International Arbitration 2019 Comparisons

Last Updated August 19, 2019

Law and Practice

Authors



Advokatfirmaet Haavind AS regularly resolves large litigation cases before the Supreme Court, courts of appeal, district courts, courts of assessment, and both national and international arbitration tribunals, including the International Chamber of Commerce (ICC). The firm has a large litigation and arbitration department, made up of more than 30 lawyers of different backgrounds, many of whom have been admitted to the Supreme Court and are experienced as judges. The team assists in resolving legal disputes relating to real estate law, labour law, tax law, IP rights, contract law and public procurement, among other areas.

In general, and depending on the type of case, most disputes in Norway are brought before the state courts. However, international arbitration is a preferred dispute settlement mechanism for corporate or international disputes, and disputes within certain sectors, such as oil and offshore.

Domestic parties favour litigation over arbitration.

For international contracts, parties prefer international arbitration as the dispute resolution method to ensure the enforcement of awards. From a Norwegian perspective, international arbitrations occur especially within shipping, oil and offshore, and post M&A disputes.

The arbitral tribunals in Norway undergo continuous technical development, with digital factual and legal abstracts and case documents, interaction on online platforms, the utilisation of digital illustrations, animations, etc, as well as new presentation formats and tools becoming increasingly common.

Another trend that may affect arbitration in Norway is the revitalisation of the Oslo Chamber of Commerce (OCC), with the aim of increasing the number of arbitration cases within this institute. The same applies to the new Nordic Offshore and Maritime Arbitration (NOMA) initiative, which has presented best practice rules from a Nordic perspective and introduced arbitration rules. These developments may lead to fewer ad hoc arbitrations and an increasing number of institutional arbitrations in Norway.

Generally, international arbitration is more common for complex contractual disputes. The onshore construction, maritime, energy and oil and gas industries are experiencing significant international arbitration activity in 2018/19.

These industries are characterised by the participation of international companies, and have a tradition of using international arbitration. As an alternative to Norwegian courts, arbitration may provide more comfort for international companies and ensure enforcement for Norwegian companies involved with foreign companies.

Furthermore, a common factor for those industries is that contracts are often extensive, in regards to both monetary sums and the duration of the contract work. Disputes arising in connection with such contracts are often complex and extensive, in addition to being technically demanding. Arbitration may be considered more favourable in these industries, as it allows the parties to choose arbitrators with specialised competence and avoid the risk of extensive appeal hearings.

In Norway, ad hoc arbitration tribunals are the most common. The most frequently used arbitral institutions are the International Chamber of Commerce (ICC), the Stockholm Chamber of Commerce (SCC) and the Oslo Chamber of Commerce (OCC).

These institutions are traditionally used within the industries experiencing the most international arbitration, and are well known to the parties.

The Arbitration Act of 2004 governs international arbitrations in Norway, and is based on the UNCITRAL Model Law of 1985. Most of the Model Law provisions are reflected in the Arbitration Act, but the amendments to the Model Law adopted in 2006 have not yet been incorporated.

The national legislation does not diverge from the Model Law in any significant way.

The Arbitration Act was passed in May 2004 and entered into force on 1 January 2005, and has only undergone minor changes in January 2007 and December 2007 in connection with changes to the Dispute Act and the Criminal Procedure Act. There is no pending legislation that may change the arbitration landscape in Norway.

There are no specific legal requirements for an arbitration agreement between professional parties to be enforceable under the laws of Norway. Contrary to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Norwegian law does not require arbitration agreements to be in writing. The assessment of whether an arbitration agreement has been entered into will be concluded based on the ordinary principles for the interpretation of contracts. However, if there is an oral arbitration agreement and the other party disputes this agreement, for practical reasons the claimant will struggle to appoint an arbitral tribunal.

Dispute resolution by arbitration may be agreed, inter alia, by referring to standard terms and conditions containing an arbitration provision.

Arbitration agreements between a professional party and a consumer must be entered into in writing, after the dispute has arisen.

