Sanctions 2024 Comparisons

The sanctions sector in Norway is continuously evolving, but is still primarily affected by Russia’s invasion of Ukraine and related sanctions against Russia. Norway has a separate sanctions regime to that of the EU, but, with certain delays and exceptions, implements the EU’s sanctions against Russia into its own system.

The COVID-19 pandemic has not affected the sanctions sector materially in 2024.

The main trends in Norway have involved the implementation of sanctions in response to Russia’s full-scale invasion of Ukraine. These were introduced by the EU against Russia and Belarus and have been implemented into Norwegian law through regulations, with certain exceptions and adaptations.

New Directorate of Export Controls and Sanctions

Norway is currently establishing its new Directorate for Export Control and Sanctions (DEKSA) under its Ministry of Foreign affairs to keep up with the increased demand for implementing sanctions regulations, handle cases, provide guidance and carry out export controls in accordance with applicable laws, regulations and treaties. DEKSA is set to be operational from 1 January 2025. Until then, the responsibility for sanctions and export controls will remain with the Ministry of Foreign Affairs.

Sanctions as National Security

Sanctions and export controls are also highly relevant as a matter of national security in the current geopolitical landscape, and risks of circumvention are also heightened in Norway, as for the rest of the world. The Norwegian Police Security Service (PST) has stated that foreign states will try to acquire Norwegian technology, and concerns are rapidly growing around covert procurement to secure sensitive Norwegian goods, services, and technologies. The primary motivation behind such attempts is to enhance military capabilities. Norwegian enterprises engaged in the production, development, and marketing of items attractive to such foreign states find themselves at the front line of a silent battle. The trading of such sensitive exports is highly regulated under stringently applied national and international laws. Nevertheless, concerned countries devote substantial resources to sidestep these regulations using various circumvention methods. Key areas of interest include not only explicit military goods but also dual-use goods, products and technologies suitable for both civilian and military utilisation. For instance, PST highlights that inertial navigation equipment, crucial for maintaining stability on modern vessels in harsh maritime conditions, also plays a pivotal role in the accuracy of missile navigation. Thus, Norwegian companies must be vigilant in assessing the potential military applications of their technologies also outside the scope of list-based export controls. The technology sectors particularly at risk span sensor and detection, maritime, semiconductor, aerospace and satellite, as well as drone and communication technologies. Additionally, emerging disruptive fields such as artificial intelligence, maritime autonomics, biotechnology, and quantum computing are highlighted.

In response to these increasing threats, Norway, alongside other western countries, has reinforced its sanctions and tightened export controls, especially against Russia. Despite these measures, Russia’s dependence on Western technology and expertise to sustain its military capabilities persists. Adaptations in its approach, such as lowering technology quality requirements, have expanded the scope of potential Norwegian enterprises that could be targeted by these procurement strategies. Covert acquisitions often involve obscured end-user identities, with multiple intermediaries, including companies within European countries, being used to cloak the ultimate recipient of the procured goods or technology.

Enforcement of Sanctions

PST is responsible for criminal enforcement of sanctions and export controls, and has publicly stated that many Norwegian companies are under investigation for potential breaches of sanctions, although the final outcomes of most of these investigations are still undecided and not yet public. The only public example of a corporate criminal penalty for breach of the Russia sanctions is a case where a Norwegian car dealer had sold an electric vehicle at a value above EUR50,000 to a Russian individual, in breach of the ban on exporting luxury goods to Russia. The car dealer accepted a fine of NOK50,000 corresponding to the estimated profit made from the same. In the court system, the enforcement landscape has been involving Russian citizens operating small drones on Norwegian territory, as such activities have been considered to be in breach of the ban of Russian controlled aircraft in Norwegian air space. Further, sanctions have been an integral part of court cases involving anti-money laundering requirements.

Norway is a significant maritime nation, with shipowners, marine insurers and large commodity players within and outside the energy sector. In addition, Norwegian industry is at the forefront of defence, dual-use and advanced energy technology, as referred to earlier. These sectors are particularly affected by the sanctions imposed by the Norwegian regulators.

Sanctions are implemented by the Norwegian Ministry of Foreign Affairs, which also handles relevant exemptions and licences. As of 1 January 2025, Norway’s new Directorate for Export Control and Sanctions (DEKSA) will also be organised under the Norwegian Ministry of Foreign Affairs. DEKSA will be responsible for issuing licences and guidance relating to the export of defence-related goods, technology, services and knowledge. It will also provide guidance and process individual cases in accordance with the sanctions regulations. Policy development and international coordination will remain with the Ministry of Foreign Affairs.

