In the spotlight – public investigations in the Norwegian petroleum industry

The continued market downturn has led to a concern that cost cutting by the offshore industry may lead to a corresponding decline in safety standards. In response to this concern, the Norwegian Petroleum Safety Agency (the “PSA”) have announced that they will increase their audit and investigation activities to ensure that the very high standards of safety expected of companies operating in the Norwegian sector of the North Sea will continue to be adhered to.

An active PSA is crucial for maintaining the very high safety standards currently expected in the petroleum industry. However, overly hasty, incomplete or incorrect conclusions resulting from public investigations may also damage companies and individuals quite severely and it is therefore imperative that the PSA acts fairly and correctly at all times. 
What public investigations are initiated by the PSA?

The PSA performs public investigations as part of their supervision audit and verification activities. Public investigations are regularly initiated by the PSA in case of a major accident or otherwise when public attention or other circumstances calls for them.

However, the PSA also has a central role in approving and supervising offshore activities on the Norwegian continental shelf, and it has therefore been debated as to whether this presents a potential conflict of interests and whether the PSA should cede its responsibilities for investigations to an independent third party. Certainly, impartiality and independence are crucial in any investigating body and in cases where deficiencies in rules or regulations, or the administration or supervision of same may be found to be a contributing factor to an accident, that very impartiality and independence may be at stake.

Publicity, yes please, but…

The obvious advantage, but also clearly a problem with PSA public investigations, is that the outcome of the investigations is a publicly available report written by the PSA. The advantages of the report being publicly available are clear - publicity and transparency contributes to active sharing of knowledge in order to avoid similar incidents in the future. However, for the companies being investigated, a public report may in practice have the same effect as a judgment. Recent events have shown that reports from the PSA can attract massive media attention, and it seems literally impossible to change the view created by such media attention, even if the PSA’s conclusions later prove to be groundless. In other words, mud sticks.

Fundamental rights of fair “trial”

In court proceedings, clear rules and principles, a predefined and predictable process and an independent and impartial judge to oversee that procedure, are in place to ensure that both sides are being heard. In PSA public investigations however, whilst the rules and principles are there, the procedure and the impartiality of the ultimate arbiter are more unclear.

 

The PSA is of course obliged by law to ensure that all facts are being properly considered during a public investigation. This implies that the PSA shall ensure that companies being investigated are given ample opportunity to present their case, including all relevant facts and arguments. In essence this reflects the adversarial principle, which is a fundamental principle of Norwegian law, but the target itself must be pro-active to ensure such rights are being upheld.

Such protective rights and tools for companies under investigation follow both from national legislation such as the Public Administration Act and general principles of law, including the obligation for any public body to ensure a fair and proper public process.

In practice – right to attend, right to observe, right to speak and be heard
In order to ensure therefore that the PSA is seen to be complying with the relevant legislation and general principles, the first thing the PSA needs to do is to notify the companies targeted for investigation that an investigation has actually been initiated. Normally this is sometimes done at the same time as such companies are asked to provide documentation and make personnel available for interviews.

More importantly, the companies in question should be given the right to be allowed access to all facts obtained during the investigation. This includes documentation and physical evidence, but may also include a right to be present during interviews, especially in cases where these are not properly documented in the form of statements or recordings. By being allowed such access to facts obtained, the companies in question may also be in a position to provide additional facts and thus enhance the quality of the report and ensure that any conclusions drawn by the PSA are factually correct. Furthermore, the companies should be given the opportunity to direct the PSA’s attention to, or request the PSA to further investigate, other facts or circumstances which the company considers may be relevant.

In addition to mere facts and documents, the companies in question should also be given access to considerations or characteristics made based on the facts obtained in the investigations. The most crucial considerations in this respect are those relating to whether the companies are in breach of applicable rules or regulations. If criticism is raised towards the targets, the relevant company must then be given ample opportunity to respond and in essence defend themselves against such allegations.

 

Timing is of course of the essence for all the rights mentioned herein. It will not be sufficient if the PSA grants access to the facts and considerations after the report is finalized and publicised. In order to be of value for the companies in question, the right to attend, to observe as well as to speak and be heard must be granted before final conclusions are drawn, and indeed well before finalisation and publication of the report. Unfortunately this is not always the case.

Practical approach

All parties involved in the petroleum industry benefit from a strong, relevant and fair supervision agency such as the PSA. An active PSA contributes to safe operations and a safe working environment. It is therefore crucial, in order to enable the PSA to do their job properly, that all companies, being targets or not, actively cooperate with the PSA and contribute fully to ensure knowledge sharing and thus reduced risk of accidents. All involved parties must however at the same time ensure that the conclusions made by the PSA are based on the best possible factual basis. To ensure same, the companies must proactively pursue their rights during investigations. No-one else will do this for them and no-one benefits from a wrong conclusion.

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