MarIus

3.4.1 The general and the statutory basis for liability

The national limitation regime determines the right of owners and operators of a ship to limit their liability for claims in respect of wreck removal and related cleanup operations subsequent to a maritime casualty to the ship, cf. MC §§ 172a, 175a and 179. Ordinarily, such claims cover the own cost or other loss incurred by public authorities or other third parties after the casualty, from operations intended to prevent or limit pollution or other damage to coastal areas, including ports and navigable waterways. In general, this is third parties having no direct interest attached to the ship or other property actually damaged by the casualty, and the cost or loss so incurred is merely indirect consequences of the property damage caused by the marine casualty. Consequently, in such cases, the basis for any third party claim for damages is not any property damage inflicted, but rather that the casualty to the ship or other property indirectly also has detrimental economic effects for such third party. Hence, the legal character of particular claims for cost and other loss of third parties is in principle different from that of claims in respect of the property damage as such, generally enforceable by the actual owner of the property damaged. The liability of the owner and operator of the ship for such claims in respect of property damage is subject to the treaty-based limitation regime (supra 3.3).

According to general principles of the law on damages, a third party without any direct property interest in the property damaged, has in general no right to claim damages for property damage or indirect consequences thereof directly from the person actually liable for property damage caused. This also applies to damage linked to the operation of ships. Exceptionally, the law on damages may nevertheless provide legal protection of such indirect third-party interests, but only if considered as warranted because the actual interest invoked has a particularly close or attached link to the property damaged. Available case law on property damage, however, reflects an obvious and definite reluctance to accept any claims by third parties not having suffered any direct property damage. (45)

In general, consequently, the law of torts as such provides no legal basis for claims by a public authority or other third party for the recovery of the cost incurred by own removal and cleanup operations in a direct action against the owner or operator of the ship subject to the marine casualty. However, the comprehensive regulatory regimes contained in the Pollution Act of March 13, 1981 No. 6 ( PA ) and the Ports and Navigable Waters Act of June 21, 2019 No. 70 ( PNWA ) now provide a statutory and strict liability basis for such third-party claims against the owner or operator of the particular ship subjected to the removal and related cleanup operations. In addition, the combined effect of the Article-18 reservation to the 1996 Convention and the new national limitation regime is actually that these statutory liabilities now are subject only to nationally determined limits of liability, cf. MC §§ 172a and § 175a ( supra 1.4 and 2.3.1). The actual limit of liability contained in § 175a, calculated on the tonnage of the ship hit by the casualty (MC § 232), increases quite substantially with the size of the ship involved ( supra 2.3.3).

According to these Acts, the owner/operator of the ship hit by a casualty consequently has a strict statutory but limited liability for the cost of the subsequent removal and related operations carried out by public authorities. The owner or operator of the ship, however, may recover the resulting cost provided the ship is sunk, wrecked, stranded or otherwise damaged and the cause thereof is due to conduct attributable to another ship. Any liability for the property damage thus caused by this ship may also include the cost payable to the public authority (infra 3.4.6).

3.4.2 The statutory remedies

The Pollution Act contains a legal framework generally setting out both wide regulatory powers designed to avoid and contain pollution damage detrimental to the coastal environment, and also provisions on strict liability for the recovery by public authorities and other third parties of the cost incurred by operations purporting to combat such pollution damage. This Act applies also to pollution damage resulting from casualties to ships and, in addition, provides important supplements to the liability systems for oil pollution damage from ships set out in MC Chapter 10, Part I and II (supra 1.3). Moreover, the Ports and Navigable Waters Act provides an almost equivalent regulatory and liability system for the removal and related operations in respect of ships likely to represent risks or effects detrimental to the sea traffic or safe use of ports or navigable waters.

In cases of casualties to ships, the point of departure for the provisions in PA §§ 7, 28 and 37 is that the shipowner or actual operator has a statutory duty generally to avoid, prevent and limit pollution damage attributable to his ship, by adopting the measures required to achieve this (infra 3.4.3). These duties include the removal of the ship or other waste, as well as the cleanup measures at the place of the casualty. Likewise, according to PNWA § 17, the rule is that the owner, operator or other user of a ship shall not leave his ship in a position likely to cause risks or detriments to ports or navigable waters, and has, in any event, a duty to ensure that such risks or detriments be removed. The provisions of these Acts also presuppose that, in any event, it is for the owner or operator of the ship concerned to cover all own cost incurred by the preventive measures carried out. However, MC § 179 allows proportionate recovery of such cost as a claim within the limit of liability for the ship concerned, cf. MC §§ 172a and 175a.

