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Trends and developments
Trends and developments
Are there any notable trends or recent legal developments in your jurisdiction’s shipping industry?
Nordic Offshore and Maritime Arbitration Association The Danish, Finnish, Norwegian and Swedish Maritime Law Associations have established the Nordic Offshore and Maritime Arbitration Association (NOMA) as an alternative to other major arbitral venues. NOMA was established in November 2017 and is registered in Oslo, Norway. The articles of association of NOMA are available at http://nordicarbitration.dk/about.html.
Ship registration On 4 October 2017 the Danish government proposed a bill to amend the regulations on the registration of ships under Section 2 of the Merchant Shipping Act. The purpose of the new bill was to attract non-EU and non-EEA merchant shipowners and shipping and management companies to the Danish flag. The bill passed Parliament on 30 November 2017 and came into force on 1 January 2018.
The initiative was prompted by concerns within the industry that the previous regulatory structure had caused uncertainties. As well as offering an appealing economic framework, the Danish legislature recognised both accessibility and transparency as key factors when registering under the Danish flag.
The bill's main innovations include:
- an increasingly transparent activity requirement;
- multiple ways of satisfying the activity requirement; and
- an equal establishment requirement that applies to EU and non-EU shipowners.
The amendments do not apply to fishing or recreational vessels.
Which ships are eligible for registration in the national shipping register(s) and which parties may register ships?
Shipowners that do not satisfy the nationality requirements set out in Section 1 of the Merchant Shipping Act, including shipowners that do not constitute a Danish state entity or municipality, non-Danish citizens or legal persons that are not incorporated under Danish law or registered as a Danish company in Denmark, must satisfy establishment as well as activity criteria.
Under the previous legislative framework, a general distinction regarding non-Danish shipowners was drawn between merchant ships owned by non-EU or non-EEA shipowners (third country shipowners) and merchant ships owned by EU or EEA natural or legal persons within the scope of EU regulations on the freedom of movement. Non-EU or non-EEA legal persons had to satisfy the establishment criterion by:
- primary establishment (ie, a domicile or principal place of business in Denmark); or
- secondary establishment (ie, a subsidiary, branch office or agency in Denmark (Sections 2(2)(b) and 8(1) of the executive order).
The Danish government recently enacted a new bill to amend the rules on ship registration, under which shipowners from third countries are no longer required to satisfy the establishment criterion by primary or secondary establishment. The bill entered into force on 1 January 2018 and aims to increase transparency for shipowners seeking to enter ships into the Danish Ship Register.
Following the amendments of the Merchant Shipping Act, it is sufficient for a shipowner from a third country to appoint a natural or legal person in Denmark with whom the authorities can confer in order to exercise control and, if necessary, serve a writ of summons (ie, shipowners outside the European Union or European Economic Area are subject to the same establishment requirements as EU and EEA shipowners).
However, the explanatory note to the amendments emphasises that the Danish flag shall not evolve into an open registry. The activity requirement – which includes economic activities – is therefore maintained as a precondition for entering a foreign ship into the Danish Ship Register.
It is therefore insufficient to have only a Danish-based mailbox or agents appointed without actual duties relating to the ship's operation. In order to facilitate a clearer and more transparent system, the activity criterion may be satisfied in a variety of ways.
To satisfy the activity criterion, the shipowner will be required to document that some degree of economic activity takes place in Denmark, including (for example):
- a declaration that the technical or commercial management of the ship is exercised out of Denmark;
- proof that the operator of the ship falls within the scope of the Tonnage Tax Act; or
- that a shipowner established in Denmark holds a compliance document pursuant to the International Safety Management Code or proof of an application therefor.
It is further suggested in the explanatory note that the activity criterion can be satisfied through a combination of several individual factors, provided that the shipowner documents actual activities in Denmark that are carried out by employees.
This now follows from Section 3(2) of Executive Order 1654/2017. The minister has been empowered to define such individual factors in more detail by way of an executive order, in which factors are set out in detail and, ideally, with clear and transparent requirements for a non-Danish ship to register with the Danish Ship Register (Executive Order 1654/2017).
The amendments do not apply to fishing or recreational vessels.
What are the procedural and documentary requirements for registration?
Pursuant to Section 4 of the Executive Order 1654/2017, a request to register a ship in the Ship Register or the Boat Register must be made to the Danish Maritime Authority on a special form (available online on the Danish Maritime Authority’s website: www.soefartsstyrelsen.dk or www.virk.dk). The request must include information on the vessel and its owner. Pursuant to Section 14 of the Merchant Shipping Act, the request must evidence:
- the applicant’s ownership of the vessel; and
- that the nationality requirement or the establishment and activity requirements are met (cf Sections 1 and 2 of the Merchant Shipping Act, respectively).
