3.4 Illustration of inadequate approach of construction taken by the Norwegian Supreme Court in the Sunna
In contrast to these foreign law elaborate considerations on the construction of the HVR, we may look at some examples of considerations of construction adopted by the Norwegian Supreme Court in the Sunna - with sole reference to the provisions of the MC, detached from their roots in the HVR.
One example concerns the Supreme Court's discussion of the privity reservation of the fire exception and its pendant to the nautical fault exception in MC s. 276. In that respect the Court states:
"The exceptions in section 276 first paragraph only concerns nautical fault and fire which are not attributable to the carrier's privity. In the provision for fire this follows from the wording itself, cf. also Rt-1976-1002 (Høegh Heron). The same must also apply to nautical fault, cf. Thor Falkanger and Hans Jacob Bull: Sjørett (7th edition) page 262, 267 and 270 and Fredrik Sejersted: Haagreglene (the bill of lading convention) (3rd edition) page 64."(1) Para. 36 - my emphasis.
Clearly that is right as a matter of law, but the mere fact of putting the question this way reveals a surprising lack of understanding, both as to the nature of a navigational fault exception and the scheme of the HVR. To say that "the same [a reservation of privity] must apply also to nautical fault", misses the point: nautical matters are within the prerogative of master and crew, hence outside of the owner's "direct control", as that phrase was used in the Tasman Pioneer.
It would therefore be a contradiction in terms to have the nautical fault exception supplemented with an express reservation of privity, as opposed to events of fire, since fire is not an "act" (of navigation or similar). It is simply what it is: fire. And clearly there is here a need for a reservation with respect to shipowners' privity, since otherwise the shipowner would (at least prima facie) be exempt from liability in all cases of fire, which clearly would not make sense.(2) A separate matter is that privity in this context must mean privity (proper) under English law, i.e. fault at the alter-ego level of the shipowning company, not fault by whoever servants or agents, such as the master, crew or ship personnel, see e.g. Cooke et al, Voyage Charters, 2007, p. 1027. Still a separate matter is that the general requirement that fire must not be attributable to negligence on the shipowner's part (or his servants) in making the ship initially seaworthy, applies also here.
This confusion concerning the concept of privity has ramifications. The City Court in the Sunna put up as a main question for discussion whether the superintendent of the shipowner belonged to the company's managerial (alter-ego) level for the purposes of asking whether the superintendent had taken sufficient steps to ensure that the master understood the seriousness of the situation, i.e. the importance of complying with the safety rules. The City Court found that the superintendent did belong to the managerial level of the company and that he had not taken such sufficient steps.(3) Or that the shipowner had not fulfilled its burden of proof in that respect, pp. 12-17 of the City Court's decision.
One could then ask: if the City Court had found that the superintendent had not belonged to the managerial level but he still had not taken the required steps, should this mean that there was no basis for holding the shipowner liable, through negligence by its servant, i.e. the superintendent? As far as I can see, the shipowner would be so vicariously liable, as there is no basis in the HVR for operating with "privity" in this respect. The confusion seems to stem from the drafting technique behind MC s. 276.
The Supreme Court in the Sunna takes the same misconceived approach when stating: "Since the carrier must be vicariously responsible for the master's mistake, there is no need to go into whether the shipowning company itself [i.e. through privity] has committed a wrong, leading to liability."(4) Para. 53.
This premise does not make sense, since there would here be no need to prove privity.
Admittedly there may occasionally be questions of negligence on the the shipowner's part (through land based servants) being intermingled with nautical decision making by those on board, as illustrated in the Icelandic Supreme Court decision the Vikartindur from 2000.(5) ND 2009.91. The situation was that the master considered whether or not to accept tug boat assistance in a situation of distress caused by engine blackout. While in this situation of distress and while considering whether or not to accept the offer of assistance, he stayed in radio contact with the shipowner's office ashore. He ended up not accepting the offer of assistance as he believed the crew would succeed in restarting the engine in time to avoid grounding. This did not happen; the ship grounded and the cargo was damaged. The decision not to accept assistance was clearly nautical in nature. The question was whether this decision was solely master's own or whether it was influenced by the shipowner's personnel ashore . The Court found that the decision was solely that of the master, based on his nautical considerations.
Even if such a decision were to be considered to have been (sufficiently) caused by shore side personnel, this would, as stated, not necessarily involve "privity" on the shipowner's side; those in the shore side office may not necessarily possess a position as the alter-ego of the shipowning company. However, in order not to dilute the navigation fault exception, it would require an unusual set of facts to end up in a situation where the master "surrenders" his prerogative of decision making to the shore side -see also comments to this effect in the above quote from the Court of Appeal in the Tasman Pioneer.
A separate point is that in the future world of remote controlled ships, navigational functions may be transposed to shore.(6) See e.g. Collin, Unmanned ships and fault as the basis of shipowner's liability, Autonomous Ships and the Law, (edited by Ringbom, Røsæg, Solvang), Routledge, 2021, p. 85 et seq. In that sense the navigational exception may become "shore based" and, if so, it may be that the delineation of navigational functions will be more intertwined than today with what is considered to be within a shipowner's "direct control". In other words, it may be that (today's) navigational functions will have a seamless transmission into other technical-strategic functions not naturally called navigation belonging to the sphere of "acts of seamanship".
