Section 8-6 of the Insurance Contract Act of 1989 (“ICA”) contains a special rule on the expiry of limitation periods for direct action claims against liability insurers. Direct action claims against Norwegian P&I insurers that, with sufficient clarity, have waived this provision in their insurance terms, can thus become time-barred pursuant to the rules under the Act relating to the limitation period for claims, as is the case in Swissmarine. The Supreme Court did not find it necessary to assess whether sections 3 and 10 or section 9 should apply, but resolved the case after a specific assessment of when the injured party had sufficient “knowledge” of the actual basis for the claim for damages.
The ICA provides wide opportunities for direct action claims against the tortfeasor’s liability insurer. In most insurance agreements, these rules are mandatory. However, in maritime insurance agreements, it is possible to depart from ICA, so that the insurer is protected against direct action claims, cf. section 1-3 c) of the ICA. All maritime insurance companies in Norway have made use of this possibility by including so-called “pay-to-be-paid” clauses and by generally establishing that the ICA does not apply to the insurance agreement. However, there is an important exemption from this possibility to depart from ICA when the insured (the alleged tortfeasor) becomes “insolvent”, cf. section 7-8 of the ICA. In such cases, the injured party may claim damages directly from the insurer. It has long been clarified that a direct claim is a separate claim where the limitation period must be interrupted separately, cf. Rt. 1997 p. 7. However, it has not been clarified whether the special rule on limitation pursuant to section 8-6 of the ICA falls within the exemption for liability insurance pursuant to section 7-8 of the ICA and therefore is a mandatory provision.
The Supreme Court has now decided that ICA’s special rule on the expiry of the limitation period can be waived in maritime insurances if the insured (the alleged tortfeasor) is insolvent. After a specific assessment, the Supreme Court concluded that Skuld had waived section 8-6 of the ICA with “sufficient clarity” in its insurance terms.
The parties agreed before the Supreme Court that the expiry of the limitation period for the direct claim was not regulated by the provisions on limitation periods in Skuld’s rules, and the Act relating to the limitation period for claims therefore applied.
The Supreme Court did not find it necessary to assess whether sections 3 and 10 or section 9 of the Act relating to the limitation period for claims apply in such cases. “Knowledge” of the actual basis for the claim for damages is key to when the limitation period starts running pursuant to the relevant provisions, and the case was resolved after a specific assessment of when such “knowledge” was available. Among other things, the justice delivering the leading opinion stated that the captain’s explanation must have been of key importance when assessing whether there was liability, and thus also whether a direct action claim against Skuld would succeed. The “knowledge requirement” was therefore not considered as fulfilled before the date of the submission of the captain’s statement, which entailed that the limitation period had not expired – regardless of whether it was based on section 3 and 10 or section 9 of the ICA.
Swissmarine clarifies that Norwegian maritime insurers can waive the provisions on limitation periods under section 8-6 of the ICA through their insurance terms even when the insured (alleged tortfeasor) is insolvent. Expiry of the limitation period can then be assessed pursuant to the Act relating to the limitation period for claims – such as for Swissmarine. An injured party that has a direct action claim must then comply with the provisions under the Act relating to the limitation period for claims, and not the ICA. The time the knowledge was acquired regarding the basis for liability can be decisive for when the limitation period starts to run. A determination of the date is discretionary and involves uncertainty. In practice, this uncertainty entails that agreements to extend the limitation period are sought with the P&I insurer. If the P&I insurer does not agree to such extension, the injured party should take measures to interrupt the limitation period well in advance of the expiry of the limitation period based on “sufficient knowledge” as a point of departure for the limitation period. As shown by Swissmarine, the “knowledge assessment” is very discretionary.