The Norwegian-registered cargo ship MV Sunna, which was managed by the Icelandic shipping company Nes Hf under a bareboat charterparty, grounded on the night of 2 January 2007 in the Pentland Strait between Scotland and the Orkney Islands. The ship was on its way from Iceland with 1,900 tonnes of ferrosilicon from Icelandic Alloys Ltd to Elkem AS in England.

It followed from the regulations that applied when the ship ran aground, that when sailing in the dark there should be a lookout on the bridge in addition to the officer on duty. It is clear nonetheless that the helmsman, according to a practice determined by the master, was generally alone on his regular watch from 24h00 to 06h00. The direct cause of the grounding was that the helmsman fell asleep somewhat after 03h00. In line with the master's practice, he was alone on the bridge. While the helmsman slept - probably for about an hour - the current led the ship off the course he had set on the ship's autopilot and the vessel grounded. Salvage vessels were called, and the ship was brought in to Lyness on the Orkney Islands. The damage was too extensive to complete the transport, and the cargo had to be transferred to another ship.

The insurance companies NEMI Forsikring AS and Sjova-Almennar Tryggingar HF issued a summons against the shipping company for the amounts paid out under their cargo policies. The shipping company filed a counterclaim with a claim for coverage of the remaining amount after a general accident settlement of NOK 865,577. The parties agreed on the amounts. They also agreed that if the insurance companies' claims are upheld, the shipping company's counterclaims will lapse, and that the insurance companies' claims will lapse if the shipping company prevails.

The Oslo District Court held for the insurance companies. The District Court found that the shipping company had breached its obligations by not implementing sufficient measures to prevent the grounding. The shipping company was therefore held liable for its own errors and omissions in accordance with the main liability rule in § 275 of the Maritime Code, and in the District Court's opinion the exemption from liability pursuant to § 276 (nautical error and fire) was not relevant.

The shipping company appealed to the Borgarting Court of Appeal, which concluded that the shipping company could not be blamed for the loss. In the opinion of the Court of Appeal, the master's and helmsman's errors fell within the exception of the carrier's responsibility for errors and negligence in navigation (§ 276 of the Maritime Code), and in the Court's opinion the ship was seaworthy at the beginning of the voyage.

The insurance companies appealed to the Supreme Court. They argued that even if the direct cause of the accident was a navigation error that falls under the exemption rule in the Maritime Code § 276(1)(1), the shipping company was still responsible for the loss because the ship was not seaworthy at the beginning of the voyage: the Maritime Code § 276(2). The ship was unseaworthy when it left Iceland because the master had decided in advance that there should be no special lookout when sailing in the dark. It was unlikely that this error would be corrected along the way. The whole journey must be considered together. It was therefore not decisive whether the ship was seaworthy during the day in isolation. The shipping company was responsible for the master, and must bear responsibility for his mistakes. Liability also follows directly from the main rule in the Maritime Act § 275 because the loss is due to the shipping company's own errors and negligence. The shipping company, which here must be identified with its technical director, acted negligently when it did not ensure that the master's serious manning error, discovered during a port state control check in the Netherlands, was rectified. There is a causal link between the shipping company's lack of follow-up and the grounding.

The shipping company argued that both the direct error that led to the grounding (that the helmsman fell asleep), and the master's decision not to always use his own lookout when sailing in the dark, were nautical errors for which the shipowner was not responsible: Maritime Code § 276(1)(1). Even if the master decided to deviate from the lookout provisions when sailing in the dark before the ship left the quay, this was still part of his seafaring management of the ship, which fell outside commercial errors for which the carrier is responsible. The provision in the Maritime Code § 276(2), which imposes liability on the carrier for seaworthiness at the beginning of the voyage, does not apply. The same circumstance cannot constitute both a nautical error pursuant to Maritime Code § 276(1) and unseaworthiness. In that case, another contributing cause of the accident must be required. It would undermine the exception for nautical errors if the same error, committed by the same person, could also lead to liability under the seaworthiness rule. In any case, there was no fault in the ship that made it unseaworthy. MV Sunna had modern navigation equipment, was in good technical condition, and all its papers were in order. There was one crew member more than required on board, and the crew was well qualified. The shipping company had not acted negligently, and there was therefore no basis for liability under the Maritime Code § 275. There was also no causal link between any errors committed by the shipping company and the loss resulting from the grounding.

Held: Judgment for the insurance companies.

