MarIus

3.2 The public policy considerations motivating Norway´s reservation against the LLMC art. 2 no. 1 letters (d) and (e)

According to Norwegian law, a shipowner is under a strict liability to avoid, mitigate and clean up any form of pollution and debris (including the ship itself, cargo on board, or other physical objects) caused by a marine casualty, cf. the Norwegian Pollution Act (the “NPA”) sections 7 and 28. The shipowner can also be ordered to carry out clean-up operations, cf. the NPA sections 7 fourth paragraph and 37 first and second paragraph. However, because of the damage potential that serious marine casualties entail, Norwegian authorities usually carry out their own mitigation and clean up-operations, more or less immediately after being notified of a casualty, cf. the NPA section 74. Such operations are expensive, and the authorities can demand that the costs for such operations be reimbursed by the shipowner, cf. the NPA section 76.^{(1) For more on the statutory regime under the NPA, see i.a. NOU 2002: 15 pp. 19–23 and Selvig 2022 pp. 115ff.}

Until Norway made its reservation against the LLMC art. 2 no. 1 letters (d) and (e), the view had been that the limitation amounts set out by the LLMC art. 6 and implemented in the NMC section 175 provided satisfactory cover for both wreck removal and clean up-costs incurred by public authorities after marine casualties. This view changed after subsequent casualties had made it clear that the then applicable limit under the NMC section 175 was too low for the public authorities to have their costs reimbursed for more than solely catastrophic events.^{(2) NOU 2002: 15 pp. 28–29 and Ot.prp. nr. 79 (2004–2005) pp. 23–26.} Because of this experience, Norway made a reservation against the LLMC art. 2 no. 1 letters (d) and (e) on 28th June 2002,^{(3) Ot.prp. nr. 79 (2004–2005) p. 15.} with the afore-mentioned separate national limitation regime being a result.

From the preparatory works of both the Maritime Law Commission (NOU 2002: 15) and the Ministry of Justice and Police (Ot.prp. nr. 79 (2004–2005)), it is evident that it was a public policy argument that Norwegian authorities should not be left footing the bill for wreck removal and clean up-costs after marine casualties, which motivated the implementation of the national limitation regime. That this was the case is already evident from reading the request of the Ministry of Justice and Police to the Maritime Law Commission. After introducing the then applicable limitation rules, it provides that: “Costs that exceed the shipowners’ liability (limit) will usually have to be covered by public authorities when removal and destruction of ship and cargo, or other mitigating measures, are carried out.”^{(4) NOU 2002: 15 p. 7 (my translation).} Further on in the request it states that:

“It seems reasonable that the shipping industry should carry a larger part of the costs incurred than is the case with the applicable liability limits, where the state – as was the case in the ‘Green Ålesund’ casualty – has to foot the bill for large parts of the costs related to clean up etc.”^{(5) NOU 2002: 15 pp. 7–8 (my translation).}

As we can see, in the request to the Maritime Law Commission, the Ministry´s concern was related to the fact that the state had to carry costs that should have been borne by shipowners. Furthermore, the Ministry particularly wanted the Maritime Law Commission to review whether liability for claims that fell under the reservation should be limited, although with sufficiently high limitation amounts, or whether liability should be unlimited.^{(6) NOU 2002: 15 p. 8.}

In the Maritime Law Commission’s recommendation for a separate national limitation system with higher limits for wreck removal and clean up-costs, instead of unlimited liability, it is interesting, but not surprising, to see that the rationale for this is the same as the rationale underpinning limitation of liability for maritime claims in general. Without this right, the insurance premium costs would be too high for smaller vessels, leaving public authorities and other claimants without the security that liability insurance entails.^{(7) NOU 2002: 15 pp. 37–39.} Again, we see the paradox that claimants are generally better off when running the risk of having their claims limited. However, by setting the limits high, this risk would only be theoretical. The Maritime Law Commission assumed that the higher limits suggested would have the consequence that “public authorities in more instances than is the case today will get their costs caused by clean-up measures covered” by the shipowner.^{(8) NOU 2002: 15 p. 44 (my translation).}

The Ministry agreed with the Maritime Law Commission that limitation of liability for wreck removal and clean-up costs was necessary to enable shipowners to obtain insurance, thus ensuring that claimants get their losses covered, but it recommended even higher limits than the limits suggested by the Maritime Law Commission.^{(9) Ot.prp. nr. 79 (2004–2005) p. 23.} These higher limits were based on experience with cases where public authorities did not get full cover for their costs related to wreck removal and clean-up measures.^{(10) Ot.prp. nr. 79 (2004–2005) pp. 24.} The suggested limits would provide “better cover for costs that the authorities or others have had in relation” to wreck removal or clean-up measures, and the aim was that for such claims “the higher limits will, in all imaginable cases, provide full cover”,^{(11) Ot.prp. nr. 79 (2004–2005) p. 36 (my translation).} i.e. shipowners’ liability would in practice be unlimited.^{(12) Although aiming for limits that should provide cover in all imaginable cases, the Ministry emphasises that the limits should not be so high that the insurance premium costs would be unnecessary high for shipowners, cf. Ot.prp. nr. 79 (2004–2005) pp. 24.}

