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Section 3: Safety regulations

  • Cl. 3-22 was amended in 2016. Further, the Commentary to Cl. 3-22 and Cl. 3-25 and this introduction to Section 3 were amended. 

    Historically, this Section of the Plan contained both provisions concerning safety regulations and provisions concerning seaworthiness. In the 2007 Version, however, the rule regarding unseaworthiness was revoked in its entirety.

    The reason for this amendment was the entry into force of the Norwegian Ship Safety and Security Act of 2006 on 1 January 2007. The Ship Safety and Security Act replaced inter alia the Norwegian Seaworthiness Act of 1903, in which the concept of seaworthiness played a prominent role, cf. first and foremost Section 2. It was therefore logical, and in keeping with general traditions in marine insurance law, that the previous marine insurance Plans made seaworthiness a key factor. At the same time, subsequent developments, particularly the growing significance of safety regulations issued by the public authorities or by classification societies, showed that there was a declining need for a separate rule on seaworthiness, and that the overlapping of such a rule with the system of safety regulations could, on the contrary, have unfortunate consequences.

    The concept of seaworthiness could, in principle, impose more stringent requirements on the assured than the requirements laid down by the provision regarding breaches of safety regulations if the ship had defects which were relevant to the ship’s safety, but which might not have been covered by the safety regulations in force. One aim of doing away with the concept of seaworthiness in the 2007 version was thus to make it clear that the duties of the assured in this respect were limited to complying with safety regulations as they are defined in Cl. 3-22. In this way, insurers were deprived of the possibility of asserting that even though the ship satisfied the relevant safety regulations, it was nevertheless unseaworthy on account of a defect. This also creates a greater degree of predictability for the assured because the concept of unseaworthiness is not a clearly defined term, but a legal standard that creates uncertainty as regards the content of the concept.

    In the Norwegian Ship Safety and Security Act, the legislature has chosen to no longer apply the concept of seaworthiness. Instead, the statute sets out – in a more concrete, explicit manner – the requirements that must at all times be satisfied by the management on shore and the master and officers on board the ship. These requirements relate to four specific matters, each of which is covered in a separate Chapter of the Act: Technical and operational safety (Ch. 3), Personal safety (Ch. 4), Environmental safety (Ch. 5) and Safety and Terrorism Preparedness (Ch. 6). Furthermore, the Act lays down a general principle of safety management (Ch. 2), whereby the shipowner must ensure that a safety management system, which can be documented and verified, is established, implemented and maintained in his organisation and on each ship. The safety management system must be used to identify and control risks, and ensure compliance with requirements laid down in or pursuant to statutes or set out in the safety management system itself. The latter also entails compliance with all provisions of the other chapters of the Norwegian Ship Safety and Security Act and appurtenant regulations.

    In relation to the regulation of safety regulations in the Plan, the requirements in Chapters 3 to 6 of the Norwegian Ship Safety and Security Act with accompanying regulations, which incorporate the specific rules found in international conventions such as SOLAS, MARPOL etc., may be characterized as traditional safety regulations. The regulations provide for specific and detailed duties that the shipowner has to comply with. Of particular relevance to the Plan is Chapter 3 on Technical and operational safety. These rules are based on the same legislative technique as the Plan and causes no specific problems The principle of safety management, on the other hand, raises more difficult questions with regard both to the concept of safety regulation, the question of causation and the burden of proof. These questions are addressed below in the Commentaries to Cl. 3-22 and Cl. 3-25.

    The background for phasing out the rules on seaworthiness is, as aforesaid, the Norwegian Ship Safety and Security Act. This Act is only applicable to ships under the Norwegian flag. For ships under the flag of another country, the safety rules of the flag state will be decisive. If the flag state applies the seaworthiness concept, as is the case in the Nordic countries other than Norway, this will be relevant in the form of compliance with the safety requirements set by the legislature and the classification society as a condition for seaworthiness. The Committee has assumed that this will normally not cause any problems because under the current international rules unseaworthiness normally presupposes a breach of a rule that qualifies as a safety regulation, but reference is made to the reason for the abolishment of the concept in the 2007 Version of the Plan above.

  • Clause 3-22. Safety regulations

    Sub-clause 3 was deleted in 2016, see further the amended Cl. 3-15 with its Commentary, and a new sub-clause 3 was provided. The Commentaries were also amended in 2016.

