Norway's Supreme Court has delivered a landmark judgment that allows a claim to be pursued against insurer Skuld over a bulker collision in 2007.
Rival protection and indemnity insurer Gard and ship operator SwissMarine are trying to force a payout for damage to its 174,000-dwt capesize bulker Mineral Libin (built 2006) after a clash with another vessel in Fangcheng, China.
The court found that the claim was not time-barred because a tribunal did not establish liability until 2016.
Gard and SwissMarine's lawyers at Thommessen said the ruling clarified key issues on the interpretation of the Insurance Contracts Act (ICA) and the Norwegian Limitation Act (NLA).
But Skuld's legal firm, Bahr, said it left uncertainty over when a legal limitation period starts due to a vagueness about what constitutes 'sufficient knowledge' of a claim.
The dispute arose after the bulker, while turning to starboard to berth in a river, struck a buoy and another berthed vessel, causing substantial damage to both ships.
In 2010, disponent owner SwissMarine commenced arbitration proceedings against sub-charterer Transfield, alleging that the port was unsafe for the vessel in breach of the safe port warranty in the charter contract.
Transfield argued that the collision was caused by navigation errors of the pilot or master.
Transfield insolvent
But Transfield went into liquidation in 2010, giving the shipowner a protected right to bring a potential direct claim against Skuld under the ICA.
However, the issue of liability through the charter chain was only finally resolved through London arbitration in 2016.
SwissMarine then brought its claim against Skuld, which argued that by that point it was too late.
The Supreme Court started out from the premise that the limitation period under the NLA begins when the claim holders have sufficient information to institute legal proceedings with "a reasonable prospect of a positive outcome".
The Supreme Court concluded that such knowledge was not available to SwissMarine until 18 November 2015, when the master’s testimony, which was of key importance to the issue of liability, was given.
Since SwissMarine filed a petition for conciliation proceedings against Skuld on 22 September 2016, the claim was therefore not time-barred.
The case has now been referred back to the Oslo district court for a further hearing of the direct claim.
Gard has already met the liabilities of SwissMarine in relation to Exelon Generation Co, from which SwissMarine had chartered the vessel.