This brief review of the preparatory works leading up to the national limitation regime is important for two reasons. Firstly, it shows that the motivation for creating a separate system with higher limitation limits for wreck removal and clean-up costs was to ensure that the public authorities (and other potential claimants) would get full cover for their costs relating to such measures by the shipowner responsible for the “pollution”. The higher limits were regarded to ensure this. Secondly, but tightly linked with the first, the attention is directed towards the shipowner liable for the “pollution”, rather than towards other third parties, such as another vessel B colliding with vessel A, that gives rise to the “pollution” after the collision. Accordingly, the purpose was to secure the authorities’ position vis-à-vis the owner of the vessel becoming a wreck and/or causing pollution, and not to improve the latter’s position vis-à-vis other third parties involved in the factual circumstances leading up to the pollution.

The view that the enactment of the national limitation regime did not aim to affect the relationship between two vessels involved in a collision inter se, but was solely aimed at regulating the relationship between the shipowner of the vessel constituting and/or causing pollution and the public authorities, is supported by the NPA. In theory, one could imagine the authorities making a claim (directly) against the owner of vessel B for reimbursement of the authorities’ costs for wreck removal and clean-up operations related to vessel A, in an instance where B ran down A and accordingly caused the latter to become a wreck. If that were the case, there is no doubt that B’s liability towards the authorities would be limited by the higher limits under the national regime. However, it is highly unlikely that the authorities could make such a claim against B under the NPA. A wreck removal order can only be made against the “owner of […] the vessel” that constitutes pollution, according to the NPA section 28, cf. the NPA section 37 second paragraph.^{(13) My translation.} If the authorities themselves carried out the removal of the wrecked vessel A, it would not be consistent if a claim for the wreck removal costs could be made against B, when he cannot be ordered to remove the wreck. Furthermore, the Norwegian courts’ restrictive interpretation of “the responsible” entity in the NPA sections 7, 74 and 76, makes it unlikely that a claim for other clean-up costs related to vessel A would be successful against B.^{(14) See i.a. Rt. 2012 p. 944 (Elverum Treimpregnering AS). See also Thor Falkanger, «Sjøtransporten og den norske forurensningsloven», in: Festskrift till Kurt Grönfors, 1991, pp. 147–168, section 5 and 8 and Hans Chr. Bugge, Forurensningsansvaret: Det økonomiske ansvaret for å forebygge, reparere og erstatte skade ved forurensning, Oslo 1999, chapters 12–14.}

Other parts of the preparatory works do not change the perception that the purpose behind Norway’s reservation against the LLMC art. 2 no. 1 letters (d) and (e) was to improve the position of third parties affected by pollution, and not the position of shipowners involved in a collision making claims against each other.

The then applicable law is set out in section 2 of the Maritime Law Commission’s report. The Commission refers to the NOU 1980: 55 p. 17 and states that in cases where damage to harbour facilities, basins, waterways and navigation aids have been caused by a marine casualty, “the cost of removal of ship and cargo etc., may however be conceived of as a part of the liability property damage” to those objects.^{(16) NOU 2002: 15 p. 15.} The consequence of this was that these costs fell under the NMC section 172 no. 1, equivalent to the LLMC art. 2 no. 1 letter (a). That construction of the provision would limit the applicability of the LLMC art. 2 no. 1 letters (d) and (e) to situations where the claimant has not suffered a property damage and where a joint wreck removal order has been issued.^{(17) As discussed in NOU 1980: 55 p. 17.} Because such an understanding would correspondingly limit the effect of a reservation, the Maritime Law Commission was of the view that

“[t]he delimitation between these provisions ought therefore to be assessed anew. The Commission is of the opinion that better reasons point to the line being drawn on a distinction between, on the one hand, the property damage and the economic consequences of this, and on the other hand, the costs related to wreck removal and other clean-up measures required by the marine casualty.”^{(18) NOU 2002: 15 p. 15 (my translation).}

Accordingly, the public authorities and other third party claimants should not have their costs for wreck removal and clean-up measures fall under the NMC section 172 no. 1 if they were unlucky enough to have also suffered property damage. The shipowner’s liability for the costs relating to the latter would fall under the NMC section 172 no. 1, and for the costs related to the former, his liability would fall under the NMC section 172 nos. 4 and 5. This is in line with the aim of protecting third party interests that are unfortunately affected by marine casualties. It does not however say that a shipowner should enjoy the benefit of the higher limitation limits when making a claim for damages, which includes wreck removal and other clean-up costs, against another shipowner. It is interesting to note, as a general point, that neither the Maritime Law Commission nor the Ministry touch upon the relationship between shipowners inter se in their preparatory works.^{(19) Contrary to Solvang’s view 2016 pp. 36–38, I read the preparatory works to support the “type of claim”-approach, since they do not touch upon “our” issue but so clearly state the purpose of Norway’s reservation. This purpose is achieved by the type of claim approach, cf. section 3.3 below.}