    Sub-clause 1 defines safety regulations as “rules concerning measures for the prevention of loss”. A fundamental requirement in order for a rule to have the status of safety regulation is that it is intended to prevent loss. A requirement may sometimes pursue several purposes. If one of them is to prevent casualties or mitigate their effect, then a breach may be relevant under the Plan’s rule. Thus, a class-related requirement will always have the status of safety regulation, as will requirements primarily aimed at preventing oil spills; e.g. marine pollution rules. However, if the requirement is linked to an entirely different purpose (e.g. immigration or customs regulations), it is difficult to envisage a relevant causal connection between a breach of a rule committed by the assured and damage sustained by the ship. Cases like this must come under the rule against illegal undertakings in Cl. 3-16.

    The text states that safety regulations can be expressed in four different ways. The first alternative is that the rule is issued by “public authorities”.  The term “public authorities” means public authorities in all states providing the rule is binding for the assured and consequently a duty the assured must adhere to. The natural starting point is the regulatory regime of the Flag State. For instance in Norway, the relevant act is the Norwegian Ship Safety and Security Act and requirements laid down by its regulations. In addition to the rules of the Flag State, a shipowner must also comply with requirements that follow from rules and regulations of the company’s country of domicile as well as those that become applicable by reason of the vessel’s location, e.g. while in coastal waters, or a port or while passing through a canal. If a conflict arises between the requirements of a Flag State and requirements originating in another applicable regime, the most stringent will apply with the presumption that this will be binding for the assured. However, it has to be recognised that good faith misunderstandings of which requirements take precedence could arise.

    Regulations prescribed by public authorities become binding when they come into force for the insured ship, even if this is after the risk attaches. It can be assumed that adequate advance notice will have been given to the shipowners. 

    International conventions such as the SOLAS Convention of 1 November 1974 and subsequent amendments are not directly binding for the shipowner, but will become applicable as a safety regulation once adopted into the laws of individual countries. How a rule issued by a public authority has come into existence is in itself not significant. In the case of ND 1973.450 NH RAMFLØY, it was held that a rule set out directly in a statute was a safety regulation under the Plan. 

     Traditionally, safety regulations provided by public authorities are specific and concrete and provide for described actions to be taken by the shipowners to promote safety.  Such provisions may be technical requirements related to design, construction and maintenance, cf. for example in Norway the Ship Safety and Security Act Chapter 3 with accompanying regulations, which incorporate the specific rules found in international conventions like SOLAS, MARPOL, etc.. However, in the last 40 years the focus in international and national safety regulation has shifted from such direct requirements to the establishment of safety management systems. The most important step in this development was the introduction of the International Safety Management (ISM) Code into SOLAS by the 1988 Protocol. The ISM Code can be found in SOLAS Chapter IX, and is included in the national legislation of most flag States, cf. for example for Norway Chapter 2 and the Ship and Security Safety Act.

    The approach to safety that underlies the ISM Code emphasises the role of management in establishing procedures and instructions for the safe operation of the vessel. It also recognises that the extent and content of such procedures and instructions must be relative to the operation of the vessel. However, according to 1.4 of the Code there are certain functional requirements that must be addressed:

    “Every Company should develop, implement and maintain a safety management system which includes the following functional requirements:

    1. a safety and environmental-protection policy; 
    2. instructions and procedures to ensure safe operation of ships and protection of the environment in compliance with relevant international and flag State legislation; 
    3. defined levels of authority and lines of communication between, and amongst, shore and shipboard personnel; 
    4. procedures for reporting accidents and non-conformities with the provisions of this Code; 
    5. procedures to prepare for and respond to emergency situations; and 
    6. procedures for internal audits and management reviews.”

    A central part of the ISM Code is a requirement for the operating company to obtain a Document of Compliance issued by an appropriate authority. This document must be kept on board each ship and each ship must also obtain a Safety Management Certificate. It is the task of the vetting authority to evaluate whether the specific procedures and instructions adopted are suitable in the context of the shipowners’ or managers’ operations. The vetting authority is the Flag State, or a classification society or other bodies that have been delegated such authority by the Flag State.

    The status of the ISM Code with regard to the concept of safety regulation in Cl. 3-22 has caused uncertainty in practice. The previous Commentary stated that it “is the establishment of the safety management system per se that constitutes the safety regulation and not the individual provision.”  This implies that the individual policies, instructions and procedures contained in the Safety Management System (SMS) for the ship does not constitute a safety regulation according to Cl. 3-22. Hence, the insurer may not invoke breach of such procedures etc. . This view was followed in ND 2010.164 Oslo FRIENDSHIPGAS.  Under the 2016 amendment of the Plan it was discussed whether individual provisions must be seen as part of the ISM regulation and therefore each provision in the system constitutes a safety regulation. However, as the Safety Management System will contain individual policies, instructions and procedures that may vary substantially between different shipowners, this would put a prudent shipowner with a more detailed system in a worse position with regard to the insurance cover than a shipowner who has chosen a less detailed system. It would be contrary to the goal of the ISM regulation if shipowners were induced to establish a less rigid system in order to prevent the risk of losing their insurance cover due to the breach of a safety regulation. It was consequently agreed that the individual instructions and procedures in the SMS do not constitute a safety regulation according to Cl. 3-22. 

