Among professional parties in Norway, arbitration is frequently used and is often the preferred dispute resolution method. Arbitration is, by example, the prevailing dispute resolution method in the reinsurance market and within the M&A sector in Norway, and is also generally preferred by parties in other large commercial agreements.
The potential for a quicker dispute resolution process compared to the process offered by the Norwegian ordinary courts, the possibility to influence the composition of the arbitral tribunal and the potential for a confidential process are three main reasons why parties choose to have disputes resolved by arbitration in Norway.
Domestic parties, however, most frequently rely on ad hoc arbitration as prescribed by the Norwegian Arbitration Act of 14 May 2004 No 25 (the "Arbitration Act") and less so on institutional arbitration proceedings, which in Norway are offered by, for example, the Oslo Chamber of Commerce.
International arbitration through foreign arbitration institutes is rarely agreed between domestic parties. Nevertheless, it is worth noting that it is not entirely uncommon that Swedish or Danish arbitrators are involved in purely Norwegian matters and vice versa. This is due to the similarities between the legal systems in the Scandinavian countries.
In matters where either of the parties is located outside Norway, there is a tendency that parties resort to the use of international arbitration through one of the recognised arbitration institutes in Europe – for example, the SCC in Stockholm or the ICC in Paris.
The COVID-19 pandemic may have contributed to more disputes being referred to arbitration, notably within the reinsurance and construction industries. However, we have not observed that COVID-19 has impacted the use of international arbitration in Norway.
In addition, COVID-19 has impacted the conduct of arbitral proceedings generally, as well as the conduct of ordinary court proceedings. This is due to the widespread acceptance of holding remote hearings through videoconferences. Case management meetings, both in arbitral proceedings and in the ordinary courts, have generally been held as remote meetings, and several large disputes have even had oral hearings conducted remotely.
As mentioned in 1.2 Impact of COVID-19, the reinsurance industry is seeing an increase in the number of disputes referred to arbitration. As reinsurance is an international industry, this is leading to an increase in the number of international arbitration proceedings. A possible explanation for this trend is the combination of a tightening insurance market as well as the impact of the COVID-19 pandemic, which has raised new and previously unresolved legal questions.
We are not seeing a decrease in the level of international arbitration as a result of the COVID-19 pandemic.
The Arbitration Act is based on ad hoc arbitration, and many international arbitrations are therefore not resolved under the auspices of a Norwegian arbitral institution.
Those international arbitrations that use an arbitral institution typically do so through the Oslo Chamber of Commerce (OCC) Institute. An alternative to the OCC Institute is the Nordic Offshore and Maritime Arbitration Association (NOMA), which was established in 2017.
The national courts of Norway have no courts designated to hear disputes related to arbitrations, whether international or domestic.
Where the Arbitration Act grants competence to the ordinary courts (eg, in case the parties are unable to agree on an arbitral tribunal), it is the courts that would have been competent in the absence of the arbitration agreement that will have competence to decide on the specific matter.
If no Norwegian courts would have had competence in the absence of the arbitration agreement, Oslo District Court will have competence to decide on the matter.
The Norwegian Arbitration Act of 14 May 2004 No 25 (the "Arbitration Act") governs arbitration in Norway – both domestic and international arbitration.
The Arbitration Act is structurally and in content based on the UNCITRAL Model Law, but there are some differences, which is in part due to the fact that the Arbitration Act governs both domestic and international arbitration proceedings.
Two key items on which the Arbitration Act differs from the UNCITRAL Model Law relate to (i) the requirements to the arbitration agreement, and (ii) the confidentiality of proceedings.
In regard to the requirements to the arbitration agreement, it should be noted that the Arbitration Act does not require an arbitration agreement to be in writing. This may raise certain challenges if an award from a Norwegian arbitral tribunal based on an oral arbitration agreement is to be enforced in a country that requires arbitration agreements to be in writing.
In regard to the confidentiality of the proceedings, it is important to note that the Arbitration Act states that arbitral proceedings and any resulting awards are not confidential unless the parties agree otherwise for the specific dispute. Consequently, an agreement regarding confidentiality must be entered into after the dispute has arisen.
There have been no significant changes to the Arbitration Act in the past year and there is no pending legislation that may change the arbitration landscape in Norway.
There are no requirements regarding the form of the arbitration agreement pursuant to the Arbitration Act. As such, even an oral arbitration agreement may be enforceable. On the other hand, the courts in Norway have been somewhat restrictive in determining that the parties have entered into an arbitration agreement; see 3.3 National Courts' Approach.
Under Section 10 of the Arbitration Act, the enforceability of the arbitration agreement depends upon whether one of the parties is a consumer. An arbitration agreement is not binding for a consumer if it was entered into prior to the dispute.
It follows from Section 9 of the Arbitration Act that only legal matters which are subject to the parties' unrestricted right of disposition may be determined by arbitration. In general, the parties' unrestricted right of disposition follows the lines of what parties may agree upon in a contract. A matter relating to children's rights is a typical example of a matter that cannot be referred to arbitration between private parties.
The question of whether the parties have an unrestricted right of disposition can sometimes be subject to doubt, and as such the arbitrability of a legal matter must be decided on a case-by-case basis. For instance, a dispute between a limited liability company and one of its shareholders regarding the validity of a General Assembly decision is argued in legal theory not to be arbitrable.
