Introduction
Nationality and Registration of Vessels
Limited Liability
Although no major changes to Norwegian maritime law were made in 1999 (changes were limited to minor changes to administrative rules), Parliament has been quick to make up for lost time. In the first quarter of 2000 it has passed at least two important laws. These recent significant changes are summarized below.
Nationality and Registration of Vessels
Section 1 of the Norwegian Maritime Code (NMC) sets out the conditions that ship-owners must satisfy in order to register their ships in the Norwegian Owners Registry (NOR). Once registered in the NOR, the vessel is deemed to have Norwegian nationality and, therefore, falls under Norwegian jurisdiction. A vessel that is registered in the NOR may not be registered elsewhere.
Prior to new legislation enacted this year, Norway's registration provisions did not comply with the European Economic Area (EEA) agreement, because they did not provide for freedom of establishment. Although the European Court of Justice has, in a number of cases, established that each member of the European Union is free to establish its own conditions for registration of vessels, the freedom of establishment is mandatory. The principle of freedom of establishment includes the right of member states' citizens to establish and conduct business in another member state.
Only owners may register vessels, and the new legislation provides that what is deemed to be owned by a natural or legal person under the EEA agreement is also deemed to be owned by that person under Section 1 of the NMC. The EEA Agreement (and therefore the NMC) prescribes that if a vessel is owned by a legal entity, then that entity must (i) be established in compliance with the legislation in one of the signatory countries to the EEA agreement, and (ii) have its headquarters or its main business in one of the signatory countries.
However, the NMC sets out further conditions for registration. For example, if the owner is a limited liability company, Section 1.4 of the NMC requires that the majority of the board of directors (including the chairman) must (i) be citizens of Norway or another EEA agreement signatory country, and (ii) have been domiciled during the previous two years in Norway or in another signatory country.
Furthermore, Section 1 provides three additional registration requirements applicable to all types of owners (ie, legal or natural person):
- The vessel must be part of an economic activity established in Norway ('economic activity' means any activity that is done with the aim of making a profit);
- The vessel must be operated from Norway (by the parent company, or by a subsidiary of a parent company that is established in a country that is a signatory to the EEA agreement); and
- If the ship-owner does not have a permanent residence in Norway, he must nominate a representative who is domiciled in Norway and is a citizen of Norway or some other EEA agreement signatory state. This nominee must have the power to sue and be sued in Norway on the ship-owner's behalf.
Norway has incorporated into national legislation the protocol of 1996 (1996 Protocol), which amended the 1976 International Convention on Limitation of Liability for Maritime Claims (1976 Convention). This protocol provides higher compensation for claimants than did the 1976 Convention. However, Norway will continue to apply the limitations set out in the 1976 Convention in cases concerning states that have not yet enacted the 1996 Protocol into national legislation. Hence, Norway will apply two sets of rules during a transition period. This legislation entered into force on July 1 2000.
A thorough discussion of the limitations that the 1976 Convention and the 1996 Protocol set out is beyond the scope of this overview. Instead, the application of the two sets of rules is discussed.
A new Section 170 of the NMC regulates whether to apply the limitation provisions of the 1976 Convention or the 1996 Protocol. The general rule is that the 1996 Protocol applies. However, the provisions set out in Chapter 9 of the NMC (which incorporate the 1976 Convention) should apply if two conditions are met. First, the party claiming that liability should be limited must request the application of the old rules. Second, when the request is made, that party must have his main place of business or permanent address in a state that is a signatory to the 1976 Convention only.
Special problems arise when several parties establish a claims limitation fund for the same incident, and some are liable under the 1976 Convention and others under the 1996 Protocol. The national legislation that incorporates the 1996 Protocol sets out the following two rules for solving this problem. First, if a limitation fund is established in accordance with the 1996 Protocol it will also be applied to persons liable under the 1976 Convention. However, these persons will only be liable under the limitation provisions of the 1976 Convention. Second, in order to ensure that persons who would be entitled to compensation under the 1996 Protocol are not deprived of their rights when funds are created under the auspices of the 1976 Convention, the 1996 Protocol provisions will be applied if the amount of the fund is increased to the amount required under the 1996 Protocol.
If a limitation fund is established under the authority of a Norwegian court, claimants may only claim that compensation should be paid to them (on a proportional basis) from the fund. No other remedies are available. Therefore, for example, a claimant may not bring a separate action for further damages to be paid from other sources (eg, the liable person's property). However, the case may be different if the limitation fund is established under the authority of a foreign court.
For further information on this topic please contact Nils H Thommessen or Malin Lundgren at Wiersholm, Mellbye & Bech by telephone (+47 210 210 00), by fax (+47 210 210 01) or by e-mail ([email protected] or [email protected]).
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