A German charterer fixed a charter with a Norwegian shipowner to conduct a carriage of aluminum hydroxide from Brazil to Norway. When the ship reached England it was arrested and the voyage was delayed. The German charterer paid damages to the cargo owner and claimed a right of recourse against the Norwegian shipowner. The Norwegian Court of Appeal found that the limitation period under the Norwegian Merchant Shipping Act was applicable in the event of delay. Consequently, the claim was time-barred.

A Norwegian aluminum company (the cargo owner) cooperated with a German charterer, which carried aluminum hydroxide on a continuing basis. A carriage from Brazil to Norway was scheduled to take place in the spring of 2009. The German charterer fixed a voyage charter with a Norwegian shipowner to conduct the carriage by sea.

The cargo was loaded in Brazil and the ship left for Europe as scheduled.  However, the ship was arrested, when it berthed at Falmouth, England. The ship did not reach the destination in Norway until 26 days later.

As a consequence of the delay, the Norwegian cargo owner sustained a loss of approximately 1.7 million NOK. The cargo owner offset the amount against an outstanding account with the German charterer. Afterwards, the German charterer offset part of the claim against the freight due to the Norwegian shipowner. As the recourse claim exceeded the freight only part of the recourse claim was offset. In the fall of 2011 – almost two and a half years after the carriage by sea – the German charterer took legal action against the Norwegian shipowner for the remaining amount. The main question was whether the claim was time-barred.

The Merchant Shipping Act or the Statute of Limitations?
The German charterer argued that the Norwegian shipowner was liable for the delay; due to the fact that the shipowner was in control of the ship at the time of the arrest the charterer held the shipowner to be responsible for the arrest. In relation to the limitation period the German charterer argued that the limitation period in the Norwegian Merchant Shipping Act was not applicable in cases of delay. Therefore, the general limitation period of three years should apply.

The Merchant Shipping Act is to a large extent an inter-Nordic set of rules and thus the maritime legislation in Norway is in many ways similar to the legislation in the other Nordic countries. According to the Danish Merchant Shipping Act a claim for damages caused by delay will without question be time-barred after one year. The question whether this equally applied in Norway had not previously been tried by the Norwegian courts.

The Norwegian shipowner claimed that the inter-Nordic character of the Merchant Shipping Act as well as the need to promote its uniformity should be taken into account. Thus, the shipowner argued that the limitation period of the Merchant Shipping Act was applicable also in the event of delay. The claim would therefore be time-barred after one year.

The Court of Appeal: The Limitation Period of the Norwegian Merchant Shipping Act also applies in Case of Delay

With reference to the purpose of the Act the Court of Appeal found that the Merchant Shipping Act should apply in event of delay. The Hague-Visby rules were also mentioned in this regard.

As the claim arose from the redemption of the cargo owner’s claim, the limitation period expired one year after the claim was founded – i.e. in the summer of 2010.  Since the claim was not brought before the courts until October 2011, the claim was time-barred. Consequently, the German charterer was barred from pursuing the claim.
IUNO’s opinion

The judgment illustrates the importance of pursuing a potential recourse claim against subcontractors as soon as possible. In this case the German charterer had to endure the loss of 1.1 million NOK by itself, even though the loss probably could have been transferred to the Norwegian shipowner, if the recourse claim had been pursued earlier.

Maritime law provides for brief periods of limitation and the limitation period of one year in the Merchant Shipping Acts of the Nordic countries is common within maritime law.  Therefore, it is important to consider all possibilities for a potential recourse claim as soon as possible – and then immediately pursue the claim against the responsible party. 

[The Norwegian Borgarting Court of Appeal on 17 June 2013. Case no. LB-2013-78197]