Introduction of Class Action
The class action regime under Norwegian law was introduced in 2008, as part of the new Norwegian Dispute Act. The rules regarding class action are set out in Chapter 35 of the Dispute Act.
Organisations or foundations may bring an action in their own name in relation to matters that fall within their purpose and normal scope (Section 1-4, Dispute Act). The Dispute Act also allows for joinder of claims and multiple parties as claimants or defendants (Chapter 15, Dispute Act). Such measures were available also prior to 2008 under the previous Dispute Act of 1915.
There is a long-standing practice under the 1915 legislation that gradually developed and clarified the circumstances under which representative actions could be brought. Two landmark cases are especially worth noting, both related to combatting environmental damage.
The first case was handled by the Supreme Court in 1980 (published in the Norwegian Law Report Norsk Retstidende (Rt) – with case reference Rt-1980-569). It concerned the establishment of a hydro-power plant in an area with significant values for nature conservation and also influenced areas traditionally used by the indigenous Sami people for reindeer herding. The action was brought by a nature conservation organisation (Norsk Naturvernforbund – the Norwegian organisation for the preservation of the nature). In the action, which was directed against the government, the organisation claimed that the permission to establish the power plant was invalid. The Supreme Court allowed the action, although it did not directly concern the organisation's own rights and duties. Hence, the organisation was allowed to bring the case as a representative for the relevant interest that would be negatively affected by the power plant. In another case, 12 years later (published in Rt-1992-1618), the Supreme Court stated that such representative action may also be brought against private entities. This case was brought by another organisation (Fremtiden i Våre Hender – the Future in our Hands). Although this organisation had a much wider scope in its statutes than Norsk Naturvernforbund, it could still be regarded as a representative organisation to bring the action. This time, the action was brought against a private entity to get compensation for damage to the environment.
The central legal question the Supreme Court considered in both cases was if the organisation had “legal interest” in bringing the action. This was answered in the affirmative. This has paved the way for representative actions in other fields of law, like consumer law.
An alternative to representative action, which has been available in Norway for a long time, is to cumulate parties in to one joint action. This has commonly been done, for example, in civil cases concerning the acquisition of land or rights for use of land for large infrastructure projects (roads, powerlines, etc). In such cases, there may be hundreds of parties on one side (usually as defendants). It has also been quite common that several parties jointly act as claimants in cases concerning compensation for similar damage, but seldom more than between ten and 20 claimants. This could be neighbours who have suffered similar damage to their properties from nearby construction work or people who have bought a similar defective product.
There is also a rather long tradition in Norway of handling many similar cases by identifying one or a few as a pilot case/test case and to stay the remaining cases. The final decision in the pilot case will then usually be considered applicable to the remaining cases for the similar topics. But this applicability does not follow from the procedural rules themselves. It will depend on the willingness of the parties.
The different types of actions described above do not have binding effect on anyone else. The binding effect is limited to the parties to the proceedings. The collective element is not as distinct as the class action regime.
The main reason for introducing the class action regime was the identification of the need to facilitate cost-effective access to courts for certain types of small claims (typically consumer claims) that were not considered practical or reasonable to litigate on individual basis prior to 2008. All the different approaches described above will usually require a claim of a rather substantial amount or concern an important principle question. Especially in consumer cases, the claim from each affected person may be so small that it is not really a realistic alternative to bring as an individual claim. On the other hand, there may be a very high number of persons that suffered identical damages. Combined, it would clearly be feasible to have the claims adjudicated as a group, where there is a large number of parties. As a result, the costs and the risk of paying opposition's costs, if the case is lost, may be very small for each of the claimants.
The Norwegian class action regime was inspired by the US regime (Federal Rule 23), with some practical differences:
Norway is a member of the EEC and will most likely adopt the EU Collective Redress Regime if it is deemed to be relevant to the EEC.
