Background Opt-in for territorial sea and inland waters Dual system Compulsory insurance Channelling liability Comment

A year and a half after the entry into force of the Nairobi International Convention on the Removal of Wrecks, the Ministry of Transport has completed a consultation process on a proposal to ratify the convention and implement it into Norwegian law. The ministry has suggested that the convention be implemented on a dual basis, alongside existing legislation.

Background

The convention sets out a number of duties relating to the removal of wrecks for both the coastal state and the registered owner of the wrecked vessel (for further details please see "The Wreck Removal Convention – a new liability and compensation regime" and "Nairobi International Convention on the Removal of Wrecks enters into force"). The coastal state is obliged to locate and mark the wreck, and take measures to facilitate its removal. Liability for wreck removal under the convention is strict and is channelled to the registered owner of the wreck. However, wreck removal may be ordered only if certain strict criteria are fulfilled and is subject to limitation of liability in accordance with applicable national law or international conventions. The Wreck Removal Convention also introduces compulsory insurance requirements and a right to direct action against the vessel's insurers.

The Ministry of Transport's proposal on ratification and draft legislation to implement the convention is based on a consultation process held between 2010 and 2011, where the government asked the industry and other interested parties for their views on whether Norway should ratify the convention and, if so, how it should be imple­mented.

A total of 29 states have ratified the convention ? including Denmark, Cyprus, Liberia, the Marshall Islands, the Netherlands, the United Kingdom and Germany ? and the convention has entered into force.

Opt-in for territorial sea and inland waters

While the Wreck Removal Convention primarily applies to wrecks in the 200 nautical mile exclusive economic zones of state parties, it contains an opt-in option whereby states may also make the convention applicable to their territorial seas and inland waters. As a result of the submissions received by the government during the consultation process in 2010, the new consultation process initiated by the Ministry of Transport includes a proposal to exercise the opt-in option to extend the convention to Norway's territorial and internal waters, as well as draft legislation to implement the same. According to the government, this is because wrecks posing a navigational hindrance or environmental hazard along the Norwegian coast are more likely to be located closer to shore than in the exclusive economic zone.

Dual system

However, the requirements for the issuance of a wreck removal order under the convention appear to be stricter than those under the current national legislation, including the Harbour and Waterway Act and the Pollution Act. For example, while the Pollution Act provides that wreck removal may be ordered if the wreck may cause "damage or disadvantage to the environment", the Wreck Removal Convention specifies that the risk must "reasonably be expected to result in major harmful consequences to the marine environment". The proposed legislation does not include any suggested changes to the current wreck removal provisions, but rather proposes a dual system whereby the convention's cost recovery rules – including the right of direct action against the insurers – may be invoked only in instances where the basis for ordering wreck removal accords with the convention (ie, where the wreck poses major harmful consequences to the marine environment).

Compulsory insurance

The Wreck Removal Convention is structured similarly to other recent maritime liability conventions, such as the Bunkers Convention and the Hazardous and Noxious Substances Convention. As such, a key aspect of the Wreck Removal Convention is the requirement for compulsory wreck removal insurance to be carried by owners of vessels exceed­ing 300 gross register tonnage. Vessels operating in the waters of states that have ratified the convention (excluding innocent passage) or sailing to their ports are already required to have a wreck removal insurance certificate.

If the convention is ratified, this requirement will impose no significant additional burdens on Norwegian flagged vessels due to Norway's 2015 agree­ment with Denmark whereby the Danish mari­time authorities issue such certificates to Norwegian flagged vessels. However, if the convention is ratified, then the Norwegian Maritime Directorate will take over issuance of the certificates and these will be renewed on an annual basis.

Channelling liability

The Wreck Removal Convention clearly identifies the registered owner of a vessel as the only liable person and hence the only person against which a wreck removal order may be issued (with the exception of state-owned vessels operated by a company).

A similar channelling of liability to the owner can already be found in the Harbour and Waterways Act and the Pollution Act, although it is a contentious issue whether – under the existing legislation – other parties involved with a vessel's operation may also be held liable for wreck removal.

The issue of whether a manager may be ordered to remove a wreck under the Pollution Act will be con­sidered by the Supreme Court in early 2017. Therefore, the Wreck Removal Convention's channelling of liability to the owner accords with existing practice on insurance cover and continues a trend of channel­ling liability to a principal, similar to that found in the petroleum sector.

Comment

Norway is expected to ratify the Wreck Removal Convention and imple­ment its principles into national legislation, but it remains to be seen whether the convention will be implemented as part of a dual system and, if so, how this will work in practice.

For further information on this topic please contact Morten Lund Mathisen, Herman Steen or Nina M Hanevold-Sandvik at Wikborg Rein by telephone (+47 22 82 75 00) or email (mlm@wr.no, hst@wr.no or nmh@wr.no). The Wikborg Rein website can be accessed at www.wr.no.

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