Another example of a matter not subject to the parties' right of disposition is the validity of private rights which have been achieved by public decision, such as patents or trade marks. Furthermore, the Working Environment Act Chapter 17 contains provisions for civil procedure which preclude labour matters from arbitration. The only exception made is for cases brought by or against the highest-ranking officer of a company.
Matters of competition law are not necessarily subject to the parties' unrestricted right of disposition. However, it follows from Section 10 of the Arbitration Act that matters concerning the private law effects of competition law are arbitrable.
Pursuant to Section 18 of the Arbitration Act, it is the arbitration tribunal that decides whether the case is arbitrable. Nonetheless, a decision that the tribunal is competent to hear the case may be brought before national courts within a month. Furthermore, pursuant to the Arbitration Act Sections 43 and 44, a ruling by the tribunal may be held invalid by the national courts on the grounds that the case was not arbitrable.
In terms of determining which country's law governs the arbitration agreement, the courts are bound by the parties' choice of law. For the sake of clarity, it should be noted that the Arbitration Act is based on the principle of separability and therefore the arbitration agreement may be governed by a choice of law other than the law governing the substantive contract.
Under the Arbitration Act Section 31, a reference to the laws of a state is presumed to be a reference to the substantive laws of that state and not the state's conflict of law rules.
In determining whether the national courts are precluded from hearing a case because of an arbitration clause, the courts apply Norwegian law as a main rule. However, the courts have taken into consideration whether the solution that follows from Norwegian law harmonises with the laws of the state governing the arbitration agreement. In particular, consideration is made to the law governing the arbitration agreement when determining the arbitrability of a matter and the validity of arbitration clauses.
Enforcement of Arbitration Agreements
Case law dictates that the evaluation of whether the parties have entered into an arbitration agreement must be restrictive. The Norwegian Supreme Court has based its reasoning on the European Convention of Human Rights Article 6 No 1, which requires that a waiver of the right to access to court must be voluntary and informed.
However, if it can be established that the parties have agreed to arbitrate a matter and arbitral proceedings are initiated, the courts are required to dismiss a case brought before them unless they find it clear that the arbitration agreement is invalid or due to other reasons cannot be carried out.
Notwithstanding the strict evaluation of whether an arbitration agreement has been entered into, arbitration agreements are only exceptionally held invalid. This is due to the strict criteria for voiding agreements in Norwegian contract law.
It follows from Section 18 of the Arbitration Act, in which the rule of separability is enshrined, that the validity of an arbitral clause is not dependent on the validity of the contract as such. Thus, the arbitral tribunal maintains its competence even if it holds the contract invalid.
In accordance with the Arbitration Act Section 13, there are no limits on the parties' autonomy to select arbitrators. The parties are free to stipulate specific requirements for the tribunal in the arbitration agreement.
In accordance with the Arbitration Act Section 13 (1), the arbitrators must be impartial and independent from the parties and qualified for the task. However, these are not mandatory requirements and the parties are free to agree otherwise.
The starting point, pursuant to the Arbitration Act Section 13, is that the parties jointly shall appoint the arbitrators.
If the arbitral tribunal shall comprise three arbitrators and the parties fail to agree on the composition of the tribunal, each party shall appoint one arbitrator. These two arbitrators shall then jointly appoint the third arbitrator to be the presiding arbitrator.
If the arbitral tribunal cannot be established pursuant to the procedure accounted for above, each of the parties may request that the ordinary court having jurisdiction decides on the appointment(s). The decision on appointment passed by the ordinary court is not subject to any appeal.
The ordinary court(s) can only intervene in the arbitrator selection process if such intervention is requested by one of the parties and authorised pursuant to the Arbitration Act.
As stated in 4.2 Default Procedures, a party may in some cases request that the ordinary court makes the appointments of arbitrators. A party may also in certain cases request that the ordinary court rules on whether there are grounds for requesting an appointed arbitrator to step down from the tribunal due to objections raised; see the Arbitration Act Section 15, second paragraph. In such case, the decision made by the ordinary court is not subject to appeal.
In accordance with the Arbitration Act Section 14, an arbitrator may only be challenged if there are circumstances which give rise to justifiable doubts about his or her impartiality or independence, or if he or she does not possess the qualifications agreed between the parties in the arbitration agreement.
The arbitrator is obliged to disclose any circumstances likely to give rise to such justifiable doubts from the time when he or she is approached in respect of a possible appointment as arbitrator. The same obligation will be in place throughout the arbitral proceedings so that the arbitrator is always under the duty to convey such information to the parties.
Unless the parties have agreed otherwise, a challenge against an arbitrator shall state the factual reasons for the challenge and shall be submitted in writing to the arbitral tribunal within 15 days after the party has become aware of both the appointment of the arbitrator and the circumstances on which the challenge is based. Unless the challenged arbitrator voluntarily withdraws from his or her appointment or the other party agrees to the challenge, the arbitral tribunal shall make a decision on whether there is basis for the challenge or not.
If a challenge is unsuccessful, the challenging party may bring this issue to the ordinary court unless the parties have agreed to another procedure.
Pursuant to the Arbitration Act Section 13, the arbitrators are required to be impartial and independent of the parties and qualified for the role as arbitrator. As mentioned, this is not a mandatory requirement and the parties are free to agree otherwise.