In cases of non-compliance with these statutory duties, public authorities may order the owner or operator responsible for the ship to carry out the preventive and remedial activities required to combat and limit pollution damage (PA §§ 7, paragraph 4, 28, 37 and 74). Likewise, the owner or operator of the ship may be ordered to remove risks and any detriment to ports or navigable waters (PNWA § 17, paragraphs 2 and 4). It is for the owner or actual operator of the ship so ordered to cover the cost incurred when carrying out the removal and cleanup operations proved to be necessary; subject, however, to proportionate recovery within the limit of liability for the ship concerned, cf. MC §§ 175a and 179. (46)

Alternatively, however, the public authority may decide that it shall be the task of the authority itself to carry out of the operations ordered (PA § 74 and PNWA § 18), employing as needed professional suppliers of salvage services to participate in its operations. In urgent cases, the authority may so decide even before issuing any order to the ship or its owner or operator. (47) In any event, the owner or operator of the ship has strict liability for the cost and loss so incurred by the public authority, including any remuneration payable to the suppliers of salvage services employed to carry out the operations (PA § 76 and PNWA §§ 17, paragraph 4 and 18, paragraph 4). However, the liability for such claims by the public authority is subject to limitation according to MC §§ 172a and 175a, cf. § 179 (supra 2.4.3).

3.4.3 The subjects of the statutory remedies

The provisions of PA §§ 7, 37, 74 and 76 as well as PNWA §§ 17 and 18 generally designate “the responsible person” as the subject or addressee of the duties, orders and claims based on these provisions. In a maritime context, nevertheless, the proper addressee for orders and claims ordinarily is, for all practical purposes, the shipowner or alternatively the actual operator of the ship involved. PA §§ 37 and 74, cf. § 55, denote that removal of the ship and waist after a casualty is a responsibility of the owner or the operator of the ship. On the whole, PNWA § 17, paragraph 4, and § 18, contain equivalent provisions.

The liability regimes for oil pollution damage contained in MC Chapter 10, Part I and II, however, contain own specific rules, matching with the rules on the duty to contract obligatory insurance for such liabilities (supra 1.8). Consequently, the subjects liable for pollution damage caused by bunker oil from ships other than laden crude oil tankers are the owner of the ship, as well as the bare boat charterer or other actual operator “responsible for the key functions related to the operations of the ship” (MC § 183, paragraphs 5 and 10). (48) According to MC § 185, paragraph 2, such liability for pollution damage is subject to limitation according to the provisions contained in MC Chapter 9 and is – irrespective of the subject responsible (supra 2.4.1) – limited as claims governed by the national limitation regime, cf. MC §§ 172a, 175a and 179. (49) On the other hand, claims in respect of oil pollution damage caused by a laden crude oil tanker are enforceable only against the owner of the ship (MC §§ 191 and 193), and these claims are also subject to the special limitation regime defined by MC §§ 194 and 195, cf. MC §§ 173 and 183, paragraph 10.

3.4.4 The scope of regulatory powers

The regulatory powers contained in the Pollution Act and the Act on Ports and Navigable Waters are very wide. According to PA §§ 7, paragraph 4, 28, 37 or 74, the public authorities may order “the person responsible” (supra 3.4.3) to implement the measures necessary to prevent pollution likely to cause damage or be detrimental to the coastal environment. PA §§ 28 and 37 generally apply to the removal of ship and other waste likely to impair, damage or otherwise be detrimental to the environment. These provisions are also applicable to ships causing oil pollution damage covered by MC Chapter 10, Part I and II.

Generally, these regulatory powers leave the public authority with a rather large amount of room for administrative discretion when determining if and how to apply these powers in particular cases. Consequently, before issuing an order to “the person responsible”, the regulatory authority has to assess whether the consequences of the casualty to the ship are likely to meet the statutory criteria and, in addition, what would be the appropriate measures for avoiding or containing any such pollution. In cases of a serious casualty to a ship, this is often a difficult task. At the casualty, relevant facts may not be readily available and further developments hardly predictable. Risks and uncertainties are inherent in most decisions on actions needed at the time of the casualty or fairly soon thereafter. The experience recurrently is that the regulatory decision-making often turns into an evolving and time-consuming process, also subject to subsequent adjustments. In spite of continuous dialogues between the regulatory authority and the owner and/or operator of the ship concerned (and their insurers), disputes on facts and law often arise between the parties, particularly when relevant for cost and liabilities, substantially delaying any final settlement.

