LIABILITY

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LIABILITY

• Spring 2007
• Faculty of Law, University of Oslo
• Research fellow Hanne Sofie Logstein
• (based on the material worked out by research
  fellow Anne Karin Nesdam)

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Liability Main Principles

• Main principles of Norwegian tort law
• Non-statutory/developed in case law
• Some codified in the Tort Act
• Three conditions for damages
• Basis of liability
• Proximate cause (causality)
• Financial loss

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Three main grounds/basis for liability

• Negligence
• Strict liability
• Vicarious liability
• E.g. the employers liability for a employee's
  tortuous actAn employer is liable for damage or
  injury caused intentionally or negligently during
  an employee's performance of work or functions
  for the employer, taking into account weather the
  requirements which the aggrieved person can
  reasonably make to the activity or service, have
  been neglected.

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Liability The liability regimes Overview (1)

• PA establishes four liability regimes dealing
  with the petroleum activities
• PA section 10-9 Vicarious liability, the
  licensee
• PA chapter 7 Liability for petroleum pollution
  damage
• PA chapter 8 Compensation to the fishing
  industry
• PA section 5-4 Liability in the abandonment phase

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Liability The Liability Regimes Overview (2)

• PA is supplemented by
• The general rules of Norwegian tort law
• Non-statutory/developed in case law
• Main rule
• Liability occurs when negligence has been
  exercised
• Joint and several liability in case of several
  tortfeasors (wrongdoers)
• Strict liability for hazardous and dangerous
  activities

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Liability The Liability RegimesOverview (3)

• The liability regulation in the Maritime Act of
  24 June 1994 no 39
• Regulates tort issues related to
• ships and vessels, including those performing
  tasks in the petroleum activities
• mobile drilling platforms, except for pollution
  damage resulting from a leakage or discharge of
  petroleum during a drilling operation (MA section
  507)

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Liability The Liability Regimes Overview (4)

• The liability regulation in the Pollution Act
  (PoA) of 13 March 1981 no 6
• Regulates tort issues related to other forms of
  pollution damage than petroleum pollution damage

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Liability The Liability RegimesOverview (5)

• Focus of the lecture
• The special liability regimes of the PA
• Apply when third parties suffer damage
• Non-contractual liability

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The Liability Regimes of the PA the Common
Feature (1)

• The responsible party The licensee
• Exception
• PA section 5-4
• Although responsible, the licensee is not the
  main responsible party in the abandonment phase
• PA section 8-2
• Background three groups of reasons
• Organizational reasons
• Licences issued to a group of licensees
• The practical work Led by the operator and
  carried out by contractors and subcontractors
• Risk (theoretical) Dilution of the
  responsibilities of the licence group and its
  licensees
• Solution Overall responsibility for each
  licensee

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The Liability Regimes of the PA the Common
Feature (2)

• Organizational reasons, continued
• Section 10-6
• Each licensee shall ensure that anyone performing
  work for him complies with the PA and regulations
  and decisions passed pursuant to the PA
• Economic reasons
• The licensees have the main economic interest in
  the petroleum activities
• Practical reasons
• Able to acquire adequate insurance coverage
• Better bargaining position due to their financial
  strength

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Vicarious Liability (1)

• Legal basis PA section 10-9(1)
• Definition
• Liability for damage caused by a person legal
  or natural who performs work for the licensee
• Scope (1) The licensee is liable
• (1) for any damage related to the petroleum
  activities
• (2) caused by anyone working or performing work
  or services for the licensee

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Vicarious Liability (2)

• Scope (2) Definitions
• Petroleum activity, cf. PA section 1-6 c)
• all activities connected to the development of
  petroleum fields on the NCS
• The activities may be divided into successive
  phases, i.e. exploration, exploration drilling,
  production and abandonment
• In each phase the term applies not only the core
  activities conducted offshore, but also related
  activities conducted on land (e.g. pipeline
  transport from offshore field to onshore
  terminal)

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Vicarious Liability (3)

• Scope (2) Definitions continued
• Damage
• Section 10-9 itself refers to damages on a
  general basis
• Scope limited by the liability regimes of PA
  chapters 7 and 8
• Anyone working/performing work
• Potential tortfeasors
• The licensees own employees
• also regulated by the general Act on torts
• Contractors, subcontractors and their employees
• the focus of section 10-9

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Vicarious Liability (4)

• Scope (2) Definitions continued
• Anyone working/performing work, continued
• Ordinary vicarious liability provisions under
  Norwegian tort law
• A direct contractual relationship (employment
  relationship) is required
• According to section 10-9
• Sufficient that the tortfeasor is a part of the
  hierarchy of entities performing work related to
  the relevant licence
• A employment relationship is not required
• Note In this respect more extensive than other
  forms of vicarious liability under Norwegian tort
  law

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Vicarious Liability (5)

• Scope (3) Liable to the same extent as the
  perpetrator and his employer
• Under ordinary Norwegian tort law
• The liability of the vicarious party is
  independent of the tortfeasors liability
• According to Section 10-9
• The licensees liability is independent of the
  type of liability incurred by the perpetrator
• Still The licensees liability equates the
  perpetrators/contractors liability
• Consequence The licensee can claim the same
  exemptions and limitations of liability as the
  perpetrator