The requirement to provide evidence of ownership with regard to newbuildings completed at a foreign shipyard is usually satisfied in the form of a builders’ certificate confirming the passage of title to the shipowner. Apart from newbuildings, a bill of sale may be used. The Maritime Authority requires all foreign documents to be certified by a notary.
Grounds for refusal
On what grounds may a registration application be refused?
The national authority may refuse an application which does not meet the formal requirements set out in the law, including especially the Danish Merchant Shipping Act and the Executive Order 1654/2017.
Are there any particular advantages of flying your jurisdiction’s flag?
Denmark has one of the world’s leading shipping industries, despite the country’s relatively small population. The Danish flag is characterised by high quality standards and can provide many competitive advantages compared to other flag states. Denmark is on the Paris Memorandum of Understanding White List, the Tokyo Memorandum of Understanding White List and the United States Coast Guard Qualship 21. Flying the Danish flag thus entails fewer port state controls.
Liens and mortgages
How are encumbrances such as maritime liens and mortgages registered in your jurisdiction and what are the effects of registration?
A ship mortgage must be registered in order to be secured against subsequent contracts or litigation concerning the ship. This requirement applies to:
- vessels which must be registered in the Ship Register (ie, with a gross tonnage above 20); and
- vessels with voluntary access to the Ship Register (ie, vessels with a gross tonnage of between five and 20).
Consequently, vessels that fall under the above categories must be registered before a mortgage can be registered.
Equally, a ship mortgage in a newbuilding must be registered in order to be protected against subsequent contracts made in good faith or litigation. Such a mortgage requires the newbuilding to be registered in the Shipbuilding Register.
Maritime liens cannot be registered. They are formed automatically and enjoy protection without registration (see Section 30 of the Merchant Shipping Act).
Securable claims and priority
What claims can be secured by maritime liens and what is the order of priority?
Maritime liens are given priority above all other encumbrances in the order listed in Section 51 of the Merchant Shipping Act – that is:
- crew hire and other allowances owed to the shipmaster and other crew members in connection with their service to the ship;
- port, channel and other waterway fees as well as pilot fees;
- damages for personal injury inflicted in direct connection with the operation of the ship;
- damages for property damage caused in direct connection with the operation of the ship; and
- salvage awards, damages owed due to wreck removal and average contributions.
However, as younger maritime liens hold a considerable interest in the salvage of the vessel, salvage awards will be covered ahead of younger maritime liens.
Under what circumstances are maritime liens extinguished?
Maritime liens cannot be registered and are not subject to extinguishment. However, pursuant to Section 51(1)(4) of the Merchant Shipping Act, maritime liens are subject to a special one-year statute of limitations from the date on which the claim arose (see Section 55(1) of the Merchant Shipping Act).
The limitation can be suspended by arresting the vessel or by an appropriation of the vessel within the one-year limit, provided that the arrest or appropriation is followed up by a judicial sale.
Are foreign liens recognised in your jurisdiction?
The enumeration set out in the Merchant Shipping Act is exhaustive, meaning that a Danish court will not recognise a foreign maritime lien as such. However, a foreign maritime lien attached to a foreign registered vessel may be recognised by a Danish court by giving the foreign maritime lien priority after registered mortgages and those maritime liens recognised under Danish law (see Section 75 of the Merchant Shipping Act).
Transfer and assignment
Which rules govern the transfer and assignment of liens, mortgages and other encumbrances?
Pursuant to Section 15(4), if a vessel is acquired from abroad or a request is made for registration pursuant to Section 2 of the Merchant Shipping Act, mortgages which are listed in the deletion testimony or the existence of which is established by the mortgagee and satisfy the requirements set out Section 74 on the recognition of foreign mortgages will be transferred to the Ship Register simultaneously with the registration of the ship.
Grounds for arrest
Under what circumstances can a ship be arrested in order to secure a claim against it?
Denmark is a party to the 1952 Arrest Convention and has adopted the convention rules into the Merchant Shipping Act (Chapter 4). In its 11 June 2010 judgment (Ufr 2010.2571), the Danish Maritime and Commercial Court ruled that it is not a prerequisite for ordering the arrest of a vessel pursuant to the Merchant Shipping Act for the arrest petitioner to demonstrate that, without the arrest, the debtor would likely hide or conceal its assets. However, this is a requirement under general Danish arrest law and it must be proven in cases where a petition for attachment of, among other things, bunkers is submitted to a Danish court.
