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Skuld.comSkuldmagazinedecember 2012 / iSSue 203TheenvironmenTSeTTling over 100,000 claimS / 12going Slow / 20

viewpoinTdouglas Jacobsohnpresident & ceo/conTenTSTop performeras we approach the end of another busy year, i am pleased to reportthat Skuld’s board of directors has agreed our strategy to 2020. we willcontinue our focus on p&i mutuality and diversify further with emphasison profitable commercial insurance activities.Performancein 2012, Skuld has been rated ‘a’ by S&p and a ‘top p&i club’ byindependent p&i brokers. by increasing our global presence, includinga new office in Singapore, we increase our capability to provide hands-onservice and save our members time and money.new ProductsSkuld’s new products have received a warm reception from the market.The latest innovations are Skuld 1897’s bespoke ‘subsea & offshoreequipment’ and ‘ports & terminals’ covers, and Skuld’s fixed-premiump&i product, which encompasses Skuld Yacht for the exclusivesuperyacht sector.financialsThis year has been challenging for many of our members and clients,with the global financial climate continuing to impact us all. in spite ofthis, Skuld remains a predictable and stable insurer with a strongbalance sheet. To retain our financial strength and predictability, it isvital to maintain a balanced underwriting result. we cannot rely oninvestments to cover underwriting losses and, with increases in poolclaims, it is necessary to adjust premiums accordingly.beacon december 2012 / iSSue 203news feature: the environment6 a vision of sustainability8 namepa after five years10 revisiting the Hebei Spirit12 Settling over 100,000 claims14 Saving the reef17 The devil and the deep blue sea20 going slow23 world’s first lng-fuelled product tankerleGal issues25 issues of liabilitycurrent27 Skuld offshore28 114 years of partnershipnews29 personnel news31 news17The deviland The deepblue Seaduring the past fifty years, the globalappetite for petrochemical products hasreached almost insatiable levels.on occasions demand has outstrippedsupply and all too often disputes have ledto political conflict, civil unrest and war.the environmentwe have seen a rise in larger international group pool claims whereScopic (Special compensation p&i clause) – which providescompensation for the environment – and wreck removal have made upa third of payments. Skuld had no such claims, but as a member of theinternational group pooling agreement, we share the costs. equally, itis our duty to reduce our members’ environmental impact through lossprevention measures and effective casualty response. This beaconfocuses on several environmental issues that can affect us all. wehope it provides food for thought.my best wishes for the holiday season and the new Year.douglaS JacobSohnSkuldmagazinebeacondecember 2012 / iSSue 203Beacon (skuld maGazine) is the official publication of assuranceforeningen Skuld (gjensidig)address p.o. box 1376 vika, no-0114 oslo, norway, Tel +47 22 00 22 00, fax +47 22 42 42 22e-mail ingeborg.berge@skuld.com editor in chief ingeborg berge editorial staff lise larson,marte nordli andersen, inger margrethe holm layout Transmission aS rePro and PrintinG07 group front PaGe coral reef Back PaGe photo: paul Souders/corbis. arctic ice. entire contents©2012, all rights reserved. reproduction in whole or in part, without written permission fromSkuld, is prohibited. opinions expressed by writers in beacon are not necessarily those held bySkuld. Skuld assumes no responsibility for unsolicited material www.Skuld.com23world’S firSTlng-fuelledproducT Tankerlng is an increasingly important fuel source for theshipping industry in its quest to meet new environmentalrequirements for 2020. Tarbit Shipping is behind the world’sfirst lng bunker conversion of a non-lng tanker.phoTo: courTeSY of SeabYTe inc.14SavingThe reefmany countries have discovered that a reefis an invaluable asset. due to risingecological awareness, environmentaldamage is punished severely by high finesin almost every part of the world, especiallyif this damage impacts the tourism industry.as reef-damage claims can become veryexpensive, rapid response is necessary tominimise exposure.

newS feaTureThe environmenTnewS feaTure legalThe environmenT iSSueSwritten Byname surnameJob title, Skuldname.surname@skuld.com/article introheadingintro textThe environmenTText“quote fromtext”coral on australia’s great barrier reef sufferingfrom bleaching. The world’s largest coralreef is under threat from australia’s surgingcoal and gas shipments, climate changeand a destructive starfish. half its coral hasbeen lost in little more than a generation.Too ofTen headline-making oil spills grab The world’saTTenTion and Tie shipping negaTively To The environmenT.yeT legislaTion, cosT facTors and recogniTion of iTs own role inenvironmenTal proTecTion is leading To sweeping change. safer,more environmenTally friendly vessels and ‘susTainable business’are The order of The day. Through The following pages we sTudya few of The Themes shaping our shipping environmenT.read morewww.address.comphoTo: reuTerSbeacon / decemBer 2012 5

newS feaTurenewS feaTure/ The environmenTThe environmenT /By ulrika leikvangvice president, Syndicate head of claims, Skuldulrika.leikvang@skuld.comimPlications of the sustainaBle shiPPinG initiativea viSion ofSuSTainabiliTYShipping has always been considered the most environmentally friendly means of transport.it accounts for just three to four percent of global co 2emissions despite the fact that shipscarry more than 90% of world trade.Yet, it is under growing scrutiny as fuel prices rise, markets and patternsof trade shift and stronger pollution and emission regulations comeinto force. These factors are driving the development of performanceefficiencytechnologies and future fleet design. with the new marpolannex vi requirements coming into force on 1 January 2013, it isimperative that shipowners and operators are up to date on theconsequences for their fleet. a new chapter was adopted by imo thatintroduces an energy efficiency design index (eedi) for new ships; atechnical measure aimed at limiting co 2. imo also agreed that all shipsshould carry a Ship energy efficiency management plan (Seemp),which is intended to assist the industry in managing ships’ environmentalperformance and practically improving operational efficiencies.the sustainaBle shiPPinG initiativeSSi is a project where two leading ngos, forum for the future andwwf, bring together leading companies from across the industry to planhow shipping can contribute to and gain from a sustainable future.Together they have recognised the importance of shipping to the globaleconomy and the significant changes the future operating environmentwill undergo. They have developed a shared vision for 2040 wheresustainability equals success. This means:• changing to a diverse mix of energy sources, using resources moreefficiently and responsibly, and dramatically reducing greenhousegas intensity• providing safe, healthy and secure work environments so thatpeople want to work in shipping, where they can enjoy rewardingcareers and achieve their full potential• companies earning reputations for being trustworthy and responsiblepartners in the communities where they work and operate• developing financial solutions that reward sustainable performanceand enable large-scale uptake of innovation, technology, design andoperational efficiencies• Transparency and accountability drive performance improvementsand enable better, sustainable business decision-making• proactively contributing to responsible governance of the oceans“they havedeveloPeda sharedvision for2040 wheresustainaBilityequalssuccess”although the vision sets outaspirations for 2040, the SustainableShipping initiative makes it clearthat the industry cannot wait until2040 to become sustainable. Thefirst priority is to understand keyglobal trends affecting shippingand identify areas for action.These are:the global economy: emerginggiants? – new demand will alterpatterns of trade, changing whichgoods are transported and where.freedom vs. level playing fields:ocean governance – national andinternational management of theoceans has increased significantlyin scope, rigour and complexityover the past 30 years. how itdevelops in future is critical tothe industry.no secrets: demand fortransparency – businessesthroughout the supply chains outsidethe shipping industry are alreadysetting social and environmentaltargets to respond to demandsfor better performance. Theyhave to navigate the fast-paced,transparent, internet-enabledworld of social media. businesseswill have opportunities tophoTo: corbiSnew demand will alter patterns of trade, changing which goods are transported and where.demonstrate leadership by giving customers, regulators and ngos theopportunity to monitor their performance.moving on from oil: the future of energy – The last 20 years’ massiveexpansion in global trade has been powered by easily available fossilfuels. major oil institutions are now cautioning that the age of easy oilis over, predicting higher and more volatile pricing and a peak in oilproduction. combined with concerns over energy security and climatechange, this may drive major changes in fuel types and efficiency.demanding higher standards: sustainability regulation – increasingpressure on global resources is likely to lead to demands for highersustainability standards. Shipping regulation has focused on traditionalissues, such as sulphur and nitrogen oxide emissions, and ballastwater. expect a new focus on workers’ rights and more sophisticatedregulatory approaches that promote ‘close-loop’ economies based onreuse and recycling.advancing technology: making it pay – new materials, alternativeenergy technologies and more fuel-efficient ship designs have thepotential to deliver radical improvements in the sustainability of shipping.as noted above, technology also increases transparency and makesbusinesses, their customers and consumers more networked.adapting to a changing climate – climate change is likely to increasethe frequency and severity of storms, and has the potential to influenceocean currents. ports and other coastal facilities could be threatened“it is clearthat theindustry isin a time ofchanGe”by sea-level rises over the next30 years. The wider impact ofclimate change on food productionand flooding of major populationcentres could have hugeimplications for global trade andshipping. There is a compellingcase to take action to prepare forpossible consequences ofclimate change and to mitigatetheir effects by reducing carbonemissions.The areas where there is mostpotential to collaborate andaccelerate change have beenidentified and work has startedwith a number of so-called ‘workstreams’, which were launchedin the spring of 2012.it is clear that the industry is in atime of change. Shipowners feelpressure as there are more shipsthan ever before in the worldfleet and, even when the marketpicks up, demand for tonnage isuncertain. The commercialbalance of power now lies withthe charterers and shippers. old,less fuel-efficient ships mayquickly become obsolete sincecharterers want ships that canlift the cargo they need, performa voyage in the time requiredand also save fuel.Skuld is closely monitoring theinteresting work of the SustainableShipping initiative. You caninvestigate further by visiting thelink at the foot of the page.1) Sustainable Shipping Initiative– Vision 2040, November 2011.2) Sustainable Shipping Initiative,The case for action, executivesummary, May 2011.read morewww.forumforthefuture.org/project/sustainable-shipping-initiative/overview6 beacon / decemBer 2012beacon / decemBer 2012 7