The arbitration agreement can only cover disputes between the parties based on specific legal relations, such as contractual obligations already made.

A dispute is arbitrable under Norwegian law if it can be settled by agreement between the parties. Since parties are generally entitled to settle commercial disputes by way of agreement, arbitrability is seldom an issue in commercial arbitration in Norway. Examples of issues that are incapable of settlement include those concerning third party interests, declarations of bankruptcy, IPR disputes regarding the existence or invalidity of patents or trade marks, claw-back disputes and taxation.

Some types of disputes can only be referred to arbitration if both parties agree after the dispute has arisen – eg, dismissal of employees other than the chief executive; see the Norwegian Employment Act.

Pursuant to the Arbitration Act, the private law effects of competition law may be tried by arbitration. This includes the question of whether an agreement between two parties is invalid, and whether a violation of competition law regulations may lead to damages claims.

Arbitrability is determined both by Norwegian law and by the law governing the arbitration agreement. Unless otherwise agreed, the arbitration agreement is governed by Norwegian law if the seat of the arbitration is Norway.

The national courts do not generally apply any formal requirements for the enforcement of arbitration agreements. As an example, there is no requirement that an arbitration agreement must be entered into in writing. However, the party referring the dispute to arbitration must substantiate that an arbitration agreement has been entered into.

Courts in Norway usually enforce arbitration agreements.

An arbitral clause may be considered valid even if the rest of the contract in which it is contained is invalid. Norwegian law gives a basis for the partial revision of contracts, so one or more provisions in a contract may be set aside or revised while others remain valid. The question of whether a contract containing an arbitral clause is invalid may be referred to arbitration based on its arbitral clause.

If the agreement is invalid in its entirety (eg, due to the agreement being entered into based on fraud or coercion), the invalidity will also include the arbitral clause.

The Norwegian Arbitration Act is based on the rule of the separability of arbitration clauses contained in invalid agreements.

Pursuant to the Arbitration Act, the arbitrator must be qualified to act as an arbitrator, be independent of the parties and be impartial. The parties may agree to waive these requirements, but for all practical reasons that is never done.

If the parties have not agreed specifically otherwise, the following rules apply:

  • the arbitral tribunal will consist of three arbitrators;
  • to the extent possible, the parties appoint the arbitral tribunal jointly. If the parties are unable to agree on the three arbitrators that will make up the arbitral tribunal, each party selects one arbitrator, and the two arbitrators select the president; and
  • if it is not possible to establish the arbitral tribunal based on these principles, each party may demand that the state courts appoint the outstanding arbitrator(s). The court’s appointment cannot be appealed.

If the parties agree on the arbitrators, the courts cannot intervene. If the parties do not manage to agree, the courts can intervene, as described in 4.2 Default Procedures, above.

Unless the parties have agreed to a different procedure, the challenge of an arbitrator shall be submitted in writing to the arbitral tribunal within 15 days of the party becoming aware of the appointment of the arbitrator and the circumstances on which the challenge is based. The challenge shall state the reasons for the challenge. Unless the challenged arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

If a challenge is unsuccessful and the parties have not agreed to a different procedure, the challenging party may bring the issue before the state courts within one month of receiving notice of the decision rejecting the challenge. The state court shall determine the issue by way of interlocutory order, which is not subject to appeal.

The challenge may not subsequently be invoked as grounds for invalidity or an objection to the recognition and enforcement of the award.

While such issue is pending before the courts, the arbitral tribunal – including the challenged arbitrator – may continue the arbitral proceedings and make an award.

Grounds for challenging an appointed arbitrator are justifiable doubts related to the arbitrator’s impartiality and independence, or lack of agreed qualifications. If the objecting party has participated in the appointment of the arbitrator, objections can only be made based on circumstances that came to the party’s knowledge after the arbitrator was appointed.

If the parties have not agreed specifically otherwise, the arbitrators shall be impartial, independent from the parties and qualified to act as arbitrators. The requirements under the Norwegian Arbitration Act are based on the international standards. When assessing an arbitrator’s independence or impartiality, international sources of law are also deemed relevant, including the IBA Guidelines on Conflicts of Interest in International Arbitration, even though there is no case law confirming this.