Directive (EU) 2020/1828 of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers is being considered for incorporation into the EEA-agreement and would subsequently be incorporated into Norwegian law. Norway has a dualistic legal system. Thus, the directive would have to be incorporated through formal Norwegian law to have legal effect in Norway.
Certain elements in the Directive, such as a list of organisations authorised to bring a class action, is contrary to the traditional Norwegian approach. Incorporation of the Directive into Norwegian to law would be expected to be an addition to the existing rules and not to limit current law and practice on who may bring a class action.
Chapter 35 of the Norwegian Dispute Act covers class actions.
The Dispute Act also regulates joinder of several parties to one ordinary action. These rules are set out in Chapter 15.
Chapter 35 of the Norwegian Dispute Act regarding class action is not limited to certain types of disputes or areas of law, but the ordinary criteria for filing suits must be met. This means that the action must involve a legal claim and the claimant must demonstrate a genuine need to have the claim decided against the defendant (Sections 1-3, Dispute Act).
The court must also approve the class action. If it turns out that further proceedings are clearly inappropriate to be heard pursuant to the class action rules, the court may reverse its approval.
For all class actions in Norway, it is a prerequisite that the factual or legal basis is identical or substantially similar for the participants. The claimants must also be so numerous that a class action procedure is the most appropriate method of hearing the claims. These conditions will typically occur in consumer cases, and consumer cases are also the category of case to have been handled most frequently by class action. Class actions have also been applied for tax cases. There seem to be a growing number of environmental or climate-related actions before the Norwegian courts. A class action may be suitable, for example, if a large group of people has been subject to environmental damage and will claim recovery of their loss from the entity responsible for the damages. A class action may also be suitable if a group of people should seek a judgment against public authorities for violation of their human rights.
A class action under Norwegian law is an action that is brought by a class on identical or substantially similar factual and legal bases, approved by the court as a class action (Section 35-1 (2), Dispute Act). A class action may also be directed against a class (Section 35-15, Dispute Act).
Class actions in Norway shall be brought by submission of a writ of summons to a district court before which a person who qualifies for class membership could have brought an ordinary action (Section 35-3 (2), Dispute Act).
Class actions may be brought by any person who fulfils the conditions for class membership if approval to bring the action is granted, or by organisations and associations, and by public bodies charged with promoting a specific interest, provided that the action falls within its purpose and normal scope (Section 35-3 (1), Dispute Act). Hence, the Norwegian Consumer Authority has brought several class actions related to consumer rights.
The overall procedure for bringing a class action is submission of a writ of summons to a district court (see 4.1 Mechanisms for Bringing Collective Redress/Class Actions).
The court shall, as soon as possible, decide whether to approve or reject the class action. If the class action is approved, the court shall do the following in its ruling:
If it transpires in the further proceedings in the case that it is clearly inappropriate to hear the case pursuant to the rules on class procedure, or that the scope of the claims in the class action ought to be redefined, the court may, at its own initiative, reverse or amend its ruling (Section 35-4 (3), Dispute Act).
After the court's approval and directions for the class action, the case will enter into an ordinary case preparatory phase. The parties may submit evidence, demand disclosure, etc. The merits of the case will then be tried during an oral hearing.
In civil cases, the court will often encourage the parties to try and solve the dispute through judicial mediation (Chapter 8 Part II, Dispute Act). The court may also, at any stage of the case, consider the possibility of a full or partial amicable settlement (Section 8-1, Dispute Act). This also applies for class actions. It seems though that the relative number of class actions that enter into court mediation is low, much lower than in ordinary civil disputes.
Any person who fulfils the conditions for class membership, if approval to bring the action is granted, has standing to bring a class action. In addition, organisations and associations, and public bodies charged with promoting a specific interest, provided that the action falls within its purpose and normal scope pursuant to Section 1-4, (Section 35-3 first paragraph, Dispute Act). There is a real limitation and narrowing of the public bodies that may have standing, fulfilling the “promoting a specific interest” requirement. The Norwegian Consumer Authority or the Norwegian Environment Agency will typically fulfil this requirement. In contrast, a governmental ministry will not be considered to be promoting a specific interest and will thus not have standing.