Under Danish law, arrests can be made only for vessels (and other assets) which are owned by the debtor that is liable for the claim for which the arrest is sought, as set out in Section 93(4) of the Merchant Shipping Act. This implies that arrests cannot, among other things, be effected for ships on time charter if only the time charterer (and not the owner) is responsible for payment of the claim for which arrest is sought. However, due to the Danish rules on joint and several liability for contracting and performing carriers in relation to cargo claims, in many instances, a shipowner will also be liable for cargo claims to the effect that the arrest of the vessel may be effectuated for such cargo claims. The condition that the owner must be liable for the claim will be fulfilled in cases where the maritime claim is secured by a maritime lien against the vessel. This is the case with respect to the claims listed in Section 5 of the Merchant Shipping Act.
Can a ship be arrested to secure a non-maritime claim?
No. Arrests pursuant to the Merchant Shipping Act may be effectuated only for maritime claims listed in Section 91 therein (corresponding to the list of claims set out in Article 1(1) of the Arrest Convention 1952).
Can a ship be arrested to secure a claim against a sister ship?
Yes. A ship can be arrested to secure a claim against a sister ship in cases where the vessels in question are owned by the same legal entity (see Section 93(1) of the Merchant Shipping Act).
What are the procedural and documentary requirements for seeking arrest of a ship?
A petition for arrest must be submitted to the bailiff’s court in the district where the vessel is positioned at the time when the petition is filed. The court may decide to hear the arrest case on an ex parte basis.
What security must the arresting party put up in order to secure arrest of a ship and how is this security calculated?
The petitioner must provide security corresponding to five days’ hire income of the vessel against which the petition is directed. Legal proceedings on the substance of the claim must be brought within seven days of the date on which the arrest was ordered.
What security can the arrested party provide for release of an arrested ship?
A vessel subject to arrest under the Merchant Shipping Act may be released if adequate security is provided. Adequate security includes security for rents and other costs incurred in connection with the arrest of the ship and the arrest proceedings, and may be provided by the debtor him or herself or the debtor’s protection and indemnity club.
The bailiff court decides whether the security is satisfactory. Experience indicates that security equivalent to the claim plus 30% to 40% of the rent and other costs is satisfactory.
Judicial sale of ships
What is the legal procedure for the judicial sale of ships in your jurisdiction?
The procedure for the judicial sale of ships is primarily regulated under the Civil Administration of Justice Act.
A mortgagee that wants to execute a judicial sale must submit a request to the bailiffs’ court in the national jurisdiction where the vessel is situated. Before making the request, the mortgagee must arrange for a sequestration of the vessel under a ‘basis of enforcement’. Among other things, sequestration may be based on court judgments and mortgages. The sequestration gives access to the execution of a judicial sale.
Given the uncertainties surrounding the size and nature of the claims giving rise to a maritime lien, these do not in themselves constitute a basis of enforcement under Danish law (ie, the maritime lien must be manifested in the form of a court ruling).
The judicial sale of vessels registered in the Ship Register, as well as vessels registered in a corresponding foreign register, must be announced at least six weeks before in Statstidende (the Danish Official Gazette).
Where the judicial sale concerns a vessel registered in a foreign state, it must be announced for at least a four-week period in the area where the ship is registered in accordance with the regulations applicable to announcements of judicial sale of ships. The request for a judicial sale must be accompanied by authorised prints from the Danish or foreign register containing information on encumbrances of the vessel.
Under what circumstances are foreign sales recognised?
Pursuant to Section 76(4) of the Merchant Shipping Act, maritime liens, mortgages and other encumbrances of the vessel are erased following the judicial sale of a vessel in a foreign state, as long as:
- the vessel, at the time of the judicial sale, is located in the state in question; and
- the sale has been effected in accordance with the regulations of that state and the International Convention for the Unification of Certain Rules relating to Maritime Liens and Mortgages of 1967.
The state in question need not have ratified the convention, as long as the requirements therein are satisfied.
Limitation of liability
What parties may limit liability for maritime claims?
Denmark is a party to the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC) and the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims of 19 November 1976 (LLMC Protocol). Pursuant to these international instruments, a liable party may, under Danish law, limit its liability for the aggregate of all claims arising out of a single harmful event and made against the liable party to a limited extent, calculated based on the gross register tonnage of the vessel giving rise to damage.