newS feaTureThe environmenTBy clay maitlandfounding chairmanclaymaitland@yahoo.comcarleen lyden-klussco-founder/executive directorexecutivedirector@namepa.netnewS feaTureThe environmenT/enGaGinG Business, the reGulators and environmental GrouPsnamepa afTer five YearSSince 2007, namepa has expanded its strategic alliances to leverageits strength with the abilities of like-minded groups. under itsmemorandum of agreement with the u.S. coast guard, namepa hasthis year produced and delivered 120,000 marine debris brochures andposters for distribution by the coast guard auxiliary, and is now amember of the coast guard’s partnership in education program.namepa has also initiated a science and technology competitionamong schools, academies and colleges. from a national fish andwildlife foundation grant, namepa created, produced and distributeda marpol/marine Science booklet and dvd targeting seafarers andboaters. This project was possible through collaboration with Searesearch foundation’s Jason project and the north american maritimeministry association. another successful alliance was forged with theamerican Salvage association in fostering noaa funding for the‘wreck oil removal program’. as a result of this initiative and workwith marine debris education, namepa is about to sign a memorandumof agreement with noaa as well. This year, namepa also partneredwith Transport canada to produce the world maritime day observanceon the Titanic in banff, alberta.in the united States and canada,namepa’s environmentalintelligence in maritime (eim)seminars have brought togetherthe u.S. coast guard, environmentalgroups, private industry andstudents in topics ranging fromballast water management to oilspill response and the containmentof marine debris.in the far north, namepa is atwork in alaska supporting theestablishment of an ‘institute ofthe oceans’, which hopefully willinclude a major degree ofparticipation by private industry,the native peoples of alaska and, ofcourse, the academic community.“whennamePa wasfounded in2007, ‘environmentalrisk’in shiPPinGwas virtuallyunheard of”namepa educates seafarers, port communities, students and the public in general about the shipping industry’s commitment to cleaner seas.The north american marine environmental protection association(namepa) is a maritime industry-led initiative committed to preservingthe marine environment. This voluntary and non-profit organizationeducates seafarers, port communities and students about the importanceof the marine environment and how to protect it. further, namepaengages maritime business, government and the public to ‘Save ourSeas’ through sound environmental practices.when namepa was founded in 2007, ‘environmental risk’ in shippingwas virtually unheard of. The regulatory ‘green squeeze’ that nowbesets the industry was barely a cloud on the horizon. True, a fewcompanies had launched corporate social responsibility programs,and there was some feeling – which gave rise to namepa – that moreneeded to be done to engage with environmental players. five yearsago, the present recession had not begun, the Deepwater Horizontragedy was in the future and we were just becoming conscious of thegrowing significance of the arctic.namepa was conceived as a maritime industry-led initiative,committed to educating seafarers, port communities, students andthe public at large about theshipping industry’s commitmentto cleaner seas. namepa is acoalition and a descendant ofhelmepa founded in greece 30years ago. it does not advocate aspecific commercial or politicalposition. rather, it serves as acatalyst or facilitator, respondingto the need for an industry voicethat communicates withenvironmentalists, regulators andopinion leaders.in addition, we plan to foster dialogue between government and theprivate sector on a number of subjects, such as:• oily water separators• port reception facilities• oil spill response• vessels of opportunity and other oil spill responders• responder immunity and moreToday, namepa has more than 100 members. its guiding vision is toencourage the study of shipping’s relationship to our planet’s uniqueresource – unique, in that no other planet in our solar system is endowedwith a mantle of water. indeed, seawater covers 70% of the earth’ssurface; a healthy ocean is the cornerstone of life on our planet. withinnorth america, the great lakes – the largest body of fresh water on earth– profoundly influences weather, natural resources and commerce.namepa has embarked on a series of programs spearheaded by theprivate sector, integrating the shipping industry’s commitment to ourseas, with the work of other stakeholders. much of its work involveseducation of students and seafarers in the meaning and enforcementof the marpol convention. projects and programs have, among othertopics, covered marine environmental care, oil spill remediation andresponse; marine engineering, underwater robotics, air emissionsfrom ships, alternative fuel supplies for ships, offshore well control,diving systems, marine biology, marine ecosystems, marine microorganisms,ship design, ship breaking, and recovery of sunken ships.There is a practical aspect to whatnamepa does: we are showingour members’ shareholders andothers that the shipping industryis not made up of environmentalhooligans. we also believe thatthere is something to be said toreversing our reputation for gettinghit in the face with unforeseendisasters, such as DeepwaterHorizon and Costa Concordia. inaddition to showing an acceptableface to the world, the opposite istrue: we emphasize the need forawareness of political realities.The environment and its protectiondo matter to the bottom line!protecting the marine environmentis a global responsibility. namepaendeavors to do its part, with thefull cooperation and participationof the many segments of thecommercial maritime industry. wewelcome members who share ourcommitment to “Save our Seas”.read morewww.namepa.net8 beacon / decemBer 2012beacon /SepTember 2012 9

newS feaTurenewS feaTure/ The environmenTThe environmenT /By nicola masonSenior vice president, deputy head of Syndicate, hong kongnicola.mason@skuld.comsandro vuylstekevice president, Syndicate head of claims, copenhagensandro.vuylsteke@skuld.comassessinG the Hebei Spirit traGedy on its five-year anniversarywhen disaster struck, the people of South korea took it as a mark of honour to clean up the beaches.reviSiTing Thehebei SpiriTon 7 december 2007, in heavy seas off the South korean coast, a large crane barge collidedwith a fully laden vlcc at anchor, resulting in one of the largest tanker spills of recent times.in december 2008, beacon printed its first feature on Skuld’s proactiveapproach in handling the Hebei Spirit disaster. now, five years after thedisaster, it is astonishing to see how much has been achieved in thistime. Hebei Spirit generated more than 100,000 claims, which is thelargest volume of claims handled by Skuld from an accident of this nature.incident and resPonsenearly 11,000 tonnes of oil were spilled in what is South korea’s worstpollution incident ever. over half of the region’s 400 fisheries andmarine culture farms were hit. The spill occurred near mallipo beachin Taean county, considered one of South korea’s most beautifulbeaches. in all, over 30 popular beaches were affected with tar ballsreaching islands over 375 kilometres south of the spill site.when disaster struck, the people of South korea took it as a mark ofhonour to clean up the beaches. any company worth anything sentvolunteers, with the old and young, soldiers and corporate high fliers,working alongside local victims and fishermen to restore the environment.phoTo: reuTerSevery day, more than 50,000 volunteers worked together, with thefigure passing one million in early January. no detail was overlooked inthe massive clean-up effort.next stePsThe next development in the case is the anticipated adjustment Judgementfrom the limitation court. from this, both the claimants and theinternational oil pollution compensation (iopc) funds/Skuld canevaluate whether to appeal or not. This presents a challenge, sincesuch appeal proceedings have to be conducted individually. withpotentially 128,747 claimants, it is highly unlikely that such a largenumber of proceedings can be concluded practically.marine environment recoveryin terms of environmental effect, spilt bulk oil was removed veryquickly and beaches were cleaned to such an extent that it was virtuallyimpossible to see traces of pollution within a few months of the incident.although some studies suggest that long-term damage to marinewildlife will last many years, the international Tanker owners pollutionfederation (iTopf), with some of the best experts in the field of oilpollution and response in their ranks, reports that the marine environmenthas recovered well and that it is wrong to simply blame the incident foreventual fluctuations in breeding patterns or other changes in themarine eco-system. The iTopf’s view is that there are many other factorsto take into consideration, such as the natural cycle of the marineeco-system, land-based industrial pollution, pollution from othermaritime activities, over-fishing, etc.in the aftermath of the spill there was an understandable decline intourists visiting the area, which is known for its excellent seafood –nobody wants to eat seafood when looking at oily beaches. however,with the immense efforts dedicated to clean-up operations, the affectedarea is again a destination for seafood tourists from other regions ofSouth korea.The issue of whether there is long-term environmental damage will nodoubt be the subject of discussions for some time to come; the questionbeing whether there will ever be conclusive evidence that crude oilspills have a significant long-term effect on the marine environment.lessons learnedit is an honour for us at Skuld to work with so many talented anddedicated people. our thanks go to all concerned including the iopc,iTopf, the South korean government, numerous experts and companiesand, very importantly, the brave victims and those representing them.all have helped find innovative solutions to the many problems thatarise from such a serious environmental crisis. lessons have beenlearnt and this experience helps Skuld handle any similar incidentsthat may occur in the future./fact fileinternational comPensationfunds & Payment to victims140p&i coverage10addiTional inTereSTproviSion180iopc fund330ToTal p&i paYmenTS& fundS450-500+eSTimaTed ToTal coSTof The incidenTthe korean sPirit/the korean PeoPle Joined in a huGemanual clean-uP effort10,000up to10,000 localvillagersand fishermena daywereinvolved50,000more than50,000volunteersworked eachday, withvolunteerstopping the1-millionmark in early20,000The cleanup utilisedover 20,000vesseldays350morethan 350helicopterflights andnearly30,000heavymachineryunit-days1,000’sThe koreanmilitarycontributedthousandsof mandaysoverthe courseof sixweeksJanuarywere usedread morewww.skuld.com/BeaconPlease see issue 192million uSdunder international conventions, Skuld– backed by the international group ofp&i clubs – funds 100% of all claims upto a limit of uSd 140 millionSkuld has also allocated additional funds asnecessary for interest on claims that coverthe period between the incident date andthe payment dateThe international oil pollution compensation(iopc) fund compensates 35% of theclaims up to their limit of approximatelyuSd 180 millionTotal funds available for compensationreach around uSd 330 million. The koreangovernment is not a signatory to a conventionthat would have provided even morecompensation coverageas the cost for compensating victims ofthe incident will go over uSd 330 million,the korean government, under the Secondcooperation agreement with Skuld, hasagreed to guarantee payment of allcompensation above this amount10 beacon / decemBer 2012beacon / decemBer 2012 11

