Facts: Swiss Marine time-chartered The Mineral Libin and sub-time-chartered it to Transfield. While mooring in a Chinese port, the ship allided with another ship and a buoy. The charterers sued the sub-charterers for breach of the safe port warranty and in September 2010 started an English arbitration. In September 2010, the sub-charterers were declared bankrupt. The arbitration dragged on until 2016, when the tribunal ruled against the sub-charterers. The P&I Club Skuld was the insurer for the sub-charterers' liability and the insurance contract was subject to Norwegian law.

Since Norwegian law made it possible to proceed directly against the insurer in the event of the insured’s bankruptcy, the charterers filed a pre-trial demand with the club back in September 2010, and in September 2016 filed a lawsuit in a Norwegian court. The club objected that the statute of limitations should be calculated according to the general Statute of limitations Act 1979 and constitutes 3 years. The charterers argued that the limitation period for the direct claim against the club must be calculated under the special Insurance Contracts Act 1989 and was equal to the limitation period for the original claim against the insured (since the sub-time charter was subject to English law, the limitation period is 6 years under the English Limitation Act 1980).

Supreme Court of Norway: the charterers’ claim is allowed, although the general statute of limitations applies (3 years).

According to the special Norwegian Law on Insurance Contracts, the provision on direct claims against liability insurers is dispositive. However, in the event of the insured’s bankruptcy, the rule on the right of direct action is mandatory. However, the Law does not indicate that the limitation period applicable to direct claims is in this case mandatory as well.

The parties to insurance contracts are free to determine themselves whether third parties have a direct claim against the insurer. Skuld’s Rules expressly stated that the Insurance Contracts Act did not apply to them. Since the provision of the Law on the right to a direct claim is mandatory, it still applied. However, the provision of the Law on the limitation period applicable to direct actions is a default rule and was excluded by Skuld’s Rules. Therefore, the general limitation period (3 years) applied to the direct claim.

On the facts of the case, the 3-year limitation period against the insurer began to run only in 2015, since it was only then

HR-2020-257-A (case no. 19-053865SIV-HRET)

Supreme Court of Norway that the charterer learned about the testimony of the ship's master necessary for their claim. Therefore, the charterer's claim was time barred.

Comments: despite the purely Norwegian context in which the dispute arose, this case may also be of interest to Russian readers, since it touches upon a number of issues not fully resolved under Russian law.

First, are direct claims against P&I clubs allowed under Russian law? The provisions of the Russian Civil Code on direct claims against the insurer of tort liability are contradictory. On the one hand, Art. 931(3) of the Civil Code states that a contract insuring tort liability is deemed concluded in favor of the victim of the tort, i.e. this is an agreement in favor of a third party, and the third party in any case has the right to claim directly against the debtor under the contract (here – the P&I club).

On the other hand, Art. 931(4) of the Civil Code states that the right of direct action against the insurer for "compensation for harm" accrues in favour of the victim of a tort only if insurance of tort liability is compulsory. The prevailing position is that the victim of a tort has a direct claim only if insurance is mandatory. In several cases where direct claims were filed against P&I clubs, the courts dismissed them, but only on the basis that insurance for a specific type of liability was not mandatory (for example, tug liability insurance¹⁰). In other cases, the courts allowed direct claims, but only because the right of direct action was specifically provided by a convention (for example, the 2001 Bunker Convention¹¹). Despite the lack of case law that directly addresses this issue, there is no reason to believe why direct claims against P&I clubs are impossible if they are based on mandatory liability insurance.

Second, what is the limitation period for direct claims? The prevailing position is that if such claims are brought by the injured person himself, then they arise from the insurance contract. According to Art. 966(2) of the Russian Civil Code CC, the limitation period for such claims is 3 years. However, if the insurer of the victim of the tort (e.g. a hull and machinery insurer) brings a direct claim against the liability insurer after becoming subrogated to that claim, then the claim arises out of the insurance contract between the tort victim and his own insurer.¹² According to Art. 966(1) of the Civil Code, the limitation period for such claims is 2 years.

The problem with direct claims against the P&I clubs is that Clubs’ insurance rules are most often subject to English law, while English law also determines the limitation period¹³ - but only if the claim "arises out of the contract of liability insurance." Therefore, if the claim against the Club is brought by the tort victim, Russian limitation periods will not apply. Instead, English limitation periods (6 years) or periods provided in an international convention will apply.

However, if the claim against the Club is brought by the subrogated insurer of the tort victim, then the claim will not be treated as “arising out of the ■

Notes