was whether the word 'act' in the phrase 'act or neglect' in Clause 8(d) of the Inter-club Agreement means a culpable act in the sense of fault or whether it means any act, culpable or not.
In Songa Winds, the London High Court found that letters of indemnity requesting delivery without the production of bills of lading to an intermediate trader of cargo are triggered even if delivery is to the trader's buyer. The use of letters of indemnity to allow the delivery of cargo to a named party without the production of a bill of lading is relatively common, but infrequently called upon.
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 commercial practice of delivering cargo to a recipient against a charterers' letter of indemnity without the production of bills of lading has long been commonplace in the shipping industry. The split of the delivery process into two stages can cause issues for owners that rely on the standard letter of indemnity wording, which refers only to the delivery of cargo and not its discharge. Given this risk, it is sensible for shipowners to ensure that discharge is explicitly covered in any letters of indemnity issued in their favour.
The English High Court recently confirmed when it will order the sale of liened cargo which is the subject of arbitration proceedings. This decision may be of interest to shipowners that are faced with a situation in which cargo belonging to a charterer remains on board a vessel for a long period without the owners receiving hire, while still incurring operating costs.
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.
A recent Court of Appeal decision overturned the High Court judgment against the time charterers of a ship, reinstating the arbitration award in their favour. The decision has added another reason for delaying a final assessment of the loss of profit on a repudiated long-term charter by waiting to see whether the owners will sell the vessel.
The Baltic and International Maritime Council recently launched a revised version of its standard time charter party for offshore support vessels – the Supplytime. Considering the form's broad application in practice, the 2017 edition's amendments and new features are likely to have a significant impact on issues facing owners and charterers.
Keeping pace with the changing nature of the liquefied natural gas (LNG) sector, the traditional long-term LNG time charter market is evolving and charter periods are becoming shorter. The fixing of LNG carriers on shorter-term and more flexible contracts is a sign that the LNG industry is becoming much less rigid. It has resulted in owners and banks having to adjust their traditional approach to LNG ship financing and agreeing to more market exposure.
The Supreme Court recently handed down its judgment in New Flamenco (Globalia Business Travel SAU of Spain v Fulton Shipping Inc). In this long-awaited decision, the court considered whether a benefit obtained by the owners relating to the sale of the vessel following the charterers' repudiatory breach of a charter should be taken into account in assessing the damages that the owners were entitled to recover.
A recent Commercial Court decision held that a charterer is 100% responsible under the Inter-Club Agreement for damage to cargo arising from an order to the vessel to delay discharge until the receivers are able to pay for the cargo. Given that it is common for shipments to be delayed, more disputes relating to deliberately delaying discharge can be expected in the future.
The Supreme Court recently handed down a judgment addressing three issues of importance to shipowners, charterers and insurers alike, defining the parameters of the safe port undertakings, the rights of subrogation of insurers where vessels are operated under bareboat charter and the right of charterers to limit their liability under the Convention on the Limitation of Liability of Shipowners.
When a ship has reached the end of its life, the owners are faced with the decision of how to dispose of it in a manner that is both commercially viable and environmentally sustainable. The controversial practice of beaching vessels in less-developed countries has prompted initiatives to tighten regulations on the recycling of ships.
It has been a brutal few years in the shipping and offshore markets with overcapacity, declining demand and the dramatic fall in oil prices all contributing to historically low charter rates and plummeting asset values. While in recent years owners have been battening down the hatches in a bid to survive, consideration is now being given as to how and when to act in order to seize the opportunities that may present themselves during recovery.
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.
In a recent case, the Court of Appeal decided unequivocally that missing a single instalment of hire under a time charter is not a breach of condition. In other words, there is no right to terminate for one missed instalment and claim damages for loss of bargain – usually the difference between the charter and market rate for the remainder of the charter period. The court also set out useful guidance on what constitutes 'renunciation' (anticipatory repudiatory breach) of a time charter.
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.
Two recent London decisions involving shipping companies have highlighted problems that can be encountered when starting an arbitration. The first decision concerned an issue with identifying whether a non-signing counterparty is bound by the agreement containing the arbitration clause. The second decision concerned the question of which parties are authorised to accept service of arbitration notices.
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.
A recent Court of Appeal decision acknowledges the difficulties of laying down general principles of law in connection with an innocent party's obligation to mitigate its loss following a repudiatory breach of contract. The case arose in the context of assessing damages for early redelivery where there was no available market at the time of the breach against which to measure the loss.
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.
A recent arbitration decision raises a number of interesting points in connection with lay-up agreements and how much can be claimed for continuing to provide services after the original contract has been terminated. It will be of interest to parties that see their unpaid charges increasing, as well as to other involuntary bailees, such as vessel owners left holding cargo with no bills of lading binding them after their charterers have ceased operations.
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.
Unlike many civil law countries, there is no implied application of the doctrine of force majeure under English law. Rather, the treatment of an event of force majeure comes from the contract. It is usual for English courts to apply contracts strictly, according to their wording and respecting the parties' freedom to contract on terms they see fit.
In a potentially problematic decision, the Court of Appeal recently upheld a High Court judgment that a contract to supply bunkers on credit terms, with a retention of title clause in favour of the sellers until full payment but with permission to consume the bunkers (or some of them) before payment was due, was not a contract for the sale of goods under the Sale of Goods Act.