newS feaTureThe environmenTnewS feaTureThe environmenTBy charles B. andersonSenior vice president, Skuld north americacharles.anderson@skuld.com/Deepwater Horizon leGal uPdateSeTTling over100,000 claimSin may 2012, Judge carl barbier of the uS federal court in neworleans gave preliminary approval to bp’s proposed uSd 7.8 billionsettlement of claims by private individuals and business for economicloss and property damage, and for the personal injury claims ofindividuals exposed to oil and chemical dispersants arising from theDeepwater Horizon explosion and oil spill in the uS gulf.before the settlement agreement was tentatively approved, however,the court handed down a series of decisions that will be of considerableimportance in future oil spill litigation and offshore operations.modus are ‘vessels’in one of its first rulings, the court held that the Deepwater Horizonmobile offshore drilling unit (modu) was a ‘vessel’ as defined andunderstood in general maritime law. cameron, the manufacturer ofthe blowout preventer, had argued that while the modu may havebeen a vessel when being moved from one drilling location to another,it was stationary at the time of the casualty and physically attached tothe seabed by means of the mile-long drill pipe. The court rejected thisargument, holding that special purpose movable drilling rigs, includingjack-up rigs, need not be in motion to qualify as vessels and are properlyclassified as such as long as they are practically capable of maritimetransportation. The significance of the court’s ruling is that themodu’s vessel status triggers uS admiralty jurisdiction and theapplication of general maritime law over accidents in uS waters.state law claims are Pre-emPted By maritime lawThe plaintiffs – commercial fishermen, recreational and commercialbusinesses, vessels of opportunity and property owners – sought torecover various types of economic losses and argued that maritimelaw did not pre-empt their state law claims because state law cansupplement general maritime law where there is no conflict. The courtheld that while states may create laws regulating conduct within theirborders, the Deepwater Horizon explosion and blowout occurred on theouter continental Shelf, an area of exclusive federal jurisdiction.To subject the owner of a vessel that discharges oil to the varying lawsof states impacted by the oil would contravene a fundamental purposeof admiralty law to preserve uniform rules relating to marine matters.catastrophe strikes – april 2010 sees the uS’s worst oil spill 50 miles off louisiana.although the oil pollution act of 1990’s (opa-90) non-preemption or‘savings’ clauses grant states broad power to enforce their own pollutionlaws, Judge barbier recognized that their authority is not unlimited.he acknowledged that these provisions preserve the states’ policepower to govern pollution within their territorial waters, but did notread them as giving the states power to regulate out-of-state conductaffecting multiple states. The plaintiffs’ claims for nuisance, trespassand other common law claims were therefore dismissed.oPa-90 Permits claims aGainst non-resPonsiBle Partiesanother significant ruling involved the plaintiffs’ general maritime lawclaims for negligence, gross negligence, and strict liability. The defendants,phoTo: epacommercial fishermen can bring claims directly against non-responsible third parties, such as cameron and halliburton.including bp and Transocean (who were designated as the ‘responsibleparties’ for the spill), sought dismissal of these claims on the basisthat opa-90 provided the sole remedy for claimants asserting economicloss and property damages. The court found that opa-90 broadenedthe scope of persons entitled to recover economic losses from“responsible parties” as defined by the statute through eliminating theproprietary-interest requirement, but did not displace general maritimelaw with respect to non-responsible parties. Therefore, persons whosuffered physical damage to their property and commercial fishermencould bring claims directly against non-responsible third parties, suchas cameron and halliburton.Punitive damaGes are recoveraBle under oPa-90although opa-90 is silent as to the availability of punitive damages, thecourt did not interpret this silence to preclude recovery of punitivedamages under general maritime law. The court reasoned that claimsfor punitive damages would not frustrate opa-90’s liability scheme orcircumvent opa-90’s limitation of liability because behavior that givesrise to punitive damages under general maritime law, such as grossnegligence or willful misconduct, would also break opa-90’s limitationof liability.claims Presentment under oPa-90 is a condition PrecedentJudge barbier also held that opa-90’s requirement for oil spill claimantsto first ‘present’ their claims to the responsible party is a mandatorycondition precedent, but ruled that the plaintiffs had sufficientlycomplied with this requirement in their complaint. furthermore, heheld that forcing the court to sort through more than 100,000 individualclaims to determine which ones should be dismissed would not beproductive or advance the litigation.The bp settlement agreement was scheduled for final approval innovember. it does not affect the claims of the federal and stategovernments for penalties, natural resource damages and responsecosts, potential criminal charges, or the allocation of liability amongthe various defendants. Trial of the liability issues will be held inJanuary 2013.read morewww.skuld.com/BeaconPlease see issue 197phoTo: JameS balog/aurora phoToS/corbiS12 beacon / decemBer 2012beacon / decemBer 2012 13

newS feaTurenewS feaTure/ The environmenTThe environmenT /By simone vitzthumclaims executive, oslo Syndicate 2simone.vitzthum@skuld.coma Proactive aPProach to reef damaGeSaving The reefscenario and coverwhen a ship runs aground, your mind turns first to possible crewcasualties, damage to hull, tanks or cargo, and the risk of pollution.whether the vessel is aground on a reef is also an important factorthat should come high on the priority list.if the vessel is resting on a reef, then the responsible underwritershould be notified immediately. in most cases this is the shipowner’sp&i club, as many hull terms exclude so-called ‘environmentaldamage’. with Skuld, this environmental damage usually falls underits property liability rules.Skuld covers restoration costs and fines for reef damage caused bygrounding. however, there is always the risk that salvage operationscan increase reef damage. To give salvors an incentive to keep furtherdamage to the reef at the lowest possible level, a ‘reef clause’ shouldbe included in the salvage contract to shift responsibility for new reefdamage to the salvors.phoTo: courTeSY of SeabYTe inc.divers carrying out reef restoration work.how hiGh is Potential exPosure?Shipowners are potentially liable for reef restoration costs and a finefrom local authorities. restoration expenses depend on the conditionof the reef and the extent of damage. for example, if a reef was 90%dead before the grounding, restoration costs are far less than if thereef was 100% alive and a national heritage site.in general, reef damage almost always triggers a fine from the authoritiesin addition to restoration costs, even if the reef was largely deadbeforehand. in a worst-case scenario, fines reach uSd 10 million.Security is always requested. additionally, there is also the possibilitythat criminal fines are issued against the vessel or her master.coral reefs are among the most diverse habitats on the planet.phoTo: courTeSY of SeabYTe inc.many countries have discovered that a reef isan invaluable asset. due to rising ecologicalawareness, environmental damage is punishedseverely by high fines in almost every part ofthe world, especially if this damage impactsthe tourism industry. as reef-damage claimscan become very expensive, rapid response isnecessary to minimise exposure.phoTo: courTeSY of SeabYTe inc.Shipowners are potentially liable for reef restoration costs and a fine from local authorities.what skuld can do for you?The message is clear – notify Skuld immediately after the grounding.we’ll help in any way necessary, including minimising potential liabilityfor reef damage. here are the steps we take:1) a national resource damage assessment (nrda) consultant iscontacted straight away. This person assesses reef damage andminimises further harm.2) local lawyers are employed to collect evidence, protect crew duringlocal authority questioning, provide advice on the impact of reefdamage under local law and liaise with local authorities.3) local correspondents are appointed to coordinate and liaise betweenvarious parties involved and help the nrda consultant set up a local team.14 beacon / decemBer 2012beacon / decemBer 2012 15

