Limitation of liability for wreck removal expenses
The Norwegian government, as owners of the frigate, has held the owners of the tanker liable for the collision and presented a claim of some NOK 13 billion for the loss of the frigate and an additional NOK 770 million for costs related to removing the wreck. Liability is disputed and is due to be adjudged next year. Simonsen Vogt Wiig acts for the owners of the Sola TS.
On 16 November 2021, the Bergen District Court rendered its judgement in an important part of the case, concerning the right of limitation under the Norwegian Maritime Code. In its ruling the court affirmed the ship owner’s right to limit its full potential liability for property damage, included any consequential losses claimed as a result thereof.
For the event that any liability is imposed, the Owners of the Sola TS has established a property limitation fund at the court and submitted that all its liability is limitable in the fund. The Norwegian government agrees that its claim for loss of the frigate is subject to limitation in the property fund, but that its claim to be indemnified for its costs incurred in raising the wreck and related clean up measures are subject to a separate and much higher limitation amount.
The issue at hand for the court arises as Norway has made a reservation against the application of Article 2 letters d and e, when acceding to the 1996 Convention on Limitation of Liability for Maritime Claims (LLMC). A number of other important maritime jurisdictions has made the same reservation. The decision, and in particular the reasoning, should be of interest for similar cases in other jurisdictions.
The LLMC Article 2 letter a and d confers a right to limit liability for:
«(a) Claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connexion with the operation of the ship or with salvage operations, and consequential loss resulting therefrom
(d) Claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship) »
Expenses related to clean-up measures and wreck removal would quite clearly be deemed losses consequential to the property damage incurred in a collision. However, the government argued that letter d had to be construed as lex specialis,, and thus that no convention based right of limitation existed due to Norway’s reservation against the application of article 2 letter d.
The court did not agree with the defendants’ reasoning. After a thorough review of the preparatory works to the Norwegian Maritime Code, and the Travaux préparatoires to the LLMC, the court emphasized that:
- It was clear that the Norwegian motivation for the reservation was to prevent that public authorities were left footing the bill for clean-up measures
- That the intention when drafting the convention was not to constrict the application of claims subject to limitation under one letter at the expense of another, but rather to emphasize the claims subject to limitation
- That it was not the Norwegian legislature’s intention to pass legislation contrary to Norway’s obligations under the LLMC
Based on the above, the court concluded that a claim for indemnity for wreck removal expenses by the owners of a sunken vessel, against the vessel alleged to be liable for the collision is a claim consequential to property damage and limitable under the NMC Section § 172 No.1, corresponding to the LLMC Article 2 letter a.
For any questions and further information, please contact Lars Inge Ørstavik or Øyvind Grøneng.