5 Some conclusions
The result and the reasoning in the Ocean Victory case is not convincing according to Norwegian law. This is true whether the judgment is based on interpretation of the charter-party or on general English law principles of co-insurance. The result appears contrary to considerations of deterrence, gives the wrongdoer a totally unwarranted gain and results in an unfair distribution of costs for the risk connected to unsafe ports (or other breaches as the case may be). However, the article has demonstrated that the concept of co-insurance may raise difficult problems in enterprises or projects involving several contractual parties where some parties but not all are covered under a co-insurance scheme. Neither the co-insured’s direct liability insurance nor the relationship between the co-insured parties is regulated in the ICA, and the comments in the preparatory documents are limited. It is an open question if the rules on subrogation in the tort act or Norwegian contract law open for the insurer’s subrogation against a liable party in a contractual chain who is not directly liable to the assured. In building projects and other projects based on ICA’s co-insurance system the parties should be aware of these problems to avoid unwanted results.
Both indirect liability insurance and subrogation is better regulated in the NP with regard to these issues, but the questions discussed here were not directly addressed in Version 2019. However, to avoid the result in the Ocean Victory case, a new sub-clause was added to Cl. 8-2:
The liability of the assured and co-insured third parties to each other shall not be excluded nor discharged by reason of co-insurance. Any payment to the assured or co-insured third party in respect of any liabilities, losses, costs and expenses shall operate only as satisfaction of the assured’s claim against the insurer but not exclusion or discharge of the liability of such person to the assured or co-insured third party.
Further, the Commentary states that(1)Chapter 8 (nordicplan.org)
As a starting point, this solution would follow from Norwegian background law, where co-insurance is meant to provide financial cover for any liability the co-insured might get against the assured, but not to effect the liability between the assured and the co-insured. This means that in cases with contractual chains, e.g. owner A charters a vessel to B, who sub-charters the vessel to C, where A and B are co-insured, the insurer has a right of subrogation against C, who is not co-insured. A waiver of liability between the parties therefore presumes explicit contractual regulation, for instance through a knock for knock agreement.
However, the UK Supreme Court case (2017) UKSC 35 "Ocean Victory" may give grounds for an argument that creates uncertainty to this principle.... Even if this is contrary to the legal position in the Nordic countries, the Committee finds it necessary to state this expressly to avoid any uncertainty. Thus, the insurers payment of compensation to an assured will operate only as satisfaction of the insurance claim from the assured against the insurer but not as an exclusion or discharge of the underlying liability between the assureds. Sub-clause 2 therefore preserves the insurer’s right to recover damages from any party external to the assured’s insurance arrangements such as a time charterer, or shipper of dangerous goods.