Contributed By Advokatfirmaet Thommessen AS
Norwegian law does not provide for a separate maritime finance law.
Norwegian law does not provide a definition of what constitutes a maritime finance entity.
Norwegian law does not provide for a definition of what constitutes a maritime finance project.
Norwegian law provides for a Norwegian special taxation arrangement (tonnage tax scheme) as well as a net-salary arrangement applying to Norwegian ship-owning companies and Norwegian seafarers. In addition, there are certain exemptions to the visa requirement applying to foreign seafarers.
Instead of ordinary income tax, a company subject to the Norwegian tonnage tax scheme pays a tonnage tax based on the net tonnage of relevant vessels, regardless of whether they have been in operation or not. The tonnage tax scheme is considered to constitute state aid to ship-owning entities and was approved by the EFTA (European Free Trade Association) Surveillance Authority (ESA) in 2017 to run until the end of 2027.
The net-salary arrangement under Norwegian law consists of subsidies to Norwegian ship-owning companies and seafarers and applies to vessels registered in the Norwegian Ordinary Ship Register (NOR), provided that certain requirements are fulfilled.
The Norwegian state refunds the amount paid in taxes by the seafarers, meaning that in practice the ship-owning companies pay only the seafarers' net salary. Due to several amendments to the arrangement, ships registered in the Norwegian International Ship Register (NIS) may also apply for grants based on their payments of Norwegian advance tax deductions, social security contributions and employer’s contribution, if certain requirements are fulfilled.
Under Norwegian law, there is no visa requirement for seafarers boarding or departing vessels in Norwegian ports when:
Moreover, seafarers do not need a visa if:
There is no maritime finance authority under Norwegian law.
Any fiscal, labour or immigration incentives are not subject to expiry under Norwegian law.
Norway is a party to LLMC 76.
Norway is a party to LLMC 76 with the 1996 protocol. However, in accordance with Article No 7.1 (a) of the 1996 protocol, Norway has reserved its right to exclude from limitation claims in respect of wreck-removal etc, as set out by section 172 (a) of the Norwegian Maritime Code. The limitation amounts applicable to such claims have been increased by legislation passed by the Norwegian Parliament on 12 May 2015, which implements the amendments to the 1996 protocol adopted by the International Maritime Organization (IMO) on 19 April 2012. The increased limitation amounts came into force on 8 June 2015.
There is no time-bar for filing a limitation of liability action under Norwegian law.
According to section 172 of the Norwegian Maritime Code, claims subject to limitation of liability include:
Furthermore, pursuant to section 172 (a) of the Norwegian Maritime Code, other claims subject to limitation of liability include:
The claims encompassed by section 172 (a) are subject to increased limitation amounts, which are described in further detail under 5.8 Hearing Procedure before Board of Inspectors.
Special limitation rules apply to convention-based liability for oil pollution damage and HNS [hazardous and noxious substances] Convention claims.
Claims excepted from limitation of liability under Norwegian law are, according to section 173 of the Norwegian Maritime Code:
Other claims excluded from limitation of liability are:
A person liable will not be entitled to limit their liability if it can be proved that the loss resulted from their personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.
The burden of proof rests with the party alleging that the person liable shall not be entitled to limit their liability.
Pursuant to section 175 of the Norwegian Maritime Code, the limitation amounts for liability subject to section 172 of the Norwegian Maritime Code shall be calculated as follows:
For claims subject to section 172 (a) of the Norwegian Maritime Code, which applies to ships with a gross tonnage exceeding 300 tons, section 175 (a) of the Norwegian Maritime Code sets out that the limitation amount is:
Moreover, the ship-owner’s liability for oil pollution damage, as set out by section 191 of the Norwegian Maritime Code (incorporating the 1992 CLC Convention and the 1992 Fund Convention), is limited to:
When the enacted legislation by the Norwegian Parliament concerning the implementation of the HNS Convention enters into force (governing liability for the carriage of hazardous and noxious substances by sea), ship-owners’ liability for damage caused by HNS in bulk shall be limited to:
The limitation amount shall in no circumstances exceed SDR100 million.
For damage caused by HNS ‘in packages’ or caused by HNS in both bulk and package form, or where it is not possible to determine whether the damage was caused by HNS in bulk or in packages, the shipowner's liability shall be limited to
The limitation amount shall in no circumstances exceed SDR115 million.