    On the other hand, the duty according to the ISM Code is to “develop, implement and maintain” the Safety Management System.  A mere establishment is therefore not enough if the system is not prudently maintained. Further, a repeated breach of the individual instructions or procedures may indicate that the Safety Management System is in reality not implemented or maintained by the management, or that they have failed to supervise the system, cf. further under Cl. 3-25 below.  Seen in this perspective, the judgement in ND 2010.164 Oslo “FRIENDSHIPGAS” is too categorical when it states that a breach of the shipowner’s individual manuals neither directly nor indirectly constitutes a breach of a safety regulation according to the Plan. To the extent an individual manual repeatedly is breached by the management, depending on the circumstances in each case such breach may also be considered breach of a safety regulation.

    The second alternative in Cl.  3-22, sub-clause 1, is rules “stipulated in the insurance contract”. These words have caused a discussion on whether they include the safety regulations stipulated in the Plan itself, i.e. whether the safety regulations stated in the Plan is considered to be “in the insurance contract”.  Such clauses are today for instance found in Cl. 3-22, sub-clauses 2 and 3, Cl. 3-26 and Cl. 18-1 (e). When the insurance contract is based on the Plan, the Plan is a part of the insurance contract and the mentioned safety regulations are thus “stipulated in the insurance contract”. A narrow interpretation of these words would exclude the safety regulations in the Plan from the definition of safety regulations in Cl. 3-22. Traditionally, the Plan did not contain any clauses that were intended to function as safety regulations, but this has changed over the years, cf. the clauses mentioned above. Hence, there is no doubt that these Plan clauses both by their wordings and intent shall be treated as safety regulations according to Cl. 3-22, sub-clause 1.  However, to get the status of a safety regulation, it must follow from the wording of the clause and/or a reference to Cl. 3-22 and/or Cl. 3-25 that this is the intent.  

    In addition, the individual insurance contract can itself contain provisions concerning measures to be taken to ensure the technical and operational safety of the vessel. If these are clear and specific, they will fall within Cl. 3-22.

    The third alternative is rules “prescribed by the insurer pursuant to the insurance contract.” Cl. 3-15, sub-clause 2, second sentence, as amended in Version 2016 gives the insurer authority to prescribe safety regulations. Authority for an extremely limited exercise of this power is also found in Cl. 3-28. If the insurer wishes to include powers beyond what is provided by the Plan in order to also have the authority to issue new safety regulations during the insurance period, a specific provision to that effect must be inserted into the individual insurance contract. In practice, this means that the contract must contain written authority and set out clear parameters for subsequent safety regulations. If such parameters or authority is not included in the contract, the insurer must resort to the rules on alteration of the risk. Under these rules, the insurer may only impose new requirements if a situation has arisen that constitutes an alteration of the risk in accordance with Cl. 3-8. If this is the case, the insurer may exercise his right to cancel the contract, and establish a new contractual relationship with new requirements.

    The fourth alternative is rules issued “by the classification society”. Cl. 3-14 makes it clear that the insured ship’s class status must be maintained in order for cover to remain in force. However, failure to comply with class requirements does not automatically lead to loss of class. Including class requirements as safety regulations further emphasises the importance of compliance. It also provides insurers with a possible sanction if failure to comply with a class requirement should be the cause of a casualty. Similar to government regulation, orders from classification societies receive the status of safety regulation from the time they are adopted or issued. 

    The provision in sub-clause 2 emphasises that the requirement of periodic surveys imposed by public authorities or the classification society constitutes a safety regulation under sub-clause 1. The provision is basically superfluous requirements issued by the classification society, including orders to carry out a Continuous Machinery Survey, will automatically constitute a safety regulation under Cl. 3-22, sub-clause 1. However, it is necessary to be able to extend the scope of identification in such cases for breaches of this duty, like the one that applies to “a special safety regulation, laid down in the insurance contract”, cf. Cl.3-25, sub-clause 2. As a safety regulation prescribed in the Plan as mentioned above constitutes a safety regulation “laid down in the insurance contract”, the extended identification rule in Cl. 3-25, sub-clause 2, second sentence, will apply unless the safety regulation itself only refers to Cl. 3-25, sub-clause 1, cf. for instance Cl. 3-26 second sentence and Cl. 18-1 (e) last sub-paragraph. In such case, the safety regulation in the Plan has status as “safety regulation” according to Cl. 3-22, sub-clause 1, but not a “special safety regulation” according to Cl. 3-25, sub-clause 2.