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Vicarious Liability (6)

• Scope (4) Joint and several liability
• The contractor and the licensee are joint and
  severally liable towards the injured party
• Section 10-9 contains no channelling provisions
• I.e. the contractor is not shielded with regard
  to claims from the injured party
• I.e. the contactor is not shielded with regard to
  an indemnification claim from the licensee (no
  indemnification regulation)

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Liability Pollution Damage (1)

• Legal basis PA chapter 7
• Strict liability, cf. PA section 7-3(1)
• The licensee is liable regardless of fault
• No articulated vis major-exception
• Scope three key elements
• Functional scope
• Geographical scope
• Economic scope

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Liability Pollution Damage (2)

• Functional scope - PA section 7-3, cf 7-1
• Liable for pollution damage - PA section 7-3(1)
• Pollution damage - PA section 7-1
• Functional definition
• Damage or loss due to leakage or discharge of
  petroleum from an installation or well
• Costs of reasonable measures taken to prevent or
  remedy such damage or loss
• Does not specify neither the damage/losses nor
  the injured parties
• Exemption Lost fishing opportunities for
  fishermen

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Liability Pollution Damage (3)

• Geographical scope - PA section 7-2
• Deviates from PA section 1-4
• Focus on where the damage occurs, not where the
  damage stems from
• Applies to pollution damage that occurs within
  Norwegian jurisdiction, i.e.
• NCS
• Norwegian territorial waters
• Norwegian internal waters
• Norwegian territory
• Applies to sea areas outside Norwegian
  jurisdiction, provided damage/loss is sustained
  by Norwegian interests
• The location of the pollution source is
  irrelevant as regard to liability under chapter 7

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Liability Pollution Damage (4)

• Economic scope PA section 7-3
• In principle Unlimited liability
• Exemptions
• Legal basis for discretionary reduction of
  liability by the courts
• PA Section 7-3 (3)
• In case of vis major and similar events
• Act on torts section 5-2
• If considered reasonable

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Liability Pollution Damage (5)

• Channelling provisions
• Work at two levels
• (1) the licence group PA section 7-3(2)
• Primarily Claims must be directed at the
  operator
• Alternatively Claims can be directed towards the
  other licensees provided the operator fails to
  cover the claim
• (2) other participants PA sections 7-4 and 7-5
• Shielded from
• a) liability claims by the injured party (section
  7-4)
• b) indemnification actions by the licensee
  (section 7-5)
• Exemption In cases of wilful misconduct or gross
  negligence from anyone in the organisation

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Second-largest oil spill in Norwegian petroleum
history

• Statfjord A, 12 December 2007
• The ruptured loading hose led to 4400 cubic
  metres of crude oil being pumped into the sea.
• Deficient designation of responsibilities,
  deficient understanding of risks and defects in
  the loading system design were among the
  underlying causes of the ruptured loading hose.

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Liability the Fisheries (1)

• Legal basis PA chapter 8
• Regulates compensation
• to Norwegian fishermen
• for economic losses suffered due to the petroleum
  activities
• Background
• Conflict between the petroleum and the fishing
  activities on the NCS

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Liability the Fisheries (2)

• Compensation in three situations
• Occupation of traditional fishing fields, cf. PA
  section 8-2
• Pollution and waste from the petroleum
  activities, cf. PA section 8-3
• Damage caused by installations, cf. PA section
  8-5

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Liability the Fisheries (3)

• Occupation of fishing fields PA section 8-2
• Note Legal occupation
• Strict liability
• Conditions for liability
• the fishing activities are rendered impossible or
  substantially more difficult
• The responsible party
• the Norwegian State, which granted the licence
• Time limited liability
• 7 years from the initial occupation

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Liability the Fisheries (4)

• Pollution and waste PA section 8-3
• Strict and (in principle) unlimited liability
• Tortious occurrence
• Pollution, not including petroleum pollution
  damage
• E.g. chemicals and toxic substances
• Waste, e.g. various kinds of debris at the well
  site or along the sailing routes of supply
  vessels
• Typically incurred losses
• Time loss (special evidence requirements), catch
  loss or damage to fishing gear
• The responsible party
• The licensee
• However there is no channelling provisions
• Indemnification clause, cf. PA section 8-3(2)
• Joint and several liability due to identification
  problems, cf. PA section 8-4

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Liability the Fisheries (5)

• Loss caused by installations etc PA section 8-5
• Strict and (in principle) unlimited liability
• Relevant
• In cases of loss due to installations on the sea
  bed
• Situations characterised by the fact that
• the installation is intentionally placed on the
  sea bed
• for use in the petroleum activities
• by a (relatively) easily identifiable
  (responsible) party
• without representing such an obstacle that the
  fishermen have to relocate to another area
  entirely
• Typically incurred losses
• Loss of or damage to fishing gear
• Responsible party
• The licensee

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Liability the Fisheries (6)

• Settlement of claims under chapter 8 PA section
  8-6
• A three step procedure
• First step
• First instance handling by special commissions
• Second step
• Appeal to an administrative appeal body
• Third step
• Action before the ordinary courts (within two
  months after notification)