newS feaTurenewS feaTure/ The environmenTThe environmenT /By kevin campbellSenior executive, risk managementkevin.campbell@skuld.comGregory thomasSenior vice president, head of offshore Syndicategregory.thomas@skuld.comdealinG with the GrowinG comPlexity of offshore riskphoTo: courTeSY of SeabYTe inc.The loose rubble moves with the current, grinding the live reef and increasing damage. reef stabilisation mats prevent this movement.why involve a nrda consultant?a nrda consultant assesses the vessel’s ‘footprint’ on the reef.assessment and underwater measurements start when the ship isstill aground. with gpS tracking, the nrda consultant records theship’s movement caused by water currents on the reef. it is veryimportant to record movement and measure footprint area to differentiatebetween recent and past damage.The nrda consultant should also be kept closely involved in salvageoperations as they can give advice on how to minimise further damagewhen refloating the vessel.as soon as the vessel is free, the in-depth assessment starts. here,the nrda consultant maps footprint area and documents damagethrough, for example, the use of photography. based on the findings,a restoration plan is put in place.why Bother with restoration?coral reefs are among the most diverse habitats on the planet and it isthe shipowner’s environmental responsibility to repair any damagecaused by their vessel.a reef cannot repair itself. after a grounding, many loose coral pieces(rubble) cover the seabed. larger sections are dislocated and oftenturned upside down. The loose rubble moves with the current, grindingthe live reef and increasing damage. a diving team needs to manuallyremove the rubble or fix the rubble in place by laying reef stabilisationmats over it to prevent movement.“fewcountrieshave theexPertiseto rePaira damaGedreef”The nrda restoration teamsaves larger coral sections byre-attaching them to the reef withunderwater cement or stabilisationmats. with such restoration, the reefsoon recovers from the damage.it Pays to Be Proactive1) minimise restoration costsfew countries have the expertiseto repair a damaged reef. localauthorities sometimes turn theoperation into a costly universityresearch project, which theshipowner and their underwritersneed to pay for. in most cases,the nrda consultant employsa local diving team to carry outthe restoration at lower cost.2) minimise the finelocal authorities always like aproactive and responsibleapproach from shipowners andappreciate being kept informedand involved. This positivelyimpacts on the level of fineissued later.in summaryif your vessel runs aground on areef, contact Skuld immediatelyand we will help by involving theright people from the very start toensure that exposure to environmental-damageclaims and finesis kept as low as possible.authorities are often afraid ofthe responsible party runningaway and the sooner we showour face to the local authorities,the better your standing will beas a responsible shipowner.Should the situation arise, pleasecall Skuld for assistance on the24-hour emergency hotline.read morewww.darrp.noaa.gov/about/nrda.htmlThe devil and Thedeep blue Seaduring the past fifty years, the global appetite for petrochemical products has reached almostinsatiable levels. on occasions demand has outstripped supply and all too often disputes haveled to political conflict, civil unrest and war.To satisfy this voracious appetite, man and technology are being drivento ever-more-distant shores and harsher environments. limits ofengineering are being severely tested and broken. it’s a tough andincreasingly expensive business. Just how tough is seen in recent highprofiletragedies where costs have gone long over pure monetary value.The industry today is unrecognisable from what the early pioneers ofoil and gas exploration and production (e&p) could ever have contemplated.new frontiers are being explored. The arctic is one, ultra-deep waterdrilling is another. capital expenditure is increasing to record levelswith oil companies and contractors striving to meet the engineering,safety and environmental challenges that accompany modern e&p –all in the quest for what some may consider to be one of the greatest‘devils’ of our world.with huge initial investment, high daily operating costs and a move byoil companies away from balanced contracting positions in somearenas, risks for vessels, equipment and personnel operating in theoffshore e&p industry are becoming more complex.Since the formation of the first p&i club in the 19th century and morerecently the advent of the international group of p&i clubs, it hasgenerally been believed that the mutuality system was never intendedto cover the risks of vessels operating in the offshore industry. as seenwith Deepwater Horizon, such risks can be unquantifiable and certainlynot ones in which a typical owner of a blue-water vessel wants to share.an alternative and secure insurance arrangement is therefore required.Skuld offshore’s continual product development and subsequentutilisation of non-poolable/non-mutual insurance products aretherefore essential for the protection of mutual members who derivelittle or no benefit from the offshore industry.a sustainable international group and global marine liability insurancemarket are essential. To avoid confusion between the boundaries ofmarine and energy liability, Skuld is advocating a process for changethrough the international group. we need to update terminology forspecialist and offshore operations in club rulebooks to reflect the 21stis knowledge and understanding of risk keeping pace with the growing complexity of theoffshore industry?“skuld isadvocatinG aProcess forchanGethrouGh theinternationalGrouP”century, while protecting the veryfoundations of the traditionalmarine business that reliesso heavily on protection affordedby mutuality.due to larger vessels, increasedtechnical complexity and theincreasing problems associatedwith hydrocarbon recovery fromextreme environments, thenumbers of offshore personnel(marine, project and third partyservices) are also increasing.however, is knowledge andunderstanding of risk keepingpace? is the industry under- orover-compensating? only time16 beacon / decemBer 2012beacon / decemBer 2012 17

newS feaTurenewS feaTure/ The environmenTThe environmenT /high-pressure fluids that once released are exceedingly difficult andexpensive to contain. had the macondo prospect (Deepwater Horizon)been an insured venture, the cost could only have been managed bylimitation of liability, which would have quickly been exhausted. To addperspective, the overall cost to bp of this one incident is estimated atuSd 37 billion, which is over four times greater than the internationalgroup and lloyd’s fund reserves combined.pollution risk should therefore be confined to the vessel itself and,unless suitably assessed and capped, no pollution liability coversshould be provided for well-borne pollution. even then, limits should bemoderate with the risk and reward going primarily to the well owner’saccount. consequently, the contractor moves on to the next job andretains no residual liability.with huge initial investment, high daily operating costs and a move by oil companies away from balanced contracting positions in some arenas, risks for vessels, equipment and personneloperating in the offshore e&p industry are more complex.will tell as equipment age and environmental deterioration take theirtoll – steel not being on the best of terms with salt!indeed with new projects, such as Shell Prelude FLNG with a 40-yearpluslife-cycle, the current global marine and energy insurance marketcapacity to cover such large and heavily capitalised vessels (Prelude isestimated to cost uSd 3 billion) will struggle to keep up with asset costand development. as such, alternate cover methods, such as largerretentions and self-financed captives, will play an increasingly importantrole in high-value developments; not forgetting, of course, the fact thatsome risks simply cannot be insured. Skuld does not believe that theinternational group should be exposed to these high-value assets as itis today. however, as the loss of such high-value assets would stillimpact across all markets, mutual or otherwise, it pays to keepabreast of this debate.with pollution being one of the principal liabilities covered by p&i“coveraGealways hasand stillmust Belimited toPollutionfrom vesselsonly”insurance, coverage always hasand still must be limited topollution emanating from vesselsonly. This limitation of liability isnever more important than in theoffshore industry where pollutioncan also stem from the well, andin circumstances of geologicalfractures, the surroundingseabed – as seen recently bychevron in brazil.although pollution from a vesselcan be extremely expensive, it isultimately quantifiable. a well, bycomparison, especially whennewly drilled, often containswreck removal of an offshore vessel or drilling unit could also severelyimpact an insurer’s financial position, one that has yet to be tested indeep or ultra-deep water. Deepwater Horizon, for instance, was lost inover 5,600 feet (1,707 metres) of water and is of a size (32,588 gT) forwhich wreck removal technology or relocation operations do notcurrently exist. furthermore, it would be detrimentally expensive forone organisation to develop this technology in isolation. it is one thingto attempt wreck removal of a beached vessel or one in shallow water(under100 metres depth), but deep or ultra-deep wrecks mean anentirely different liability level.To provide a comparison, the last ultra-deep water recovery wasattempted in 1974 by the Hughes Glomar Explorer, designed by howardhughes and secretly funded by the cia, to recover the Soviet submarineK-129. only 38 feet (11.6 metres) of the submarine were reportedlyrecovered from a depth of 16,000 feet (4,877 metres) in the pacific.when factoring inflation, size of vessel to be recovered and technicalcomplexity in to the equation, the estimated cost today is close touSd 3.8 billion – a technically interesting, but ultimately self-destructiveproject, for all but the largest of companies.The dangers of offshore operations to vessels and personnel are welldocumented. however, it should be remembered that the offshoreindustry has very high safety standards and few major accidents. Thisimpressive record is not only driven by national regulatory requirements,but also internally with increasing focus on the moral, ethical andfinancial benefits of good risk management. indeed, as recentlydemonstrated by changes in india, more nations require vessels tohave a p&i certificate of entry prior to allowing port access. althoughprincipally focussed on pollution liability mitigation, this movedemonstrates that vessel liability insurance within the general marketmay not be sufficient in the future and that p&i clubs could see anincrease in requests for cover.The devil may indeed be under the deep blue sea, but currently we can’tdo without it. as such, the vessels required to discover and extract it willcontinue to operate in extreme environments, while requiring liabilitycover against worst-case scenerios. how such covers are developed,oil pollution can also stem from the well and surrounding seabed – as seen in theDeepwater Horizon tragedy.“ ...theoffshoreindustryhas veryhiGh safetystandardsand fewmaJoraccidents”presented and managed isultimately up to the organisationsinvolved and their individualappetite for and tolerance of risk.as such, p&i clubs should notnecessarily avoid the industryaltogether, but must temper theirdepth of interaction. internalcontrols and processes are neededand expertise must be developed toidentify, quantify and acknowledgethe risks being insured, whilecontaining these risks withinfixed-premium and non-mutualproducts. after all, the risks may begreat, but so too are the rewardswhen taken from a position ofknowledge and understanding.phoTo: reuTerS18 beacon / decemBer 2012beacon / decemBer 2012 19

