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02 February 2005
A recent report by the Permanent Law Commission for Maritime Matters (NOU 2004:21) recommends that Norway ratify the Hazardous and Noxious Substances Convention (1996).
The convention will strengthen the legal position of injured parties with regard to sea accidents involving certain types of dangerous goods. The definition of 'hazardous and noxious substances' in the convention covers liquefied petroleum gas, liquefied natural gas and similar substances, as well as certain chemicals.
The liability and compensation regime established by the convention is very similar to that in the international oil pollution conventions: strict liability channelled towards the shipowner and compulsory insurance. Under the Hazardous and Noxious Substances Convention, a compensation fund will be established for those instances where liability extends beyond the limitation amounts for shipowners and their insurers.
The convention contains considerably higher limitation amounts than those under the 1976 London Convention on the Limitation of Liability for Maritime Claims, as amended by the 1996 Protocol to the 1976 Convention. For instance, under the global limitation rules, a 40,000 gross ton vessel would give a limitation fund amounting to 15.2 million special drawing rights (SDRs) for property damage, whereas under the Hazardous and Noxious Substances Convention, the same vessel would have a limitation amount of SDR 67 million. Due to the high limitation amounts, compensation under the Hazardous and Noxious Substances Convention is expected to come primarily from shipowners and their liability insurers.
The compensation fund will be financed by the receivers of hazardous and noxious cargo through a tax payable to the fund. The compensation fund will cover claims up to 250 million SDR, to the extent that the claim is not covered by the shipowner or its liability insurer.
The convention will make it easier for injured parties to claim compensation directly from liability insurers. Under Norwegian law, third parties may, in practice, commence direct action against the liability insurer only if the insured is insolvent. However, under the convention, the right to commence action against liability insurers is not subject to this precondition.
In 2002 the European Council decided that the EU member states shall take the
necessary measures to ratify the Hazardous and Noxious Substances Convention by no later than June 30 2006. The Norwegian law commission asserts the same, citing
Norway's tradition of a competitive shipping industry and close cooperation
with the EU member states with regard to international maritime conventions.
For further information please contact Gaute K Gjelsten or Trond Eilertsen at Wikborg, Rein & Co by telephone (+47 22 82 75 00) or by fax (+47 22 82 75 01) or by email (firstname.lastname@example.org or email@example.com).
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