This case arose out of a collision between the Danish naval frigate KNM Helge Instad and the tanker Sola TS, owned by Twitt Navigation Ltd (Twitt), on 8 November 2018 in Hjeltefjorden in Øygarden outside Bergen. On 25 January 2019, a limitation fund of 33,170,321 SDRs was established in accordance with the rules in the Maritime Code which give domestic effect to the LLMC 1996 in Norway. An undertaking from Twitt's P&I Club, Britannia Steam Ship Insurance Association Ltd, was approved as a guarantee for the establishment of the limitation fund (see further CMI1156).

The Norwegian State, which owned the Helge Ingstad, made two main claims against Twitt. The larger claim concerned the loss of the frigate, which was around NOK 13 billion. It was agreed that this was covered by the right of limitation in s 172.1 of the Maritime Code (which broadly equates to art 2.1.a of the LLMC 1996). The State also submitted a claim to cover the costs of raising and removing the wreck of the frigate. The size of this claim was approximately NOK 770 million. The issue was whether Twitt was entitled to limit its potential liability for wreck removal costs under the ordinary limitation rules in ss 172 and 175 of the Maritime Code (equating to arts 2.1.a and 6 of the LLMC 1996), or whether this was required to be limited according to higher liability limits specified in ss 172a and 175a of the Maritime Code.

Twitt argued that there were no claims in the case that could not be limited according to the ordinary limitation rules. The limitation of liability system arose from the LLMC 1976, as amended by the 1996 Protocol. Norway was a party to both the Convention and the Protocol, and the obligations under international law that this entailed were codified in Norwegian law in the Maritime Code. The Maritime Code thus contained a 'two-track system' for the right to limitation of liability; a Convention-based limitation system and a national limitation system. Both ss 172 and 172a stipulate that the right to limitation of liability applies 'regardless of the basis for liability', ie regardless of the basis on which a party mentioned in s 171 can be held liable for the claim or claims that have been made. This is clearly expressed in the preparatory work, including NOU 1980:55. The right of limitation under s 172 of the Maritime Code also includes consequential losses, such as the clean-up costs that were the subject of the present case, if they were a consequence of property damage subject to limitation under s 172. That the loss of the frigate was property damage which could be limited under s 172, was not disputed.

However, the State contended that '[t]he nature of the costs is decisive for the right to limitation of liability'. The State argued that its claim was based on the Maritime Code's rules on collision liability: see ss 161 and 151. Section 172 of the Maritime Code only applies to limitation of liability for the property damage itself. All claims concerning removal and clean-up costs should be referred to limitation under the higher limits in s 172a.

Held: Judgment for Twitt. Twitt has the right to limit its overall responsibility for the collision in accordance with the ordinary limitation rules in ss 172 and 175 of the Maritime Code.

The LLMC 1976 is based on the LLMC 1957 and is largely a continuation of it. The principle of limited shipowners' liability was enshrined in art 1 of the 1957 Convention, and the starting points here have essentially been retained by subsequent amendments. In NOU 1980:55 point 2.3, the following is stated about the background for the 1976 Convention revision: 'A significant reason for the drafting of the 1976 Convention was that the liability amounts after the 1957 Convention had gradually become far too low. During the 20 years since the adoption of the 1957 Convention, the real value of its limitation amount had fallen to about half as a result of inflation.'

The right to limit liability for costs of raising and removal of wreckage was specifically expressed in the 1957 Convention: see art 1.1.c: 'any obligation or liability imposed by any law'. This restriction was not explicitly continued in the 1976 Convention: compare art 2.1.d. Similar to the 1976 Convention (art 18), the Member States also had the opportunity in the 1957 Convention to reserve the right to limit such claims: see cl 2(a) of the Protocol of Signature. Norway did not exercise its right of reservation under the 1957 Convention, nor was any such reservation considered necessary in the Maritime Law Committee's report in NOU 1980:55. On the basis of the Committee's recommendations, Norway ratified the 1976 Convention, which entered into force on 1 December 1986.

In July 2001, the Maritime Law Committee was again instructed to assess whether Norway should declare a reservation for claims covered by arts 2.1.d (raising and wreck removal etc) and art 2.1.e (removal etc of cargo) of the Convention. The Committee recommended that this be done, and Norway declared its reservation with effect from August 2002. The legislator's motivation to declare a reservation against claims in connection with termination and wreck removal was heavily justified on the grounds that the State should not be left with the bill after State actions.