Pursuant to Section 171 of the Merchant Shipping Act, the parties that may limit liability for maritime claims are:
- reders (ie, the person or company that runs the vessel for its own account, typically the owner or demise charterer);
- shipowners who are not considered a reder;
- charterers and managers; and
- any other entity performing services in direct connection with salvage work, including the work mentioned in Section 172(1)(4-6).
For what claims can liability be limited? Are any claims explicitly exempt from the limitation of liability?
Pursuant to Section 172(1)(1-6) of the Merchant Shipping Act, the right to limitation of liability applies regardless of the basis of liability (ie, strict liability or negligence-based liability). This includes liability incurred in connection with:
- loss of life or personal injury or loss of or damage to property if the injury or damage arose on board or in direct connection with the operation of the ship or salvage;
- damage resulting from delay in the carriage of goods by sea, passengers or their luggage;
- damage caused by infringement of a non-contractual right, which arose in direct connection with the operation of the ship or salvage; and
- measures taken to avert or minimise losses for which liability would be limited, including losses caused by such measures.
Claims that are exempt from the limitation of liability are enumerated in Section 173(1-6) of the Merchant Shipping and include:
- claims for salvage awards; and
- claims in respect of injury to an employee covered by Section 171(1, whose duties are connected) with the operation of the ship or salvage (see Section 173(1)(5)).
What limits are set for eligible claims?
Shipowners can limit their liability for passenger deaths or personal injury to passengers to 165,000 special drawing rights (SDR), multiplied by the number of passengers which the ship can carry according to its certificate.
For other claims in respect of death or personal injuries to passengers, liability can be limited to 2 million SDR for vessels with a gross register tonnage of 2,000 or less. For vessels with a higher gross register tonnage, the limit is calculated based on the system set out in Section 175(2)(1-3). For all other claims, and for the remaining personal injury claims not covered under Section 175(2), the limit of liability is 1 million SDR for vessels with a 2,000 gross register tonnage or less. For vessels with a tonnage exceeding 2,000 gross register tonnage, the limit is increased in accordance with Section 175(3)(1-3).
What rules and procedures govern the establishment of limitation funds?
A right to limit liability exists under Danish law regardless of whether a limitation fund has been constituted. However, the legal effect of constituting a limitation fund is that enforcement actions in Denmark against the liable party are prohibited, as the claimants must instead seek satisfaction by filing claims against the fund (see Article 13(2) of the LLMC).
In a 11 May 2005 judgment (UfR 2005.2550), the Danish Maritime and Commercial Court found that an enforceable judgment from another EU member state did not preclude the limitation of liability by constituting a limitation fund in Denmark. However, had the relevant proceedings in the EU member state extended to claims concerning the liable party’s right to limit its liability according to the LLMC or the LLMC Protocol and the judgment involved an assessment of such claims, an obvious assumption would be that the court of the member state in which enforcement was sought could not order satisfaction according to limitation rules other than those applied in the judgment.
A liability limitation fund based on the LLMC or the LLMC Protocol may be constituted only if a petition for arrest is filed, an action is brought or other legal proceedings are instituted against the liable party with respect to claims which, according to their nature, may be limited (see Article 11 of the LLMC). However, legal action taken between a charterer and an owner (or its managers), including legal actions claiming exclusion of claims and liability, will, as a general rule, constitute the basis for constituting a limitation fund (see Swedish decision issued by Svea Hovrätt Decision ND 2005.31).
The European Court of Justice (ECJ) decision in Cornelius Simon (Case C-39/02) is of significant importance when it comes the question of whether a limitation fund constituted in a EU member state pursuant to the LLMC should also be given legal effect and recognised in other EU member states that are party to the LLMC Protocol. The ECJ found that the Dutch court’s decision to constitute a limitation fund in the Netherlands fell within the meaning of Article 25 of the European Commission’s convention on recognition and enforcement (Article 33 of the Brussels 1 Regulation) to the effect that the constitution of a fund must be granted identical legal effect in the country where the question of legal effect arises, as stipulated by the rules of law of the country where the fund is constituted.
How are liability funds distributed?
Liability funds are distributed in accordance with the enumeration set out under Section 176 of the Merchant Shipping Act. The section applies regardless of the constitution of the limitation fund.
Each liability amount is distributed among the claimants in proportion to their claims. If the amount outlined in Section 175(2) does not fully satisfy the claims to which the amount relates, the remaining is paid on an equal footing with other claims out of the amount outlined in Section 175(2).
