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16 December 2015
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.
The aquaculture industry's demand for well boats is frequently met by time chartering. Ship owners' liability towards fish farmers under time charterparties for loss or damage during transportation of live animals (including fish) is governed by Section 277 of the Maritime Code. The provision is non-mandatory if the contract entered into is a time charter, and owners and charterers often agree on deviating principles in time charterparties. Under Section 277, the owner is not liable for loss or damage to live fish if it is caused by the 'particular risks' inherent to carriage of such cargo. Further, if the owner can show that loss or damage may have been caused by such particular risks and that it has followed the particular instructions given, the burden of proof shifts to the charterer, which must then prove negligence on part of the owner in order to substantiate a claim against it.
The term 'particular risks' leaves room for interpretation, as the relevant legal sources offer little guidance to clarify the meaning of the term. Thus, in cases where fish have been damaged or lost, disputes are likely to arise between owners and charterers regarding the scope of the term. The likelihood of such disputes arising is relatively high, taking into account the large number of well boat charterparties that have been entered into in recent years.
Another potential issue under Section 277 is that the provision applies only to 'transportation by sea'. This clearly covers traditional transportation – for example, of live smolt and fish from a fish farm to a port facility. However, the increasingly sophisticated tasks carried out on board well boats (eg, the delousing, treatment and sorting of fish) are not necessarily covered by the term. Further, it appears difficult for owners or charterers to insure the full potential loss that could result from such tasks.
The liability regime under the Maritime Code falls short when it comes to regulating the handling of live fish by well boats. Therefore, parties to a time charterparty should include specific provisions for allocation of risks and liability, particularly in respect of tasks such as sorting, splitting and counting, as well as medical and parasite treatment (eg, using chemical products, water flushing or other methods). Such provisions should also specify whether liability should be subject to limitation. Despite the many difficulties which may be encountered when negotiating and drafting well boat charterparties, solutions are often possible, given an appropriate approach to the issues.
As is true in all contracts, increased clarity in the liability provisions of well boat charterparties reduces the risk of costly and time-consuming disputes.
For further information on this topic please contact Øyvind Axe, Hågen Hansen or Matthias Grieg at Wikborg Rein by telephone (+47 55 21 52 00) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Wikborg Rein website can be accessed at www.wr.no.
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