Actions usually take place on an opt out basis (Section 35-6, Dispute Act), but opt in is also available on certain conditions (Section 35-7, Dispute Act).
Size of Class
There are no limits on the number within a class.
After a class action has been approved by the court, the court shall, by notice, announcement or other method, ensure that the class action is made known to those who may join it or who are class members (Section 35-5, Dispute Act). The notice shall state the time limit for registering in the class register.
In opt in cases, class action shall only include those who are registered as class members (Section 35-6, Dispute Act). The application for registration must be submitted within a time limit.
In opt out cases, the court can decide that persons who have claims within the scope of the class action shall be class members without registration in the class register, if the claims individually involve amounts or interests that are so small that it must be assumed that a considerable majority of them would not be brought as individual actions, and if the claims are not deemed to raise issues that need to be heard individually (Section 35-7, Dispute Act). Persons who do not wish to participate in the class action may withdraw.
The court can decide that subgroups shall be established if the class consists of a large number of class members and the same or substantially similar legal or factual issues that differ from the issues that apply to the class as a whole apply to several of them (Section 35-10 second paragraph, Dispute Act).
As far as opt in-cases are concerned, the rule is that at any time before the main hearing, the court may, in special instances, approve a delayed registration unless regard for the other parties strongly suggests otherwise (Section35-6 (2), Dispute Act).
For opt out class actions, the members will be defined by the court's decision that describes the scope of the class. Thus, it will not be possible to join the action if one falls outside the scope the court has given.
Any member of the class is free to withdraw before the judgment of the merits. Until this point, a class member may withdraw without waiving their substantive claim.
The courts have powers to approve or reject a class action and to decide upon the mechanism of the class action (opt in or out). Apart from that, the courts have ordinary management powers on the basis of the Norwegian Dispute Act and the Courts Act.
If collective redress is not sought in a class action procedure but through individual claims, the court has a rather wide discretionary power to unite proceedings of test cases. The court may also stay proceedings in other cases awaiting final judgment in a test case.
The length of proceedings will depend on the circumstances of each case.
However, class actions often take up to several years to be carried through. The main reason for this is that the approval decision (including the choice of opt in or opt out mechanism) and the judgment on the merits may be subject for appeals. The appeals court will have a wide competence to make its own assessment of all the conditions for bringing class actions, and this may contribute to widespread use of appeals against decisions that allow class actions. In addition, the time required will depend to a degree on the court's case load.
Some recent cases may illustrate the above uncertainties.
Changes to Length/Timetable
There are no specific rules in place for class actions, but there is an overall goal that all cases shall be handled as swiftly and efficiently as possible.
When the case is approved as a class action, the court will regularly summon the counsels to a planning meeting to fix a timetable for the further case preparation and the main hearing. This is to ensure that the case progresses to the main hearing without undue delay. This time schedule may be changed.
Disposal of Proceedings
The court may decide to reverse its class action approval order on certain conditions. If it transpires in the further proceedings that it is inappropriate to hear the case pursuant to the rules on class procedure, the court may reverse its approval. The threshold is high – it must be demonstrated that it is “clearly inappropriate” to hear the case as a class action (Section 35-4 third paragraph, Dispute Act). The court may also amend its class action approval if the court finds that the scope of the claims in the class action ought to be redefined (Section 35-4 third paragraph, Dispute Act).
The Norwegian Dispute Act also contains a number of ordinary measures available also for class actions that in principle may impact on the timetable, such as rescheduling, stay of proceedings, simplified judgment proceedings, etc.