newS feaTurenewS feaTure/ The environmenTThe environmenT /By Peter Bløcherclaims executive, lawyer, Skuld copenhagenpeter.blocher@skuld.comknut drabløsTrainee, risk managementknut.drablos@skuld.comthe leGal and insurance asPects of slow steaminGSlow steaming can result in adverse legal and insurance complications unless contracts are drafted prudently.going Slowwhile fuel prices have soared, shipowners and time charterers have been eyeing the opportunity to cutdown on fuel consumption and reduce carbon dioxide emissions. one solution is to reduce vessel speed.in recent years, the intentional reduction of ship speed, also generallyknown as ‘slow steaming’, has become a hot topic. Slowing down notonly saves fuel, but also gives the added benefit of reducing pollution – orso the argument goes. it therefore appears that slow steaming may behere to stay despite manufacturers’ concerns about its effect on engines.however, potential for engine wear and increased maintenance are notthe only things to consider. Shipowners and charterers should alsorealise that slow steaming can result in adverse legal and insurancecomplications unless contracts are drafted prudently.leGal and insurance imPlicationsat present, there is little or no legal precedent dealing with theconsequences of slow steaming to intentionally reduce speed. however,in the absence of express conditions to the contrary, a vessel ownerundertaking a voyage implicitly agrees to proceed by a customary routewithout unjustifiable departure or unreasonable delay. hence, if a“slowsteaminG mayBe here tostay desPitemanufacturers’concernsaBout itseffect onenGines”vessel slows down, this maynot only breach an eventualperformance warranty (an issueto consider separately), but mayalso constitute deviation andbreach of owners’ ‘due despatch’obligations, which may meanowners are liable to charterersand/or bill of lading holders.consequently, it is well worthremembering that Skuld’s p&iinsurance does not cover liabilityresulting from deviation ordeparture from the contractuallyagreed voyage to the extent thatthe deviation or departuredeprives the member of the right to rely on defences or rights of limitations,which would have otherwise been available (see rule 5.2.11).liBerty clausesit is therefore paramount that any owner or charterer who contemplatesslowing down ensures that they are entitled to do so by incorporatingthe necessary provisions, not only in the governing charterparties, butalso in the relevant bills of lading.Such provisions are commonly referred to as liberty clauses and manystandard charterparty forms already contain them to varying scope andextent. moreover, bimco has also drafted specific slow-steaming clausesthat can be incorporated into both time and voyage charterparties.however, liberty clauses, or slow-steaming clauses for that matter,should be treated with caution as they are typically construed against theparty who seeks to rely on them. Therefore, a prudent owner is wise not tobe too reliant on the liberties, which the clauses appear to allow, withoutcarefully considering the commercial context that a court or arbitrationtribunal would use in its interpretation later. To give one example: if avessel embarks on a voyage with perishable cargo then – even if a broadlydrafted liberty clause has been incorporated into the bill of lading – thecarrier should consider whether the delay caused by the intended reductionin speed is likely to inflict harm to the cargo in question. if this is the case,the contractual carrier under the bill of lading may very well find himselfliable for cargo damage notwithstanding any agreed liberties.from the perspective of a time charterer, it is just as important toapply proper charterparty provisions. a time charterer who seeks toreduce fuel expenses by ordering the vessel to slow down, can end upbeing unable to validly give such an order since it may conflict with therights and expectations of a third party bill of lading holder.on a final note, it is also important to remember that if contract termsare insufficiently clear as to whether you can slow down or not, Skuldmay be able to offer additional cover, but only if notification of theintended deviation is given prior to its execution.recommendations• ensure that slow steaming has been agreed in the charterparty(both up and down the chain) and that the relevant liberty orslow-steaming clause is incorporated into bills of lading• an incorporation clause in a bill of lading should ideally makespecific reference to the liberty or slow-steaming clause of thegoverning charterparty• contact Skuld to discuss the need for additional insurance or obtainspecific advice• for more information on slow steaming, please see the article‘deviation: Justified or allowed and implications for the p&i cover:slow steaming’ at www.skuld.com/deviationread morewww.bimco.org20 beacon / decemBer 2012beacon / decemBer 2012 21

newS feaTurenewS feaTure/ The environmenTThe environmenT /By marte nordli andersenmarketing & communication executivemarte.andersen@skuld.comtarBit shiPPinG – the bit Viking conversion ProJectSlow STeaming from a Technical viewpoinTworld’S firST lng-fuelledproducT Tankerlng is an increasingly important fuel source for the shipping industry inits quest to meet new environmental requirements for 2020. Tarbit Shippingis behind the world’s first lng bunker conversion of a non-lng tanker./ Some companies have requested that large engine manufacturersissue no-objection certificates to show that slow steaming ispossible and does not harm the main engine if work is properlycarried out. To achieve this, there are several options, includingretrofitting of equipment, or modifications with upgrade kits thatchange the way the engine is used. This improves vessel operationwhen slow steaming. Traditionally, vessels’ engines are designedto run at rated capacity. with new intelligent engines, slowsteaming is considered at the design stage./ a slow-steaming vessel may risk problems as explained below. insome cases, lowering speed may change the vessel’s manoeuvringcharacteristics and, in others, it may be necessary to changepropellers to gain the most efficiency from reducing speed./ marine engineers have always been advised to run engines atthe speed they are rated for. manufacturers have stated thatslow steaming should be avoided. a place to start can thereforebe re-education of marine engineers and crew away from thetraditional mindset and provide additional routines for slowsteamingoperation./ more frequent inspections and maintenance need to be allowedfor due to the change in operation. This also necessitates a reviewof spare part stocks./ operators need to consider several factors, including the following:- less heat transfer due to carbon deposits- failure of components due to thermal stress- increased risk of scavenge fire- reduced peak compression pressure- low exhaust temperature can cause low-temperature corrosion- compromises piston-ring pack efficiency, which leads toincreased under-piston and scavenge deposits- over lubrication – special lubrication oil is needed- Turbochargers mean less airflow and more deposits- carbon deposits on the injectors- exhaust gas, reduction of capacity and soot- Scavenge air pressure and fuel atomisation give impropercombustion- carbon deposits mean increased maintenance intervals- damage is likely when engine is run at full load after a longperiod of slow steaming- for longer transits, it’s common to use full speed for at leasttwo hours of every 24 hours given to slow steaming- economiser clogging- engine manufacturers normally provide operation manuals forslow steaming- when the vessel has long passages in channels, rivers, etc.,it is recommended to change from heavy fuel oil to diesel oilemissions from domestic fishing and offshore activities in the northSea have been a growing concern for many maritime communities.globally the shipping industry is more aware of the need forenvironmentally friendly vessels, particularly those powered byliquefied natural gas (lng).Scandinavian shipowners are leading the drive for gas power and mostvessels using lng today operate along the norwegian coast or in itsoffshore sector. The nox fund is already proving to be a successfulinitiative by contributing to significant improvement in air quality innorwegian ports.tarBit shiPPinGTarbit Shipping is a Swedish company that has been transportingbitumen, petroleum products and chemicals since 1962. Tarbit’smission statement reads: “Through safety and environmentalexcellence we offer our customers a long-term committed, reliableand cost-effective transport partner by using fit-for-purpose builttonnage manned with experienced, motivated and well-trainedseafarers.” The conversion of Bit Viking into the world’s first lngfuelledproduct tanker is a bold step in fulfilling its mission.“Bit Viking has been on time charter to Statoil since she was built in2007. in 2009, we started cooperating with Statoil, researching possiblealternatives to reduce the negative effects of our operations on theenvironment. in august 2010, we contracted finnish engine manufacturerwärtsilä to convert Bit Viking to lng propulsion for reduced noxemissions. wärtsilä also supplied the ship with a wärtsilä lngpacsystem for safe and convenient storage of lng onboard”, says andershermansson, Technical manager, Tarbit Shipping.before conversion, the vessel had twin-screw propulsion, with eachscrew powered by a six-cylinder in-line wärtsilä 46 engine running onheavy fuel oil (hfo). The conversion involved changing these to sixcylinderin-line wärtsilä 50df dual-fuel engines that operate on lng.it is not necessary to complete refining to ‘clean’ the lng before it istaken onboard.“Bit Viking was built with a high safety and environmental profile.before starting the conversion project, we performed a hazid study“scandinavianshiPownersare leadinGthe drive forGas Power”(hazard identification Study) andachieved good results. The mainfuel for the vessel is lng, but thedual-fuel solution enables thevessel to run on traditional fuel(marine diesel oil) as backup,securing safe and reliableoperations”, says anders.successful conversionThe conversion of Bit Viking tolng bunkers represents a bigstep towards more environmentallyfriendly shipping operations. BitViking is today one of the safestand most environmentally friendlyproduct tankers in the world.“The benefits of converting tolng fuelled from hfo are many,with the large reduction ofenvironmental pollutants at thetop of the list. You get lower noxemissions, in addition to fulfillingfuture environmental requirements”,says anders.compared to diesel, carbon dioxideemissions can be reduced byabout 30 per cent and nitrogenoxide emissions by 95 per cent.The technology means the ship isable to comply with increasinglystringent emission regulationsfor nox set by the norwegiangovernment and also operate indesignated emission controlareas (ecas) approved by the imo.22 beacon / decemBer 2012beacon / decemBer 2012 23