The Arbitration Act does not include a definition of "impartial and independent". This must be assessed on a concrete assessment in the individual case. The Courts of Justice Act which will apply for all ordinary courts, Section 108, sets out some provisions regarding legal capacity for judges in the ordinary courts which can provide some guiding for the assessment, even though not directly applicable. Also the Guidelines on Conflicts of Interest in International Arbitration from the International Bar Association may provide some guidance for resolving whether an arbitrator is "impartial and independent".
The requirement regarding the arbitrators' qualifications must also be assessed specifically in each case, based on the parties' agreement and the specific facts. If the parties have agreed on any specific requirements regarding experience or knowledge, this would of course be relevant (if not decisive) in the assessment.
As stated, a candidate approached for possible appointment as arbitrator, as well as appointed arbitrators, is under a constant duty to disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence.
As stated in 3.2 Arbitrability, only legal matters which are subject to the parties' unrestricted right of disposition may be determined by arbitration; see the Arbitration Act Section 9. In general, the parties' unrestricted right of disposition will normally correspond with what the parties may agree upon in a contract. As a general rule, fields of law traditionally concerned with public policies – such as family law and criminal law – are jurisdiction-exclusive to the national courts. It should also be mentioned that the Arbitration Act Section 11 provides for a large degree of consumer protection and inter alia states that an arbitration agreement entered into prior to the dispute arising shall not be binding on the consumer.
Challenges to the tribunal's jurisdiction, including any objections as to the existence or validity of the arbitration agreement, are decided by the arbitral tribunal in accordance with the Arbitration Act Section 18. The arbitral tribunal may rule on an objection as to whether it has jurisdiction over the case, either during the arbitral proceedings or in the arbitral award determining the dispute.
As a general rule, if a party wishes to raise the objection that the arbitral tribunal does not have jurisdiction over the case or the claim, such objection shall be raised no later than in the parties' submission of the first statement to the merits of the case.
If the arbitral tribunal during the arbitral proceedings rules that it has jurisdiction, any party may – within one month of having received such ruling – bring the issue before the ordinary courts, which will determine such issue by way of an interlocutory order; see the Arbitration Act Section 18, second paragraph.
As stated in 5.2 Challenges to Jurisdiction, the ordinary courts can determine whether an arbitrational panel has jurisdiction – this, if a party pursuant to the Arbitration Act Section 18 brings the issue before the ordinary courts after a decision from the arbitral tribunal deciding that the arbitral tribunal has jurisdiction, has been passed.
In accordance with the Arbitration Act Section 43, second paragraph, litra c, the ordinary courts may also set aside an arbitral award if the arbitral award is outside the scope of the jurisdiction of the arbitral tribunal.
The party must bring a legal action for setting aside the arbitral award before the ordinary courts within three months after receiving the arbitral award. It is also a condition that the courts have not already decided on the arbitral tribunal's jurisdiction in the particular case, pursuant to the Arbitration Act Section 18, at an earlier phase of the arbitral proceedings.
If the arbitral award falls outside the scope of the jurisdiction of the arbitral tribunal, the ordinary courts may also refuse to recognise or enforce the award in accordance with the Arbitration Act Section 46.
As stated in 5.2 Challenges to Jurisdiction, a party must bring the issue regarding the jurisdiction of the arbitral tribunal before the ordinary courts within one month after having received a ruling from the tribunal deciding that the tribunal has jurisdiction.
If the jurisdiction of the arbitral tribunal is not challenged during the arbitral procedure, the parties can bring a legal action for setting aside the arbitral award before the ordinary courts within three months of the party receiving the arbitral award; see 5.3 Circumstances for Court Intervention.
As a general rule, in the judicial review the ordinary courts will make a full and independent assessment of the relevant facts and of the applicable legal sources, based on the grounds invoked by the parties.
If a party commences court proceedings in the ordinary courts in breach of an arbitration agreement before the arbitration proceedings are initiated, the ordinary courts are obliged to dismiss the case pursuant to the Arbitration Act Section 7, provided that the other party requests dismissal no later than when addressing the merits of the case.
As stated in 3.3 National Courts' Approach, the courts are required to dismiss a case brought before them unless it is found to be clear that the arbitration agreement is invalid or due to other reasons cannot be carried out, in cases where arbitral proceedings are already initiated.
Case law dictates that the evaluation of whether the parties have entered into an arbitration agreement must be restrictive. However, if the courts find that the parties have entered into an arbitration agreement, such agreements are only in exceptional cases held invalid. This is due to the general strict criteria under Norwegian contract law to find contract provisions void.
As stated in 13.5 Binding of Third Parties, the general principle under Norwegian law is that a contract is only binding for the parties of the contract. Hence, a third party is not bound by an arbitration agreement or an award issued pursuant to this agreement when this third party has not entered into the agreement or otherwise has not accepted to be bound by the agreement.
Unless the parties have agreed otherwise, the arbitral tribunal may, at the request of a party, order any party to take such interim measures as the tribunal may consider necessary based on the subject matter of the dispute pursuant to Section 19 of the Arbitration Act.
An interim relief ordered by the arbitral tribunal is binding upon the parties, but is not enforceable according to Norwegian law, as provisions for this are not contained in the Norwegian Enforcement Act of 26 June 1992 no 86 nor in Chapter 10 of the Arbitration Act. In practice, most parties will adhere to an arbitral tribunal's order for interim relief to show respect for the authority of the arbitral tribunal.