Norwegian law reflects the rules of the LLMC in this respect, meaning that there is no right to limit the liability if it can be established that the liable person caused the loss deliberately or through gross negligence and with knowledge that such a loss would probably result.
As yet, however, there have been no judgments in Norway in which the limitation limits have been broken.
Section 233 of the Norwegian Maritime Code states that the party seeking to establish a limitation fund shall pay the amount to the court or provide such security for the amount as the court finds satisfactory. Thus, it is up to the court to decide the acceptable type of guarantee. In practice, the most common type of guarantee is a Letter of Undertaking (LOU) issued by the vessel’s P&I Club, but the court is not bound to accept such an LOU from non-Norwegian insurers.
P&I Club LOUs are normally accepted as guarantees to constitute a limitation fund under Norwegian law, but the court is not bound to accept a P&I Club LOU from non-Norwegian insurers.
Pursuant to section 178 of the Norwegian Maritime Code, where a limitation fund has been established in accordance with section 177 of the Norwegian Maritime Code or similar provisions have been made in another state that is party to the LLMC, any person having made a claim against the limitation fund shall be barred from requesting the arrest or exercising any other enforcement action in respect of the vessel or any other assets of the person by or on behalf of whom the limitation fund has been established. Within the Lugano Convention, there are additional rules on the recognition of limitation funds even before claims have been made against the fund.
Furthermore, section 235 of the Norwegian Maritime Code provides that a deadline shall be fixed when the limitation fund is established. Claims filed after this deadline can be disregarded but are not, however, absolutely barred. In the event the limitation fund is released following a settlement, the claim will still be valid and can be pursued, even though it has not been filed.
Under Norwegian law, a creditor requesting a judicial sale of a vessel must have a valid basis for execution (tvangsgrunnlag). Most commonly, this will be either a registered mortgage or a registered attachment (utlegg). A creditor with a final and binding court judgment or arbitration award cannot apply directly for a judicial sale, but must first obtain an attachment on the vessel before the judicial sales procedure can commence.
Similarly, a creditor with a maritime lien must first obtain a judgment for his or her claim and subsequently an attachment on the vessel, before being able to apply for a judicial sale. Under Norwegian law, judicial sales of vessels are handled by the first-instance court and a court-appointed assistant.
Once the request for a judicial sale has been filed, the owner and the Master are notified by the court, and the owner is given the opportunity to comment on the request. The court then decides whether to allow a judicial sale and, if so, the decision is recorded in the vessel’s register.
The forced sale of a vessel will be prepared and handled by the court-appointed assistant. The assistant shall, as far as possible, try to follow the same procedures as in a normal commercial sale of a vessel within the framework of the Norwegian Enforcement Act. The assistant must notify the owner, mortgagees and other holders of registered encumbrances of the judicial sale.
Furthermore, the assistant has a duty to announce and advertise the sale. The details in respect of such a sale are left to the assistant’s discretion, although ordinary commercial practices should be followed. The assistant should also arrange for inspection of the vessel by potential bidders, which, according to sections 11-25 of the Norwegian Enforcement Act, is to be carried out in accordance with normal practice in a voluntary sale.
There is no first, second and third round of a judicial sale under Norwegian law. A judicial sale may be effected only if the bid gives full payment to all claims with greater priority than that of the claimant, cf sections 11-20 of the Norwegian Enforcement Act.
If the assistant is of the opinion that no satisfactory bid will be submitted, the claimant and the court shall be informed. If no objections are raised within two weeks, the court shall dismiss the case.
A prospective bidder does not need to make an appearance in the judicial sale proceeding with an attorney.
There are no particular actions a prospective bidder must take in order to participate in a judicial sale. A bid must be made in writing to the assistant, however.
According to section 11-26 of the Norwegian Enforcement Act, a submitted bid must be valid for at least six weeks, unless the court accepts a shorter deadline.
Once the vessel is sold, the due date for payment of the purchase price is at the latest three months after the bid has been presented to the involved parties, or two weeks after the decision of the court becomes final and binding, cf section 11-27 of the Norwegian Enforcement Act.
A party that has a judicially recognised credit against the vessel is permitted to place a bid during the judicial sale auction.