When this reservation was declared, Norway had ratified the 1996 Protocol to the 1976 Convention. This entered into force for Norway on 13 May 2004, and Norway withdrew from the 1976 Convention on 1 November 2006. There are formally two separate Conventions. For the questions this case raises, however, the changes are not of material significance. The 1996 Protocol did not entail any change in which claims could be limited, nor in relation to the right of reservation. The 1996 Protocol, however, entailed a significant increase in limitation amounts.

As a result of the Maritime Law Committee's recommendation that Norway declare a reservation for the claims covered by arts 2.1.d and 2.1.e of the Convention, it was proposed that these be included in the Maritime Code with their own limits of liability. Implementation of this work resulted in the adoption of ss 172a and 175a of the Maritime Code, which entered into force on 1 November 2006.

According to the wording of art 2.1 of the LLMC 1996, the right of limitation applies regardless of the basis of liability for the claim. This is clearly expressed in the wording 'whatever the basis of liability may be', which is further supplemented by the clarification in art 2.2 that the right of limitation also applies where the claim is pursued as part of recourse claims or equivalent liability: 'even if brought by way of recourse or for indemnity under a contract or otherwise').

The types of claims that form the basis for the right of limitation are further set out in art 2.1.a-f. As mentioned earlier, Norway has declared a reservation for claims covered by arts 2.1.d and 2.1.e (wreck and cargo removal, respectively). The legislator emphasised that the implementation of the reservation and the new rules in s 172a of the Maritime Code were not intended to change the understanding of, or the content of, the Convention's provisions: see Ot.prp.nr.79 (2004-2005) p 41, special remarks on s 172a: 'The interpretation of [172a] first paragraph nos. 1 and 2 must, as under current law, be based on the interpretation of the 1996 Limitation Convention Article 2 no. 1 letters d and e.'

When the wording of art 2.1 is seen as a whole, from an objective interpretation there seems to be an overlap between arts 2.1.a, and 2.1.d and 2.1.e. Article 2.1.a includes any damage to property and loss as a result of that ('damage to property ... and consequential loss resulting therefrom'). Claims relating to the costs of removal of wreckage, eg as a result of a collision, and loss of cargo in this connection, will based on an objective interpretation of the wording in art 2.1.a, also fall within the scope of that provision. When claims in connection with wreck removal are nevertheless separated out in a separate provision, this may lead to the result that such claims in all cases - even where the claim is directed at the alleged tortfeasor - must be subsumed under art 2.1.d.

In the Court's view, it cannot be inferred from the wording of the provision - or the context in general - that the Convention is intended to be understood in this way.

In the preparatory work for the text of the Convention, which has been consolidated by the Comité Maritime International, the connection between art 2.1.a and the other provisions is explained in more detail. The significance of the preparatory work is limited, but is nevertheless considered relevant in order to shed light on the content of the Convention provisions. The statements in the Convention preparatory work are largely in line with the views that have been expressed in the legislative work on the Norwegian provisions in the Maritime Code.

The Court first refers to page 60 in the preparatory work for the Convention, where certain statements have been made which in isolation can be understood to mean that claims in connection with wreck removal are not covered by the provision in art 2.1.a: 'Subparagraphs (c), (d), (d) [e] and (e) [f], corresponding to § 1° c) of Article 1 of the Convention, are not on the same level as the two previous ones. They are necessary insofar as they define limitable claims which are not covered by (a) and (b), such as wreck removal and the rendering harmless of the cargo.' In the Court's view, however, the statement above must be seen in connection with the fact that art 1.1.c of the 1957 Convention also granted a right of limitation for claims in connection with wreck removal. The wording of the provision read as follows: 'any obligation or liability imposed by any law relating to the removal of wreck and arising from or in connection with the raising, removal or destruction of any ship which is sunk, stranded or abandoned (including anything which may be on board such ship) and any obligation or liability arising out of damage caused to harbour works, basins and navigable waterways'.

The right of limitation under the 1957 Convention was thus narrower, as it only applied if the liability was imposed pursuant to law. This presumption of public order is not expressed in the current Convention, but there are otherwise no indications in the legal source material in general that the change would cause any disturbance in the relationship between arts 2.1.a and 2.1.d, corresponding to arts 1.1.a and 1.1.c of the 1957 Convention.