The parties may also pursue a claim for interim relief in the ordinary Norwegian courts pursuant to Section 8 of the Arbitration Act. Interim relief may also be sought in foreign-seated arbitrations; see the Arbitration Act Section 1, second paragraph. The Norwegian rules on interim measures give the courts quite a lot of flexibility to grant arrest, or to issue orders preventing a party from certain actions or prescribing a party to perform certain actions.
The Arbitration Act does not contain any provisions regarding emergency arbitrators, entailing that it depends on the parties' agreement. Emergency arbitrators are not common in Norwegian arbitrations.
According to Section 41 of the Arbitration Act, the arbitral tribunal may order the parties to provide security for the costs of the arbitral tribunal unless the parties and the arbitral tribunal have agreed otherwise. The arbitral tribunal may terminate the arbitral proceedings if such security is not provided. If a party fails to provide security as ordered, the other party may provide the security in full, or bring the dispute before the ordinary courts unless the parties have agreed otherwise.
The Arbitration Act Chapter 6 (Sections 20 to 30) sets out the detailed provisions governing the procedure of the arbitration. In the absence of agreement between the parties, the provisions in Chapter 6 will apply. It should also be noted that it is explicitly stated in some of the provisions in Chapter 6 that these may not (fully or partly) be exempted from by agreement. The arbitration agreement between the parties may state that arbitral proceedings are to be filed at a specific institution, in which case the rules of the institution will govern the procedure of the arbitration and supplement the provisions of the Arbitration Act and possibly overrule the provisions that can be exempted from.
Section 22 provides for the regulation of the place (legal venue) for arbitration, which is decided by the tribunal if not agreed by the parties. Normally, the legal venue and choice of law are agreed upon in the arbitration clause under the contract subject to dispute.
Unless otherwise agreed, the arbitration commences when a written request for arbitration is received by the respondent; see Section 23. The Arbitration Act does not set any explicit requirements to the content of the notice. A letter which clearly notifies that arbitration is requested for a specific dispute is sufficient.
With respect to language for the arbitration (communication from the tribunal, pleadings, hearing and judgment), Section 24 states that this is decided by the tribunal unless otherwise agreed by the parties. Section 24 further states that the tribunal can require written evidence to be translated into the agreed language for the arbitration.
Section 25 sets the requirements for the filing of a statement of claim from the claimant and for the respondent for filing the reply. Pursuant to the last paragraph of Section 25, the parties have wide rights to bring new claims, to expand the contention in respect of existing claims, and to submit new grounds for the contention and new evidence, unless they have agreed otherwise.
Section 27 provides for the regulation of the consequences of failure by the claimant to submit a statement of claim and by the respondent to file a reply according to Section 25, absence from hearing, etc. The tribunal will, unless otherwise agreed, have specific powers under Section 27 to pass decisions depending on the non-fulfilment. Specifically, in case the claimant fails to provide a statement of claim, the arbitral tribunal shall dismiss the case. If the respondent fails to file a reply, the case will continue and the failure shall not be construed as an acceptance of the claims. If a party without reasonable grounds is absent from the hearings, the tribunal can continue the case and hand down its verdict on the factual basis that it has been presented with.
The Arbitration Act Section 26 relates to the question of whether hearings shall be conducted. Unless the parties have agreed otherwise, the tribunal shall decide whether an oral hearing shall be conducted; however, a party may always request an oral hearing.
In general, the procedural steps are set out in the response to 7.1 Governing Rules. As stated, most of the provisions set out in the Arbitration Act Chapter 6 are non-mandatory, but the principle of equal treatment must be complied with. Also note that Section 30 provides for a provision allowing assistance from other courts to obtain witness statements, taking evidence, etc. In case the parties have not agreed to authorise the tribunal to pass legally binding decisions on document requests, there is not sufficient basis under the Arbitration Act to force a party to disclose documents. Hence, there might be a need to seek assistance from the ordinary courts to resolve this.
Pursuant to the Arbitration Act Section 20, the arbitration tribunal shall at all stages of the arbitral proceedings treat each party equally and each party ishall be given full opportunity to present its case. The principle of equal treatment has general bearing and applies for all steps under the proceedings and cannot be exempted from.
Furthermore, pursuant to Section 21 of the Arbitration Act, the tribunal is given a discretionary power to determine how the arbitration proceedings shall be conducted. The exercise of this discretion will be subject to the limitations set out in agreement between the parties and under the Arbitration Act.
In arbitral proceedings, there are no statutory provisions in the Arbitration Act outlining particular qualifications or other requirements for the legal representatives. A party can decide not to appoint legal counsel – although in general this is not recommended.
However, there are legal requirements for representatives acting on behalf of a client and before the regular courts in Norway set out in the Norwegian Act relating to mediation and procedure in civil disputes (the "Dispute Act"); see Section 3-3. The main rule is that the legal representative must be a qualified lawyer to appear in the national courts.
The general rule on evidence is set out in the Arbitration Act Section 28, which states that the parties are responsible for substantiating the case and entitled to present such evidence as they wish.
