Litigation 2019 Second Edition

Last Updated December 05, 2019

Norway

Law and Practice

Authors



Advokatfirmaet Thommessen AS was established in 1856 and is considered to be one of Norway’s leading commercial law firms. The firm has offices in Oslo, Bergen, Stavanger and London. The firm provides advice to Norwegian and international companies as well as organisations in the public and private sectors, ranging from SMEs to large multi-national corporations. Thommessen covers all business related fields of law. 260 people work at Thommessen today. Approximately 180 of them are lawyers. The firm has extensive experience in resolving disputes both in and outside the courts. Many disputes are a fight over the facts and Thommessens's lawyers find what is necessary. Project management is critical, team selection is essential. Thommessen has cutting edge expertise and versatility. Its litigation specialists work closely with the firm's technical professionals and market experts. The right people get involved at the right time in the process. The use of resources should always correspond to the importance of the case and Thommessen takes neither shortcuts nor any detours.

The Norwegian legal system is based on civil law traditions. As such, the main source of law is statutory law. In addition to the Constitution, acts by Parliament, and administrative rules and regulations, other important sources of law are preparatory works, case law, and doctrine. The latter is frequently used in the interpretation of statutory law and – particularly as regards contract law – to derive principles with general applicability.

Norway is not a member of the European Union (EU). However, following the incorporation of The Agreement on the European Economic Area (EEA), most instruments of EU law have been transposed, or are in the process of being transposed, to Norwegian law. In case of conflict, the courts will apply EEA law and give it precedence over ordinary Norwegian legislation.

In civil cases, the litigation process is governed by the Dispute Act 2005 (DA). Civil proceedings generally follow an adversarial model, although with some inquisitorial elements depending on the nature of the case. With few exceptions, it is for the parties to decide whether to bring or conclude an action, to decide what evidence to be presented and which arguments to be made. The judge has, however, a reasonably strong control over the conduct of the case in order in order to bring the case to a conclusion in an efficient and sound manner.

At the preparatory stage, the parties will exchange written submissions, presenting their claims, arguments and supporting evidence. All ordinary courts are now using an electronic web system where information and documents pertaining solely to the relevant cases are exchanged electronically. During hearings, all documentary evidence is collected in an electronic file used instead of printed case documents. This system is today mandatory for case preparation at the ordinary courts, thus rendering a substantial part of the procedure paperless.

Normally, the court then holds a main hearing where oral arguments and the evidence is presented by the parties. The court is free in its evaluation of evidence and the law, but – as a main rule – the judgment may only be based on evidence that has been presented and subject to contradiction during the main hearing.

The Norwegian judiciary have a three-level, hierarchical structure with first-level District Courts, Court of Appeals as second instance and the Supreme Court at the apex.

Prior to initiating litigation before the first-level district courts, the parties are, as a main rule, required to submit the matter to a conciliation board according to DA Chapter 6. The conciliation board may in certain cases issue an award, but in the majority of cases the matter is simply referred to the ordinary courts.

All courts have competence to hear both civil and criminal cases, including commercial matters, cases concerning the validity of administrative decisions, and constitutional issues. A few exceptions to the ordinary court's all-encompassing competence is enumerated in the Courts of Justice Act 1915 (CJA), the most important specialised courts being the land consolidation courts and the labour courts. In addition, patent disputes are subject to certain exceptional rules.

Norwegian procedural law adheres to the principle of open justice. Accordingly, court hearings may normally be attended and reported by anyone, upcoming cases are searchable and judgements are usually publicised online.

Case files are, however, not generally available to the public. Access to the parties' final written submission and the documentary evidence may be granted upon application. A wider right to access may be granted to third parties who can prove an individual and significant interest in a specific legal issue.

The public's right to attend hearings and access court files may be restricted if the case or case documents concerns sensitive issues related to national security, business secrets or the right to privacy. In such cases, the judgement is usually redacted for secrecy or anonymised if made publicly available.

Under Norwegian law, the parties may choose to represent themselves at any court stage. However, if unsatisfactory, the court may mandate that the party engage a lawyer.