Reporting obligations relating to sanctions usually follows the specific sanctions regimes that may impose various reporting obligations. In addition, certain actors, such as finance institutions, could be subject to reporting obligations pursuant to Anti Money Laundering Regulations for suspicious transactions. Generally, a report under the Norwegian Sanctions Act and relevant sanctions regulations is filed with the Ministry of Foreign Affairs. As of 1 January 2025, reports will most likely be filed with DEKSA, although this is not confirmed.

As of today, a report concerning freezing obligations is required by filling out a form issued on the website of the Ministry of Foreign Affairs. The form should be sent by email to the Ministry of Foreign Affairs at the email address sanksjoner@mfa.no. Confidential information, such as the name of the listed person, should not be included in the subject field of the email, as this may appear in the Ministry of Foreign Affairs’ public mail journal.

There have been a few significant court decisions in Norwegian courts the past three years, as follows.

The Norwegian Supreme Court

Several cases have been rendered regarding the interpretation of whether the flight ban concerning Russian-registered aircrafts also apply to Russian citizens flying drones. One case (HR-2023-1246-A) was in respect of a British-Russian citizen who was prosecuted for flying drones over Svalbard. A Supreme Court majority of three judges concluded that drones fall under the category of “aircraft”, and that the flight ban’s alternative aimed at “any non-Russian-registered aircraft” does not entail a requirement that the aircraft must be registered. Two judges dissented, and held that the prohibition did not apply to the drone use in question. The question was also dealt with by the Supreme Court at an earlier stage in connection with a decision by the lower courts to release the same person under investigation for operating of drones on Norwegian territory (HR-2022-2089-U) after the Court of Appeal had released the individual who had been charged with flying drones over Norwegian territory on the grounds that drones were not registered, and were therefore not covered by the Sanctions Regulations. Unlike the Court of Appeal, the Supreme Court found that the aircraft would not have to be registered to be covered by the prohibition and, accordingly, the Court of Appeal’s ruling was overturned.

The judgments shed light on the Norwegian Supreme Court’s interpretation method for Norwegian sanction regulations based on EU law. Further, the judgments deal with the general principle of legal certainty.

Another interesting Supreme Court case not dealing directly with sanctions, but with anti-money laundering regulations is HR-2024-761-A. The case dealt with companies involved in the production of hatchery fish that were notified by their insurance company that their operational insurance would not be continued due to an obligation to terminate the customer relationship according to Norwegian Anti-Money Laundering act. The companies, initially owned by Russian interests, had been transferred to a Norwegian company. The insurance company reasoned that the actual ownership was unclear, and that customer measures according to the Anti-Money Laundering regulations could not be implemented. The companies sought a temporary injunction claiming that the insurance could not be terminated, and initially succeeded in the Court of Appeals. However, the Supreme Court overturned this decision, stating that the Court of Appeals had erred in its interpretation by focusing on a broader assessment of money laundering risk, rather than on the specific duties in a specific paragraph of the Anti-Money Laundering act. Moreover, the Court of Appeals was wrong in assuming that real beneficiaries need not be identified. The decision of the Court of Appeals was thus reversed.

District and Appeal Court Judgments

There have been several cases in the lower courts directly or indirectly dealing with sanctions, as follows.

• Numerous convictions related to the operation of drones by Russian citizens.
• A Norwegian bank was acquitted by Hordaland District Court. The Norwegian Police Security Service (PST) and the prosecution had accused the bank of not complying with sanction regulations concerning a deposit of NOK46,000 made in 2020 into an account opened by a lawyer. The account was in the name of an individual on a sanctions list, and the funds were collected by the individual’s family to pay his lawyer in another jurisdiction. However, due to the individual being listed by the UN as associated with terrorist organisation Al Qaeda, the bank eventually blocked outgoing transactions from the account. PST deemed this action insufficient, and imposed a fine of NOK1 million for violating sanction rules. The bank was, however, acquitted in the District Court.
• A professor with background in Iran employed at a Norwegian university was acquitted by the Borgarting Appeals Court of violating export control regulations and sanctions against Iran, after being sentenced to jail in the District Court. The charges alleged that the professor provided services and technical assistance related to technology requiring an export license from the Ministry of Foreign Affairs to four Iranian visiting researchers. This assistance included guidance on using a scanning electron microscope (SEM) and advising on research concerning certain metals. The court concluded that the technology was not listed in the export control regulations and that the visiting researchers did not receive the technological knowledge necessary to develop any listed goods. The services provided by the professor were also found not to enhance a country’s military capabilities. General knowledge about basic research tools does not closely relate to the development of military capabilities under the relevant export controlregulations. While SEMs are listed under the Iran Sanctions regulations, the court decided that knowledge about their usage does not fall under the export control sanctions because it pertains to publicly available information. The professor was also acquitted of charges related to aiding a data breach.

As mentioned above, the Police Security Authority is currently investigating many cases relating to potential violation of sanctions. The outcome of these cases is undecided, but we expect that there will be an increase in enforcement cases relating to sanctions and export controls in the coming years.