newS feaTureThe environmenT/legaliSSueSBy mats e. sætherattorney, advokatfirmaet ba-hrmesat@bahr.no/oil Pollution liaBility on the norweGian shelfiSSueS of liabiliTYfollowing the Deepwater Horizon tragedy of 2010, focus on oil spill liability has increased.norway has largely escaped oil spills from exploration. in fact, the most serious spills so farhave originated from ships.bit viking cuts nitrogen oxides (nox) omissions by 95%. These are waste gases that cause acid rain and increase concentrations of ground-level ozone. emissions may have harmfuleffects on the eco system and are hazardous to people’s health.“by operating an lng-fuelled vessel, the owner benefits from a cleanerengine room and extended engine life, in addition to fuel efficiency. it isdifficult to see any cost savings on maintenance, however, what issaved on longer overhaul intervals can be used for maintenance ofmore expensive equipment”, adds anders.nox fundinGThis conversion project is of tremendous benefit to the environment andis in line with both the letter and intent of the norwegian government’snox fund initiative. Tarbit was granted a contribution of 75% of theconversion cost (eur 5.5 million) from the nox fund. This representsthe highest contribution given by the fund in 2011. The project resultsin significant emission reductions – nox 90%, Sox 100%, particles 99%and co 220%.“although the conversion project was a success, it is expensive toconvert an existing ship. it would have been difficult to go through withthe project without the contribution from the nox fund. we have notplanned for a new conversion project yet. in order for this to happen,we would need further financial support”, says anders.futureSo far, norway is the only country that has an lng-powered fleet. Bit Viking’sconversion commenced in august 2011 and the vessel first bunkered atrisavika in october 2011. Statoil is chartering the vessel and supplyinglng bunker fuel with Skangass. Today, Bit Viking transports petroleumproducts from mongstad refinery to terminals along the norwegian coast.“statoil ischarterinGthe vesseland suPPlyinGlnG Bunkerfuel withskanGass”“The project has resulted insubstantial interest from all overthe world. earlier this year, wewere nominated for the Thorheyerdahl international maritimeenvironmental award and thegreen Ship Technology award”,says anders.by 2020 it is expected that newtankers, bulkers and containervessels will be up to 30 per centmore energy efficient than today’snewbuildings. an analysis of fuelchoices reveals that 10 to 15% ofnewbuildings delivered by 2020will be able to burn lng fuel. it isalso believed that ships usinglng will increase significantlywhen a global sulphur limit kicksin from 2020 1) .it seems that natural gas is theonly realistic fuel that meetsforthcoming required reductionsin emissions of local pollutants,without using any exhaust gascleaning system.even with stringent safety requirements, danger of pollution from oilexploration activities still exists. This article gives an overview of thenorwegian liability regime for oil pollution, including mandatoryprovisions for allocating such liability. it also explains how mandatoryprovisions limit what parties can agree in certain contracts for work inthe petroleum industry, or contracts for manufacturing or delivery ofrelevant equipment.legislation regarding liability for oil pollution varies from country tocountry and contractors operating within several jurisdictions aretherefore exposed to differing liability regimes. The differences inlegislation must be taken into account when drafting and entering intocontracts. different liability regimes also affect the extent of insurancecover necessary to safely operate within each jurisdiction. in thisarticle, only norwegian legislation is discussed.in norway, liability for oil pollution is regulated mainly by three acts:(i) act of 29 november 1996 no. 72 relating to petroleum activities(the ‘Petroleum activities act’),(ii) norwegian maritime code of 24 June 1994 no. 39 (the ‘maritimecode’), and(iii) act of 13 march 1981 no. 6 concerning waste and protectionagainst pollution (the ‘Pollution act’).in general terms, the petroleum activities act regulates pollution frompetroleum activities, while the maritime code regulates pollution fromships. The pollution act regulates all forms of pollution and does, assuch, supplement the petroleum activities act and the maritime code.liaBility for Pollution damaGe Pursuant to the Petroleumactivities actaccording to the petroleum activities act Section 7-1, pollution damageis defined as:“… damage or loss caused by pollution as a consequence of effluence ordischarge of petroleum from a facility, including a well, and costs ofreasonable measures to avert or limit such damage or such loss …”The term ‘facility’ is defined in Section 1-6 (d) as:“installation, plant and other equipment for petroleum activities, howevernot supply and support vessels or ships that transport petroleum in bulk.Facility also comprises pipeline and cable unless otherwise provided”.with regard to pollution liability, the scope of the term ‘facility’ is furtherdefined in Section 7-1, second subsection, which states:“Ships used for stationary drilling are regarded as a facility. Ships used forstorage of petroleum in conjunction with production facilities are regardedas part of the facility. The same applies to ships for transport of petroleumduring the time when loading from the facility takes place.”Thus, the petroleum activities act applies to liability for oil spills fromall types of installations used for petroleum activities, including fixedplatforms, semi-submersibles and jack-up rigs. it applies to shuttletankers during loading operations, but not before loading or after loadingis complete. once the vessels are loaded, liability for pollution damageslies with the shipowner and is regulated by the maritime code.a. allocation and channellinG of liaBilityaccording to Section 7-3 of the petroleum activities act, “the licensee isliable for pollution damage without regard to fault”. The provision therebyimposes strict liability upon the licensee, without regard to whether,for example, a sub-contractor caused the pollution. The provisionmakes a few exceptions for certain force majeure events, which falloutside the scope of this article.The petroleum activities act Section 7-4 also includes provisions for‘channelling’ liability for pollution damages towards the licensee byThe petroleum activities act applies to liability for oil spills from all types of installations usedfor petroleum activities, including fixed platforms, semi-submersibles and jack-up rigs.phoTo: rainer JenSen/dpa/corbiS1. dnv press release dated 20.06.05at www.dnv.com.24 beacon / decemBer 2012beacon / decemBer 2012 25