    Sub-clause 2, second sentence, imposes a duty on the assured to carry out the survey by the stipulated deadline. A breach of this safety regulation will arise as soon as the deadline is exceeded; no reaction is required on the part of the classification society in the form of a reminder or even withdrawal of class, cf. the above Commentary regarding Cl. 3-14.

    If the classification society grants a postponement of a periodic survey, the provision will not be triggered; in such case no breach of any safety regulation will have occurred. However, a postponement must in fact have been granted; it is not sufficient that the classification society would have granted a postponement if the assured had requested it.

    The provisions regarding periodic surveys in Cl. 3-22, sub-clause 2, cf. Cl. 3-25, sub-clause 2, are a supplement to Cl. 3-14. The classification society may at any time cancel the class in the event of breach of the duty to carry out periodic surveys, with the result that the insurance cover lapses in its entirety.

    Cl. 3-22, sub-clause 3, was amended in 2016. The previous rule concerning the effect of ice class was abolished, see the Commentary to Cl. 3-15.  However, a new rule replaces the previous exclusion in Cl. 12-5 (f) for liability for loss due to lubricating oil, cooling water or feed water becoming contaminated. This former exclusion also extended the circle of persons with whom the assured could be identified with to include the master and chief engineer. Sub-clause 3 imposes instead a duty for the assured to ensure that the Safety Management System “includes instructions and procedures for the use and monitoring of lubricating oil, cooling water and boiler feed water.”

    The duty under this safety regulation is «to ensure» that the system includes the mentioned instructions and procedures.  If the vetting authorities accept these instructions as part of the Safety Management System, the assured has satisfied his duties under the new sub-clause 3. The concept of safety regulation is the same as according to Cl. 3-22, sub-clause 1. This means that the individual instructions and procedures will not constitute a safety regulation as such, but repeated breaches of such instructions and procedures may imply a failure on the part of the management to supervise compliance with the system.  Whether the insurer can invoke such failure will depend on whether there was a causative connection between the breach and the loss or damage, and whether the assured had acted negligent, see further under the Commentary to Cl. 3-25.

    It can be argued that establishing appropriate instructions and procedures for the matters named in sub-clause 3 is regardless a natural part of any functional SMS. However, the ISM Code is, as noted above, deliberately designed to give shipowners flexibility to develop and tailor a safety system to their specific operation. Experience has shown that losses related to lubricating oil, cooling water and boiler feed water very often arise from the erosion of sound practice at the operational level. These matters are important in preventing not just costly damage to machinery, but also loss of propulsion and the dangers that inevitably follow from it. The deleted provision in Cl. 12-5 (f) addressed this fact by a very concrete rule including a somewhat arbitrary three month time limit. Contrary to this rather stringent approach, the new provision in sub-clause 3 underlines the undisputed fact that ensuring consistency at the operational level is a management function with the SMS being the main tool management has to achieve this. It follows that the person with the overall responsibility for a company’s SMS will be regarded as part of that company’s management, acting on behalf of the assured irrespective of their formal title and place in the organisational hierarchy.

    Sub-clause 3 refers to Cl. 3-25, sub-clause 1, and not to sub-clause 2. This means that the extended identification rule in Cl. 3-25, sub-clause 2, does not apply.

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    Clause 3-22. Safety regulations

    A safety regulation is a rule concerning measures for the prevention of loss, issued by public authorities, stipulated in the insurance contract, prescribed by the insurer pursuant to the insurance contract, or issued by the classification society. Periodic surveys required by public authorities ...

  • Clause 3-23. Right of the insurer to demand a survey of the ship

    Sub-clause 1 gives the insurer authority to demand a survey of the ship at any time during the insurance period for the purposes of ascertaining that the ship meets the technical and operational safety regulations that are prescribed by public authorities or by the classification society.