The remedy available to challenge decisions by the regulatory authority is primarily an administrative complaint, requesting a general review and reconsideration of the decision by a superior administrative authority, usually the relevant government agency or ministry. Subsequently, according to settled principles of administrative law, the legality and validity of any regulatory order may also be subject to judicial review. In general, however, the courts limit their review to legal issues relating to the scope of regulatory power granted by the relevant Act or to the proper application of the rules for administrative procedures. It is common ground that the courts will only quite exceptionally reconsider or intervene in the actual assessments made by the regulatory authority when applying their statutory power. The role of judicial review, as a safeguard, is nevertheless important and not to be underestimated.

In ND 2017 p. 63 NSC (“Server”), relating to removal of a submersed ship according to PA § 37, cf. § 28, the Supreme Court pointed out that PA §§ 28 and 37 leave it to the regulatory authority itself to assess whether an order for the removal of the ship “may” be issued. The court held that, ordinarily, the discretion actually exercised according to such a “may-rule” as § 37 is not a subject for judicial review. In general, it is not a task for the courts to assume the role of a regulatory authority by exercising the assessment contemplated by the statutory provision. Nevertheless, the court concluded that the order for the removal of the ship was invalid.

The basis for the regulatory order to remove the wreck of “Server” was only the one of two particular criteria set out in § 37, viz. that the ship after the casualty appeared to be “impairing” the environment. The court, however, held that a submersed ship which was not at all visible at the scene of casualty, did not meet the condition set out in the statutory provision relied upon. Further, it was held as irrelevant whether the removal order might alternatively be warranted if based on the other criteria in PA § 37, covering ships “causing damage or other detriments” to the environment. This part of § 37 cf. § 28, however, required another and somewhat different assessment, not actually made by the authority. Nor could any order be issued according to PA § 7, since this provision only covered “damage or detriment” to the environment resulting from pollution caused. In any event, the judicial review of a regulatory order did not ordinarily extend beyond the proper interpretation and application of the statutory basis actually invoked for the removal order issued. Consequently, the removal order issued, since not warranted by the statutory authority invoked, was set aside as invalid.

In ND 2017 p. 63 NSC (“Server”) the Supreme Court also has to clarify the relationship between the regulatory powers granted by PA § 37, cf. § 28 and the national limitation regime, limiting the liability of the owner and operator for cost or loss resulting from removal of a ship sunk, wrecked, stranded or abandoned, cf. MC §§ 172a, 175a and 179. The shipowner challenged the removal order issued, essentially alleging that the regulatory powers were subject to limitation, and that the removal order was invalid because the shipowner, by complying therewith, would entail cost and liabilities exceeding the statutory limit of liability.

It was common ground that according to PA § 53, paragraph 1, any liability according to the Pollution Act was subject to special provisions on liability contained in other legislation, and that this exception covered the limitation regimes contained in the Maritime Code. Consequently, the liability of the owner or operator of the ship would be subject to limitation if the regulatory authority, according to PA § 74, decided to carry out the removal operations itself and, subsequently, wanted to recover the resulting own cost or loss incurred by a claim according to PA § 76, against the owner or operator of the ship. In the “Server” case, however, the regulatory authority did not follow this course of action, relying instead on its alternative power according to PA § 37, paragraph 2, by issuing a direct order to the owner/operator of the ship for the removal of the wreck and related cleanup operations. Accordingly, the shipowner asserted that he had no legal duty to comply with this removal order, because his cost in doing so would exceed the statutory limits of liability and amount of the limitation fund established by the shipowner according to the rules in MC Chapter 9 and12 (§ 232).