There is no requirement that the winning bid has to cover all arrest expenses incurred. However, the sale may be effected only if all encumbrances with a better priority than the claimant’s claim are discharged, cf sections 11-20 of the Norwegian Enforcement Act.
Norway is a signatory to the Hague-Visby Rules, which have been incorporated into the Norwegian Maritime Code with certain modifications. Furthermore, Norway is a signatory to, but has not ratified, the Hamburg Rules. However, some of the provisions set out by the Hamburg Rules, which are considered to be compatible with Norway’s obligations under the Hague-Visby Rules, can be found in the Norwegian Maritime Code. Moreover, Norway has signed the Rotterdam Rules, although these have not yet been ratified.
The rules governing the carriage of goods by sea are mainly set out in Chapter 13 of the Norwegian Maritime Code. The provisions of the chapter apply to contracts of carriage by sea in domestic trade in Norway and trade between Norway, Denmark, Finland and Sweden.
In respect of other trades, the provisions apply to contracts of carriage by sea between two different states if:
Furthermore, if neither the agreed place of loading nor the agreed or actual place of delivery is in Norway, Denmark, Finland or Sweden, the parties may nevertheless agree that the contract of carriage by sea shall be subject to the law of a state party to the Hague-Visby Rules.
A bill of lading evidences a contract of carriage, cf section 251 of the Norwegian Maritime Code.
According to section 299 of the Norwegian Maritime Code, a bill of lading is evidence that the carrier has received the goods or, if a shipped bill of lading has been issued, that the carrier has loaded the goods as stated in the bill of lading insofar as no reservation has been made pursuant to section 298 (concerning the carrier’s duty of inspection) or nothing to the contrary is shown.
The carrier and the sender are the contracting parties in a carriage of goods by sea contract.
A cargo claim against the carrier may be raised by the shipper, the consignee or the owner of the goods (sender).
Norwegian law allows for claims to be directed against both the contractual carrier and the actual carrier. Pursuant to sections 285 to 287 of the Norwegian Maritime Code, the contractual and actual carrier will be jointly and severally liable for the parts of the voyage performed by the actual carrier. ‘Identity of carrier’ clauses will not be enforceable under Norwegian law.
Section 251 of the Norwegian Maritime Code defines ‘carrier’ to be the party entering into a contract with a sender for the carriage of general cargo by sea.
Claims in rem are not recognised by Norwegian law.
Cargo claims do not give rise to a maritime lien under Norwegian law, but may give rise to a right to arrest the vessel.
Norwegian law incorporates the Hague-Visby rules, which means that the defences and limits of liability provided for therein will be applicable in any action against the carrier in respect of loss or damage to goods covered by a contract of carriage, regardless of whether the action is founded in contract or in tort.
Norwegian courts do recognise the effectiveness of Himalaya clauses in bills of lading. Additionally, there is a statutory provision in section 282 of the Norwegian Maritime Code which states that the provisions relating to the carrier’s defences and the limits of the carrier’s liability will apply correspondingly if the claim is brought against anyone for whom the carrier is responsible, and that person shows that he or she was performing his or her duties in the carrier’s service or was acting in order to fulfil his or her duties. This group of persons includes inter alia stevedores, whether they have been engaged by the carrier or the cargo interests.
The exceptions from the carrier’s liability are set out in sections 275 and 276 of the Norwegian Maritime Code. These state that the carrier will not be liable if the carrier can show that the loss:
However, the carrier will be liable for losses resulting from unseaworthiness caused by a failure to exercise due diligence to make the vessel seaworthy at the commencement of the voyage, either on the part of the carrier personally or of a person for whom the carrier is responsible.
However, the carrier will not be liable for losses resulting from unseaworthiness if able to prove that due diligence was exercised in order to make the vessel seaworthy at the commencement of the voyage.
Note that the above provision does not apply to contracts for carriage by sea in domestic trade in Norway, in which case the carrier will also be liable for damage resulting from fire, or failure or neglect in the navigation or management of the ship.
According to section 280 of the Norwegian Maritime Code, the carrier’s liability shall not exceed SDR667 for each package or other unit of the goods, or SDR2 per kg of the gross weight of the goods lost, damaged or delayed, whichever is higher.
An increased limit applies in respect of domestic trade in Norway, in which the carrier’s liability shall be limited to SDR17 per kg of the gross weight of the goods lost, damaged or delayed. The liability for delay shall not exceed the full freight according to the contract of carriage.