In certain circumstances, and on a case-by-case basis, an arbitral tribunal may be disqualified due to lack of impartiality and/or independence. General Norwegian case law regarding the independence and impartiality of judges in the state courts may guide the assessment of arbitrators. There is a large amount of such case law assessing different circumstances, including for expert lay judges.

Upon being contacted with a request to act as an arbitrator, the candidate must declare any circumstances that may lead to justifiable doubts as to their impartiality or independence. From being appointed and throughout the arbitration process, an arbitrator must immediately inform the parties of any new such circumstances.

An arbitrator may only be challenged if there are circumstances that give rise to justifiable doubts about his or her impartiality or independence, or if he or she does not possess the qualifications agreed on by the parties.

A party may challenge an arbitrator in whose appointment it has participated only for reasons of which it became aware after the appointment was made.

Please see 3.2 Arbitrability, above.

Pursuant to the Arbitration Act, a challenge to the arbitral tribunal’s own jurisdiction is decided by the tribunal itself. The arbitral tribunal also rules on any objections to the existence or validity of an arbitration agreement. The respondent will have to address the issue in the statement of defence; failure to do so will result in the respondent being regarded as having recognised the arbitral tribunal.

If the arbitral tribunal finds that it has jurisdiction, the respondent may bring the issue before the state courts.

If there is any doubt regarding the arbitration agreement, it may be advisable for the claimant to bring the case before the state courts to have a final decision regarding the jurisdiction issue.

If a party challenges the arbitral tribunal’s jurisdiction and the tribunal decides that it has jurisdiction, such decision may be brought before the state courts by either party within a month of receiving notice of the ruling. The ordinary courts determine the issue by interlocutory order.

If the claimant brings the case before the state courts, and the court finds that the arbitral tribunal has jurisdiction, the parties will have a final decision on the matter. The arbitral tribunal will base its jurisdiction on the final decision from the state courts.

The state courts of Norway generally show reluctance to intervene.

The parties may go to court to challenge the jurisdiction of the arbitral tribunal as soon as a case has been filed, and at the latest in the party’s first submission regarding the merits of the case. While the issue is pending before the courts, the arbitral tribunal may continue the arbitration process and submit its award.

Judicial reviews for questions of admissibility and jurisdiction are made de novo – ie, from the beginning. In other words, questions of admissibility and jurisdiction are not limited to “clearly erroneous” decisions or similarly relaxed standards of review. However, if arbitration has been initiated (ie, if the respondent has received the request for the dispute to be referred to arbitration), the case shall only be heard if the court finds it obvious that the arbitration agreement is null and void, or that the case cannot be dealt with by arbitration for other reasons.

At the request of a party, the Norwegian state courts shall dismiss any attempted court proceedings initiated in breach of an arbitration agreement, as long as the request is made as early as possible during the court proceedings. If the party’s request is made later on in the court proceedings, the request shall be dismissed according to the Norwegian Dispute and Mediation Act. The court shall hear the case if it finds that an arbitration agreement is null and void, or that the agreement for other reasons cannot be effectuated.

The Norwegian state courts will generally be reluctant to allow court proceedings in breach of an arbitration agreement.

Norwegian law does not allow an arbitral tribunal to assume jurisdiction over individuals or entities that are neither party to an arbitration agreement nor signatories to the contract containing the arbitration agreement.

The arbitral tribunal may order any parties to take such interim measures as the tribunal may consider necessary based on the subject matter of the dispute, at the request of a party. Such interim measures include orders to maintain or restore the status quo pending determination of the dispute, to preserve evidence that may be relevant, or to refrain from certain acts (eg, disposing of assets), as well as orders requiring certain acts. The arbitral tribunal’s decisions in respect of interim relief are not enforceable. In practice, however, the parties often comply with such orders from the tribunal.