Carriage of goods
Is your jurisdiction party to any international conventions on the carriage of goods by sea? If so, does the relevant domestic implementing law contain any notable modifications (eg, extensions to the scope of application)?
Denmark is a party to the Hague-Visby Rules 1968 and has incorporated the rules into its national law (ie, the Merchant Shipping Act). In addition to incorporating the Hague-Visby Rules, Denmark has adopted parts of the Hamburg Rules 1978, even though Denmark is not a party to the Hamburg Rules. This mixture of rules is sometimes referred to as the ‘Scandinavian compromise’ as, by taking this approach, Denmark, Norway, Sweden and Finland have sought to improve and strengthen the legal position of cargo interests compared to the protection offered to it under the Hague-Visby Rules, without abandoning these rules.
What is the official extent of the carrier’s responsibility for goods?
The general liability rules correspond to those of the Hague-Visby Rules. However, under the Merchant Shipping Act, the so-called ‘tackle-to-tackle’ principle from the Hague-Visby rules has been abandoned. Carriers cannot limit liability for loss of or damage to goods occurring at the port of loading or discharge before or after the goods pass the ship’s rail, provided that the goods are in the care and custody of the carrier or its servants or agents.
Contractual limitation of liability
May parties contract out of any legal provisions governing cargo liability?
The rules contained in Chapter 13 of the Merchant Shipping Act are mandatory only in relation to the cargo side, meaning that the carrier may take on more onerous obligations (eg, agree that exceptions for navigational error and fire do not apply or agree to higher amounts relating to the unit limitation rules than the limits established in Section 280 of the Merchant Shipping Act).
Title to sue
Who has title to sue on a bill of lading?
A bill of lading is a document of title (see Section 292 of the Merchant Shipping Act). In other words, it contains a clause to the effect that the carrier undertakes to deliver the goods in exchange for the return of the document only. A bill of lading may be made out to a named person, order or bearer.
The righteous holder of a bill of lading – not the sender – is entitled to sue under the conditions of the bill of lading, insofar as it has suffered actual loss.
What is the time bar for cargo claims?
A cargo claim is subject to the limitations enumerated under Section 501(6-7) of the Merchant Shipping Act.
A claim for damages for loss caused by cargo being delivered without presentation of a bill of lading or to the wrong person is subject to a one-year time bar from the date on which the goods should have been delivered, or from the date on which they were delivered if this was done later.
Definition of ‘carrier’ and ‘goods’
How are ‘carrier’ and ‘goods’ defined in respect of cargo claims? Is there any especially pertinent case law on this issue?
Under the Merchant Shipping Act, the ‘carrier’ is defined as the person who enters into a contract with a sender for the carriage of general cargo by sea. Apart from the shipowner, the carrier can be constituted by a time charterer, voyage charterer or bareboat charterer.
Defences available to carrier
Under what circumstances may the carrier rely on the perils of the sea defence? What other defences are available to the carrier?
The carrier has access to several defences under the Merchant Shipping Act. Section 276 of the Merchant Shipping Act lists two unique exemptions from liability:
- fault or neglect in the navigation or management of the ship on the part of the master, crew, pilot, tug or others performing work in the service of the ship; and
- fire, unless caused by the carrier’s personal fault or neglect.
What legal protections and defences against cargo claims are available to agents of the carrier and other third parties (eg, Himalaya clauses)?
Pursuant to Section 282(2) of the Merchant Shipping Act, the provisions relating to a carrier’s defences and the limits of a carrier’s liability apply correspondingly if:
- the claim is brought against anyone for whom the carrier is responsible; and
- that person shows that he or she acted in the performance of his or her duties in the service or to fulfil an assignment.
This section ensures that the protections and defences contained in the Merchant Shipping Act are not circumvented by a direct claim against a third party.
Deviation from route
Under what circumstances is deviation from the agreed route allowed?
Section 265 provides that if hindrances arise which prevent the ship from reaching the port of discharge and discharging the goods, or if this cannot be done without unreasonable delay, the carrier may instead choose another suitable port of discharge. Further, pursuant to Section 275(2) of the Merchant Shipping Act, the carrier is not liable for losses incurred due to deviation taken in order to save human lives or for other reasonable measures to salvage vessels or other property at sea.
Claims against shipper
What claims can the carrier pursue in respect of the shipper’s failure to meet its obligations?
