Shipowner s liability when navigating the Northern Sea Route. Lars Rosenberg Overby

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1 K R O M A N N R E U M E R T C V R. N R R E G. A D R. : S U N D K R O G S G A D E 5 DK K Ø B E N H A V N Ø Shipowner s liability when navigating the Northern Sea Route Lars Rosenberg Overby

2 NORTHERN VS. SOUTHERN SEA ROUTE

3 NORTHERN SEA ROUTE FACTS The route is officially defined by Russian legislation as going from the Atlantic Ocean to the Pacific Ocean, mainly running along the Russian Artic coast from the Kara Gates strait between the Barents Sea and the Kara Sea, along Siberia, to the Bering Strait The NSR opened to foreign vessels in 1991 The route runs solely in Arctic waters The Arctic Ocean about 14,056,000 km 2 - nearly the same size as Russia Parts currently free of ice around two months a year The term ice free refers to the absence of fast ice it does not mean that there is no Artic sea ice.

4 ARCTIC PORTS

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6 TRAFFIC Generally, the traffic in the Arctic increases due to climate changes The NSR offers substantial benefits The journey is one third shorter and will cut journey times by around two weeks from Rotterdam It is estimated to cut fuel costs by around $180,000 There is a drastically reduced risk of piracy which again reduces costs Lower environmental emission The Arctic Region produces about one tenth of the world s oil and a quarter of its natural gas As much as 25% of the world s remaining fossil fuel reserves are located in the Arctic Ocean

7 BENEFITS FROM USING THE NSR IN NUMBERS Distance via the Northern Sea Route is approx. 40 % shorter between Northern Europe and China compared to via the Suez Canal. Same distance via NSR approx. 60 % shorter than via the Cape of Good Hope SUBSTANTIAL SAVINGS: Cargo from Kirkenes and Murmansk: Copyright to ArticBulk (

8 TRANSIT STATISTICS 2013

9 NORTHERN SEA ROUTE PASSAGE STATISTICS 2013

10 IDENTIFIED ADDITIONAL ARCTIC HAZARDS Ice bergs as collision hazard Ship pushed around by moving ice Ice bergs as ship crush hazard (structural failure). Ice on ship superstructure (loss of stability, foundering) Extreme cold leading to brittleness of metal (structural failure) Extreme cold or icing leading to technical failure of equipment, including emergency or backup Equipment that might fail on demand due to extreme cold or icing

11 IDENTIFIED ADDITIONAL ARCTIC HAZARDS Long response times and limited emergency response capability Weak or non-existing conventional navigational aids (lights, distinguishable features for bearings, etc.) Poor navigational charts High latitude effects on navigation systems (lack of GPS, cosmic radiation effects) Variations of magnetic north/south Long days or long nights resulting in interrupted sleep patterns, loss of alertness, poor decision making Weak primary radar returns from icy shorelines

12 IDENTIFIED ADDITIONAL ARCTIC HAZARDS Difficulty of distinguishing sea ice from wave clutter with primary radar Extremely low visibility or low visibility for long periods of time Extreme sea state (wave height) Extreme wind speed Darkness Extreme brightness due to low sun, 24 hours per day

13 NAVIGATIONAL AID

14 NORWEGIAN WATERS Norwegian territorial sea extended to 12 nm (from 4 nm in 2003) 200 nm EEZ The overall relevant Norwegian act is the Shipping Safety Act of 2007 The safety act geographically covers vessels in Norwegian territorial waters, including surrounding Svalbard, the EEZ and the continental shelf of Norway No special regulation in the act regarding Artic waters but general detailed provisions for technical and operational safety, environmental safety, human safety etc.

15 NORWAY LEGAL RISKS Safety certificate mandatory for shipowners and duty to establish internal safety management rules. No provisions for clearance before entering Norwegian zones (as opposed to e.g. Canadian and Russian waters) Norwegian authorities have extensive powers to inspect and issue directions Civil and criminal liability provisions The pollution Act Applies not only to vessels in the EEZ, including waters outside Svalbard, but also to vessels on the High Seas if harmful pollution threatens

16 NORWAY LEGAL RISKS Norwegian intervention possible if acute pollution or risk of acute pollution of Norwegian coast arise Section 55: Strict liability ( polluter pays ) NB! Interaction with the Norwegian MSA A special pollution-protecting act regarding Svalbard has been passed Release, dumping, incineration of waste or other materials prohibited In case of significant environmental damage to Svalbard, the Governor of Svalbard can order the polluting party to pay compensation to the Svalbard Environmental Protection Fund

17 SVALBARD

18 NORWAY LEGAL RISKS Norwegian Merchant Shipping Act Oil pollution damage International Convention on Civil Liability for Oil Pollution (CLC), IOPC 2003 Collision Bruxelles Collision Convention 1910 Limitation of liability Convention on Limitation of Liability for Maritime Claims 1976 (1996 protocol) Salvage International Convention on Salvage 1989 (Passengers and cargo)

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20 RUSSIAN WATERS Russian territorial sea 12 nm since nm EEZ The right to innocent passage is acknowledged in the Russian 1998 act regarding the low water coast line but subject to certain restrictions UNCLOS Art. 234 invoked Coastal states within the exclusive economic zone may adopt and enforce the non-discriminatory laws and regulations for prevention and monitoring of marine pollution from vessels in the areas covered with ice for most of the year Federal act N 132-Ф on amendments to specific legislative acts of the Russian Federation related to governmental regulation of merchant shipping in the water area of the NSR

21 RUSSIA LEGAL RISKS 2013 Rules of navigation on the water area of the NSR Permit from the Federal State Institution Administration of the Northern sea route Safety of navigation Navigation in certain dangerous areas is prohibited Special regulations as to e.g. icebreakers and pilots Requirements of the design, equipment and supplies etc. Evidence of insurance (liability insurance mandatory)

22 APPLICATION FOR ADMISSION TO NSR

23 RUSSIA LEGAL RISKS The EEZ act (N 191-FZ of 17/12/1998) Dumping of waste and discharge of harmful substances prohibited Willful and serious pollution of the environment considered to be prejudicial to the peace, good order or the security of the Federation Environmental protection act (N 7-FZ of 10/01/2002) The water act (N 74-FZ of 03/06/2006) The internal waters and territorial sea act (N 155-FZ of 31/07/1998) The continental shelf act (N 187-FZ of 30/11/1995)

24 RUSSIA LEGAL RISKS Merchant Marine Code 1999 Oil pollution damage International Convention on Civil Liability for Oil Pollution (CLC), IOPC 1992 Collision Bruxelles Collision Convention 1910 Limitation of liability Convention on Limitation of Liability for Maritime Claims 1976 (1996 protocol) Salvage International Convention on Salvage 1989 (Passengers and cargo)

25 IN THE HORIZON LARS ROSENBERG OVERBY Partner, Kromann Reumert law firm