Claims in connection with wreck removal will mainly be made by public authorities. Such claims are generally not justified by the fact that the port State has suffered a concrete (financial) loss that can be limited under art 2.1.a, but are instead justified by more general political considerations, including environmental and pollution considerations. The provision in art 2.1.d is thus necessary to ensure that such claims can still be limited in the event of an accident.

However, when the injured party, who has been able to limit its liability under art 2.1.d, advances its claim against the tortfeasor, it may be natural to see this as a claim in connection with damage to property covered by art 2.1.a. The Court bases this understanding on an objective interpretation of the wording of art 2.1, and points out in particular that the injured party's claims in this connection must be regarded as one of several possible consequential losses and financial claims that have arisen in connection with the property damage itself. Based on the Convention's system, it makes little sense to establish an interpretive result which means that the parties to the Convention must have intended to restrict the application of one provision at the expense of another. On the contrary, the purpose of the individual provisions has been to make manifest which claims can be limited, and this regardless of the basis of liability that is applied to the claim. Such claims - regardless of whether they are pursued by the authorities in support of the injured party or as a recourse against the tortfeasor - will also in any case be covered by the general limit of liability in art 6 of the Convention. The Court's preliminary conclusion is thus that the tanker, according to the Convention, would have had the right to limit the frigate's claim for coverage of wreck removal costs pursuant to art 2.1.a of the Convention.

From this point of departure, the Court then proceeds to assess whether the implementation of the reservation and the rules in art 172a of the Maritime Code provide a basis for another outcome. As mentioned, Norway has declared a reservation in accordance with art 18.1 of the Convention, and this means that the provisions of arts 2.1.d and 2.1.e are exempt from the binding force of the Convention. Norway chose to follow up the reservation by establishing its own limits of liability in s 175a of the Maritime Code for claims in connection with raising and wreck removal. Such a solution was in accordance with the scheme chosen by, among others, the Netherlands, Belgium, and Germany in connection with the fact that these countries had also declared reservations. A number of other Member States, such as Australia, France, and the United Kingdom, however, opted for a solution with unlimited liability for such claims: see NOU 2002:15 pp 30-31.

The establishment of s 172a was intended as an implementation of new Norwegian liability limits for these types of claims. Otherwise, it does not seem to have been a precondition on the part of the legislature that s 172a should entail any material changes in the relationship between the individual provisions in art 2.1 of the Convention. On the contrary, it was emphasised in the preparatory work that such requirements the provisions include must, as under the current law, be based on the interpretation of the LLMC 1996.

Based on the central preparatory work in connection with the amendment and the reservation, it was stated by the legislator that a significant motivation for the use of the reservation right - as far as wreck removal costs were concerned - was that the legislator did not want public authorities to be left with the financial consequences after major accidents, and that the shipping industry had to bear a greater share of the responsibility: see, among others, Ot.prp.nr.79 (2004-2005) s 3.2.1 p 14:

Developments have shown that maritime accidents in coastal areas and offshore areas can lead to pollution damage, and the costs of measures to prevent and limit pollution will exceed the limitation amounts significantly. The compensation can also be reduced as a result of other claims arising in the same accident. Costs that exceed the shipping company's liability will usually have to be covered by the public sector when measures to remove and neutralise ships and cargo, or other preventive measures, are implemented.

The Limitation Convention has an important role in maritime law, especially in relation to shipping companies' insurance coverage. However, it is desirable that the limitation amounts be sufficient to cover expenses and losses as a result of damage that occurs on the Norwegian coast, including pollution or pollution risk in the event of maritime accidents. It seems reasonable that the shipping industry must bear a larger share of such expenses than is the case with the current limits of liability, where the State - as in the case of the 'Green Ålesund' - must sometimes bear large parts of the expenses for clean-up etc. Against this background, it is time to assess whether Norway should make such a reservation such as Article 18(1) provides for, especially in view of the fact that measures of this kind are typically necessary to prevent pollution damage.