The carrier is prima facie liable for damage to or loss of the cargo whilst in the custody of the carrier, unless the carrier shows that the loss was not due to his or her personal fault or neglect, or that of anyone for whom he or she is responsible. Consequently, the carrier has the burden of proof with respect to the applicability of any of the available defences.
Moreover, as stated above, the carrier is not liable if the carrier can show that the loss resulted from
The carrier is, nevertheless, liable for losses due to unseaworthiness resulting from the failure to exercise due diligence to make the ship seaworthy at the commencement of the voyage, either on the part of the carrier personally or a person for whom the carrier is responsible. The burden of proving that due diligence was exercised to make the vessel seaworthy rests with the carrier. This provision incorporates the Hague-Visby Rules.
Section 288 of the Norwegian Maritime Code provides that if the goods have been delivered and the receiver has not notified the carrier in writing of any loss or damage which the receiver had or ought to have discovered, stating the nature of the loss or damage in question, all the goods are, where nothing to the contrary is proved, considered to have been delivered in the condition described in the transport document. Moreover, if the loss or damage was not apparent at the time of delivery, the same applies if written notice is not given within three days of the delivery.
Written notice is not required in respect of loss or damage ascertained in a joint inspection of the goods.
The carrier is not liable for losses due to delayed delivery unless written notice is given within 60 days of the goods’ delivery to the receiver.
Notice can be given to the sub-carrier who delivered the goods, or to the carrier.
According to section 501 (7) of the Norwegian Maritime Code, the time-bar for claim for damages for loss of or damage to or in connection with goods or for incorrect or incomplete statements in a bill of lading is one year from the time of delivery or from the time that delivery should have taken place.
As the Norwegian Maritime Code does not regulate all aspects of time-bar issues exhaustively, the rules will be supplemented by the general rules governing statutory limitation as set out in the Norwegian Limitation Act. Pursuant to section 28 of said Act, the parties may agree to extend the time bar by up to three years each time, but not beyond ten years from the date on which the limitation period would otherwise have expired.
In order to be valid under Norwegian law, jurisdiction and choice of law clauses must comply with section 310 (1) of the Norwegian Maritime Code. This states that any agreement made in advance that limits the right for the claimant to have a legal dispute relating to the carriage of general cargo settled by litigation is invalid insofar as it limits the claimant’s right at his or her own discretion to bring an action before the court at the place where:
If the agreed or actual place of delivery of the cargo is in Norway, Denmark, Finland or Sweden, section 252 (3) prohibits the parties from entering into an agreement in which the laws of any other Hague-Visby state shall govern the contract of carriage. However, section 310 (5) sets out that the above-mentioned requirements in section 310 (1) do not apply if:
This means that if the carriage does not have any connection to the Nordic countries, the parties may agree that the contract of carriage shall be subject of the laws of other Hague-Visby state parties.
Notwithstanding the above, section 310 (2) provides that an agreement designating the place where the claimant may institute any actions, which is made by the parties after a claim under the contract of carriage by sea has arisen, will be effective.
Pursuant to section 311 of the Norwegian Maritime Code, the parties may otherwise agree to settle disputes by way of arbitration.
Norway has not enacted separate legislation governing marine accidents in waterways. Consequently, the Norwegian Maritime Code, which regulates the responsibility for collisions and other damage caused by ships, will also be applicable in respect of marine accidents in waterways.
The term ‘waterways’ is not defined under Norwegian law, as there is no separate legislation governing marine traffic in waterways. However, the Norwegian territorial seas consist of territorial waters and inland waters. As inland waters are considered to include all waters on the landward side of the baselines, they will therefore include all waterways.
Whether pilotage is compulsory or not is regulated by the Compulsory Pilotage Regulations. As a main rule, pilotage is compulsory for all vessels exceeding 70 m length or 20 m width when sailing within the Norwegian baselines. However, there are a number of geographical areas and types of vessel excluded from this general rule, which are explicitly listed in the Compulsory Pilotage Regulations. The Norwegian Coastal Administration may add or remove areas from the list of exceptions.
