Norway Urged to Ratify HNS Convention 1996

A recent report from the Permanent Norwegian Law Commission for Maritime Matters has recommended that Norway ratifies the HNS Convention 1996. The Convention, which concerns liability for damage caused by hazardous and noxious substances, such as LPG and LNG gas, carried by sea, will make it easier for injured parties to claim compensation directly from the liability insurers. "Under Norwegian marine insurance law, third parties may, in practice, only commence direct action against the liability insurers if the insured is insolvent. However, under the HNS Convention the right to commence action against liability insurers is not subject to this precondition," says Gaute Gjelsten, newly-appointed partner at Oslo-based law firm Wikborg Rein. The HNS Convention contains considerably higher limitation amounts than those under the 1976 Limitation Convention as amended by the 1996 Protocol. "As an example, under the global limitation rules a 40,000 gross ton vessel would give a limitation fund amounting to approximately $21,700,000 for property damage. Under the HNS Convention the same vessel would have a limitation amount of approximately $95,700,000," explains Gjelsten. Compensation under the HNS Convention is expected to come primarily from shipowners and their liability insurers. A compensation fund will be established for those instances where liability extends beyond the limitation amounts for shipowners and their insurers. The fund will be financed by the receivers of HNS cargo through a tax payable to the fund.