MarIus

2.3.1 Two new separate limitation regimes

Norway and the other Nordic states ratified the 1996 IMO Protocol and the 1996 Convention with the reservation permitted by Article 18 “to exclude the application of article 2, paragraphs 1 (d) and (e)”, i.e. claims in respect of the removal of ship, cargo and other clean-up operations relating to a ship sunk, wrecked, stranded or abandoned. The Norwegian ratification in 2002, prior to the entry into force of the 1996 Protocol and Convention on May 13, 2004, contained this reservation. For Norway it was important to become a state party to the new 1996 Convention while, at the same time, also safeguarding the right under treaty law to adopt national legislation with a higher limit of liability for the excluded types of claims, in particular claims by public authorities according to existing environment and pollution legislation. (18) A treaty-law effect of this reservation, however, was also that the 1996 Convention would not govern the right of Norwegian ships to limitation of any liability for the excluded claims incurred in other 1996-states (supra 2.2.1). This, however, was a rather limited problem, arising only in a 1996-state actually ratifying the Convention with an Article-18 reservation and – in addition to its reservation – subsequently adopting national legislation providing an express exemption or a specific limitation regime for such claims. If not, the entire limitation regime of the 1996 Convention, as implemented in the national law of that state party, would be applicable even to ships from other 1996-states (supra 2.2.1).

The denunciation of the 1976 Convention by the Nordic states and the ratification of the 1996 Convention with a reservation according to its Article 18, entailed a substantial change in the position of these states, as a matter of public international law, leaving a new and wide room for national legislation on limitation of the excluded maritime claims (supra 2.2.1). Subsequent to the entry into force of the 1996 Convention in 2004, this opened for a thorough redrafting of MC Chapter 9, originally modelled on the global limitation system of the 1976 Convention. The redraft, adopted in Norway by an amendment to the MC by an Act of June 17, 2005 No. 88, actually replaced the limitation regime of the 1976 Convention by a two-track model, consisting of two separate limitation regimes for different groups of claims other than personal injury claims. (19)

One limitation regime had, of course, to be convention-based, implementing the 1996 Convention and the limits therein as applicable exclusively to the aggregated sum of the claims listed in the Convention Article 2, paragraphs 1 (a) to (c) and (f), cf. MC §§ 172, 175, paragraphs 3 and 4, and 178. The other limitation regime was a new nationally established limitation regime, with substantially higher limits of liability, applicable exclusively to the aggregated sum of the claims listed in the Convention Article 2, paragraphs (d) and (e), excluded from the treaty-based regime by the Article-18 reservation, cf. MC §§ 172a, 175a, 178a and 179.

The provisions of the redraft of MC Chapter 9 specify the key elements inherent in each of the new convention-based and nationally established limitation regimes. Except for the differences relating to the limitable claims and the limits of liability, the structure of the two regimes and the actual wording of the particular provisions are nearly the same. An important exception, however, is that MC §§ 172a, paragraph 1 (3) and 179, deviates from Article 2, paragraph 1 (f) of the Convention, by providing that even loss prevention cost incurred by the shipowner in respect of the claims listed in § 172a is recoverable in the national limitation fund. (20)

2.3.2 The redrafting of the Maritime Code Chapter 9.

The effect of the 2005 MC amendments is that, in principle, the convention-based limitation regime and the nationally established limitation regime each constitute a separate and legally independent limitation regime. In MC Chapter 9, this is denoted by the new headings respectively to MC §§ 172, 175 and 178, and to MC §§ 172a, 175a, 178a and 179. According to the Government Bill, the purpose of the new headings is to have specifically clarified, both that the redrafted § 172 only includes the claims subject to limitation according to the rules of the 1996 Convention, and also that the new § 172a only governs limitation of the claims excluded and exempted from the treaty effects of the Convention. (21) Accordingly, the claims listed in the existing MC (1983) § 172, paragraphs 1 (d) and (e) – the claims in respect of removal and clean-op operations – were actually deleted from § 172 and instead inserted in the new MC § 172a. The purpose of this change was to denote both the exclusion of these claims from the 1996 Convention and, in addition, that specific rules on limitation of liability rules applied to the § 172a-claims. (22) This difference between the treaty-based and national limitation regimes is also denoted expressly by equivalent changes made to the headings of MC (1983) §§ 175 and 178 and in the new headings to §§ 175a, 178a and 179.

The redraft of MC Chapter 9 itself, however, specifically regulates only the matters characteristic of each of two new limitation regimes, such as the limitable claims (MC §§ 172 and 172a), the limits of liability and aggregation of claims (MC §§ 175 and 175a), and the bar-to-otheraction effect of a limitation fund (MC §§ 178 and 178a). The approach of the redraft is that, in addition, the numerous other provisions already contained in MC Chapters 9 and 12 – actually based on provisions in the 1976/1996 conventions – would serve as rules common for each of the two new regimes. (23) Consequently, the preparatory works relating to the legislation implementing the 1976 Convention – and its predecessor the 1957 Convention (supra at note 14), still provides guidance to the interpretation of the actual wording of particular provisions of the legislation presently in force.