Under Norwegian law, the legal starting point is that the ship-owner will be responsible for damage arising from a marine accident, provided that a basis of liability can be established. Pursuant to § 151 of the Norwegian Maritime Code, the ship-owner is vicariously liable to compensate damage caused by the fault or negligence of the master, crew, pilot, tug or others performing work in the service of the ship. Thus, the ship-owner will not be able to recover against any authorities if, for instance, negligence on part of the pilot results in a marine accident in waterways.
Authorities may, however, become liable in accordance with the general rules of liability in tort if the relevant requirements are present. In theory, the Norwegian Coastal Administration could therefore be held liable if the process of training or employing the pilot was performed in a negligent manner, provided that a causal link could be established between the negligence and the damage/loss.
Following the capsizing of MV Rocknes in 2004, the ship-owner argued that the authorities were liable for negligence in training the pilot who had performed the pilotage, as well as negligence in providing updated versions of the chart of the waterway. The Court of Appeal held that the authorities may become responsible for negligence in their administration or policy. No negligence was found in that case, however.
The Norwegian Maritime Authority is in charge of inspection of Norwegian ships and ship-inspectors may be employed by the authorities. Inspection and supervision may, however, be delegated to the recognised classification societies. The ship-inspectors’ role is to ensure vessels’ compliance with all applicable safety regulations. Ship-inspectors role is to prevent marine accidents, but they are not involved in the investigation of marine accidents.
According to section 476 (2) of the Norwegian Maritime Code, it is mandatory for the Accident Investigation Board to investigate marine accidents of a ‘severe’ nature. A severe marine accident is defined in section 472 (a) (5) to be loss of the vessel, loss of life, significant damage to the environment or immediate danger of any of these events concerning a passenger ship.
The Accident Investigation Board is required to investigate a severe marine accident only when it involves:
There are two exceptions set out in section 476 of the Norwegian Maritime Code. If a fishing vessel less than 15 m in length has been lost without any loss of life, there is no obligation to investigate the accident. Moreover, severe accidents involving vessels used for recreation do not require investigations.
Following a ‘marine accident’, the Accident Investigation Board may, at its sole discretion, initiate an investigation, cf section 476 (1) of the Norwegian Maritime Code. According to section 472 (a) (4), a marine accident is defined as an event occurring during the operation of the vessel in which there is either:
The Accident Investigation Board shall clarify the circumstances surrounding the marine accident, including the sequence of events and causes leading up to the accident, aiming to improve safety at sea and avoid future maritime accidents.
The Accident Investigation Board may publish a report including the board’s recommendations in this respect. It is not up to the Accident Investigation Board to make assessments as regards any civil or criminal liability.
The Accident Investigation Board has the discretion to decide the form of the investigation, pursuant to section 476 of the Norwegian Maritime Code. A formal hearing is usually not held, but there may be interviews with relevant persons in the case.
There is no special procedure under Norwegian law for ship-owners to recover against any given authority. If the ship-owner wishes to claim against the authorities, the normal procedure for initiating legal proceedings must be complied with.
As Norwegian law does not provide for administrative claims against the authorities, the ordinary rules governing the filing of judicial claims will apply, see question 5.15 Time-Bar for Filing Judicial Claims below.
If it can be established that the authorities have acted negligently within their scope of responsibility and that there is a causal link between such negligence and the loss or damage, the general principle in Norwegian tort law is that the injured party should be compensated as if the accident never happened. Thus, all monetary damages which flow from the accident should be compensated.
If any authority is found liable, any type of damages recognised by Norwegian law can be recovered from that authority.
As mentioned above, where a person acts in the service of the vessel, any negligence in their performance of this service is the ship-owner’s responsibility. This entails that the negligence of, for example, a pilot will not give rise to a claim against the authorities. In practice, there is a high threshold in order to establish that the authorities have acted negligently.
There is no separate procedure for filing a judicial claim against the authorities. The claimant must comply with the ordinary rules governing civil proceedings.
The general time-bar for civil claims for damage will be applicable in this respect. Pursuant to section 9 of the Norwegian Limitation Act, the person who has suffered a loss or damage must file their claim against the authorities within three years of the day the person obtained, or should have obtained, necessary knowledge of the damage and the person or relevant body responsible.
There is no specialised court with exclusive jurisdiction to hear cases concerning marine accidents. Judicial claims must therefore be filed with the relevant court that has jurisdiction to hear the case.