    The insurer must always bear the cost of any survey he requests. If the survey reveals that the ship has defects which must be rectified and for which the insurer is liable, the Plan’s other rules on liability of the insurer during repairs will be triggered. The insurer will then be liable for related expenses under the usual rules, although not for the assured’s operating expenses for the ship or other financial loss incurred as a result of the repairs (but see Cl. 12-13 on the ship’s operating expenses during removal to a repair yard). The result is the same regardless of whether the immediate reason for the survey was a casualty.

    If no damage is found which must be repaired for the purposes of the ship’s technical and operational safety, the issue arises as to whether the assured should be indemnified for his loss. If a casualty or other similar circumstance covered by the insurance has occurred previously, the assured has, under general principles, the obligation to allow the ship to be inspected for the purpose of ascertaining whether there is damage. The expenses of the inspection may be claimed from the hull insurer, but the assured must bear the operating costs and loss-of-hire for the time during which the inspection is carried out. The expenses of unloading for a survey following a casualty are indemnified under special rules, usually general average, but also under Cl. 4-12 regarding particular measures taken to avert or minimise the loss. If no event has occurred which requires the assured to allow the ship to be inspected, but the insurer requests the survey due to a general suspicion of poor maintenance, it is reasonable to have the insurer bear the full liability if the suspicion turns out to be unfounded. Accordingly, sub-clause 3 of the Clause provides that the insurer shall, in such cases, indemnify the assured for costs as well as loss resulting from the survey.

    In practice, the insurance contract sometimes contains a provision under which the insurer reserves the right to have the ship undergo a condition survey, instead of a pre-entry survey, because the shipowner contacts the insurer so close in time to the annual renewal that there is not time for a survey before the contract is to be renewed. If a condition survey has been agreed upon, the insurer does not need authority under Cl. 3-23 to request a survey of the ship. Usually, the reservation in the insurance contract will also provide sanctions the insurer may invoke if the ship turns out not to meet the requirements as regards technical and operational safety, e.g. rules regarding the right of the insurer to require that repairs be made, as well as sanctions if the necessary repairs are not carried out. If the contract does not provide for any sanctions, one then falls back on the general rules of the Plan, i.e. the right to cancel under Cl. 3-27. The insurer may not invoke other or more stringent sanctions in the absence of clear authority to do so in the contract. This means, for example, that the insurer may not cancel the contract due to other circumstances or on shorter notice than that prescribed in Cl. 3-27.

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    Clause 3-23. Right of the insurer to demand a survey of the ship

    The insurer has the right at any time during the insurance period to verify that the ship meets the technical and operational safety requirements that are prescribed by public authorities or by the classification society. If necessary for the purpose of such verification, he may demand a complete...

  • Clause 3-24. (open)

    In earlier versions of the 1996 Plan, this provision contained rules on safety regulations. In the 2007 version, the Clause was moved to Cl. 3-22 and in that connection slightly amended.

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    Clause 3-24. (open)

  • Clause 3-25. Breach of safety regulations

    The Commentary was amended in 2016. 

    Under sub-clause 1, first sentence, the assured will lose insurance cover if he can be blamed for breaching the safety regulation and there is a causal connection between the breach and the loss. The sanctions may be applied to all forms of negligence. In ocean hull insurance, the fault of the assured will often manifest itself by the assured failing to supervise his staff’s compliance with applicable rules. In relation to the ISM Code, there may be fault with regard to implementation or maintainance of the safety management system, but due to the vetting system this is less practical. However, the assured may be guilty of a failure to supervise that the system is followed. The extent of the assured’s duty of supervision must be determined on a case by case basis, cf. ND 1980.91 Hålogaland TOTSHOLM. If the assured has delegated supervision duties to the captain or officers on board, or to certain persons on shore (cf. the "designated person" that shall be appointed according to the ISM Code), he may be identified with them within the meaning of Cl. 3-36, sub-clause 2.

    The requirement of a causal connection between the breach of the safety regulation and the loss will normally not be difficult if the safety regulation contains a specific duty for the assured to comply with, cf. the duties specified for example in the Norwegian Ship Safety and Security Act Chapter 3 with accompanying regulations. It is more difficult to establish causation in the case of regulations like the ISM Code, which requires the shipowner to ensure the establishment, implementation and maintenance of a safety management system that can be documented and verified in the shipowner’s own organisation and on individual ships. Breaches of these formal requirements will less frequently be the cause of the casualty in question. However, if the management fails to supervise that the system is complied with and this leads to repeated breaches of procedures for e.g. lookout, this may result in a collision and thus causation between breach of the ISM Code and the casualty.

