OWNERS LIABILITY

1
OWNERS LIABILITY

• Eve de Coning
• Research fellow PhD
• Scandinavian Institute of Maritime Law
• September 2007

2
LECTURE OUTLINE

• MARL4 Tuesday 11. Sept
• 10h15 11h00
• Chapter 7 Ways of Structuring Shipowning
  Entities, and
• Chapter 8 Liabilities.
• 11h15 12h00
• Chapter 9 Limitations of Shipowners
  Liabilities.

• MARL5 Wednesday 12. Sept
• 10h15 11h00
• Chapter 10 Oil Pollution and Environmental
  Liability.
• 11h15 12h00
• Chapter 11 Liability for Collisions

Chapter 12 The Legal Position of the Crew is
self study
3
Chapter 7 Ways of Structuring Shipowning
Entities

• Overview
• Definition of the terms shipowner and
  shipowning company
• Forms of organisation of the shipowning entity
• Transfer of the shipowners functions
• Frequently used intermediaries and independent
  contractors

4
1. Definition of terms

• Shipowner starts up the operation, manages it
  and bears the economic risk. (Brækhus Rederens
  Husbondsansvar Sjø og Land at 294)
• There are two essential features
• a) operation, and
• b) ownership
• As to b) reder vs. shipowner (Compare the use of
  the term reder and owner in the Maritime Code
  Chapter 7)

5
2. Forms of organisation of the shipowning entity

• Alternative ways in which the shipowning entity
  may be organised
• Sole proprietorships
• Partnerships Part owners and joint ownership.
• Limited partnerships
• Limited liability corporations

6
3. Transfer of the shipowners functions

• Ownership functions may be transferred either
• a) completely (eg to bareboat charterers or
  through requisitioning), or
• b) partly (eg the chartering, technical,
  commercial or marketing aspects of the
  operation).
• Ownership functions are frequently transferred in
  three ways. Through
• a) pool agreements,
• b) joint ventures, and
• c) management agreements.

7
3. Transfer of shipowners functions (cont.)

• Pool agreements
• 1. Pool carry resources and share profits
• 2. Semi-monopolistic (EU disagrees on semi)

8
3. Transfer of shipowners functions (cont.)

• Joint ventures
• Pool carrying resources and distributes
  profits.
• There is no restriction on competition.
• Management agreements
• Specialised management agencies.
• On the basis of management agreements.
• The management agreements will limit the
  liability of the managing company.

9
4. Frequently used intermediaries and independent
contractors

• See pages 155 158

10
Chapter 8 Liability

• Overview
• Types of damage or loss
• General principles of liability
• Contractual liability
• Liability in torts based on
• a) negligence,
• b) vicarious liability, or
• c) strict liability
• 5. Claims for personal injury
• 6. Limitations on availability of actions
  Prescription and waiver

11
1. Types of damage or loss

• Plethora of factual circumstances.
• Economic interests cargo, ship, port,
  environment
• Personal injury passengers, crew, builders,
  stevedores etc.

12
2. General principles of liability

• Normally contractual regulation of liability.
• Contractual regulation is subject to mandatory
  application of statute.
• 3. An action for damages or loss is also
  available in torts. (Torts Act of 13 June 1969
  no. 26 read with the Maritime Code of 1 October
  1994)

13
3. Contractual liability

• Damages or loss due to improper performance.
• Three issues arise as to
• a) the concurrent liability of the parties in
  contract and torts,
• b) the identities of the parties to the
  contract, and
• c) whether there are any restrictions on the
  contractual terms that the parties may be agreed
  upon.

14
4. a) Liability in torts based on negligence

• The general tort-rules will normally apply.
• Frequent problem Who is the tortfeasor?
• a) Norwegian law actions made by the companys
  organ
• b) Common law alter ego, ie not an employee or
  servant, but does not need to be a director on
  the board.

15
4. b) Liability in torts based on vicarious
liability

• MC section 151
• The shipowner here reder shall be liable to
  compensate for damage by the fault or negligence
  caused in service of the ship by the master,
  crew, pilot, tug or others performing work in the
  service of the ship.

ND 2000.502 NCA GRIGOROUSSA
16
4. b) Liability in torts based on vicarious
liability (cont.)

• Three requirements
• a) Legal relationship,
• b) service, and
• c) servant.
• Legal relationship
• Typically employment relationship
• Service of ship, not owner
• Imposed assistants longshoremen and pilots

17
4. b) Liability in torts based on vicarious
liability (cont.)

• Nature of service
• In service of particular ship
• The test is whether shipowner is entitled to
• a) give orders,
• b) supervise performance, and/or
• c) check quality of work?
• Alternative test
• The work should be integral to the activities
  typically undertaken by the shipowner
• Categories of servants/assistants
• Pages 174 - 175.

18
4. c) Strict liability in torts

• Judicially created
• Imposed to
• redress injuries caused by persons engaging
  in extrahazardous activities, who for reasons
  of public policy are required to insure the
  safety of those they foreseeable harm
• (According to Justice Oliver Wendel Holmes Jr
  in
• Grey Accidental Torts 54 Vanderbuilt Law Review
  (2001) 1225 at 1257)
• 3. Rationale Shipowners may spread the loss.

19
5. Claims for personal injury

• Ordinary tort principles applies.
• Liability for passengers in section 418,
  limitation of liability in section 422.
• Compensation National Insurance Act of 28
  February 1997 no 19, chapter 11 read with the
  Torts Act section 3-1.

20
6. Limitation on availability of actions

• Prescription and waiver
• Important for the balance of interests
• MC chapter 19 and Limitation of Actions Act of 18
  May 1979 no 18.
• Cannot contract out, but can extent with three
  years at a time (LAA section 28)