UNIVERSITETET I OSLO OWNERS LIABILITY Eve de Coning

UNIVERSITETET I OSLO OWNER’S LIABILITY Eve de Coning Research fellow Ph. D Scandinavian Institute of Maritime Law September 2007 © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO LECTURE OUTLINE MARL 4 – Tuesday 11. Sept: MARL 5 – Wednesday 12. Sept: 10 h 15 – 11 h 00: Chapter 7 ‘Ways of Structuring Shipowning Entities’, and Chapter 8 ‘Liabilities’. 10 h 15 – 11 h 00: Chapter 10 ‘Oil Pollution and Environmental Liability’. 11 h 15 – 12 h 00: Chapter 9 ‘Limitations of Shipowners’ Liabilities’. 11 h 15 – 12 h 00: Chapter 11 ‘Liability for Collisions’ Chapter 12 ‘The Legal Position of the Crew’ is self study © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO Chapter 7 ‘Ways of Structuring Shipowning Entities’ Overview: • • Definition of the terms ‘shipowner’ and ‘shipowning company’ Forms of organisation of the shipowning entity Transfer of the shipowner’s functions Frequently used intermediaries and independent contractors © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 1. Definition of terms 1. ‘Shipowner’: ‘starts up the operation, manages it and bears the economic risk’. (Brækhus ‘Rederens Husbondsansvar’ Sjø og Land at 294) 2. There are two essential features 3. a) operation, and 4. b) ownership 3. As to b): reder vs. shipowner (Compare the use of the term ‘reder’ and ‘owner’ in the Maritime Code Chapter 7) 4. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 2. Forms of organisation of the shipowning entity Alternative ways in which the shipowning entity may be organised: 1. 2. 3. 4. Sole proprietorships Partnerships: Part owners and joint ownership. Limited partnerships Limited liability corporations © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 3. Transfer of the shipowner’s functions 1. Ownership functions may be transferred either a) completely (eg to bareboat charterers or through requisitioning), or b) partly (eg the chartering, technical, commercial or marketing aspects of the operation). 2. Ownership functions are frequently transferred in three ways. Through 3. a) pool agreements, 4. b) joint ventures, and 5. c) management agreements. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 3. Transfer of shipowner’s functions (cont. ) Pool agreements: 1. ‘Pool’ carry resources and share profits 2. ‘Semi-monopolistic’ (EU disagrees on ‘semi’…) © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 3. Transfer of shipowner’s functions (cont. ) Joint ventures: 1. ‘Pool’ carrying resources and distributes profits. 2. There is no restriction on competition. 3. 4. 5. 6. Management agreements: Specialised management agencies. On the basis of management agreements. The management agreements will limit the liability of the managing company. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 4. Frequently used intermediaries and independent contractors See pages 155 – 158 © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO Chapter 8 ‘Liability’ Overview: 1. 2. 3. 4. 5. 6. 7. 8. 9. Types of damage or loss General principles of liability Contractual liability Liability in torts based on a) negligence, b) vicarious liability, or c) strict liability 5. Claims for personal injury 6. Limitations on availability of actions: Prescription and waiver © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 1. Types of damage or loss 1. Plethora of factual circumstances. 2. Economic interests: cargo, ship, port, environment 3. Personal injury: passengers, crew, builders, stevedores etc. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 2. General principles of liability 1. Normally contractual regulation of liability. 2. Contractual regulation is subject to mandatory application of statute. 3. An action for damages or loss is also available in torts. (Torts Act of 13 June 1969 no. 26 read with the Maritime Code of 1 October 1994) © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 3. Contractual liability 1. Damages or loss due to improper performance. 2. Three issues arise as to 3. a) the concurrent liability of the parties in contract and torts, 4. b) the identities of the parties to the contract, and 5. c) whethere any restrictions on the contractual terms that the parties may be agreed upon. 6. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 4. a) Liability in torts based on negligence 1. The general tort-rules will normally apply. 2. Frequent problem: Who is the tortfeasor? a) Norwegian law: actions made by the company’s organ b) Common law: alter ego, ie not an employee or servant, but does not need to be a director on the board. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 4. b) Liability in torts based on vicarious liability 1. MC section 151: 2. ‘The shipowner [here “reder”] shall be liable to compensate for damage by the fault or negligence caused in service of the ship by the master, crew, pilot, tug or others performing work in the service of the ship. ’ ND 2000. 502 NCA GRIGOROUSSA © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 4. b) Liability in torts based on vicarious liability (cont. ) 3. Three requirements: 4. a) Legal relationship, 5. b) service, and 6. c) servant. Legal relationship: • Typically employment relationship • Service of ship, not owner • Imposed assistants: longshoremen and pilots © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 4. b) Liability in torts based on vicarious liability (cont. ) Nature of service: 1. In service of particular ship 2. The test is whether shipowner is entitled to 3. a) give orders, 4. b) supervise performance, and/or 5. c) check quality of work? 3. Alternative test: 4. ‘The work should be integral to the activities typically undertaken by the shipowner’ 5. Categories of servants/assistants: 6. Pages 174 - 175. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 4. c) Strict liability in torts • • Judicially created Imposed to ‘…[redress] injuries caused by persons engaging in “extrahazardous” activities, who for reasons of public policy are required to insure the safety of those they foreseeable harm’ (According to Justice Oliver Wendel Holmes Jr; in Grey ‘Accidental Torts’ 54 Vanderbuilt Law Review (2001) 1225 at 1257) 3. Rationale: Shipowners may spread the loss. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 5. Claims for personal injury 1. Ordinary tort principles applies. 2. Liability for passengers in section 418, limitation of liability in section 422. 3. Compensation: National Insurance Act of 28 February 1997 no 19, chapter 11 read with the Torts Act section 3 -1. © DET JURIDISKE FAKULTET

UNIVERSITETET I OSLO 6. Limitation on availability of actions 1. 2. 3. 4. Prescription and waiver Important for the balance of interests MC chapter 19 and Limitation of Actions Act of 18 May 1979 no 18. Cannot contract out, but can extent with three years at a time (LAA section 28) © DET JURIDISKE FAKULTET