    The provision in Cl. 2-13 on concurrent causes will, in some situations, lead to a reduction of the insurer’s liability. A typical example of this is when a breach of a safety regulation has combined with an error committed by a member of the crew in his service as a seafarer, cf. Cl. 3-36, sub-clause 1, to cause the loss. Breaches of safety regulations such as the ISM Code and similar rules prescribed by national authorities in accordance with the SOLAS convention, etc., are probably good examples of situations where there can be a question of a combination of causes, assuming of course that there is a causal connection between the infringement of the duties related to the safety management system and the loss sustained.

    Sub-clause 1, second sentence makes an exception from the rule in the first sentence in cases where a master or crew member is also the shipowner. In those cases, it would be too stringent a sanction to let every blameworthy breach of any safety regulation entail loss of cover. Thus the rules in the first sentence do not apply when the negligence of the assured is "of a nautical nature". In that case, one falls back on the general rules applicable when the assured brings about the casualty, in Cl. 3-32 and Cl. 3-33. The concept "of a nautical nature" comprises not only the rules of navigation as such but, depending on the circumstances, may also include port and canal regulations, regulations for passing minefields and other obstructions, regulations on the use of radio equipment in emergencies, etc.

    If, however, the insurer has found it necessary to impose a special safety regulation at the time the contract is entered into, e.g., that the vessel must only be used in sheltered waters, or that there must be special equipment on board for safety reasons, then there is reason to have more stringent rules. In those cases, the insurer must be able to invoke negligence committed by anyone who is under a duty on behalf of the assured to comply with the regulation or ensure that it be complied with, cf. sub-clause 2, first sentence. Generally speaking, people who work in a senior position in the service of the assured will have a duty to comply with the regulation or ensure that it is complied with. The shipmaster, mates and engineers in particular are crew members who will be covered by the rule. In addition, the nature of the regulation in question will, to a certain extent, determine how far down in the ranks identification will take place.

    In view of the comprehensive nature of the concept of a safety regulation under Cl. 3-22, the question might be asked whether the shipowner may invoke the defence that he was unaware of, for instance, regulations issued by public authorities. If it is a question of regulations issued by the flag State, this must be answered in the negative, cf. ND 1986.226 Namdalen SYNØVE. On the other hand, depending on the circumstances, it must be possible to accept as a defence that the assured has misinterpreted the regulations, provided the interpretation is justifiable, cf. ND 1982.328 Kristiansund HARDFISK. With respect to alleged ignorance of regulations issued by another State, the question must be considered on a case-by-case basis.

    The provision in sub-clause 2, second sentence, stated that the extended rule of identification also applied to the safety regulation on periodic service in Cl. 3-22, sub-clause 2. This was deleted in 2016 as it is clarified that a safety regulation in the Plan constitutes a “safety regulation laid down in the insurance contract”. This means that such safety regulation also constitutes a “special safety regulation” according to Cl. 3-25, sub-clause 2, unless it is expressly provided that the extended identification shall not apply. This is achieved if the safety regulation in the Plan only refers to Cl. 3-25, sub-clause 1, see as an example Cl. 18-1 (e).

    Sub-clause 3 regulates burden of proof. According to the first sentence, the insurer has the burden of proving that a safety regulation is breached. This means that the insurer must establish the existence of a safety regulation, which of course is an easy burden when it comes to applicable SOLAS rules or incorporation of the SOLAS rules in the relevant flag states legislation. Equally easy is the burden if there is a breach of the rules of the relevant classification society. When it comes to special safety regulations stipulated in the insurance contracts or prescribed by the insurer pursuant to the insurance contract, the insurer must satisfy that such rules has in fact been given and have the required basis in the insurance contract.

    If the insurer alleges that the assured has committed a breach of his obligation to design,  implement (establish) and maintain a suitable SMS system, the insurer must specify in which way the assured is at fault in relation to this general obligation. 

    Approval by the vetting authority is strong prima facie evidence that an appropriate system is established. Consequently, the insurer must produce evidence if alleging that the system itself is either inadequate, lacking some essential element or that it has not been properly established within the organisation or on board. More commonly, the issue is whether the system has been followed, monitored and maintained for instance through prudent reporting and evaluation systems.

    It is not a breach of the ISM Code that the established management system could be improved. One of the reasons why the ISM Code is based on general functional requirements rather than prescriptive rules is that the system shall be able to develop and adapt in light of experience. The discovery of weaknesses that can be improved is evidence of a functioning  system. It is important not to compromise this process by fear of the consequences. Loss of insurance cover is such a serious matter that it can only be justified when an evaluation of all the evidence shows that the system as such failed either because it was quite inadequate, had not been implemented or had not been followed up at the relevant management level.