Pursuant to the Norwegian Arbitration Act, the state courts may order preliminary or interim relief, even if a dispute is subject to arbitration. As the state courts’ decisions are enforceable, as opposed to the arbitral tribunal’s decisions on interim relief, bringing such requests before the state courts may be a preferred alternative, especially in urgent matters.

The Norwegian state courts can also grant interim relief in aid of foreign seated arbitrations, as long as they have jurisdiction. For decisions regarding interim relief, legal domicile for the defendant will normally be required.

The Norwegian rules related to preliminary / interim relief are quite extensive and provide the state courts with substantial discretion regarding the type of preliminary or interim relief.

The Norwegian Arbitration Act does not explicitly address the use of emergency arbitrators, but there is nothing in the legislation preventing the parties from using emergency arbitrators. 

Decisions of emergency arbitrators are binding between the parties, but not enforceable by state courts.

According to the Norwegian Arbitration Act, the state courts can also intervene in order to grant interim relief after an emergency arbitrator has been appointed. 

The arbitral tribunal may order the applicant of the interim measure to provide security for any consequences thereof, and may reduce or revoke an interim measure. If the claim to be secured by the interim measure did not exist when the measure was decided, the party that requested the measure should indemnify the other party for the loss suffered due to the measure. The latter is a special rule under the Norwegian Arbitration Act that differs from the UNCITRAL Model Law; however, the parties may agree to derogate from this rule.

The arbitral tribunal may instruct the parties to provide security for its costs, unless otherwise agreed between the tribunal and the parties. The arbitral tribunal may – wholly or partially – terminate the arbitration if the required security is not posted. If one party fails to post security in accordance with the tribunal’s instructions, the other party may post the security in its entirety or bring the dispute before the state courts, unless the parties have agreed otherwise.

Chapter 6 of the Norwegian Arbitration Act contains rules governing the procedure of arbitration, which entail that the parties shall be treated equally at all stages of the arbitral proceedings, and that each party shall be given a full opportunity to present its case. These requirements must be complied with by the tribunal, regardless of any agreement between the parties.

Furthermore, the arbitral tribunal shall generally conduct the arbitration in a manner that it considers appropriate, within the time limits set out in the arbitration agreement and the Arbitration Act. The arbitral tribunal or the president of the tribunal shall prepare a plan for the further arbitration process, as soon as they have been appointed and after discussing it with the parties. However, these requirements are not mandatory, and the parties could agree otherwise.

If the place of arbitration has not been agreed between the parties, it shall be decided by the arbitral tribunal, taking into account the practical conduct of the case, including the prospects for the parties to participate in oral hearings. The arbitral tribunal may meet at any place to deliberate, to examine witnesses, experts or parties, or to inspect evidence.

If the language of the arbitration has not been agreed, the arbitral tribunal shall decide on the language for all written statements, oral hearings and all rulings or other communications by the arbitral tribunal. If the language is Norwegian, the proceedings may also be conducted in Swedish or Danish, unless otherwise agreed.

All statements, documents and information supplied to the arbitral tribunal by either party will also be communicated to the other party at the same time. If the tribunal receives material from third parties, copies shall be sent immediately to the parties.

Unless otherwise agreed between the parties, the following steps are required:

  • The claimant shall submit a statement of claim to the arbitral tribunal within an agreed time limit, or within such time limit as the tribunal determines. The statement of claim must include the presented claim, the factual and legal grounds on which the respondent bases his claim, the evidence he will rely on, and the requested outcome of an award.
  • The respondent shall submit a statement of defence within an agreed time limit, or within such time limit as the tribunal determines. The statement of defence must state whether the claim is accepted or contested, and whether there are objections to the arbitral tribunal handling the case. The reply shall also state which outcome the respondent requests of an award, the factual and legal grounds on which the respondent bases his rejection, and the evidence he is relying on. If the respondent is presenting a claim for which he requests an award, the provisions on statements of claim and statement of defence apply accordingly for his claim.
  • Either party may include new claims into the arbitration proceedings, present new grounds for presented claims and introduce new evidence.