The parties may appoint the lawyer of their choice. All Norwegian licensed lawyers (advokat) have the rights of audience in all District Courts and Court of Appeals. Appearance before the Supreme Court requires a special permission.

Lawyers from EEA states has the right to practice as lawyers, including right of audience, under the title achieved in their home country, subject to notification to the Supervisory Council for Legal Practice and certain further conditions. Non-EEA lawyers may not practice Norwegian law in Norway unless they have obtained license following a strict assessment of the applicant's competence and suitability.

Litigation in Norway is, in the vast majority of cases, funded by the parties to the dispute themselves. There is, however, nothing in the law prohibiting or restricting a third-party from funding the litigation for one of the parties. There are private companies offering such funding for claimants on the Norwegian market. Also, liability insurers frequently fund litigations for their insureds as defendants. In real estate disputes concerning sale of private homes, there could be insurers funding a litigation for both sellers and buyers.

Any type of civil action lawsuits by and/or between private parties are available for third-party funding in Norway.

Funding by third parties is available to both the plaintiff and the defendants, see 2.1 Third-Party Litigation Funding.

As third-party funding is not regulated under Norwegian law, there are no rules determining any maximum or minimum amounts of such funding.

In general, third-party funding is not usual in Norway, see 1.1 General Characteristics of Legal System. The costs will, typically, consist of legal representation, expert witnesses and court fees. Liability insurers will often limit their liability to "reasonable and necessary" defense costs, and also require their insured to bear a retention as defined by the insurance policy.

Contingency fees are not permitted for lawyers in Norway. This is regulated in the Norwegian Bar Association's Code of Conduct Rules, Article 3.3.2, which is enacted as law by the Norwegian Courts of Justice Act Section 224. Lawyers are permitted to agree on a "no cure no pay" arrangement if the case is lost and agree on a modest uplift in hour rates if the case is won. However, this is rarely used in legal practice.

As third-party funding is not regulated by Norwegian law, see 1.1 General Characteristics of Legal System, there are no time limits applicable.

Pursuant to the DA Chapter 5, there are three pre-action steps required before bringing an action. In practice, the most important rule follows from Section 5-2, which states that a party shall give notice in writing to the person or persons whom the action may be brought. The notice shall contain brief details about the claim and its grounds. A party who receives a notice of claim should within a reasonable time inform whether the claim is contested in whole or in part, and if so, specify on what grounds the claim is contested. In its response, the party should also give notice of a potential counter claim. 

Section 5-3 imposes the parties to provide information about important documents or other evidence that each party is aware of. Section 5-4 imposes a general obligation upon the parties to make attempts to reach an amicable settlement before an action is brought.

Failure to comply with the rules on pre-action conduct are taken into consideration by the court when awarding costs for the action. If a party has failed to send a notice of claim, it may be criticised for not adhering to the pre-action rules, resulting in liability for its own costs if the claim succeeds.

There are no procedural limitation rules that apply to civil suits in general. There are, however, important limitation rules governing monetary claims and criminal liability.

Monetary claims, including claims for damages that arise from a contract, are subject to a three year limitation period. The limitation period runs from the date on which the creditor/claimant first had the right to claim performance.

For claims arising from breach of contract, the starting point for the limitation period is the day upon which the breach occurred. This starting point may vary depending on the dispute and when the effect of the breach of contract occurred.

If the creditor has not asserted the claim because they lacked necessary knowledge of the claim (or the debtor), the period of limitation expires at the earliest one year after the date on which the creditor obtained or should have obtained such knowledge. The limitation period cannot be prolonged on that ground by more than ten years (ie, a total of 13 years).

Claims for damages which do not arise from a contract are subject to a limitation period of three years from the date on which the injured party obtained, or should have obtained, necessary knowledge of the damage and who is responsible for it – up to a maximum of 20 years from the date on which the damage was caused.

Under the Penal Code 2005, the limitation period for criminal liability is from two to 25 years depending on the seriousness and scope of the crimes committed.