The point in this respect is however that there is a double type of misconception on the part of the Supreme Court in the Sunna: a) that to ask, as the Court does, for a privity reservation in situations of nautical fault, makes limited sense, b) that if such a reservation were to be inserted, it would be a different kind of "privity" from that related to the liability exception for fire; it would be negligence, rather than "privity".
Another example of the Supreme Court's reasoning in the Sunna concerns the delineation between the shipowner's initial seaworthiness obligation and the nautical fault exemption. The Supreme Court found no reason to go into this as the case was decided on the basis that there was initial unseaworthiness held to override whatever nautical fault exception, but the Court still stated as a general point of construction:
"According to section 276 second paragraph the carrier is nevertheless liable for losses resulting from unseaworthiness at the commencement of the voyage. The scope of this provision may appear somewhat uncertain. But it is in any event clear that it constitutes 'an exception from the exception' in that the carrier will be liable for initial unseaworthiness even if there is nautical fault falling within section 276 first paragraph."(7) Para. 37.
As a general statement, it is far from obvious that this is so. Also this concerns what is addressed by the New Zealand Supreme Court in the Tasman Pioneer: what is within the prerogative of the master in terms of navigation, is at the same time considered to be outside of the shipowner's "direct control". Therefore, there may well be situations of navigational decision making by the master which may occur (also) before departure from load port.
This pertains to a difficult dividing line to which we shall later return. The point in the present respect is that such a categorical statement as that set out by the Supreme Court, is not occasioned by the wording of the HVR in the way it (perhaps) is by MC s. 276. In the context of the HVR, there is a question of breach of art. III 1 as an "overriding obligation" which does not allow for application of the nautical fault exception. However, art. III 1 does not answer the point in any particular way, hence the editing of MC s. 276 may appear misleading. Put differently, art. III 1 sets out the obligation of the shipowner i.a. to properly man the ship, but this does not answer the question of the role of the master and the time aspect of his navigational decision making. Therefore, from the wording of the HVR and its general scheme (as e.g. expressed in the Tasman Pioneer), it is far from clear that a nautical fault cannot extend into matters which may be viewed as constituting initial unseaworthiness.
Another point of a similar nature goes to the Norwegian Supreme Court's making use of legal arguments taken from the MC but which do not form part of the HVR. The Court's line of arguments in the Sunna, ending up with liability for initial unseaworthiness, and the analysis of the master's role in that respect, takes as a starting point that the master is subject to a duty, under MC s. 131, to ensure that the ship is seaworthy before embarking on a voyage.(8) Para. 48, where it is stated that the duty under MC s. 131 also applies during the voyage. This legislative duty forms no part of the HVR, as the governing scheme for deciding questions of liability for cargo damage. That is not to say that it would be "illegitimate" to take supporting arguments from other provisions of the MC than those implementing the HVR. However, an abnormality which may ensue is that MC s. 131 imposes a duty on the master also to retain the ship in a seaworthy state during the voyage, while here the nautical fault exception of the HVR and the MC clearly applies, thus rendering MC s. 131 nugatory for the purpose of the risk allocation system of the HVR, as implemented in MC s. 262, 275 and 276.
This type of argument therefore may lend a false premise to the role of the master as seen within the risk allocation system of the HVR.
Furthermore, the Supreme Court makes one reference only to the HVR, in connection with the background of the nautical fault exception in MC s. 276. Part of what is stated therein is simply not correct. The Supreme Court states:
"[Section 276] is aligned to(9) Norwegian: 'er tilpasset', a term which is symptomatic of the Court's lack of reference to the HVR, although as a matter of fact Norway has ratified those rules, thus undertaking to be bound by them - 'alignment' is therefore not the appropriate legal term. [sic] the international bill of lading convention of 1924 as amended by protocol of 1968, the so called Hague-Visby-rules. The main rule in section 275 establishes an ordinary negligence and vicarious type of liability but with reversed burden of proof. The exemptions from liability(10) In Norwegian: 'ansvarsbegrensningen', which literally means 'the limitation of liability' but which is a separate matter from 'exemption from liability' ('ansvarsunntak'). are peculiar to international sea carriage. They arose as compensation for the fact that the carriers during the negotiations for the Hague-Visby-rules had to accept the burden of proof rules in section 275, see Norsk Lovkommentar(11) Norwegian Statutory Commentary (to the MC Chapter 13). - the maritime code, footnote 500."(12) Para. 34 - my translation.
This latter sentence simply does not make sense. The nautical fault and fire exceptions are left unamended from the inception of the Hague rules of 1924, and their insertion at that time came about as a compromise between the cargo merchants and the carriers - as stated above by the New Zealand Supreme Court, and as set out in numerous other sources, including Norwegian textbooks.(13) Falkanger/Bull, Sjørett, 2016, pp. 278-280.
These were some remarks on the structure and the manner of implementation of the HVR, which are of general importance to the below closer review of the Sunna case as analysed within such a wider context of the HVR and relevant international sources.