2. Legal Sources
As a starting point, marine insurance contracts in Norway are regulated by the Insurance Contracts Act of 1989, which contains a set of mandatory provisions. Still, in accordance with § 1-3 letter c, the provisions are not mandatory for insurance of ships that are to be registered in the Norwegian Ship Register. Thus, the Insurance Contracts Act is used as background law for marine insurance contracts and the act will not be directly used in thesis.
In the Nordic marine insurance market, the Nordic Marine Insurance Plan is often used as an agreed standard contract. The contract dates back to 1871(1) H. Bull, Insurance Law and Marine Insurance Law: The Unequal Twins, 2004, p. 20, but the most current version is based on the Norwegian Marine Insurance Plan of 1996, Version 2010. All references to the Nordic Marine Insurance Plan relate to the most recent version: The Nordic Marine Insurance Plan of 2013 – version 2019. The Nordic Marine Insurance Plan is developed and negotiated by representatives from various interested parties, such as members by the Nordic Association of Marine Insurers (Cefor) and Nordic Shipowners’ Associations, as well as technical surveyors and members of the academic societies. By ensuring that all parties develop the contract together, the result is a balanced and fair contract.(2) T. Wilhelmsen, Flexibility, foreseeability and reasonableness in relation to the Nordic Marine Insurance Plan 2013, 2013, pp. 67–68Furthermore, the contract is revised every third year. This secures a dynamic document, where the parties may amend the contract if the risks in the business change.(3) T. Wilhelmsen, Planen som Nordisk Plan – forhold til konkurrerende produkter, særlig engelske vilkår, 2019, p. 35. Reference is also made to T. Wilhelmsen, Flexibility, foreseeability and reasonableness in relation to the Nordic Marine Insurance Plan 2013, 2013
The Nordic Marine Insurance Plan is supplemented by the Commentary to The Nordic Marine Insurance Plan of 2013 – version 2019.(4) The Commentary is only available online. All references to page numbers in the Commentary are based on the available pdf version to be found online at http://www.nordicplan.org/Commentary/Pdf-download/ (23.02.2020)The Commentary is written by the parties responsible for the development of the Nordic Marine Insurance Plan and contains a substantial level of information about the different clauses and how they should be interpreted.
The Commentary shall have a higher degree of precedence than ordinary preparatory works.(5) Commentary to The Nordic Marine Insurance Plan of 2013 – Version 2019, p. 25 The document has been thoroughly discussed and must be regarded as an integral component of the Nordic Marine Insurance Plan.(6) The Commentary p. 25. See also ND 1998.216 NSC Ocean Blessing and ND 2000.442 NA Sitakathrine This structure allows for the clauses in the contract to be relatively precise, while the Commentary provides a broader interpretation where the considerations and background are included.(7) T. Wilhelmsen, Planen som Nordisk Plan, 2019, p. 18
Even though the Commentary holds a high interpretative value, the weight will vary depending on the relationship between the wording in the contract and the Commentary. As the Commentary compliments the clauses in the contract, the remarks in the Commentary will carry a high interpretative weight if they elaborate on matters that were difficult to incorporate in the clause.(8) See ND 1978.138 NA Stolt CandorThe same applies if the Commentary resolves issues that are unsolved in the contract.(9) T. Wilhelmsen & H. Bull, Handbook in Hull Insurance, 2017, p.27 This is for example demonstrated in ND 2000 p. 442 NA Sitakathrine where the scope of the hull insurance was extended in light of remarks in the Commentary.(10) T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan. Regulation and practice, 2019, pp. 81–83However, if the remarks in the Commentary concern general reflections and interpretation, they should not be interpreted as literally.(11) T. Wilhelmsen & H. Bull, Handbook in Hull Insurance, 2017, p. 28
Case law from the supreme court will usually be an important legal source with considerable precedence.(12) T. Eckhoff, Rettskildelære, 2001, p. 160However, there are few, if any, cases from the supreme court relating to the topic of this thesis. Case law from the lower courts does have some degree of interpretative value,(13) T. Eckhoff, Rettskildelære, 2001, p. 162but also this case load is limited.