Usually, the witnesses meet directly before the arbitral tribunal and are available for cross-examination. If requested by a party or the arbitral tribunal, an expert who has submitted a written report is obliged to attend the oral hearing where the parties have the opportunity to ask questions and to present expert witnesses to testify on the points at issue; see Section 29 of the Arbitration Act.
The arbitral tribunal, or a party with the consent of the arbitral tribunal, may also ask the domestic courts to take testimony from the parties or witnesses and to record other evidence. The arbitrators are entitled to be present and to ask questions during the taking of evidence. In such instances, the relevant party or witness is obliged to meet before the court subject to the provisions in the Dispute Act.
The Arbitration Act does not contain any rules on discovery, disclosure or privilege.
Please see 8.1 Collection and Submission of Evidence.
The rules of evidence in the Arbitration Act are less detailed than the rules of evidence in the Dispute Act that apply in domestic matters. However, the parties are free to agree on more specific rules of evidence in the specific matter.
As mentioned above in 7.2 Procedural Steps, the Arbitration Act does not contain any provisions that authorise the arbitral tribunal to force a party to disclose documents, and the same will apply relating to the attendance of witnesses.
However, as mentioned in 8.1 Collection and Submission of Evidence, the arbitrators may ask the court for assistance to hear statements from the parties or witnesses or to record other evidence. In such instances, the more detailed rules in the Dispute Act will apply to the hearing of the evidence, including the rules which oblige anyone (ie, both the parties and third parties) to provide relevant information and documentation available to them.
As mentioned in 2.1 Governing Law, it is set out in Section 5 of the Arbitration Act that the arbitral proceedings and any resulting awards are not confidential unless the parties agree otherwise for the specific dispute. Consequently, an agreement regarding confidentiality must be entered into after the dispute has arisen. In such instances, the parties may agree that the whole or parts of the proceedings shall be subject to confidentiality.
If the parties have agreed on confidentiality, the main rule is that the information cannot be disclosed in subsequent proceedings. However, there is an important exemption where a party is obliged by law to present the relevant documentation or information. This will, as a main rule, be the case in proceedings before the regular courts if the information is considered to constitute evidence in the proceedings; see Section 21-5 of the Dispute Act which sets out that "[a]ll persons have a duty to testify about factual circumstances and to grant access to objects etc. that may constitute evidence in legal proceedings, subject to the limitations in the rules on prohibited and exempted evidence in Chapter 22 and other provisions on evidence in this Act".
The above-mentioned provision will also apply to subsequent arbitral proceedings in instances where the arbitrators seek assistance from the courts to obtain evidence, as mentioned in 8.3 Powers of Compulsion.
The arbitral award shall be made in writing and signed by all arbitrators; see Section 36 of the Arbitration Act. In arbitral proceedings with more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated in the award.
Furthermore, the award shall state the reasons on which it is based unless it is an award on agreed terms pursuant to Section 35, which sets out that the arbitral tribunal shall, at the parties' request, record the settlement in an award on agreed terms, unless the court has reason to object to it, and the parties settle the dispute. The award shall also state whether it is unanimous. If it is not unanimous, the award shall state who is in dissent and to which issues the dissent relates.
The award shall also state its date and the place of arbitration.
The Arbitration Act does not contain any provisions on time limits for delivery of the award.
There are no general limitations by law as to the types of remedies that an arbitral tribunal may award. The remedy awarded must, however, fall within the scope of the claims of the parties.
The arbitral tribunal shall at the request of a party allocate the costs of the arbitral tribunal between the parties as it sees fit; see Section 40 of the Arbitration Act. This includes ordering one of the parties to pay all or part of the costs of the other party. This will typically be relevant if one of the parties is successful in the claim, fully or in the main.
The allocation of costs by the arbitral tribunal is final and shall be included in the award or in the order terminating the case.
The parties may also agree between them how the costs shall be allocated – ie, that the parties shall carry their own costs irrespective of the outcome of the case.
Arbitral awards are not subject to appeal. However, an action for invalidity may be brought before the ordinary courts on the grounds set out in the Arbitration Act Section 43, which sets out that an award may only be set aside by the courts if:
If the issue of validity of an award has been brought before the ordinary courts, the court shall on its own initiative also set aside the award if:
If the grounds for invalidity affect only parts of the award, only such part shall be deemed to be invalid.
An action to set aside an award shall be brought within three months after the award was received by the party; see Section 44 of the Arbitration Act.
If an action for invalidity has been brought and there are grounds for setting aside the award, the court may, at the request of a party, adjourn the action to set aside and refer the case back to the arbitral tribunal to continue the proceedings and make a new award if this may obviate the grounds for setting aside.
When an award is set aside, the arbitration agreement shall again become effective unless otherwise agreed between the parties or implied by the judgment setting aside the award.
Under Norwegian law, the parties may not agree to exclude or expand the scope of appeal or challenge, as set out in 11.1 Grounds for Appeal.
The court may only set aside the case as invalid based on the grounds detailed in 11.1 Grounds for Appeal.
Norway is party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, with the following reservations:
The matters of recognition and enforcement of awards are regulated in Chapter 10 of the Arbitration Act (Sections 45 and 46). The parties cannot derogate from the applicability of these rules by agreement; see Sections 2, 45 and 46.