    When it comes to special safety regulations stipulated in the insurance contracts or prescribed by the insurer pursuant to the insurance contract, the insurer must satisfy that such rules has in fact been given and have the required basis in the insurance contract.

    If the ship springs a leak whilst afloat, the burden of proof is reversed, and the assured must then prove that no safety regulation has been breached. The word "afloat" implies that the ship is floating on its own buoyancy. The rule implies a presumption that safety regulations have been breached if the vessel springs a leak whilst afloat. The presumption will only apply, however, to casualties in the form of leaks; for other types of casualties, e.g. fire or engine casualty of unknown cause, the insurer carries the burden of proof that a safety regulation has been breached. Nor can the provision be interpreted by analogy to encompass capsizing, cf. ND 1969.436 Gulating HEIMNES. The application of this provision has also been dealt with in ND 1972.71 NH ROSA, ND 1982.194 NH FRANK ERIK, and ND 1986.258 Agder LECH WALESA, and, as regards ships laid up, ND 1991.214 NH MIDNATSOL and ND 1991.156 Hålogaland SOPEN. These judgements were considering the corresponding provision in Cl. 45 of the Norwegian 1964 Plan and were deemed equally relevant to the previous Cl. 3-22 of the Norwegian 1996 Plan and the current sub-clause 3.

    The presumption applies only to the question of whether safety regulations have been breached, not the question of whether or not the assured caused the breach through negligence. If the assured does not succeed in refuting the assumption of breach of safety regulations when the vessel springs a leak whilst afloat, the assured may all the same invoke the defence that he did not cause the breach through negligence. Here, the burden of proving that he has not been negligent rests with the assured, cf. sub-clause 3, second sentence.

    The burden of proof rule is not relevant to any doubts on interpretation or application of a safety regulation. If there is any doubt or disagreement on interpretation or application of the safety regulation, this doubt or disagreement must in the last instance be decided by the competent court (or arbitrators if arbitration has been agreed) in accordance with the ordinary principles on interpretation and application of statutes and statutory instruments applying the relevant sources of law available.

    Once it is established that a safety regulation has been breached, the assured has the burden of proving that neither he nor anyone he may be identified with in accordance to Clauses 3-36 – 3-38 has been acting negligently. An isolated breach of the SMS at ship or shore level will not in itself  be sufficient to establish that the assured has acted negligently, unless it is the result of a negligent failure to supervise the maintenance of and compliance with the system at the management level with which the company will be identified according to Cl. 3-36 to Cl. 3-38. The assured will also carry the burden of proof that there is no causative connection between the breach of safety regulation and the casualty.

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    Clause 3-25. Breach of safety regulations

    If a safety regulation has been breached, the insurer shall only be liable to the extent that the loss is not a consequence of the breach, or that the assured has not breached the safety regulation through negligence. However, the insurer may not invoke this rule where the assured is the master o...

  • Clause 3-26. Ships laid up

    The Commentary was amended in 2016.

    The provision introduces safety regulations for ships that are laid up; the insurer may also invoke other safety regulations, in so far as they are applicable to situations where ships are laid up.

    The first sentence imposes on the assured an obligation to prepare a plan for the lay-up and submit it to the insurer for approval. It is sufficient that the lay-up plan be forwarded to the claims leader, cf. Cl. 9-3. The assured has an obligation to comply with the approved plan.

    A lay-up plan should resolve four issues: it should state where the ship is to be laid up, set out guidelines for mooring while the ship is laid up, provide guidelines for supervision of the ship, and contain rules on minimum crew. It is not necessary, however, to impose any requirement that the ship must maintain its class. In practice, the periodic class survey will be postponed for the time the ship is laid up, and the ship will be able to keep its class provided it is inspected before being operated again.

    The provision concerning the lay-up plan will only be applicable when the ship is to be "laid up". Brief stays in port for the purpose of loading or unloading or bunkering will not trigger the requirement to prepare a lay-up plan. For that to happen, the ship must be taken out of operation and the crew reduced. If the ship lies in port for a while with full crew, it is not "laid up". It is virtually impossible to set a limit for how long a stay must be before it constitutes "lay-up"; sometimes a ship will abruptly end a lay-up period because it has obtained a cargo assignment.

    As a rule, a lengthy stay accompanied by a request from the person effecting the insurance for a reduction in premium will constitute "lay-up".

    If the assured has prepared a lay-up plan and forwarded it to the insurer, and the insurer does not respond with any objections, this will usually be taken as tacit acceptance of the plan by the insurer. The insurer may not then invoke Cl. 3-23 if the assured follows the plan during the lay-up period.