The Arbitration Act generally contains few limitations on the power of the arbitrators: they may decide on their jurisdiction, impartiality, independence and competence, and on the matters of the dispute. The arbitrators issue a final and binding award on the questions of the dispute, including legal costs and fees.

However, the arbitrators are bound by the agreement entered into with the parties, and have a corresponding duty to act loyally towards the parties. This duty means that the arbitrators must ensure that they have the necessary information and understanding of the case to issue a final award. The arbitrators have a duty to inform the parties immediately of any circumstances that may give rise to justified doubts regarding their impartiality, independence or competence.

The Arbitration Act does not require particular qualifications or contain other requirements for legal representatives appearing in Norway.

The general approach to the collection and submission of evidence at the pleading stage and at the hearing is that each party is entitled to produce such evidence as they wish. The Arbitration Act does not have any specific rules regarding discovery, disclosure, privilege or the use of witness statements, and does not give a basis for any discovery, disclosure or privilege processes, but such processes may be agreed between the parties. As Norway is a civil law country, there is no tradition for discovery processes, as is typical in common law countries. However, in international arbitration seated in Norway it is not uncommon for the parties to agree on a disclosure procedure – eg, agreeing to apply the IBA Rules on the Taking of Evidence in International Commercial Arbitration.

Documentary evidence is usually presented by the legal counsels during the oral hearing, as part of their opening statements. The parties are not required to produce witnesses, but normally do so. Generally, witnesses give statements after the opening statements during the oral hearing. The parties are always given the opportunity to cross-examine the witnesses brought before the tribunal. The tribunal may also direct questions to the witnesses. In international arbitration seated in Norway, written witness statements are also normal. The witness statements during the hearing are mainly for cross-examination.

The parties are responsible for substantiating the case and their claims, and are entitled to present such evidence as they wish.

The arbitral tribunal may reject evidence that is obviously irrelevant for the determination of the case. Furthermore, the tribunal is entitled to limit the presentation of evidence if the extent is unreasonably disproportionate to the importance of the dispute or the relevance of the evidence.

The arbitral tribunal decides whether to hold oral hearings or to decide on the basis of written proceedings. Either party may request an oral hearing. In Norway, there will normally be only one oral hearing, which may continue for as long as is considered necessary. The hearing normally consists of opening statements by each party, witness testimonies and closing statements. The arbitral tribunal may appoint one or more experts to report to it on specific issues, at its discretion.

The rules of evidence that apply to arbitration are not the same as in state court proceedings, regardless of whether the arbitration is domestic or international. The Arbitration Act only includes one paragraph regarding evidence, so the rules of evidence in arbitration are less extensive and less detailed than the rules of evidence applicable to domestic matters in court.

The Arbitration Act does not give the arbitral tribunal powers of compulsion to order the production of documents or require the attendance of witnesses. Arbitrators cannot administer oaths, and a witness is not obliged by law to give testimony before an arbitral tribunal. However, the arbitral tribunal may request the state courts to compel the production of evidence or the attendance of witnesses.

There is no difference between parties and non-parties as far as the obligation to produce evidence or testify is concerned.

Arbitral proceedings and the award are not deemed confidential, unless otherwise agreed between the parties for each arbitration. It is common for the parties to include confidentiality provisions in the arbitration agreement.

Third parties may only attend hearings if and to the extent agreed between the parties.

Whether information in arbitral proceedings can be disclosed in subsequent proceedings will depend on the individual agreement between the parties.

An arbitral award in Norway must be made in writing and signed by all arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal shall suffice, as long as the reason for an omitted signature is stated in the award. The award shall further state its date and the place of arbitration, and shall be sent to the local district court to be filed in its archives.

Unless the parties agree otherwise, the award shall state whether it is unanimous and the reasons on which it is based. If the award is not unanimous, it shall be stated who is in dissent and to which issues the dissent relates. An award on agreed terms (a settlement) does not need to state the reasons on which it is based. The award shall also be delivered to the parties, unless otherwise agreed.

The legal requirements for an arbitral award do not establish any time limits on delivery of the award.

