LIABILITY

1. LIABILITY Spring 2008 Faculty of Law, University of Oslo Research fellow Hanne Sofie Logstein (based on the material worked out by research fellow Anne Karin Nesdam)

2. Scope of the lecture • Norwegian Tort Law in general and the four liability regimes in the Petroleum Act • Compensation to Norwegian fisheries • Comparisons between the liability regimes • Liability – the Abandonment Phase • Liability – financial Security of Claims

3. Liability • Main principles of Norwegian tort law • Non-statutory/developed in case law • Some codified in the Tort Act • Three conditions for damages • Basis of liability • Proximate cause (causality) • Financial loss • Three main grounds/basis for liability • Negligence • Strict liability • Vicarious liability • Four liability regimes in the PA

4. Compensation to Norwegian fisheries • From the oil companies liability system, annual report 2005 -2006 • The number of cases has decreased since 1984 • The reason is changes in the liability system, stricter demands for evidence and clearing of trash from the sea floor • Since 1998 some variations in the number of cases due to more underwater installations and fishing gear getting ruined

5. Liability to fisheries –seismic data acquisition • Two working groups • One has submitted a report proposing new measures in connection with acquisition of seismic data on the NCS • The other has discussed the liability regime in the PA and the need for law revision • Conclusion; Recommend to keep today's liability regime but do some improvements

6. Comparisons (1) • Common features – chapter 7 & 8 and section 10-9: • Type of liability: Strict liability • The responsible party: The licensee • Exemption: • Section 8-2: In case of occupation of fishing fields, the responsible party is the Norwegian State

7. Comparisons (2) • Common features – chapter 7 & 8 and section 10-9 (continued): • Joint and several liability • Section 10-9: No channelling provisions – the licensee and the contractor joint and severally liable • Section 7-3 and 7-4: the licensees in the licence group, but channelling provisions (operator first) • Section 8-3, cf. 8-4: different licence groups/ several fields

8. Comparisons (3) • Common features – chapter 7 & 8 and section 10-9 (continued): • Indemnification provisions • Section 10-9: No • Section 7-5: Yes, towards other participants but only in cases of wilful misconduct or gross negligence • Section 8-3(2): Yes, in case of pollution and waste from vessels (supply and support)

9. Comparisons (4) • Common features – chapter 7 & 8 and section 10-9 (continued) • Functional scope: Differs (obviously!) • Section 10-9: general in scope, limited by chapter 7 and 8 • Chapter 7: Petroleum pollution damage (exclusive) • Chapter 8: Compensation to Norwegian fishermen for damage due to petroleum related activities (exclusive)

10. Comparisons (5) • Common features – chapter 7 & 8 and section 10-9 (continued): • Economic scope: Unlimited liability • Exemptions: • Section 10-9: equates the liability of the perpetrator • Chapter 7: Discretionary reduction by courts; section 7-3(3) • Chapter 8: Time limited; section 8-2

11. Comparisons (6) • Common features – chapter 7 & 8 and section 10-9 (continued): • Geographical scope: • Within Norwegian jurisdiction, cf. PA section 1-4 • Exemption: • Section 7-2: Also sea areas outside Norwegian jurisdiction provided loss is sustained by Norwegian interests

12. Liability – the Abandonment Phase (1) • Legal basis: PA section 5-4, cf. 5-3 • PA section 5-3, cf. 5-1: Procedure with regard to the decommissioning of field installations • Decommissioning plan by the licensee (5-1) • Decision by the MPE (5-3) • Choices: Decommissioning, left at site, continued petroleum activities, other use • Appointment of those responsible (licensee, owner and /or user) for the implementation • Implementation • If continued petroleum activities • the ordinary liability rules apply

13. Liability – the Abandonment Phase (2) • PA section 5-4 • Liability for negligence • Unlimited liability • Liable for: Damages occurring during decommissioning, or, if the installation is left at the site, future damages • Liable: the responsible party pursuant to section 5-3 • Joint and several liability • No channelling or indemnification provisions

14. Liability – the Abandonment Phase (3) • The party responsible, PA § 5-4, cf. § 5-3 and § 5-6 • The liable party: • Not just the licensee • Subject to case-by-case decisions by the MPE • Number of responsible entities • Joint and several liability • The liability may be taken over by the State based on an agreed financial compensation • The State has a right to take over the licensee’s fixed facility when a licence expires, PA §5-6

15. Liability – the Abandonment Phase (4) • The extent of the liability • Unlimited responsibility • No channelling provisions • Claims may be directed against any of the responsible parties • The Ministry may decide that the licensee and any other responsible party shall provide security for possible liability, § 10-7

16. Liability – the Abandonment Phase (5) • The relationship between the liability regimes • Petroleum activity - disposal prior to licence expiry • Overlap, i.e. all liability regimes apply • Chapter 7 • Chapter 8 • Section 10-9 • In the abandonment phase • Section 5-4 applies • The installation is used for other purposes than petroleum activity: Only the liability regime in section 5-4 applies • Disposal after licence expiry/other use • Only the regime pursuant to section 5-4, cf. section 5-3, applies

17. Liability – the Abandonment Phase (6) • Summing up § 5-4 • Deviates in many ways from the other liability regimes • The liable party is not only the licensee • The Ministry decides who is liable • There is no channelling provisions • Deviates from the principle of strict liability • It is not solved if tort law in general is applicable

18. Liability – Financial Security of Claims • Guarantee • The MPE may require a guarantee from the parent company of the licensee, cf. PA section 10-7 • Insurance • The licensee has a duty to carry insurance, PR section 73