In ND 2017 p. 63 NSC (“Server”) paragraphs 120-132, the Supreme Court rejected this objection by the shipowner. The court held that the removal duties of the Pollution Act, having the character of public law, was not subject to the limitation regimes of the Maritime Code. Accordingly, the cost incurred by the shipowner himself when complying with such duties was not subject to limitation. Such claims were not included in the list of claims of § 172a, and had to be covered by the shipowner in addition to claims by third parties resulting from the casualty. (50) Moreover, in 2005 these principles also served as the basis for a compromise, with the adoption of both a new and higher limit of liability in § 175a and a new § 179 entitling the shipowner to proportionate recovery of own removal cost from the limitation fund when distributed among the claimants. This means, essentially, that any excess liability of the shipowner resulting from carrying out the removal order issued, is confined to the amount of own cost not recovered from the limitation fund according to § 179. (51)

3.4.5 Limitation of statutory liabilities

The most important groups of claims subject to the national limitation regime and MC §§ 172, 175a and 179 are the various statutory claims by public authorities and other third parties for own cost resulting from removal and/or clean-up operations, according to the Pollution Act or the Act on Ports and Navigable Waters (PA §§ 55 and 76, and PNWA § 18). (52) These provisions define the liability of the owner or operator of the ship hit by the casualty to which the pollution damage to the environment or detriments to navigable waters are attributable (supra 3.4.1 and 3.4.2). The provisions of the Pollution Act also apply as supplement to MC Chapter 10, Part I and II, on the liability for oil pollution damage caused.by ships, including the cost removal and cleanup operations needed after the casualty to the ship (MC §§ 172a, 179 and 191, paragraph 2). This is particularly important for the claims for bunker oil pollution in coastal areas.

Subject to specific rules on limitation for laden crude oil tankers (MC §§ 193 to 196), these statutory liabilities of the owner or any actual operator of the ship are subject to the national limitation regime and the limit in MC § 175a (supra 3.4.3 at notes 48-49). This limit covers claims in respect of removal and cleanup operations carried out after the casualty by public authorities and other third parties (MC § 172a, paragraph 1) as well as by the responsible shipowner or actual operator of the ship (MC § 179). The limit in MC § 175a, calculated on the tonnage of the ship hit by the casualty, applies to all such claims arising out of the same occurrence against the owner or other actual operator of the ship (MC 175a, paragraph 2, cf. § 175, paragraph 4). Moreover, the limitation fund established by any of these persons has effect for and may be invoked by all the other persons liable for the claims listed in MC § 172a (MC § 177, paragraph 2). As a bar to independent actions by claimants, however, the effect of a limitation fund based on the § 175a-limit established at a Norwegian court according to MC § 232, generally relates only to actions brought in Norway to enforce claims listed in § 172a (MC § 178a), cf. supra 2.3.2 and 2.3.3.

The provisions in MC § 172a appear as a Norwegian version of the provisions of the 1996 Convention Article 2, paragraphs 1 (d) and (e). In general, this provides the point of departure for the interpretation of the provisions in § 172a. (53) The national limitation regime generally applies to claims in respect of removal and cleanup cost in cases where the ship concerned is sunk, wrecked, stranded or abandoned, cf. MC § 172a, but there are also other – less serious – incidents of damage to the ship not meeting these criteria. (54) If, after the casualty, the ship is removed by salvage operations within a reasonable time, the remuneration for salvage services is generally not subject to limitation (MC § 173, paragraph 1). However, there may nevertheless remain a need for cleanup operations after the casualty, and MC § 172a, paragraph 1 (3) also includes claim for cost incurred thereby (supra 2.4.3). Claims unrelated to a casualty to the ship referred to in § 172a, e.g. resulting from an event referred to in NPWA§§ 17 and 18, may be subject to limitation as a liability for claims in respect of infringement of a non-contractual right, cf. MC § 172, paragraph 1 (3).

3.4.6 The treaty-based and the national limitation regimes distinguished

When interpreting MC 172a, however, it is also relevant that the paramount purpose of § 172a is to define the scope of the national limitation regime for statutory liabilities for claims by public authorities and third parties based on the Pollution Act and Act on Ports and Navigable Waters. The objective was to provide appropriate limits for such claims, replacing the far too low limit of the 1996 Convention that would otherwise apply. (55) However, the new limitation regime and § 172a were not to affect or contain the scope of MC § 172 as defining the claims which have to remain subject to the treaty-based limitation regime consistent with the treaty-law obligations of Norway as a party to the 1996 Convention, subject to the reservation according to its Article 18 (supra 1.4 and 2.2). This means that the provisions of MC § 172a may not be subject to any extensive interpretation in order to include also claims which are within the scope of MC § 172, paragraph 1, because this would actually entail an equivalent exception from § 172 inconsistent with a treaty-based interpretation of the Convention Article 2, paragraph 1(1) as implemented by § 172. (56)