legaliSSueS/currenTBy Gregory thomasSenior vice president, head of offshore Syndicategregory.thomas@skuld.com/phoTo: reuTerSnorway’s legal system places liability for petroleum industry pollution on the licensee.severely limiting the right of thirdparties to bring claims directlyagainst a licensee’s subcontractors,employees andother involved parties.B. limited riGhts of recoursea licensee that has covered liabilitycaused by a sub-contractor orother third party would normallyhave recourse against theresponsible party. a licensee’sright of recourse for liabilityunder the petroleum activitiesact is, however, severely limited bymandatory provisions in Section7-5 of the act, which state:“the licensee cannot claim recoursefor pollution damage against“not allcountrieshave equallystraiGhtforwardrules for oilPollutionliaBility”someone exempted from liability pursuant to the rules of Section 7-4,unless the person in question or someone in his service has acted wilfullyor by gross negligence.” 1)even when a person protected by Section 7-4, such as an employee,sub-contractor or someone who has taken measures to avert or limitpollution damage, has acted wilfully or by gross negligence, recoursemay be mitigated “to the extent that this is considered reasonable in viewof manifested conduct, economic ability and the circumstances in general”.including a right of recourse clause in the agreement between theparties may not circumvent the limitation on the right of recourse asSection 7-5, sub-section four invalidates such agreements.P&i cover and liaBility for oil Pollutionfor vessels subject to pollution liability under the maritime code, likesupply vessels or shuttle tankers under transit, liability for pollution iscovered pursuant to Skuld’s standard Statutes and rules (2012) rule14.1. exceptions from the cover are listed in rule 14.2, and rule 14.3,and appendix 5 includes certain limitations as well. additional cover isoffered in rule 14.4.liabilities arising out of oil pollution emanating from mobile offshoreunits not permanently fixed to the seabed, such as semi-submersibleand/or jack-up rigs, drill or construction ships, fpSos, or accommodationunits in support of such units, are covered by Skuld’s offshore Terms& conditions clause 45. exceptions from the cover are included insub-section a, part 3. additional cover is offered in sub-section b, e.g.for pollution caused by blowouts (part 7) and clean-up costs (part 8).conclusionsnorway’s legal system places liability for petroleum industry pollutionon the licensee. furthermore, licensee’s right of recourse against itssub-contractors is limited, unless pollution damages are causedwilfully or by gross negligence.however, not all countries have equally straightforward rules for oilpollution liability. as many oil-service contractors deliver goods andservices in multiple jurisdictions under varying oil pollution liabilityregimes, they should consider including similar provisions to those ofthe petroleum activities act, chapter 7 in their contracts.if the relevant jurisdiction does not have a similar liability regime asthe norwegian petroleum activities act, or it is not feasible to implementsimilar regulations in the contract, contractors should perform additionalrisk analysis before concluding contracts. in any event, a contractormust always ensure that he has sufficient insurance to cover any claimresulting from oil pollution liability.1. english translations by the norwegian petroleum directorate http://www.npd.no/en/regulations/acts/petroleum-activities-act/Skuld offShoreexPandinG serviceSince the establishment of Skuldoffshore in 2008, we have managedto create a growing global clientbase that relies on the service weprovide. our aim then and now isvery simple – not to be the largest,but to be the best in the market.while Skuld offshore is still‘small’ in relative terms, ourcommitment to the industry andthe service we provide are withoutquestion. we have assembled someof the best brains in the business.we are expanding and developingoperations and we are improvingour service to clients no matterwhere they are in the world.staffinG uPwe are delighted to confirm thatmatthew burton has joined ourteam as assistant vice president,client Servicing and marketing.based in our london office,matthew is responsible on a dailybasis for all relationships in thelondon market and in north andSouth america. matthew joins usfrom the north of england clubwhere he was responsible foroffshore activities.more resPonsiBilitychristofer kobro, who has beenwith Skuld offshore from thevery start, will have day-to-dayresponsibility for our northeuropean business, including thevery important market in norway.christofer will continue to bebased in oslo.Skuld offshore is expanding and developing operations. photo shows the team assembled in london.Top row from left: matthew burton, kevin campbell, katinka kure-dziakonski, anne lise Ødegård and katinka mørch granberg.bottom row from left: christofer kobro, oleksandra leginevych, gregory Thomas, milla andrew and ann-charlotte zervens.26 beacon / decemBer 2012beacon / decemBer 2012 27

currenT/perSonnel/fred. olsen & co and skuldtoGether since 1897newSfrom skuld officesaround the worldnew emPloyees & Promotions/chanGescaPitalisinG on our assetskevin campbell, who joined Skuld offshore in 2011,continues to work from our aberdeen office. withexperience of hSe and risk assessment in the offshoreindustry, kevin’s technical input in day-to-day activities,advising potential new clients and simply enhancingour knowledge of offshore risk is invaluable. as akey member of Skuld offshore, his skill set isunique among clubs in the international group.ann-charlotte zervens and oleksandra leginevychprovide all servicing for claims and contract reviews.Their proximity to underwriting within Skuld offshoreenables risks to be uniquely framed inside contractreviews and comprehensive advice provided to ourmembers and clients.114 YearS ofparTnerShip13245 6skuldcoPenhaGen1 / kim frostclaims executivekim, 30, is appointed claimsexecutive. before joining skuld,kim was an assistant attorneyin the shipping, offshore andtransportation department ofinternational law firm gorrissenfederspiel. he holds a master inlaw with a maritime specialismfrom the university of copenhagenand has studied corporate andcommercial law at flindersuniversity in adelaide, australia.skuldhonG konG3 / thomas zhangclaims executive, lawyerThomas, 42, is appointed claimsexecutive, lawyer in skuld (fareast). he is a qualified prc lawyerand master mariner, and holds allm in maritime law and a bsc innavigation from shanghai maritimeuniversity. he spent over ten yearson board container vessels withcosco, five years in the shanghaimaritime law firm sloma & co.and five years in the north ofengland club’s hong kong office.skuldoslo6 / Jaime van der ebclaims executive, lawyerafter a temporary position inskuld hamburg, Jamie is appointedclaims executive, lawyer insyndicate 2. prior to joining skuldhe worked as Trainee solicitor forholman fenwick willan ingeneva and as a dry-cargochartering broker in london andhamburg. Jaime has a master’sdegree in shipping, trade andfinance and is a solicitoradvocateof england and wales./we are often judged by the accuracy of ourdocumentation and the speed that it is produced.here, anne lise Ødegård and milla andrew areessential in producing documentation to thestringent demands of our clients.having two katinkas also makes us unique! katinkakure-dziakonski has been with us for nearly threeyears. during this time, management processesintroduced by her for our daily business have beenessential for our high service level. katinka mørchgranberg joined us earlier this summer to focus onunderwriting and marketing.perhaps, the biggest structural change is my relocationto our soon-to-be-opened office in Singapore. i amexcited about business development generally inasia and can’t wait to get started on developingopportunities created by having a full-time presencein Singapore. asia and Southern asia are importantto Skuld and i cannot be happier at the prospect ofhelping establish Skuld as a real force in the region.skuld offshore Provides the followinG covers/ protection and indemnity – mutual/ protection and indemnity – mou/ protection and indemnity – fixed/ Specialist extensions of cover (mutual/mou/fixed)/ freight, defence and demurrage/ Specialist charterers liability covers/ Specialist covers for the renewables market/eric bruusgaard (left), general manager of fred. olsen brokers, receives copies of the firstpolicies signed with Skuld p&i and Skuld 1897 respectively from Skuld’s president and ceodouglas Jacobsohn (centre) and bernt hellman, active underwriter, Skuld 1897.in 1897, fred. olsen & co. was one of Skuld’sfounding members. last year, 114 years later,the first risk written by Skuld’s new lloyd’ssyndicate, Skuld 1897, was a hull and machinerycontract for the same company.To celebrate the long-established relationship between Skuld andfred. olsen, copies of the first policies were formally handed over toeric bruusgaard, general manager of fred. olsen brokers aS, duringthe housewarming at Skuld’s new head office in oslo earlier this year.eric bruusgaard has since retired and received thanks for his long andhighly valued relationship with Skuld.Two further framed copies of the policies are now on display in Skuld’soffices in oslo and london.fred. olsen & co./ fred. olsen & co. was founded in 1848 by petter olsen (1821 to 1899)/ petter olsen’s son, Thomas fredrik ‘fred’ olsen (1857 to 1933), tookthe business from a few ships to a multinational corporation/ company lost 44 ships in wwi and 28 in wwii/ group interests are mainly in transportation, energy – including renewables– and leisure. companies include bonheur, first olsen Tankers,fred. olsen cruise lines and fred. olsen energy/ group still family run and owned by anette olsen7 8/ skuld GrouP emPloyees214skuldhamBurG2 / aisling fenixsenior claims executive, lawyeraisling fenix, 36, is appointedsenior claims executive, lawyer.aisling joins skuld fromeversheds where she’s worked inboth its newcastle and hongkong offices. before taking herlaw degrees at nottingham Trentand northumbria universities,aisling passed a bachelor inmaritime studies at Johnmoore’s university, england.she has spent several years assailing instructor and has sailedfor ireland in european andworld championships.skuldnew york4 / carolyn elizabeth (Betsy)Bundyassistant vice Presidentbetsy, 34, joins skuld’s new yorkoffice as assistant vice presidentworking primarily with uspersonal injury claims. betsyworked as maritime attorney innew york city for nine years,specialising in personal injurydefence. after attending theuniversity of kansas she earnedher law degree from new englandschool of law in boston.5 / christine aliceaoffice manaGerchristine, 34, joins skuld’s newyork office as office manager.christine worked as medicalauditor for rochester generalhospital and as financial analystfor the university of rochester.christine is hired to manageday-to-day operations withemphasis on accounting andmedical auditing.7 / elisabeth h. normannexecutive assistantelisabeth, 48, is appointedexecutive assistant to themanagement group in oslo. shehas earlier worked as advertisingconsultant in boating magazines‘seilas’ and ‘båtliv’, executiveassistant in pa consulting groupand executive secretary andoffice manager in rs platoumarkets. elisabeth has secretarialtraining with courses in salesand marketing.8 / sigrun hvaalsenior executive salary and hrsigrun, 57, joins skuld as seniorexecutive salary and hr. she hasworked in the health sector,education and marketing, beforeworking with human resources.sigrun is qualified in hrm andhas degrees in business andnursing, with a minor in sociology.28 beacon / decemBer 2012beacon // decemBer 2012 2008 29