The class representative has a right and a duty with respect to the costs of the class action (Section 35-12 (1), Dispute Act). This means that the class representative will be liable for any legal costs awarded to the defendant under the ordinary rules regarding responsibility for legal costs (Chapter 20, Dispute Act). The class representative is entitled to remuneration for their work and to a refund for their disbursements, including the fees and disbursements of the class's legal counsel (Section 35-13 (1), Dispute Act). A claim for the class representative's costs can be made against the opposite party to the extent that the opposite party is ordered to pay costs. Such claim can also be made against the class members on certain conditions (Section 35-14 (1), Dispute Act). In opt out cases, class members are liable towards the class representative for costs imposed on them pursuant to Section 35-12 and for remuneration and coverage of disbursements determined pursuant to Section 35-13 in so far as such liability is a condition for registration. There is no corresponding basis for holding class members liable towards the class representative in opt in cases.
There are no specific rules regarding litigation funding under Norwegian law, but it is assumed that it is permissible.
Third party funding is not very common in Norway, but there has been a development on this issue over the last few years. There is no legally-binding case law regarding third party funding of class actions in Norway, but this may change in a few months. The association Alarmkundeforeningen (Alarm Customers organisation) has brought a class action against providers of alarm services that were previously fined for cartel behaviour. The case is funded by a third party, and the association has requested the court to approve the third party's consideration as part of the decision to approve the class action. It is expected that the Supreme Court will make a decision on this matter in late 2022 or early 2023, hopefully providing clarification with regard to third party funding of class actions.
There are ethical guidelines established by the Norwegian bar association that restrict lawyers' fee arrangements from being dependent on the outcome of the case (ie, payment of a percentage of the claim amount is prohibited).
There are no specific rules regarding class actions, meaning that disclosure and privilege will be governed by the ordinary rules of the Dispute Act.
The parties shall ensure that the factual basis of the case is correctly and completely explained. They shall provide such accounts and present evidence that is necessary to fulfil this duty, and they have a duty to give testimony and provide access to evidence. A party shall also disclose the existence of important evidence that is not in their possession and of which they have no reason to believe that the opposite party is aware. This applies irrespectively of whether such evidence favours the case of the party or that of the opposite party (Section 21-4, Dispute Act).
The court cannot hear evidence from lawyers (Section 22-5, Dispute Act).
In addition, there are a number of rules regarding prohibited and exempted evidence set out in Chapter 22 of the Dispute Act. Among these are trade secrets (Section 22-10, Dispute Act).
It should also be noted that the parties may not submit evidence that covers what occurred at judicial mediation (Section 8-6, Dispute Act).
The ordinary rules for appeals and reopening as set out in Part VI – Remedies of the Dispute Act apply for class actions.
This means that appeals may be brought against any class action judgment, interlocutory order and decision.
There are no specific rules or mechanisms for settlements regarding class actions as far as opt in-actions are concerned.
The court must approve settlements in opt out-actions (Section 35-11 (3), Dispute Act).
Rulings on claims raised in a class action will qualify as ordinary judgments under the Dispute Act (Section 19-1 (1), Dispute Act), meaning it is not different in nature compared to judgments in general. The provisions of the Enforcement Act regulate the enforcement of judgments.
A judgment in a class action is binding on the parties to the dispute, including the class members at the time of the ruling (Section 35-11 (1), Dispute Act). The class members include those who have claims or obligations that fall within the scope of the class action as defined by the court and are are included in the action either pursuant to Section 35-6 that require registration to become a class member (opt in) or to Section 35-7 that require withdrawal from class membership for persons who do not wish to participate (opt out). Withdrawal takes effect when notification of withdrawal is received by the court. A class member cannot withdraw after their claim has been determined by a final and enforceable ruling (Section 35-8, Dispute Act).
It appears that there are no policy developments or initiatives, besides the fact that Norwegian authorities are currently in the process of considering whether the EU Directive 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers will be incorporated into Norwegian law.
There are no legislative reforms in progress.
Brexit has had no clear impact on the Norwegian system of class actions.
COVID-19 has had no clear impact on class actions as such.