Under Section 257 of the Merchant Shipping Act, dangerous goods must be marked as such in a suitable manner and the shipper must provide timely notice of their dangerous nature to the carrier and sub-carrier to which the goods are delivered and state the necessary precautions.
Pursuant to Section 291, the shipper is liable without fault towards the carrier – and towards the sub-carrier – for any costs or losses arising out of the carriage of goods if they have been shipped without informing the carrier of their dangerous nature.
In cases not involving dangerous cargo, the shipper is generally liable towards the carrier only for loss or damage caused by cargo, including misdeclaration of cargo, if the carrier can prove that any such loss or damage was caused by the shipper’s fault or neglect.
Multimodal carriage of goods
How is multimodal carriage regulated in your jurisdiction?
The Danish regulatory regime does not provide for a holistic approach to multimodal transport. Rather, as a point of departure, the various forms of transport are regulated under specific unimodal regimes.
However, in a contractual setting Danish law largely supports freedom of contract. Therefore, the parties are free to stipulate the terms of their contract for the carriage of goods. An example of regulating multimodal transport is a network system, which can take on different bespoke variations. A ‘clean network system’ entails that the liability of the carrier is regulated by the liability rules applicable to the particular unimodal sections of the complete transportation. In these cases, when damage or loss is localised to a particular section of a multimodal transport, the relevant test of the carrier’s liability will be governed by the relevant unimodal rules applicable to that particular section of transport.
Collision and pollution
What rules and procedures (under both domestic and international law) apply to the prevention of, liability for and remedy of:
Denmark is a party to the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910.
Denmark has adopted national rules based on the 1910 convention on the liability of ships in cases of collision (see Section 161 of the Merchant Shipping Act). Pursuant to this section, a ship at fault is liable to compensate the damage or loss thereby caused. Compensation must be paid for all losses arising from the collision. This includes damage to the other ship, its cargo and its passengers. A ship at fault may also be liable towards its own cargo or passengers; however, these issues are decided in accordance with the transport rules (contracts) applicable between the vessel owner and cargo interest or the involved passengers.
If both vessels involved in a collision are at fault, the losses will be allocated based on the blame accorded to each ship (see Section 161(2) of the Merchant Shipping Act). If the collision is not the result of negligence on the part of any of the ships involved, each party must bear its own losses.
(b) Oil pollution?
Denmark is party to the Civil Liability Convention 1992, the Fund Convention 1992 and the Fund Protocol 2003. These regulations have been incorporated into Chapter 10 of the Merchant Shipping Act.
Pursuant to Section 191(1) of the Merchant Shipping Act, a shipowner is liable without fault (strict liability) for oil pollution damage arising from the escape or discharge of persistent mineral oil from a ship carrying oil in bulk. Pursuant to Section 193 of the Merchant Shipping Act, claims for oil pollution damage can be made only against the registered owner of the particular vessel causing pollution.
Pollution damage caused by bunker oil from ships not carrying oil in bulk is governed by Chapter 9a of the Merchant Shipping Act, which incorporates into Danish law the rules of the International Convention on Civil Liability for Bunker Oil Pollution Damage (2001), to which Denmark is a party.
(c) Other environmental damage caused by a ship?
Denmark has ratified the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 and prepared an incorporation of the convention rules into the Merchant Shipping Act. However, until this legislation enters into force, liability for pollution damage not caused by bunker oil or the escape or discharge of persistent mineral oil from a ship carrying oil in bulk is governed by the Act on the Environment of the Sea. Pursuant to Section 47 of this act, the operator of a ship is liable without fault for any pollution damage caused by a ship. The ‘operator’ is defined as the party liable for the operation of the ship. In most instances, the owner will also be considered to be the operator. However, if the vessel is on a bareboat charter, the charterer will be considered to be the operator. If the operator cannot be identified or is unable to settle a claim for compensation, claims may be directed against the registered owner of the vessel, regardless of whether he or she was actually the responsible operator of the ship when the pollution was caused.
What is the legal regime governing salvage and general average?
Denmark has incorporated the International Convention on Salvage 1989 into Chapter 16 of the Merchant Shipping Act.
The New York-Antwerp Rules 1990 have been incorporated into Danish national law (see Chapter 17 of the Merchant Shipping Act).
What rules and procedures apply to the removal of wrecks in your jurisdiction?
Pursuant to Section 166(1) of the Merchant Shipping Act, the registered owner of a sunken vessel is, without fault, liable to pay costs and expenses in relation to finding, marking and removing the wreck. The rule corresponds to the Nairobi International Convention on the Removal of Wrecks.