This approach was a pragmatic and convenient solution, taken in order generally to meet the need for adequate regulation, even of the matters relating to the new national limitation regime not already addressed by specific provisions. This applies to MC §§ 171 and 182 defining the general scope of application of both limitation regimes, MC §§ 173 and 174 on exceptions to limitation, MC §§ 176, 177 and 180 on implementation of the limitation of claims, MC § 181 on warships, and MC §§ 182a to 182c on obligatory insurance of claims subject to limitation. However, the provisions of the Maritime Code Chapters 9 and 12 designed to serve as “common” for the treaty-based and the national limitation regime, are “common provisions” only in the sense that they actually constitute a part of each of the two limitation regimes as a whole, supplementing the particular provisions specific to each of the regimes mentioned above.

2.3.3 Two different limitation funds

A particularly important consequence of this drafting approach is that the existing limitation fund system for enforcing the actual limitation of particular claims, defined primarily by the provisions in MC §§ 176, 177 and §§ 231 to 245, will continue to apply as a system common for both limitation regimes. (24) This explains why the definition of “global fund” includes both type of limitation funds. The apparent implication is that the rules on the establishment, administration and distribution of the limitation fund are equally applicable, both to limitation funds established according to MC § 175 to ensure limitation of claims listed in MC § 172, and to limitation funds established according to MC § 175a to ensure limitation of claims listed in MC § 172a. As a matter of law, however, it is nevertheless necessary – when applying the “common” provisions – to distinguish between the two types of limitation funds:

• Each of the limitation funds is legally a separate fund to be established at a Norwegian court according to MC § 177, paragraph 1, in order to cover solely either the claims listed in § 172, or the claim listed in § 172a, as determined specifically by a decision of the court according to MC § 234,

• a limitation fund established according to § 175 may be used only to make payments of claims subject to the limit contained in § 175, and a § 175a fund may only be used to make payments of claims subject to the limit contained in § 175a, cf. MC § 177, paragraph 2.

• the amount of each of the limitation funds – although both calculated according to MC § 232 – will be quite different, because §§ 175 and 175a both referred to in § 232, provide different limits of liability,

• the claims against each of the funds are exclusively determined either by § 172 or by §§ 172a and 179,

• any limitation fund is established for the benefit of all persons entitled to invoke the same limitation of liability, cf. MC § 177, paragraph 2,

• the scope and effect of a subsequent limitation action against all claimants according to the rules in §§ 177, paragraph 3 and 240, as applied to each of the two funds, will be different,

• the effect of each of the funds as a bar to other actions by claimants relating to claims subject to limitation is different, cf. §§ 178 and 178a,

• the effect of procedural rules such as §§ 235, 237, 238 and 241 as applied to each of the funds, will vary with the particular claimants in each fund,

• the effect of § 244 for the distribution of each of the funds among the established claims will depend on the effect of the particular rules in §§ 176 and 177 as applied to each of the funds.

The key rules on limitation funds contained in MC §§ 176, 177 and 231 to 245 are based on the internationally uniform principles for limitation funds set out in the 1976/1996 Convention Articles 11 to 13. The provisions of MC §§ 177 and 232-234 implement the main rules on the constitution of the fund (Article 11), while the main rule on distribution of the established fund (Article 12), and on the effect as bar to other actions (Article 13) are implemented by MC § 176, cf. § 244, and § 178. It follows from Article 14 of the Convention that – subject to Articles 11-13 – a state party may only provide by national law supplementary rules on such matters. Article 14 is the basis for the provisions in MC Chapter 12 other than those implementing Articles 11 and 12 of the Convention, but not – as held in HR-2018–1260-A (Full City) para. 56-57 – a basis for providing or interpreting national rules amounting to a derogation of any provision in Articles 11 to 13 of the Convention.

As a matter of international treaty law, Articles 11-14 of the Convention are subject to treaty conform interpretation. Consequently, the provisions of Articles 11 and 12, as implemented in the MC §§ 176, 177, 232, 234, 240 and 244, should be interpreted and applied consistent therewith, in matters related to the treaty-based limitation regime (supra 2.2.1). While the Convention does not apply to the national limitation regime, the provisions of the Maritime Code on limitation fund – and other provisions “common” for the two limitation regimes (supra 2.3.2) – are nonetheless also applicable as national law to limitations funds established as part of the national limitation regime. This is relevant for MC §§ 176 and 177 and the entire MC Chapter 12. Consequently, in the absence of specific rules, the interpretation of these provisions as applied to the treaty-based and the national limitation regime should generally be the same (infra at notes 38-39). This is also the approach applied in HR-2018–1260-A (Full City), however, with the surprising and regrettable result of an interpretation freely detached from the ordinary reading of the wording of the equivalent provisions contained in both the Convention and the Maritime Code (see my Comments in ND 2017 pp. xxxv-xlviii). Quite another matter – as pointed out above – is that the effect of a particular provision as applied to either of the two limitation regimes may be different.