In addition, the risks of circumvention and covert procurement activities are heightened today, and likely to remain so in the years to come, as further detailed above.

To challenge a listing under Norwegian sanctions law, a person or entity must first ensure that they meet certain criteria. They must be either a Norwegian citizen, a resident of Norway, a company registered in Norway, have been listed at Norway’s initiative, or be significantly affected by Norway’s implementation of international sanctions.

If these criteria are met, the individual or entity can submit a written request to the Ministry of Foreign Affairs explaining why they believe the listing is incorrect. This request must be well-justified and detailed. The Ministry will then review the request following the procedures outlined in the Public Administration Act.

Should the Ministry decide to reject the request, the individual or entity has the right to appeal. This appeal is directed to the King in Council, who will review the case under the rules provided in the Public Administration Act.

In cases where the listing involves binding UN sanctions, the Ministry can only attempt to facilitate delisting by advocating on behalf of the listed individual or entity to the relevant bodies within the United Nations.

Additionally, if the person or entity wishes to challenge the validity of their listing through the courts, they can file a lawsuit under the provisions of the Dispute Act. In situations where sensitive information is involved, the King may order that such information be disclosed only to a specifically appointed lawyer, who will represent the listed person in the proceedings. This lawyer is appointed by the court and is paid by the state.

The available remedies are delisting or amendment of the listing.

There are no specific time limits, other than the general requirements pursuant to Norwegian Administrative Law and, in the event of judicial review, the Dispute Act. If a delisting is rejected and brought to the judicial system, the process can take several years. We are not aware of any examples of delisting processes in Norway.

Several sanctions regimes include export and import bans that could also apply to services. In addition, Norway has implemented export controls based on various treaties. Norway’s export control system is governed by the Export Control Act and the Export Control Regulations, with guidelines provided for processing applications for exporting arms, military equipment, and related technology and services. The Ministry of Foreign Affairs administers these regulations, manages legislation updates, and oversees the issuance of export licences. The system mandates that certain products, technologies, and services outlined in List I for defence-related items and List II for dual-use items cannot be exported without appropriate licensing. These lists are updated regularly based on international export control regime agreements.

Licenses are also required for brokering services involving the transfer of items between foreign countries, for certain services and for exports under “catch-all” clauses which cover products designed or modified for military use. Exporters must provide proper documentation regarding the end use of items before a license is granted. The Section for Export Control in the Ministry of Foreign Affairs is specifically tasked with overseeing the application and implementation of these control measures. As mentioned above, a new directorate, DEKSA, is under establishment.

See 5.1 Services.

The general understanding, based on Norwegian background law, is that there is no firm case law yet confirming that sanctions as a force majeure event would constitute a bar to performing contractual obligations. For sanctions to be a force majeure event, the contractual requirements in the relevant force majeure clause, relating to, among others, foreseeability and reasonable endeavours, would need to be fulfilled.

There is no case law yet confirming that sanctions are a relevant legal obstacle for enforcing judgments or arbitral awards. Based on Norwegian background law, the rules of ordre public may be invoked if the enforcement of a relevant judgment goes against Norwegian sense of justice. This was asserted in a case put before the Borgarting Appeals Court (LB-2023-18169), which concerned the enforcement of arbitral awards from the ICC and a judgment from the Court of Appeal in Paris. In the judgments, which concerned commercial disputes between a Norwegian company and the State of Yemen, the State of Yemen was awarded larger amounts. The Norwegian company argued that payments to Yemen would be in violation of applicable sanctions. The Court of Appeal did not agree. No one in the Presidential Leadership Council (PLC), claiming to represent the State of Yemen, was on the sanctions list, and there was no evidence of a concrete and real risk that persons on the sanctions list would be favoured by the payments. Finally, the Norwegian company argued that payments to PLC would be contrary to “public policy” because the money would probably be used to finance human rights violations and war crimes that occurred in the ongoing conflict. The Court of Appeal found that it was not obvious that enforcement of the judgments in question was at all contrary to “public policy”, but that a decision to enforce the judgments would in any case not be “contrary to the rule of law”, including the state’s responsibility to safeguard the rights of its citizens and not to contribute to violations of humanitarian law. The appeal against the District Court’s decision to confirm and enforce the judgment was rejected.

Designations are made by including consolidated sanctions lists, eg, the UN or the EU, into Norwegian regulations adopted by the Norwegian Ministry of Foreign Affairs. The delisting process according to the Norwegian Sanctions Act is also administered by the Norwegian Ministry of Foreign Affairs.

The test of ownership and control is similar to that of the EU. This means that assets owned, held or controlled by designated persons will be frozen, and that the prohibition to indirectly make funds or economic resources available to designated persons on a rebuttable basis also applies to, for example, entities owned or controlled by a designated person or entity.