However, in order to recover such costs from the owner, the costs must have been incurred due to a risk to navigation. Liability for wreck removal and other clean-up costs arising out of maritime accidents is generally subject to limitation under the Limitation of Liability for Maritime Claims 1976 (LLMC) and the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims of 19 November 1976 (LLMC Protocol). Under the LLMC Protocol, parties can reserve the right to exclude liability for clean-up costs from the scope of the LLMC Protocol, which a number of states have done. However, this approach has not been taken by Denmark.
Under what circumstances can the authorities order removal of wreckage?
If the wreck is deemed to pose a threat to the coast or a coast-protection facility, the minister of environment and food or the municipal authority board may order the owner to remove the wreck (see Section 19(e) of the Coastal Protection Act).
Places of refuge
What framework governs access to places of refuge for ships in distress?
The Ministry of Environment and Food has designated 21 places of refuge for ships in distress under Executive Order 875/2016. The coordinates are enumerated in Appendix 1 to the executive order and the areas have been designated in accordance with Article 20 of Directive 2002/58/EC and International Maritime Organisation Resolutions A 949(23) and A950(23).
What maritime risks must be covered under the law and what is the mandatory level of coverage?
The Merchant Shipping Act contains a number of provisions prescribing mandatory insurance coverage for both the shipowner and the registered owner.
Pursuant to Chapter 7a of the Merchant Shipping Act, the owner of a Danish-flagged vessel with a gross registered tonnage of 300 or above must have protection and indemnity (P&I) insurance covering maritime claims. Further, the insurance certificate must be carried on board and be shown to authorities on demand. The insurance requirement applies equally to foreign-flagged vessels with a gross tonnage of 300 or above when calling on or departing from Danish ports or any other loading or unloading facility in Denmark or on the Danish continental shelf.
Under Chapter 9a, which incorporates the Bunkers Convention 2001, the registered owner of Danish-flagged vessel with a gross register tonnage of 1,000 or above must have insurance covering claims arising out of pollution damage caused by bunker oil. The insurance must cover claims under Section 183 of the Merchant Shipping Act and the global limitation rules under Section 175 of the Merchant Shipping Act. The compulsory insurance applies equally to foreign vessels with a gross register tonnage of 1,000 or above, calling at or sailing from ports or other loading or discharging locations in Denmark or on the Danish continental shelf.
Chapter 10 incorporates the Civil Liability Convention for Oil Pollution Damage. The registered owner of Danish-flagged vessel carrying oil in bulk with a gross register tonnage of 2,000 or above must have insurance covering claims under Section 191 of the Merchant Shipping Act and the special limitation rules under Section 194 of the Merchant Shipping Act. A certificate must be issued as evidence of this insurance. In the absence thereof, operation of the vessel is prohibited. The duty applies correspondingly to foreign ships carrying 2,000 tonnes of oil in bulk as cargo when calling at or sailing from ports or other loading or discharging sectors in Denmark or on the Danish continental shelf.
Insurable risks and ships
What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?
The individual types of insurance include cargo insurance, P&I and hull and machinery insurance, which encompasses:
- total loss insurance;
- war risk insurance; and
- loss of hire insurance.
Marine perils in hull insurance effected under the Nordic Plan cover all perils to which the ship may be exposed, with the exceptions listed in Sections 2-8(a)-(d). Therefore, compared to marine insurance policies effected on English terms, the Nordic Plan is based on the ‘all risks principle’ (ie, all risks are covered unless specifically excluded).
Insurance may be effected for ocean-going ships, fishing vessels, small freighters and mobile offshore units. Further, a builder’s risk insurance can be effected under the plan (ie, newbuildings and the rebuilding of ships).
What is the legal regime governing marine insurers’ subrogation rights?
Subrogation in insurance relations is governed by the general rule in Section 22 of the Tortious Liability Act, which stipulates that to the extent the insurer has paid out in connection with a damage covered by the insurance, the insurer subrogates into the assured’s claim against a tortfeasor.
Jurisdiction and dispute resolution
What courts are empowered to hear maritime cases in your jurisdiction?
All Danish courts can hear maritime cases brought within their jurisdiction. The Copenhagen Maritime and Commercial High Court is specialised and deals only with certain types of case.
Exclusive jurisdiction and arbitration clauses
Under what conditions will exclusive jurisdiction and arbitration clauses in shipping contracts be held as valid?