The relevant provisions of the Maritime Code are adapted from the Hague-Visby Rules. The main rule in § 275 stipulates an ordinary negligence and employer liability, but with a reverse burden of proof. The limitations of liability in § 276 are specific to maritime transport in foreign trade. They were introduced as compensation for carriers having to accept the burden of proof rule in § 275 during the negotiations on the Hague-Visby rules: see the Norwegian Law Commentary - Maritime Code, n 500. It is clear that § 275 covers both losses as a result of the carrier's own errors and errors committed by someone for whom the carrier is responsible, for example the master and helmsman of the shipping company's ship. It is also clear that § 275 has a wider scope than § 276(1). The main rule covers all types of negligent acts or negligence that lead to losses as specified in the provision, while the exemption provision only applies to nautical errors and fire.

The exceptions in § 276(1) apply only to nautical faults and fires that are not due to the carrier's own fault. In the provision on fire, this follows directly from the wording: cf also Rt-1976-1002 (Høegh Heron). The same must apply to nautical errors: cf Thor Falkanger and Hans Jacob Bull, Maritime Law (7th ed) pp 262, 267 and 270 and Fredrik Sejersted, The Hague Rules (3rd ed) p 64. Pursuant to § 276(2), the carrier is nevertheless liable for losses as a result of unseaworthiness at the beginning of the journey. The scope of the provision may be somewhat uncertain. But it is in any case clear that it constitutes an 'exception to the exception' as the carrier is held responsible for the original seaworthiness of the vessel, even if nautical errors have been committed that fall under § 276(1).

There is no doubt that Nes Hf is in principle liable for the master and the helmsman, and that the shipping company can be held liable for losses as a result of their mistakes and negligence according to the main rule in § 275. Both employees have been guilty of serious mistakes and negligence: the helmsman by not staying awake on duty, and the master by organising the watch on board in violation of rules ensuring the safety of the ship, crew and surroundings.

The first question that arises is whether the carrier can nevertheless be released from liability due to the exception for nautical errors in § 276(1)(1). The immediate cause of the grounding - that the helmsman fell asleep on duty - must undoubtedly be characterised as such an error. However, questions may be raised as to whether the master's irregular decision that the helmsman should generally go on his regular night shifts alone can be regarded as a 'mistake or negligence in the navigation or management of the ship'. It is not necessary to take a position on this because the Court finds that the ship was not seaworthy when it began the voyage.

It is clear that the shipping company cannot be held responsible for the helmsman's error under the rule of original seaworthiness. The assessment of seaworthiness related to the ship, as a general scheme, sailing without sufficient manning on the bridge, is somewhat more difficult. The term 'seaworthiness' is not further defined in current law. Whether a ship is seaworthy must be decided according to a specific judgement where not every trivial error is taken into account: cf Rt-1975-61 (Sunny Lady). It is clear that not only deficiencies related to the ship itself and its nature come into consideration. Failure of the crew can also lead to the ship not being seaworthy: cf Rt-1993-965 (Faste Jarl) where the shipping company was held liable because the ship was unseaworthy due to the helmsman's intoxication. Regarding the central assessment theme, the judgment states: 'The crew must be able to complete the voyage without exposing ships and/or cargo to greater danger than that which must be expected when transporting goods by sea.' Both parties accept that the MV Sunna was not seaworthy on the nights when the helmsman had been alone. There can be no doubt that the cargo was then exposed to significantly higher risk than the owners had reason to expect. The question is whether this amounts to unseaworthiness at the beginning of the voyage.

According to the Maritime Code § 131, the master must, before the voyage begins, ensure that the ship is in a seaworthy condition, and must along the way do what is in his or her power to maintain this condition. When it is clear in advance - due to the master's instructions to the crew - that the ship will generally not be seaworthy at night, there is also initial unseaworthiness. In such a case, the voyage must be assessed as a whole, and it is irrelevant whether there was no fault with the crew on the bridge at the moment the ship left the quay. A prudent shipowner would - if familiar with the situation - not have allowed the ship to begin its journey with a watch arrangement that exposes the cargo to a significantly increased risk. There is nothing on the facts that made it probable that the master would change his practice during the voyage. The MV Sunna was thus not seaworthy on its departure from Iceland.

The responsibility for original unseaworthiness lapses if the carrier itself, and those for whom it is responsible, have shown due care in ensuring that the ship was seaworthy. It is readily clear that the master has not shown due care for the ship's seaworthiness. When the master's conduct has led to the ship being unseaworthy when it commenced the voyage, it is irrelevant whether his conduct could also be seen as a nautical error that falls under § 276(1). It is clear that the shipping company cannot be released from liability on this basis. Since the carrier must be responsible for the master's error, it is not necessary to decide whether the shipping company itself has committed errors. It is clear that there is a causal link between the master's negligence and the loss that occurred during the grounding. Nes Hf must be held responsible for the insurance companies' losses.