Norway considers ratification of the Nairobi Wreck Removal Convention
Claims against or from third parties to an agreement containing an arbitration clause often give rise to the question of whether such third parties are bound by, or whether they can invoke, the arbitration clause.
The Convention sets out a number of duties related to the removal of wrecks for both the coastal state and the registered owner of the wrecked vessel (Wikborg Rein has previously written about the Convention in Update Nor-Shipping Edition 2011 and Update December 2014). The coastal state is obliged to locate and mark the wreck and take measures to facilitate removal. Liability for wreck removal under the Convention is strict and is channelled to the registered owner of the wreck. Wreck removal may however only be ordered if certain strict criteria are fulfilled and is subject to limitation of liability in accordance with applicable national law or international conventions. The Convention also introduces compulsory insurance requirements and a right to direct action against the vessel’s insurers.
The Ministry’s proposal on ratification and draft legislation to implement the Convention is based on a consultation process held in 2010/2011, where the government asked the industry and other interested parties for their views on whether Norway should ratify the Convention and, if so, how it should be implemented.
At present, a total of 29 states have ratified the Convention, including Denmark, Cyprus, Liberia, the Marshall Islands, the Netherlands, the United Kingdom and Germany, and the Convention has entered into force.
Opt-in for territorial sea and inland waters
Whilst the Convention primarily applies to wrecks in the 200 Nm exclusive economic zones (EEZs) of the state parties, it contains an opt-in whereby states may also make the Convention applicable in their territorial seas and inland waters. As a result of the submissions received by the Norwegian government during the consultation process in 2010, the new consultation process initiated by the Ministry of Transport in recent months includes a proposal to exercise the opt-in option to extend the Convention rules to Norway’s territorial and internal waters as well as draft legislation to implement the same. According to the Norwegian government the rationale for doing so is that wrecks posing a navigational hindrance or environmental hazard along the Norwegian coast are more likely to be located closer to shore than in the EEZ.
The requirements for the issuance of a wreck removal order under the Convention appear to be more strict however than under the current national legislation, including the Norwegian Harbour and Waterway Act and the Pollution Act. For example, whilst the Pollution Act states that wreck removal may be ordered if the wreck may cause “damage or disadvantage to the environment”, the Convention specifies that the risk has to “reasonably be expected to result in major harmful consequences to the marine environment”. The proposed legislation does not include any suggested changes to the current Norwegian wreck removal provisions but rather proposes a dual system whereby the Convention’s cost recovery rules, including the right of direct action against the insurers, may only be invoked in instances where the basis for ordering wreck removal is in accordance with the Convention i.e. where the wreck poses major harmful consequences to the marine environment.
The Convention is structured in a similar manner as other recent maritime liability conventions such as the Bunkers Convention and the HNS Convention. As such, a key aspect of the Convention is the requirement for compulsory wreck removal insurance to be carried by owners of vessels exceeding 300 grt. Vessels operating in the waters of states that have ratified the Convention (excluding innocent passage), or are sailing to their ports, are already required to have a certificate of insurance for wreck removal.
To a great degree, should Norway ratify the Convention, this requirement will not impose significant additional burdens on Norwegian flagged vessels as Norway has had an agreement with Denmark since 2015 whereby the Danish maritime authorities issue such certificates to Norwegian flagged vessels. However, should the Convention be ratified, then the Norwegian Maritime Directorate will take over issuance of the certificates, which will have to be renewed on an annual basis.
Channelling of liability
The Convention clearly identifies the registered owner of the vessel as the only liable person and hence the only person against whom a wreck removal order may be issued (with the exception of state owned vessels operated by a company).
A similar channelling of liability to the owner can already be found in the Norwegian Harbour and Waterways Act and the Pollution Act, although it is a contentious issue whether under the existing Norwegian legislation other parties involved with a vessel’s operation may also be held liable for wreck removal.
By way of example, the issue of whether a manager may be ordered to remove a wreck under the Pollution Act will be considered by the Norwegian Supreme Court in early 2017 with Wikborg Rein representing the owner, manager and insurer against the Norwegian state. The Convention’s channelling of liability to the owner is therefore in accordance with existing practice on insurance cover and continues a trend of channelling of liability to a principal similar to what can be found in for example the petroleum sector.
It is expected that Norway will ratify the Convention and implement its principles into national legislation, but it remains to be seen whether the Convention will be implemented as part of a dual system and, if so, how such dual system will work in practice.