With regard to jurisdiction clauses, a distinction must be made between agreements entered into in advance of a dispute and agreements entered into after a dispute has arisen.
Agreements entered into after a dispute has arisen may freely stipulate exclusive jurisdiction (see Section 310(2)(2) of the Merchant Shipping Act).
Pursuant to Section 310(1) of the Merchant Shipping Act, any agreement entered into in advance of a dispute which limits the plaintiff’s right to have a legal dispute relating to the carriage of general cargo (according to Chapter 13 of the Merchant Shipping Act) settled by legal proceedings, is invalid insofar as it limits the right of the plaintiff to bring an action before the court at the places enumerated in Numbers 1 to 4, including the place where the defendant’s principal place of business is situated.
With regard to arbitration clauses, the parties may agree in writing that disputes must be settled by arbitration, given that arbitration proceedings can be instituted at the discretion of the plaintiff in one of the states mentioned in Section 310(1) (ie, the parties cannot circumvent Section 310 of the Merchant Shipping Act by inserting an arbitration clause into the contract).
What is the general state and prevalence of maritime arbitration in your jurisdiction?
Arbitration in commercial settings is generally considered to be an advantageous form of dispute resolution as the procedure ensures confidentiality and enables the parties themselves to influence the appointment of arbitrators.
A joint effort between the Nordic associations of maritime law has resulted in the constitution of the institutional arbitration centre for maritime and offshore disputes: the Nordic Offshore and Maritime Arbitration Association.
Recognition and enforcement
What regimes govern the recognition and enforcement of foreign judgments and arbitral awards?
Pursuant to the Brussels I Regulation, any judgment rendered by a court within the European Union is enforceable in all other EU member states, regardless of what the basis was for the court to accept jurisdiction in the particular case.
Similarly, court decisions rendered by courts in the European Free Trade Association (EFTA) (ie, Liechtenstein, Iceland, Norway and Switzerland) are directly enforceable in all EU member states. This follows from the Lugano Convention. In general, judgments issued by a court in any state outside the European Union or the EFTA are not enforceable or recognised in Denmark.
A new Arbitration Act (553/2005) was adopted in Denmark on 24 June 2005. The act applies to arbitration, including international arbitration, if the place of arbitration is in Denmark. The Arbitration Act to a large extent builds on the UNCITRAL Arbitration Model Law Rules. Denmark is a party the New York Convention of 10 June 1958 on the recognition and enforcement of arbitral awards.
What regime governs the imposition of security measures on ships and in port facilities?
The Safety at Sea Act is the primary legal instrument governing safety measures on ships. The act incorporates several international legal instruments (eg, the International Convention for the Safety of Life at Sea and the International Convention for the Prevention of Pollution from Ships). The act is supplemented by regulations in executive orders issued by the competent ministry.
The Harbour Act is the primary legal instrument governing ports that are used for commercial handling of goods, vehicles, persons and fish. The act is supplemented by inter alia Executive Order 1462/2016 on securing port facilities, which provides the legal basis for compliance with the International Ship and Port Facility Security Code.
What rules apply to the qualification and conduct of security officers on ships and in port facilities? Are armed guards allowed on ships?
Section 4(c)(1) of the Danish Arms Act authorises the Ministry of Justice to grant shipowners general permission to engage armed guards. The act is supplemented by Executive Order 698/2012, pursuant to which the Ministry of Justice, subject to the shipowner’s application, may issue a general permit to employ armed civilian guards on board Danish-flagged cargo vessels for use in self-defence. The permit remains valid for one year and applies in areas with a risk of pirate attacks or other armed attacks on ships.
What rules govern the provision of security information to port authorities?
Pursuant to Section 17 of Executive Order 30/2016, the shipmaster must submit pre-arrival security information electronically through SafeSeaNet. However, ocean liners between a Danish port facility and one or more port facilities in other EU member states can be exempted from pre-arrival security information to port authorities. The shipowner must submit its application to the national authorities.
A written report must be submitted within 72 hours to the Ministry of Justice when a cargo ship owned by a shipowner which has been issued a permit according to Section 1 of Executive Order 698/ 2012 has been attacked, necessitating the use of forcible means (see Section 8(1)). However, immediate reporting to the police in the district where the shipowner is established is required when there is reason to believe that use of forcible means has resulted in personal injury or death (see Section 8(2)). Pursuant to Section 8(2), the report stipulated under Section 8(1) must, among other things, describe the events, report what parties were involved and what means of force were used, including the use of firearms.