    The second sentence prescribes the sanctions that apply if the assured fails to prepare a lay-up plan or to have it approved by the insurer, or fails to follow the lay-up plan while the ship is laid up. In such case, Cl. 3-25, sub-clause 1, will apply correspondingly. In practice, this means that unless the assured can prove that he cannot be blamed for negligence and that the casualty that occurred would have happened even if a lay-up plan had been prepared or even if the lay-up plan had been followed, the insurer is not liable for the loss sustained. As the clause only refers to Cl. 3-25, sub-clause 1, the extended identification clause in Cl. 3-25, sub-clause 2, does not apply. 

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    Clause 3-26. Ships laid up

    For ships which are to be laid up, a lay-up plan shall be drawn up which shall be submitted to the insurer for his approval. If this has not been done, or the lay-up plan has not been followed while the ship is laid up, Cl. 3-25, sub-clause 1, shall apply correspondingly.

  • Clause 3-27. Right of the insurer to cancel the insurance

    This Clause was amended in the 2007 version, in connection with the revocation of the former Cl. 3-22 on unseaworthiness. The provision corresponds to relevant Nordic Insurance Contracts Acts, but contains no explicit requirement that the cancellation must be reasonable in order for the cancellation to be valid.

    Sub-clause (a) corresponds to the former sub-clause (a), but makes the insurer’s right to cancel the contract contingent on the ship not being in compliance with technical and operational safety regulations, cf. Chapter 3 of the Norwegian Ship Safety and Security Act, instead of, as before, linking the assessment to the ship’s seaworthiness. This rule is applicable regardless of whether any degree of blame can be attached to the assured. In practice, it mainly has significance in the case of older, poorly maintained ships, or ships in which construction defects have been discovered, as a result of which the ship cannot be considered technically and operationally safe.

    The former sub-clause (b), which allowed the insurer to cancel the insurance if, after a casualty, the ship has lain unrepaired for a long time and does not satisfy the seaworthiness requirements, has thus been revoked, but it now follows from sub-clause (a) that the insurer has the right to cancel if the ship, due to a casualty, is not in compliance with technical and operational safety regulations. Even if this is not explicitly stated, it is self-evident that the insurer will not have the right to cancel the insurance after a casualty if the assured, within a reasonable period of time, takes steps to have the ship repaired so that it is in compliance with the prescribed safety regulations.

    Sub-clause (b) corresponds in full to the former sub-clause (c). Cancellation under this provision is conditional on it being a question of an intentional or grossly negligent breach of a safety regulation, and on this regulation being of material significance. It makes no difference what kind of safety regulation it is. The insurance may also be cancelled if the breach has been committed by a subordinate of the assured, provided that it is the duty of the person in question to comply with the regulation or to ensure that it is complied with. In this connection, the regulation concerned does not necessarily have to be of the type referred to in Cl. 3-25, sub-clause 2.

    The notice period for cancellation is 14 days, but cancellation may not take effect until the ship arrives at the nearest safe port. In accordance with the rules set out in Cl. 3-7, Cl. 3-14 and Cl. 3-17, it is specified that the insurer shall issue instructions regarding such a port.

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    Clause 3-27. Right of the insurer to cancel the insurance

    The insurer may cancel the insurance by giving fourteen days' notice, but with effect at the earliest on arrival of the ship at the nearest safe port, in accordance with the insurer's instructions, if: the ship, by reason of unsuitable construction, a defect, a casualty or similar circumstances, ...

  • Clause 3-28. Terms of contract

    This Clause corresponds to earlier versions of the 1996 Plan.The provision gives the insurer authority to impose safety regulations during the period of insurance, cf. Cl. 3-22, sub-clause 1. The rule is of particular significance for the hull insurer’s cover of collision liability, e.g., in connection with entering into contracts of towage or contracts for calling at privately-owned quay facilities.

    The sanction for breach of safety regulations issued pursuant to This Clause is expressly regulated in Cl. 4-15. The effect of the breach is that the insurer is not liable for liability which the assured may incur and which the assured would have avoided had he not entered into the contract in question. The assured will be fully identified with his employees, even though the regulation in question may not have been in effect at the time the contract was entered into.

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    Clause 3-28. Terms of contract

    The insurer may require that certain terms shall be included in contracts concerning the operation of the insured ship, or that certain terms of contract shall not be included in such contracts. The requirement may be made in respect of contracts in general or in respect of contracts for a specif...