It is set out in Section 46 that the recognition and enforcement of an arbitral award may only be refused if:
The court shall of its own accord refuse recognition and enforcement of an award if:
If the reason for refusing recognition or enforcement affects only part of the award, the court shall only refuse recognition or enforcement of such part.
Enforcement shall take place pursuant to the provisions of the Enforcement Act except as provided by Chapter 10 of the Arbitration Act; see Section 45.
The enforcement process is initiated by the claimant filing a petition for enforcement to the execution and enforcement commissioner. The application must include the information set out in Section 5-2 of the Enforcement Act. If the basis for enforcement is a foreign arbitral award, the claimant must also attach documentation to show that the award is enforceable in the relevant foreign jurisdiction. Recognition and enforcement of an award is dependent on a party providing the original award or a certified copy thereof. If the award is not made in Norwegian, Swedish, Danish or English, the party shall also provide a certified translation thereof. The court can require documentary proof of the existence of an agreement or other basis for arbitration; see Section 45 of the Arbitration Act.
The execution and enforcement commissioner shall on his or her own initiative ensure that they are competent to handle the case, that the parties have capacity to sue and be sued and that there exist a valid basis for enforcement. Besides this, the parties are responsible for clarifying and presenting the relevant facts and documentation which may affect the decision of the execution and enforcement commissioner in the matter; see Section 5-3 of the Enforcement Act.
The New York Convention is implemented in Norwegian law via the Arbitration Act.
Pursuant to the Arbitration Act, arbitral awards, irrespective of the country in which they were made, are recognised and enforceable under Norwegian law subject to exhaustively listed exemptions; see 12.2 Enforcement Procedure.
The Arbitration Act does not contain provisions allowing class-action arbitration or group arbitration. In general, the agreement between the parties will be the determining factor. It is possible to consolidate claims between the same parties or include more parties to the same arbitration process, if agreed upon.
Norwegian qualified lawyers acting as legal counsels in arbitrations must act in accordance with the ethical codes generally applicable to lawyers. These ethical rules are set out in the Regulations for Advocates, Chapter 12.
There are no general rules or restrictions on third-party funding in the Arbitration Act or under Norwegian law. It is not common in Norway that third parties fund litigation in return for a share of the possible outcome of the case. That being said, a party to an arbitration is free to agree to such funding and sharing of the potential outcome.
There is no basis for the tribunal under the Arbitration Act to decide that separate arbitration proceedings shall be consolidated into one case. There are consolidation rules under the Dispute Act but these will not apply under the Arbitration Act unless agreed by the parties. Hence, a consolidation will require an agreement between all parties involved – ie, that there is one agreement that covers all claims and parties subject to the consolidated disputes.
As stated in 7.1 Governing Rules, the Arbitration Act Section 25, last paragraph, provides for a wide right to bring new claims into the arbitration, but this presupposes that the parties and the claims initially are subject to the same arbitration proceeding. Article 25 does not give basis to expand the case to new parties.
The general principle under Norwegian law (which is in line with the doctrine of privity) is that a contract cannot confer rights or impose obligations upon any person who is not a party to the contract and correspondingly only parties to the contracts are able to sue or seek enforcement of their rights or claim for damages as such. Hence, a third party is not bound by an arbitration agreement or an award issued pursuant to this agreement provided that this third party has not signed the agreement or otherwise accepted to be bound by it.
In principle, in case of succession (change of control of a legal person or assignments of contractual obligations), a third party may also succeed in an arbitration clause being agreed by the predecessor. However, this is also based on contractual commitment.
If it is disputed whether a third party is a party to an arbitration agreement or not, the matter may be referred to the regular court for settlement.
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Increased Use of Arbitration – Ad Hoc and Institutionalised
For some time, we have seen a growing number of cases decided by arbitration tribunals seated in Norway, and this appears to be continuing in 2022. Arbitration is especially resorted to within the shipping, offshore, energy and construction sectors. Also, disputes concerning reinsurance of Norwegian insurers are almost exclusively referred to arbitrations. Norway has a large marine insurance industry, and the standard insurance terms – the Nordic Marine Insurance Plan 2013 (version 2019) – now adopts arbitration as the preferred mechanism for dispute resolution when the claims leader is non-Nordic (Clause 1-4B). These marine insurance terms are frequently also used by non-Nordic marine insurers. The Nordic marine insurers now more frequently opt for arbitrations instead of court proceedings.
An arbitration award under Norwegian law is final and binding, with only a limited possibility to challenge the award on procedural grounds before the regular courts. Such arbitrations have proven to be efficient, with a normal time span from notice to award of six to 12 months. Both foreign and Norwegian arbitrators may be appointed, and the language of the arbitration is often determined to be English.
Arbitration in Norway is governed by the Norwegian Arbitration Act of 2004, which is based on the UNCITRAL Model Law. Traditionally, most arbitrations in Norway have been ad hoc arbitrations rather than institutionalised, and this is also the situation in 2022. The number of matters referred to institutionalised arbitration does, however, seem to be on the rise, with both the Oslo Chamber of Commerce and the Nordic Offshore and Maritime Arbitration Association (established in 2017) processing an increasing number of cases. The latter institution was established on the initiative of the Danish, Finnish, Swedish and Norwegian Maritime Law Associations, building on the long tradition in the Nordic countries for settling disputes within the maritime and offshore industries by arbitration. The Nordic Offshore and Maritime Arbitration Association ("NOMA") published updated rules as recently as April 2021, and has also published a set of rules applicable for fast-track arbitrations in disputes where the aggregate amount in dispute does not exceed USD250,000 or equivalent amount in another currency, or such other amount as the parties have agreed.
