On 1 January 2010 new rules on limitation of liability for bunker oil pollution damage entered into force in Norway, ref. the Norwegian Maritime Code (“NMC”) Section 175a. Norway has significantly increased the shipowners’ liability limits applicable to claims in respect of (1) the raising, removal, destruction or rendering harmless a ship which has sunk, stranded, abandoned or wrecked, as well as everything that is or has been on board the ship, (2) the removal, destruction or rendering harmless the ship’s cargo, and (3) measures taken to avert or minimize losses for which liability would be limited pursuant to the above mentioned, including losses caused by such measures, ref. Section 172a. The Norwegian limits were already before the amendment significantly higher than the limits pursuant to the Convention on Limitation of Liability for Maritime Claims (“LLMC”), 1976, as amended, article 6 (1) (b).
The limit of liability for claims comprised by the NMC Section 172a, is SDR 2.000.000 for vessels with tonnage not exceeding 1000 tons. For vessels with tonnage exceeding 1000 tons, the limit is increased (i) for every ton from 1.001 to 2.000 tons, by 2.000 SDR, (ii) for every ton from 2.001 to 10.000 tons, by 5.000 SDR, and (iii) for every ton exceeding 10.001 tons, by 1.000 SDR. Accordingly, the owner of the vessel “Godafoss” (14,664 tons) which ran aground off the Norwegian coast 17th February 2011, had the right to limit his liability for claims specified in Section 172a to about SDR 49 millions. By comparison, the owner of the vessel “Full City” (15,873 tons) which ran aground off the Norwegian coast 31st July 2009, before the entering into force of the new and increased limitation limits, were liable for equivalent claims only up to about SDR 23 millions. Further, the limits pursuant to the LLMC article 6 no. 1 (b) would entitle the shipowners in the groundings of the vessels “Full City” and “Godafoss” to limit their liability to about SDR 6 millions, i.e. about 12,5 % of the Norwegian limits as per today. In addition to the quantitative differences, the LLMC limit shall cover not only the claims specified in article 2 no. 1 (d) and (e) (the NMC Section 172a), but also claims relating to property damage and uncovered claims for loss of life or personal injury.
The differences in the limitation rules make visible the importance of choice of law. The shipowner may invoke the limitation rules applicable in the jurisdiction where legal proceedings are initiated against him. Notwithstanding the creditors’ right to choose the forum for initiating legal proceedings against the shipowner, of course subject to the relevant choice of law, the shipowner may force the application of the limitation rules of his domicile by not invoking the limitation rules before enforcement proceedings are initiated at his domicile. However, within the EU/EEA, the Brussels I regulation and Lugano Convention prevents this result by establishing that judgments given in one of the EU/EEA country shall be recognized and enforceable in the other EU/EEA countries. In my view, the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 to some extent also prevents such a result between its member states.
This article is also included in Vogt & Wiig Maritime News No. 1 (pdf version).