It is not necessary to go into all the details of the preparatory work, but the general focus was on safeguarding the public interest. In particular, the review in s 3.5.3 of the legislative proposal - the Ministry's view - made reference to the experience with 'government actions relating to the removal of ships, cargo, bunker oil etc' in the period from 1981-2001:

Of these 19 cases, in three cases there was not full coverage for the claim for government actions, because the limitation amount in the Maritime Code was too low. ... When considering how high the limits of liability should be for the requirements that are included in the Bill here in the new § 172 a and § 175 a, it is worth looking more closely at the five cases from 1981 to February 2005 where we do not have full coverage of the costs of government clean-up actions etc after sea closures. ... Although in most of these cases there would be full coverage for claims concerning state actions within the limits of liability proposed by the Maritime Law Committee, the Ministry believes that there is reason to consider whether higher amounts should apply than in the proposal in NOU 2002:15. The limitation amounts should be so high that one is sure that they extend even to very special cases.

The focus on the public interest is also consistent in the Maritime Law Committee's report in NOU 2002:15. This was also in accordance with the mandate given to the Committee in connection with the report.

For the sake of clarity, the Court notes that the State's view is supported by two decisions from the Supreme Court (Hoge Raad) of the Netherlands, both of which were handed down on 2 February 2018 (see CMI160 and CMI157). The Netherlands has implemented its reservation right in the same way as Norway, by establishing its own national limits of responsibility. Both judgments concerned collisions. During the proceedings, however, it was clarified which ship was responsible for the accident. The casualty claimed that its expenses for raising and wreck removal, which had been presented as a claim for compensation/recourse against the other ship, could only be limited in accordance with the national rules (corresponding to s 172a). In the case of MS Amasus, the Supreme Court of the Netherlands concluded as follows:

In themselves, the subjects listed in Article 2 paragraph 1 LLMC can overlap, and therefore a claim can be amenable to different grounds for limitation in the provision. This can be the case (among other things) for a recourse claim with regard to a shipowner that is covered by Article 2 paragraph 1(d) and (e) LLMC. The claim can in certain circumstances also be designated as a claim as defined in Article 2 paragraph 1(a) LLMC.

Based on the LLMC's regime, this concurrence does not lead to questions of interpretation, because in both cases the same limits (governed in Article 6 ff LLMC) apply. It is however different if a State bound by the Convention applies the reservation of rights in Article 18 paragraph 1 LLMC and on this basis a different regime applies to that State with regard to the claims covered by this reservation of rights, as is the case for the Netherlands. In view of the content and scope of Article 18 paragraph 1 LLMC ..., that other, special regime has precedence over the authority of Article 2 paragraph 1 preamble and (a) LLMC as a special rule ('lex specialis').

As the Court understands the premises in the above judgment, great emphasis is placed on the fact that the national rules for wreck removal must be regarded as special rules - lex specialis - for all claims related to wreck removal and raising.

However, when the Court is to assess whether the rules in s 172a of the Maritime Code are to be regarded as lex specialis, this cannot be based on how the question is resolved in Dutch law. The view of the State has also been expressed in Norwegian legal theory: see Trond Solvang, [2016] SIMPLY pp 29-43. In this article, Solvang discusses the question of consequential loss in the relationship between ss 172 and 172a of the Maritime Code, based on a scenario where a wrecked ship A claims against ship B for the costs of raising and wreck removal:

The claim in question – shipowner A's claim for recovery of wreck removal costs against shipowner B – would probably be labelled a claim for consequential loss under the ordinary terminology of the law of damages. The primary loss would be that related to the property damage caused to ship A, while the subsequent event of shipowner A having to incur wreck removal costs would constitute a consequential loss.

After a review of the preparatory work for ss 172 and 172a of the Maritime Code, Solvang summarises as follows:

Returning to our case, it seems clear that what must be considered decisive is that the claim by shipowner A is of the nature of wreck removal costs. There is no indication in the preparatory work that an exemption should be made dependent on whether a claim relating to wreck removal pertains to the liable shipowner B's ship, or to a colliding ship for which shipowner B is liable. In other words, the whole 'package' of the earlier section 172 (Article 2, 1 (d) and (e)) is lifted out and made subject to national rules by way of section 172a.

This view also seems to be supported by the fact that, when adopting the new sections 172a/175a, the legislator chose to distinguish between vessels of tonnage above and below 300 tons. Claims for costs of wreck removal relating to ships below 300 tons fall under the lower limitation contained in section 172. There is clearly no room for applying different concepts of what constitutes claims relating to wreck removal, depending on whether one is faced with wreck removal situations involving ships below or above 300 tons.