NOMA has also published a set of detailed Best Practice Guidelines, which are often applied also in ad hoc arbitrations. These guidelines include a matrix for the conduct of case management meetings and Rules on the Taking of Evidence (mainly based on the IBA Rules on the Taking of Evidence in International Arbitration).
Accordingly, Norwegian arbitrations are well adapted to international arbitral trends and practices, and this is a development we expect to continue with both institutionalised and ad hoc arbitration. We also expect that the use of arbitration will continue to increase, especially taking into account the possibility of settling less extensive disputes through fast-track arbitration.
Predictability and Emphasis on Oral Hearings
Although dispute resolution before the ordinary courts traditionally has had a strong standing in Norway, for many, institutionalised and ad hoc arbitration in Norway is a preferred dispute resolution mechanism due to the expertise of the arbitrators, predictability, effectiveness and proportionality of costs.
In most cases, three arbitrators are appointed, preferably in joint agreement between the parties, depending on the particular arbitration clause. The Norwegian Arbitration Act Section 13 explicitly states that, as far as possible, the parties shall appoint the three arbitrators jointly. This is a practical approach, avoiding lengthy procedures in establishing the arbitration tribunal, with no need to involve third parties in composing the tribunal, etc. This is, of course, subject to the disputing parties being able to appoint the panel jointly. Usually, each party suggests one arbitrator, and they then agree on the third arbitrator as a chairperson. The benefit of this approach is also that all three arbitrators are appointed jointly, so that none of the arbitrators can be deemed to be appointed individually by one of the disputing sides. In Norwegian arbitral practice, this system of joint appointment of arbitrators has become the norm.
We note that foreign individuals are now appointed as arbitrators in Norwegian arbitrations more often than previously. For example, Danish, Swedish and English arbitrators are appointed from time to time, and several arbitrations are conducted entirely in English. However, the chairperson tends to be a Norwegian person with a legal background – for example, a lawyer, law professor or judge with extensive experience within the specific industry or legal field.
Norwegian arbitration generally entails a few written submissions with documentary evidence as exhibits, followed by an oral main hearing which may last for days, or – in technically or otherwise complex cases – many weeks. After the main hearing, the arbitral tribunal renders its award. The emphasis on the oral hearing and on oral witness testimonies may differ from arbitration in other countries, and is similar to regular litigation in Norway. Norwegian arbitration is generally predictable, as the different steps and submissions as well as the deadlines are generally agreed upon in advance and adhered to by the tribunal and the parties.
However, the parties may agree on procedures differing from the norm – for example, by choosing written statements from witnesses with only oral cross-examination, written post-hearing closing arguments, or an arbitration conducted entirely in writing. Increasingly, Norwegian arbitrations suggest written statements from witnesses, both witnesses of facts and expert witnesses. This practice has become very usual in Norwegian arbitrations, and distinguishes arbitrations from the practices of regular courts, where witnesses of facts almost exclusively testify orally in court.
Under Norwegian law, the parties may agree that the arbitration awards are to be kept confidential – however, it is not sufficient that this is agreed in the arbitration clause. According to the Norwegian Arbitration Act Section 5, confidentiality must be specifically agreed for the particular arbitration when the dispute arises. Third parties may not attend the arbitral hearing unless this is specifically agreed to by all parties.
Increased Focus on the Tribunal's Impartiality
In line with the UNCITRAL Model Law, Sections 13 and 14 of the Norwegian Arbitration Act require that the arbitrators shall be "impartial and independent of the parties". The duty to disclose facts or circumstances which may give rise to justifiable doubts as to impartiality lies with the person who receives a request to be appointed as arbitrator. The starting point in Norwegian arbitrations is that the parties shall attempt to appoint all three arbitrators jointly. This specific Norwegian feature with joint appointments has in general been well received.
Although the duty of disclosure is placed on the arbitrators, in cases with joint appointment, the parties should also be transparent on any relevant connections they are aware of and consider whether any such connections should be disclosed, which will reduce the risk of any subsequent challenges of impartiality. In a recent application to set aside an arbitral award, the Norwegian Appeal Court held that joint appointments require trust between the parties and that the general duty of loyalty under Norwegian law implies that the parties should share relevant information about the candidates in connection with the appointment of the tribunal.
In smaller jurisdictions with limited pools of arbitrators, there could often be a certain connection between a potential arbitrator and the parties. And taking the maritime sector as an example, certain decades ago, a professor (or former professor) from the Scandinavian Institute of Maritime Law would very often be appointed. One could therefore experience that the same persons very often recurred as arbitrators. Although these arbitrators were qualified and experienced, this background may have caused Norwegian lawyers to take a lenient approach to the impartiality requirement, potentially accepting certain questionable connections.
In recent years, in line with the trend towards both institutionalisation and internationalisation of Norwegian arbitrations, we have experienced that both the parties and the parties' counsels are more focused on ensuring an impartial tribunal. Persons who are approached to serve as arbitrators should take this into consideration and carefully consider whether they are aware of any facts or circumstances which should be disclosed. The duty of disclosure extends in principle beyond what eventually may be considered as disqualifying.