There are no limits on the types of remedies that an arbitral tribunal may award, unless otherwise agreed by the parties.

According to the Interest on Overdue Payment Act, parties are entitled to delay interest on claims governed by Norwegian law, unless otherwise agreed. Interest is applied from the term of payment and until payment is made. The percentage is set by the government each half year; as of 1 July 2018, it is 8.50% per year.

The arbitral tribunal has complete discretion in establishing the division of the legal costs between the parties, unless otherwise agreed. The arbitral tribunal’s decision in this respect is final, and cannot be appealed. The general practice is to award costs in favour of the party that is deemed to – wholly or mainly – have won the dispute. If none of the parties are deemed to have mainly won the dispute, the general practice is for each party to bear its own legal costs and for the parties to split the fee of the arbitral tribunal equally.

There is no provision in Norwegian legislation giving a basis for appealing an arbitral award, unless the parties have agreed to such in the arbitration agreement.

There is, however, a provision entitling either party to go to the Norwegian civil courts to overturn an arbitral award if there is a basis for claiming that the award is invalid. The grounds of invalidity are limited to the grounds set out in Article 34 of the Model Law.

The parties cannot agree to exclude or expand the scope of appeal or challenge under the national law.

The state courts will not review the merits of a case; any judicial review is limited to whether or not the arbitral award is invalid. If the award is found to be invalid, the dispute must be referred to arbitration again, or to the state courts if the arbitration agreement is held to be invalid.

Norway signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards without any reservations on 14 March 1961.

In Norway, arbitral awards are enforced as any other judgment – ie, by submitting a request for enforcement to the enforcement authorities. The arbitral award constitutes the basis for enforcement.

If the award has been set aside by the courts in the seat of arbitration, the award may not be enforced in Norway.

A state or state entity may not successfully raise a defence of sovereign immunity at the enforcement stage.

The courts will generally enforce arbitral awards, unless enforcement must be denied based on the grounds of invalidity set out in Article 34 of the Model Law. The threshold for refusing enforcement on public policy grounds is extremely high, and is reserved for circumstances where enforcement would contradict the fundamental principles of the Norwegian legal system. To date, there are no examples of enforcement being denied.

The Norwegian Arbitration Act does not provide for class action arbitration or group arbitration.

The Norwegian Bar Association’s Code of Ethics applies to all Norwegian lawyers and associates conducting proceedings in Norway, including arbitration proceedings. There are no other ethical codes or professional standards that apply for arbitrators.

There is no legislation or mandatory rules in Norway regulating third-party funding, but third-party funding is not uncommon in Norway.

There is no legislation regulating consolidation in the Norwegian Arbitration Act. Therefore, the consolidation of separate arbitral proceedings requires the parties’ consent.

As a starting point, third parties cannot be bound by an arbitration agreement or award in Norway. However, if the subject matter is transferred to a third party, the third party will be bound by the arbitration agreement, unless otherwise agreed. The same applies if the contract between two parties to an arbitration agreement constitutes the legal basis for a third party’s legal position (direct claim). In such cases, the third party will have to accept that potential disputes based on the same legal relation shall be solved by arbitration.

If a third party is bound by an arbitration agreement, that party will, to the same extent, be bound by an award regarding the same matter.

The national courts do not have the ability to bind foreign third parties.

Advokatfirmaet Haavind AS

Advokatfirmaet Haavind AS
Bygdoey Alle 2
N-0257
Oslo
Norway

+47 22 43 30 00

post@haavind.no https://haavind.no/en
Author Business Card

Law and Practice

Authors



Advokatfirmaet Haavind AS regularly resolves large litigation cases before the Supreme Court, courts of appeal, district courts, courts of assessment, and both national and international arbitration tribunals, including the International Chamber of Commerce (ICC). The firm has a large litigation and arbitration department, made up of more than 30 lawyers of different backgrounds, many of whom have been admitted to the Supreme Court and are experienced as judges. The team assists in resolving legal disputes relating to real estate law, labour law, tax law, IP rights, contract law and public procurement, among other areas.

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.