newSnew reGulations, current cases and other skuld news9101112131415 169 / aurélie yannicactuaryaurélie, 31, joins the enterpriserisk management team as actuary.she spent the past three years atgenerali in paris as actuary ofthe workers insurance lob, firstworking with business planning,result monitoring and directiveimplementation, and thenreinsurance. aurélie has an mscin mathematics and is a memberof the french institute of actuaries.skuldsinGaPore10 / kjell-Åke augustssonsenior vice Presidenthead of officekjell-Åke augustsson, 48, returnsto skuld as senior vice presidenthead of office for singapore. hefirst joined skuld stockholm in 1991as underwriter and transferred tooslo in 1999 as chief underwriter.in 2000, kjell-Åke left skuld forthe swedish club in gothenburgand later relocated to its hongkong office as deputy managingdirector. he currently worksfrom skuld’s hong kong officeuntil the singapore offices opensin early January 2013.skuld 189711 / tom GrahamunderwriterTom, 32, joins skuld 1897 to underwriteand develop the new portsand terminals (property andbusiness interruption) product.Tom started in insurance as ane&o construction broker atlockton before moving to insurelondonllp to underwrite portsand terminals property withparticular focus on scandinavia andthe americas. Tom holds a degreein business studies and financefrom oxford brookes university.12 / christopher hainesunderwriterchristopher, 27, also joins skuld1897 to underwrite and developthe new ports and terminalsproduct. initially a broker at aon,christopher was an underwriterat insure-london llp, prior tojoining skuld. christopher holdsthe advanced diploma in insurance(acii) and a bachelor of sciencefrom loughborough university,england. he spent his formativeyears in the caribbean beforereturning to the uk to pursue acareer in insurance.13 / Georgina withamrecePtionistgeorgina, 22, is appointedreceptionist for skuld 1897. shepreviously worked in administration/reception at a top medical clinicin belgravia, london.skuld offshore14 / matthew Burtonassistant vice Presidentmatthew, 33, joins skuld offshorein london as assistant vicepresident with responsibility forclient relationships in the uk andnorth and south america.matthew joins from the north ofengland p&i association wherehe developed the club’s offshorebusiness. earlier he worked forthe shipowners club focusing ontheir offshore portfolio. matthewis dip. cii with a bsc in maritimelaw and a hnd in marineengineering. matthew also holdsan oceanmaster’s certificate withcommercial endorsements. hehas sailed professionally with thebT global challenge fleet and onsuper yachts as chief officer.15 / oleksandra leginevychcontracts and claims executiveoleksandra, 24, is appointedcontracts and claims executive,skuld offshore. she has a masterof law (llm) with a specialism inmaritime law from the universityof oslo. internships with lawfirms gist, kennedy & associatesand arzinger & partners, as wellas the ukrainian ministry offoreign affairs, provided workexperience during her studies.16 / katinka mørch Granbergclient servicinG and marketinGexecutivekatinka, 27, is appointed clientservicing and marketing executive.she first joined skuld in 2011 asintern in syndicate 2 while finishingher maritime law degree ataix-marseille university, france.her responsibilities are offshoremarketing, external and internalcommunication, market intelligenceand client servicing. she was aproject manager for the frenchnorwegian chamber of commercein paris and worked as Traineein simonsen law firm. katinkahas a master of law from theuniversity of oslo./ Bwm reGulationsThe ballast water managementconvention has been developedto regulate discharges of ballastwater and reduce the risk ofintroducing non-native speciesinto a port or coastal area. Theconvention comes into effect 12months after 30 countries representinga combined total grosstonnage of over 35% of the world’smerchant fleet have ratified it.This will most probably be in 2013.in march, the uS coast guardpublished a final rule on ballastwater management in uS waters.This became effective on 21 June2012, but the requirements will bephased in over a period of severalyears. The rule applies to mostuS and foreign vessels with ballasttanks operating in uS waters./ tiGhter emission controlsThe north american emissioncontrol area (eca) came intoeffect 1 august 2012. This meansstricter controls on emissions ofsulphur oxide (Sox), nitrogenoxide (nox) and particulate matterfor ships trading off canada andthe uS. There are now threedesignated ecas in effect globally,the other two being in the balticSea and north Sea. The europeanfactsskuld business by region 1)44.2%europe (eX. nordic)22.8%nordic20.0%aSia11.5%americaS1.6%oTher1) excluding Skuld 1897source: skuld GrouPcommission has also proposed arevision to their sulphur directiveby 2015. here, sulphur content offuel used in shipping must belowered from its present 1% to0.1% by 2015./ recyclinGThe hong kong convention forthe safe and environmentallysound recycling of ships wasadopted by 67 imo member statesin may 2009. The conventionenters into force 24 months after15 states, representing 40% ofworld merchant shipping bygross tonnage, have ratified it.To date, the convention has onlybeen signed, subject to ratificationor acceptance, by france, italy, thenetherlands, St kitts & nevis andTurkey./ carGo damaGea cargo damage claim of approx.uSd 530,000 was presented upondischarge in dili, east Timor toSkuld’s member. The club’scorrespondent in darwin, australiaflew out a surveyor to attend jointsurveys. The surveyor providedimportant facts and evidence,which resulted in the claim beingreduced and a strong defenceestablished under the bill of ladingfor the reduced amount. followingcontinuous correspondencebetween claimant and club onthe formal defences and meritsof the cargo claim, the memberwas found not liable due to atime-bar clause. The high cost ofthe surveyor – due to travel toeast Timor – were thereforeclearly justified./ riGht to rectify errors incharterPartiesSkuld has assisted in a disputeunder a voyage charter. The casestarted as a trivial collection ofdemurrage, but the charterersfiled a very significant counterclaim for cargo damage. Thedispute arose from failure to provideenough dunnage for the cargo.The vessel was fixed ‘fioS lSd’(loading, Stowing and dunnaging),but during issuance of the charterparty the ‘d’ disappeared. expertevidence and witness statementsshowed that the error occurred atthe owners’ brokers’ office, but asthe arbitrator found that therewas every indication that it wasthe intention of both parties to fixthe ship ‘lSd’, he found in favourof the owners. This means charterterms have been corrected andresponsibility for dunnaging restswith the charterers. consequently,the charterers’ counter claimmust fail.heavY STormSoff valenciaSeveral members’ vessels werehit by heavy storms off valencia,Spain on 31 September. The Skuldgermany-entered vessels MVCelia and BSLE Sunrise bothgrounded on valencia beach. inaddition, another german member’svessel, SP Dublin, suffered minor/ new offices in londonand PiraeusSkuld uk and Skuld 1897 havemoved from 15 lime street tonumber 40, while Skuld hellashas relocated to another waterfrontproperty in piraeus – 95 aktimiaouli. See full address detailson our website./ Get skuld newsfor e-mail updates or an rSSfeed, please register through linksat the foot of our web pages.read more www.skuld.comSkuld germany-entered vessels MV Celia and BSLE Sunrise aground on valencia beach.damage from a vessel collision.a representative from Skuld’s riskmanagement team coordinatedonsite, while Skuld’s casualtyresponse team assisted fromhamburg.read morewww.skuld.com30 beacon / decemBer 2012 beacon / decemBer 2012 31

Skuld.comSkuldmagazineneXT iSSueout march 2013The arcTicwithin the next decade, global warmingmay transform the arctic from an inaccessiblefrozen desert into a seasonally navigable ocean.vessels using the northern sea route havealready increased tenfold over the last two years.in the next issue, we focus on the arctic froma legal and practical perspective, and ask what itmeans in terms of risk.the skuld GrouP provides marine andenergy insurance to shipowners and clientsworldwide. liability insurance is provided bySkuld p&i and Skuld offshore, while Skuld1897, a syndicate at lloyd’s, provides furthermarine, energy and cargo covers. The headoffice for global operations is located in oslo,with additional offices in aberdeen, bergen,copenhagen, hamburg, hong kong, london,new York and piraeus.24-houremergencYnumber+47 952 92 200call this number if you havean emergency where skuldcan assist.Beacon Back issuesfor back issues of beacon, please referenceour online library located at the foot of our webpages or go to www.skuld.com/beacon.skuld.comskuldmAGAzineseptember 2012 / i sue 202cArGoA complicAted relAtionship / 6GettinG the blue cArd / 20previous editions are availablefor download in pdf format.p.o. boX 1376 vikano-0114 oSlonorwaYTel +47 22 00 22 00faX +47 22 42 42 22Skuld.com