Arbitration is commonly used to solve disputes relating to marine insurance. A rough estimate indicates that about 25 % of disputes are solved through arbitration.(14) T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 74 From a marine insurance perspective, there are several benefits from using arbitration compared to solving disputes in the ordinary court system. Brækhus lists expertise, time efficiency, confidentiality, costs efficiency and internationality as the five main benefits.(15) S. Brækhus, Voldgiftspraksis som rettskilde, 1990, p. 451 ff., as cited in T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 74In Norway, where the courts are generalized, it cannot be expected that the judges have sufficient competence to solve issues related to complex matters of marine insurance.(16) This is further emphasized by the fact that neither ordinary nor marine insurance law are a part of the legal education program in Norway. Hence, an arbitrational tribunal of experts in the field secures expertise, which ensures time and cost efficiency.(17) T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, pp. 74–77An unpublished arbitration award may be beneficial for a company with regards to keeping valuable information confidential. However, in a business where lack of competence is an issue, it is important to limit the confidentiality in order to secure knowledge and development of the Nordic Marine Insurance Plan as a contract.(18) T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 78
The arbitration awards will normally have a limited weight as legal precedence.(19) T. Eckhoff, Rettskildelære, 2001, p. 163, as cited in T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 79 However, the significance increases for standard contracts that use arbitration clauses.(20) T. Eckhoff, Rettskildelære, 2001, p. 163, as cited in T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 79. This is particularly the case for shipbuilding contracts, but such a clause was also included in the Nordic Marine Insurance Plan in the 2019 version, cf. Cl. 1-4A and 1-4BWhere such clauses are commonly used, the number of ordinary court cases will naturally be low. Consequently, the arbitration awards will be the main source of information about the interpretation and the legal development of the contract. Furthermore, accessibility of the awards further increases the significance.(21) T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 79The general view in theory is that published arbitration awards should carry the same level of precedence as judgements from the lower court.(22) S. Brækhus, Voldgiftspraksis som rettskilde, 1990, p. 459 and T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 80 The most common way to publish arbitration awards of significance is to publish them in Nordiske Domme for Sjøfartsanliggende. In addition, some awards are specifically mentioned in the Commentary as examples of interpretation. These awards should have an even higher degree of precedence, as the award will be treated similarly to other remarks in the Commentary.(23) S. Brækhus, Voldgiftspraksis som rettskilde, 1990, p. 459 and T. Wilhelmsen, Choice of forum in the Nordic marine insurance plan, 2019, p. 80
There are a limited number of cases from both the ordinary courts and from arbitration that relate to faulty material and error in design. However, some cases will be used to demonstrate the general aspects related to the Nordic Marine Insurance Plan.
In addition to arbitration, minor disputes are may be solved by the use of Nordic average adjusters, currently Bjørn Slaatten in Norway, in accordance with Nordic Marine Insurance Plan Cl. 5-5. The average adjuster is an independent and objective party who can issue a legal evaluation of a dispute. The evaluation is non-binding and does not prevent the parties from taking the dispute to court or arbitration. These cases will have low degree of precedence as the evaluation is only issued to the concerned parties; usually the assured, the broker and the underwriters. Still, the evaluations are useful to demonstrate how the theoretical issues in the Nordic Marine Insurance Plan occurs in practice, even if they are customarily adhered to by several leading Nordic insurers.
As mentioned above, the community for marine insurance law under the Nordic model is relatively limited. Consequently, the availability of literature concerning marine insurance under the Nordic Marine Insurance Plan is limited and there are no books concerning the latest version of the contract. However, the 2019 version did not result in any major amendments in relation to the topics discussed in this thesis. Hence, literature concerning the 2016 version is highly relevant.(24) There are still only a limited number of relevant books regarding the Nordic Marine Insurance Plan: T. Wilhelmsen & H. Bull, Handbook in Hull Insurance, 2017 and Stang Lund, Handbook in Loss of Hire Insurance, 2017. A very limited presentation is also available in T. Falkanger, H. Bull, & L. Brautaset, Scandinavian Maritime Law: The Norwegian Perspective, 2017Furthermore, the rules concerning faulty material and error in design have been relatively unchanged since 1964 and many of the governing principles of the Nordic Marine Insurance Plan have remained the same throughout the previous versions. Thus, literature concerning the earlier versions of the Nordic Marine Insurance Plan, such as Brækhus and Rein’s Håndbok i kaskoforsikring: på grunnlag av Norske Sjøforsikringsplan av 1964 will still be of interest when it comes to the broader lines in the Nordic Marine Insurance Plan, as well as the specific considerations that apply for losses caused by error in design and faulty material.