This result of having all claims 'in respect of' wreck removal allocated to section 172a also seems to make good sense from a perspective of policy consideration (reelle hensyn). To stick to the scenario of our case, albeit with the facts slightly adapted: if shipowner A were not to incur the costs of wreck removal of ship A, but, for some reason, the authorities were instead to incur those costs on shipowner A's behalf, section 172a would clearly apply in relation to such removal costs being claimed by the authorities against shipowner A. If shipowner A, as in our case, were then entitled to claim recovery against shipowner B, it would make little sense if this claim by shipowner A against shipowner B is made subject to the lower limitation amount under sections 172/175. Shipowner A would then be caught in the middle, having to bear the excess of the lower limitation amount, despite the claim clearly arising from a situation of wreck removal.

In its 1980 report, the Maritime Law Committee discussed the relationship between the current provisions in ss 172 and 172a of the Maritime Code. However, a reservation was made that the liability could possibly be subsumed under no. 4 (172a no. 1) where it was not asserted as a derived property damage claim, '[eg where] the port authorities in a country have the authority to assert joint and several liability for wreck removal liability against the shipowners of two colliding ships'.

When these statements were followed up in NOU 2002:15, the background for the report was to secure the State's interests in such claims, and the comments must be seen in the light of this. As the Maritime Law Committee stated in s 2.3: 'the boundary should instead be based on a distinction between, on the one hand, the property damage itself and the financial consequences thereof and, on the other hand, the costs of the removal and clean-up measures that the maritime accident necessitates'. The Court believes that it is thus natural to see this as an expression that the State would have room for manoeuvre - by using the right of reservation - to separate claims for wreck removal with special limits of liability within the framework of the Convention. There is no evidence in the rest of the preparatory work that this would mean that the demarcation between ss 172 and 172a of the Maritime Code would otherwise be disturbed or changed. The Court also mentions that, in addition to this restatement of NOU 1980:55, no further reflection is made in the preparatory work that the rules should be given any special regulation in the relationship between two parties involved in a collision. On the basis of the interpretation of the provisions of the Convention, the Court also emphasises that such an interpretation result would conflict with the Odelsting Bill's explicit clarification that 'the proposal [does not] affect ... the interpretation of what kind of requirements the preconditions include': see Ot.prp.nr.79 (2004-2005) p 41. The statements in Ot.prp.nr.79 can be taken as the basis for another point of view, and the Court refers in particular to what is mentioned in conclusion in this quotation: 'If, on the other hand, the loss of income is a consequence of damage to the pier caused by measures covered by § 172a, the loss will be covered by § 172. This follows from the fact that such consequential damage to measures will be "claims in connection with" such measures.'

A similar view, albeit with a different starting point, has also been expressed in Gutierrez, Limitation of Liability in International Maritime Conventions (2011), section 2.8.2. Gutierrez's view is that, in a collision case such as this, it would be correct to distinguish between the injured party's right to limitation vis-à-vis public authorities as one claim, and secondly the injured party's claim for these expenses against the tortfeasor as another claim. His view is further that, even though both claims in the broadest sense are related to wreck removal costs, there is otherwise no legal connection between the basis for these two claims. The Court agrees with this analysis.

Therefore, it may be concluded that when adjudging recourse claims for wreck and cargo removal – as in the case of salvage claims – the Court must consider the claim brought against the party seeking limitation, and not the original claim or its original factual or legal basis. The two claims in question are completely different. The purpose of arts 2.1.d and 2.1.e was to prevent public entities footing the bill for the removal of wrecks. This was not intended to extend to recourse claims brought against third parties. Although this may not seem fair to the owner of ship B, who was completely innocent in the incident, it must be recalled that - in the words of Lord Denning - 'limitation of liability is not a matter of justice'.

In assessing the State's claim in the case here, the Court first finds that, based on the legal source material and the Convention, the frigate's claim for wreck removal costs must be classified under s 172 of the Maritime Code. Second, the Court emphasises that when transposing the Convention into Norwegian law, one has to understand the rules in ss 172 and 172a in accordance with Norway's obligations under international law. Third, the Court refers to the fact that the State's claim in this case must be regarded as consequential damage of property damage which 'occurred on board or in direct connection with the operation of the ship', which, based on a natural understanding of the wording, is subsumed under the ordinary rules of s 172.