As a response to the increased focus on impartiality, we are aware that both the Oslo Chambers of Commerce and NOMA are working on developing a form with questions (checklist) to be used by potential arbitrators in order to ensure disclosure of circumstances which could give justifiable doubts as to his or her impartiality or independence. In general, the International Bar Association's Guidelines on Conflicts of Interest in International Arbitration would be useful in order to assess whether a situation should be disclosed and potentially disqualify the arbitrator in question.
Challenge of Arbitration Awards Before the Ordinary Courts
Although the increased focus on having impartial arbitrators can be seen as positive, we have also experienced that this can pave the way for cases where the dissatisfied (losing) party challenges the validity of the award before the ordinary courts, alleging that one of the arbitrators was impartial. Any impartiality issues shall in principle be finally resolved in connection with the appointment, if necessary by a court decision. However, if the party was not aware of the alleged facts or circumstances, there may still be a possibility to challenge the impartiality after the award is rendered. This option may incentivise the losing party to "search for" reasons to challenge the award, including potential "connections" between the other party and the arbitrators.
We were therefore pleased to see that the Norwegian Court of Appeal recognised this risk in a judgment from 2021 in a case where the dissatisfied party eventually acknowledged that the arbitrators were not impartial, but alleged that one of the arbitrators would not have been appointed if information about a (minor) link between the party's representative and the arbitrator had been disclosed. In the Court of Appeal's view, the award could only be set aside if the arbitrator actually was impartial, and not based on any arguments that information about non-disqualifying connections potentially could have led to a different composition of the arbitral panel. The Court emphasised that that possibility to set aside an arbitral award is supposed to be "very narrow", with reference to the fundamental purpose with arbitrations – achieving a final and binding award quickly.
Since 2017 over 50 arbitration awards have been challenged before the ordinary courts in Norway. However, the number of cases each year fluctuates and we see no clear trend towards an increase in the number of cases where arbitration awards are challenged. The threshold for succeeding with a claim for invalidity is extremely high, and this is evident from the results of the court cases as from the available date none of the cases have succeeded with obtaining a judgment for an invalid arbitration award.
Technological Developments – Digitalisation and Videoconferences
A trend in both Norwegian litigation and arbitration is the increased use of digital technology. All ordinary courts are now using an electronic web-based data room where information and documents solely pertaining to the cases are exchanged electronically. During hearings, all documentary evidence is collected in an electronic file instead of printed case documents. This system is now mandatory for case preparation at the ordinary courts, thus rendering a substantial part of the procedure paperless. Such use of data rooms has also become the norm in Norwegian arbitrations. It is also quite common for the major Norwegian law firms to establish electronic data rooms for case preparation, shared with the clients.
Videoconferences have also become more frequent than traditional physical meetings. Case management conferences have been held as conference calls or videoconferences for some time, but extensive use of videoconferencing is becoming more usual. Some arbitral hearings have been conducted virtually from start to end, as have hearings before the ordinary Norwegian courts. Nevertheless, traditional physical arbitration hearings still seem to be the preferred or most common choice, post-COVID-19. Witnesses are, to an increasing extent, heard by videoconferences, especially witnesses who would otherwise have to travel to Norway from other countries. The combination of written statements and oral cross-examination over a videoconference is both effective and saves costs.
It is thus a trend that Norwegian arbitration is shifting towards "greener arbitrations", also seeking to reduce the environmental footprint of conducting arbitrations. There is an extensive use of electronic documentation instead of hard copies, and the use of videoconferencing is encouraged whenever viable. Still, it must be emphasised that it is ultimately up to the parties how the arbitration proceedings shall be conducted. The party autonomy remains governing, but as the shift towards "greener arbitrations" also brings down time and costs for these proceedings, we see a clear trend towards the new, more digital approach to conducting arbitrations in Norway.
Increased Use of Alternative Dispute Resolution Mechanisms
Another trend within Norwegian commercial litigation and arbitration – especially within the construction and offshore industries – is increased use of alternative dispute resolution mechanisms, such as mediation or expert procedures. Regardless of whether the parties have agreed on litigation or arbitration, many contracts include provisions requiring the parties to attempt to find a solution through mediation or expert procedures before the dispute may be brought before the courts. Several Norwegian standard contracts include provisions for so-called "project-integrated mediation", whereby one or more mediators follow projects throughout project execution with the aim of resolving disagreements before fully-fledged disputes arise. Typical topics of such mediations are claims for additional payment or extension of time.
Normally, appointed mediators or experts have legal backgrounds and work as lawyers, law professors or judges. In general, the experts are specialised and highly regarded professionals, who are chosen due to their extensive experience within the specific industry or legal field. In matters where the facts are more complex, the appointed mediator(s) or expert(s) may suggest a co-mediator with a technical background – ie, someone without a legal degree.
Focus on Equal Representation
Several Norwegian law firms and the Oslo Chamber of Commerce have taken the equal representation in arbitration pledge. This pledge was drawn up in 2015 by members of the arbitration community, in recognition of the under-representation of women on international arbitral tribunals. The pledge seeks to increase, on an equal opportunity basis, the number of women appointed as arbitrators in order to achieve a fair representation as soon as practically possible, with the ultimate goal of full parity.
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