We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
22 January 2014
On April 5 2013 Norway 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.
According to the directive, member states shall require that all vessels flying their flag shall be insured for claims which are subject to global limitation under the convention. Ships registered to non-member states must also be insured if they intend to enter EU ports or operate in the territorial waters of EU states.
The directive has been implemented in the Norwegian Maritime Code 1994 by adding new Sections 182a to 182c.
Mandatory insurance requirements have become a popular feature in international shipping legislation, and several conventions include such requirements for their respective, limited scope of application. Examples are the International Convention on Civil Liability for Oil Pollution Damage 1992 and the Bunker Convention 2001, both of which have entered into force. In addition, insurance obligations are also found in several conventions that have yet to become effective – namely, the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996, the Nairobi Wreck Removal Convention 2007 and the Athens Convention 2002 on passenger liability. However, the directive and the new provisions of the Maritime Code are the first examples, internationally and in Norway, of introducing general, mandatory insurance requirements for ships.
The directive forms part of the joint maritime transport policy of the European Union and the International Maritime Organisation (IMO). Its objectives are to:
The mandatory liability insurance applies to vessels of 300 gross tons or more, and shall cover all such claims that can be limited by the Convention on Limitation of Liability for Maritime Claims in an amount equal to the relevant maximum liability amount for the vessel (Section 182a(1)).
Although the convention gives the registered owner, the operator, the bareboat charterer and other parties a right to limit liability, there is only one party that is responsible for taking out insurance under the directive, and that is 'the shipowner' (as defined in the directive). The shipowner means the party "responsible for the operation of the ship", which can be the registered owner or a bareboat charterer. Under the International Convention on Civil Liability for Oil Pollution Damage and the Bunker Convention, the party responsible for having insurance is the registered owner of the vessel.
The insurance shall be documented by a certificate issued by the providing insurance company. The directive sets out detailed requirements, such as that the certificate include:
In Norway, these detailed requirements are not included in the Maritime Code, but are incorporated in the corresponding regulations.(1) The insurance certificate must be onboard the vessel at all times (Section 182a(2)).
Subject to the new rules are vessels flying a Norwegian flag (or the flag of an EU member state) and, more importantly, all other ships calling at ports or places in Norway on the Norwegian continental shelf (or in the European Union) or that operate in Norwegian territorial waters (Section 182a(3)). The Norwegian Coastal Administration proposed that the insurance requirements should apply to all ships sailing through Norwegian waters; however, the ministry concluded that this would contradict the right of innocent passage under the international law of the sea.
No doubt to the satisfaction of the International Group of P&I Clubs, the directive makes its terms the golden standard. The type of insurance cover required is defined in the directive as "for example, indemnity insurance of the type currently provided by members of the International Group of P&I Clubs", as well as other effective forms of insurance and financial security offering similar conditions of cover. However, the provisions of the Maritime Code contain no such requirements. The Ministry of Justice stated in the preparatory works that the term 'similar conditions of cover' should be clarified, and that this would be best done in the regulations. However, the two-paragraph-long regulations make no mention of the required insurance terms at all.
Whether vessels are in possession of the required insurance certificates will be checked during ordinary port state controls.
If a vessel calling at a port or place in Norway or on the Norwegian continental shelf does not carry onboard an acceptable insurance certificate, an expulsion order can be issued (Section 182b). The expulsion order shall be notified to the European Commission in accordance with the directive. The result will be that every EU member state shall refuse the vessel to enter any of its ports until the shipowner has remedied the breach and provided an insurance certificate.
Penalties towards Norwegian vessels are similar and based on the existing penalty regime of Section 199 of the Maritime Code. The Norwegian Maritime Directorate may refuse the vessel to enter port, or may order the vessel to leave port or to be discharged or moved.
For further information on this topic please contact Gaute Gjelsten, Morten Lund Mathisen, Ena Aarseth Barder or Mari Gjerstrøm Christensen at Wikborg Rein by telephone (+47 22 82 75 00), fax (+47 22 82 75 01) or email (email@example.com, firstname.lastname@example.org, email@example.com or firstname.lastname@example.org).The Wikborg Rein website can be accessed at www.wr.no.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.