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.
In a dry bulk market where a charterer is not paying freight or hire, its counterparty is often left to consider whether it can lien the cargo on board the chartered vessel to obtain payment. When it comes to liening cargo under a Congenbill, English law will look first to the head voyage charterparty as the source of relevant terms to be incorporated into the Congenbill, unless another charter is expressly identified. This can lead to a less-than-obvious outcome.
Owners continue to face uncertainty when charterers fail to pay hire under a time charterparty, particularly in respect of when they can withdraw the vessel or terminate and claim damages for future loss of hire. However, these uncertainties can be managed by including appropriate terms in the charterparty and by a careful and well-advised approach when charterers do fail to pay.
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.
A shipowner's bid to avoid the risk of paying twice for bunkers supplied has been thwarted by a recent High Court decision, which held that a contract for the supply of bunkers is not a sale contract falling within the Sale of Goods Act 1979. The decision is important since, as the court recognised, the contract terms in this case are "typical of hundreds or even thousands of such transactions carried out every year".
If a time charterer redelivers a vessel before the end of the agreed charter period, the owner is faced with the choice of either accepting redelivery and claiming damages or maintaining the charterparty and continuing to claim hire. This decision has both commercial and legal implications. The owner's dilemma remains the same under a bareboat charterparty as under a time charterparty.
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.
In a recent Court of Appeal decision a reference in a bill of lading to an arbitration clause in the underlying voyage charterparty was understood to incorporate the dispute resolution clause in the charterparty which provided for high court jurisdiction. The decision demonstrates that all parties to bill of lading contracts must be conscious of the fact that the words printed on the bill may not provide the whole story.
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.
In a volatile market, many owners face the difficult challenge of having a vessel redelivered early under a profitable charter. Early redelivery may arise where a charterer is no longer willing or able to perform the charter or where, faced with non-payment of hire, the owner decides that it has no choice but to withdraw the vessel and terminate the charter.
There has been uncertainty in terms of the interpretation of Clause 13 of the Norwegian Saleform and, in particular, as to the extent of amounts recoverable where a buyer has failed to pay the deposit in accordance with Clause 2. In Griffon Shipping LLC v Firodi Shipping Ltd the Court of Appeal provided guidance on this point, holding that Clause 13 does not exclude a seller's right to claim the deposit as a debt.
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 Commercial Court has handed down its judgment in Ocean Victory. The case concerned a safe port warranty and total loss, but it also addressed whether the insurer – as the assignee of the co-assured demise charterer – was entitled to claim indemnity from time charterers for the demise charterer's liability towards the co-assured head owners in respect of their breach of the safe port warranty.
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.
Life as a shipowner is seldom easy. In addition to the commercial challenges that owners face on a daily basis, time must be given to reading law reports to ensure that benefits are gained and warnings heeded from the misfortunes of those who find themselves embroiled in the legal system - particularly when economic conditions demand strict enforcement of legal rights. Three recent decisions may be of particular interest.
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.
Whether the 1993 Norwegian sale form excludes terms as to satisfactory quality and fitness for purpose, which are implied in contracts of sale by the Sale of Goods Act, has always been the subject of speculation. A recent decision has put this debate to rest, holding that such terms are to be implied unless expressly excluded. This ruling has implications for the terms agreed for the sale and purchase of second-hand vessels.
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.
When a party commits a breach of contract entitling the other party to terminate, the innocent party should not delay in exercising its rights. To do so may raise difficult questions as to whether the right has been waived and whether the late exercise of a right to terminate itself amounts to a repudiatory breach. A recent decision in a case involving a shipbuilding contract highlights that time may be an important consideration before the right to terminate arises.
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.
The English courts have delivered a decision on guarantees and the all-important distinction under English law between guarantees and indemnities or on-demand bonds. The courts have repeatedly attempted to explain the distinction between these two forms of security. In a recent decision the Court of Appeal attempted a more simple solution by seeking to cut – or perhaps unravel – this Gordian knot.
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.
A guarantee designed to provide security for the performance of the obligations of a debtor sometimes turns out to be far from secure. Where the nature and extent of a guarantee is ambiguous, courts are often called on to determine the scope and validity of the security. What seems simple and straightforward when these guarantees are negotiated can become less so when it comes to enforcement against a resistant guarantor.
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 Supreme Court recently ruled in favour of the buyers of six Korean newbuildings, Rainy Sky SA and five other entities, reversing the Court of Appeal's decision which rejected their claim under refund guarantees. The decision represents a victory for commercial common sense over the strict legal interpretation of the language used in guarantees.
The procedure for enforcement of a ship mortgage under English law is based on a contractual right. Thus, the rights of a mortgagee are derived from specific terms agreed with the mortgagor. Typically, the loan documentation will identify those events of default by the mortgagor which give rise to the right on the part of the mortgagee to take enforcement action.
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.
In a recent case the charterers argued that a London Maritime Arbitrators Association tribunal had erred as a matter of law in awarding damages to the shipowners despite the fact that they had suffered no loss, and so had ignored a fundamental principle in English law that damages are intended to be compensatory. The decision both simplifies and makes clear the basis on which losses are to be recovered
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.