According to MC § 172, paragraph 1, the shipowner/operator of a ship may generally limit his liability towards third parties for claims in respect of property damage and its consequences occurring in connection with operations of his ship. If the property damage is caused to another ship, any claim for damages of its owner also includes, in addition to the damage inflicted on his ship, the consequences thereof such as the resulting own cost for subsequent removal and cleanup operations relating to this ship (supra 3.3 at notes 42 to 44). The own cost of the owner/ operator of the damaged ship also includes any liability for the cost of public authorities and other third parties according to the Pollution Act § 76 or MC § 183 for bunker oil pollution (supra 3.4.3). Quite another matter is that, in any event, such liability, incurred by the public authorities having carried out such removal operations (PA §§ 74 or 76), is subject to limitation according to MC § 172a and the national limitation regime. However, this does not provide any basis for any restrictive interpretation of MC § 172, paragraph 1 or an extensive interpretation of § 172a, with the result that even the liability of the ship responsible for the casualty and its consequences is subject to MC § 172a and the higher limit in MC 175a. Such an interpretation would deprive the ship responsible for the casualty of the right to treaty-based limitation according to §§ 172 and 175 of any liability for property damage and the consequences thereof (supra 3.1 at notes 38-40). In addition, the question of limitation relates to two different claims and different liabilities. One claim is a claim by the public authority against the owner/operator of the damaged ship for the recovery of the cost of removal and cleanup operations. Such liability is subject to the national limitation regime. The other is a claim by the owner/operator of the damaged ship against the owner/operator of the ship responsible for the casualty, for recovery of damages for the property damage inflicted and consequential loss thereof. Such liability is subject to the treaty-based limitation regime. If the ship sunk, wrecked, stranded or abandoned is solely responsible for the casualty, the question of limitation of liability consequently only relates to the claim by the public authorities subject to the national limitation regime.

Conversely, difficult problems may arise if the casualty is due to a “both-to blame” collision, initiating removal and cleanup operations at the site of the casualty. First, each ship has a statutory strict liability towards the public authority according to PA § 76 for 100% of the cost of the part of removal operations attributable to each of the ships. The resulting liability for each of the ships is subject to limitation according to MC §§ 172a, 175a and 179, as applied to the tonnage of each ship. Second, each of the ships is liable for collision damage caused to the other ship, viz. the property damage inflicted and the consequential loss thereof, determined according to the extent that faults on its part has contributed to the collision. The claim for collision damages by each ship also includes, as consequential loss, its statutory liability for the cost due to the public authority. Third, the claim for collision damages of each ship against the other ship is a claim for property damage covered by MC § 172, paragraph 1 (1). However, when applying the treaty-based rules of limitation of liability to such liabilities, these claims are set off against each other (the single liability principle), and only the remaining balance is subject to treaty-based limitation, cf. the Convention Article 5 and MC § 172, paragraph 2. (57)

The 1996 Convention Article 2, paragraph 2 states that a “claim set out in paragraph 1 shall be subject to limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise.” This provision is not implemented in MC § 172 because the right to limitation of liability of the listed claims applies “whatever the basis of liability may be”. (58) The question may nevertheless arise as to whether the shipowner/ operator of the ship hit by the casualty, by covering the claim incurred by the public authority according to the Pollution Act § 76, may by way of subrogation acquire this claim against the ship responsible for the casualty and damage caused thereby. In such a case, however, there is no claim to acquire by way of subrogation.

The claim by the public authority according to PA § 76 is a statutory strict liability imposed only on the owner/operator of the ship subject to the removal and cleanup operations (supra 3.4.3). There is no basis for extending this liability to any other ship, since each of several ships involved in the same casualty is liable towards the public authority according to PA § 76 only for the removal and cleanup operation related to that ship. Moreover, the public authority itself, having no direct property interest in the ship actually damaged, does not ordinarily – according to general principles of the law of damages – have any claim for damages for property damage against another ship, even if this ship is solely responsible for the casualty and the damage caused thereby (supra 3.4.1 at note 45). Hence, the cost for removal and cleanup operations due to the public authority according to PA § 76 may only be included as an item of the damages due to the owner of the ship for the damage inflicted on his ship hit by the casualty, subject to limitation according to MC § 172 (Supra 3.3 at note 40 and 44).