The jurisdictional requirements for a defendant to be subject to suit in Norway only apply to hearings in first instance. In case of an appeal, the action shall be filed to the appellate court in which the District Court is organised under. 

As a main rule, a lawsuit can be brought before the defendant's ordinary legal venue, being the defendant's place of residence, see the DA Section 4-4 (2). Companies registered in the Register of Business Enterprises (Norwegian: Foretaksregisteret) has its ordinary venue at the place where the head office is located according to the company's registration. Similarly, for a foreign company conducting business in Norway, the ordinary venue is at the branch's registered address, see DA Section 4-4 (3).   

For a group of claims, the legal venue may be elected by the claimant. Actions relating to real property may be filed in the judicial district where the real property is located. Cases concerning contractual relationships may be filed at the place where the obligation that forms basis for the action has been performed, or is to be performed. Actions for damages in tort may be filed at the place where the damage originated, or where its effect occurred or may occur.

If an action is filed with a court that lacks territorial jurisdiction, the court is to refer the case to a competent court. If no Norwegian court has territorial jurisdiction, the case will be dismissed.

The Lugano Convention 2007 on jurisdiction applies as Norwegian law, including its protocols and annexes to the extent that these are binding upon Norway at all times.

To initiate a lawsuit, a claimant must file a writ pointing out key factual and legal aspects of the case.

The DA Section 9-2 (2) lists the requirements a writ must meet, including:

  • the name of the court;
  • the names and addresses of the parties, their party representatives and counsel;
  • the claim that is being asserted and a statement of the outcome the claimant is requesting by way of judgment;
  • the factual and legal grounds upon which the claim is based;
  • the evidence that will be presented;
  • the basis upon which the court has jurisdiction to hear the case, if this may be in doubt; and
  • the claimant's view on the further proceedings of the case.

A party who is not represented by counsel may submit a writ orally by appearing in court in person.

Once the writ is submitted, the only amendments that may be done is to rectify potential deficiencies within a time limit set by the court. More substantial amendments regarding the parties to the case or the prayer for relief, can be done through subsequent submissions to the court elaborating or amending details on the matter.

Pursuant to the DA Section 12-4, the court is responsible for ensuring that pleadings, including the writ, are served to the defendant.

If the defendant is residing outside Norway, and is not represented by a Norwegian lawyer, notice must be served under applicable international conventions, in particular the Haag Convention of 1965 on the service abroad of judicial and extrajudicial documents in civil or commercial matters.

If the defendant does not submit a written reply to a writ pursuant to the DA Section 9-2 and 9-3, or submits its defense after the deadline set by the court, the party is deemed to be unlawfully absent in the case. If the court does not grant reinstatement, the court may deliver a default judgment in accordance with the claimant's prayer for relief if the court can find in favour of the claimant in full or in the main.

In Norway, collective or class actions are permitted pursuant to the terms in the DA Chapter 35. There are several conditions to be met for a class action to be approved by the court:

  • several legal persons have claims or obligations for which the factual or legal basis is identical or substantially similar;
  • the claims can be heard by a court with the same composition and principally in accordance with the same procedural rules;
  • class procedure is the most appropriate method of hearing claims; and
  • it is possible to nominate a class representative.

Class actions are usually opt-in and only include those who have registered as class members. This register is maintained by the court. However, the court may decide that a class action shall be opt-out, but only if the claims involve amounts or interests that are so small that it is unlikely that the majority of them may be brought as individual actions, and the claims are not deemed to raise issues that need to be heard individually.

Under Norwegian law, there is no statutory requirement to provide clients with a cost estimate of the potential litigation at the outset. It is, however, considered good practice as a counsel and a part of the professional duty to keep the client informed of the costs related to a lawsuit. A party succeeding in its claim may only be awarded legal expenses for what the court finds to be necessary costs incurred in relation to the action, see the DA Section 20-5 (1). It is not unusual for the court to make substantial deductions in counsels' statements of costs.

In Norway it is possible to obtain a ruling on an interim measure prior to the trial of a claim. Court decisions prior to the main hearing of a particular claim may concern either case management issues, such as a dispute regarding evidence, or interim measures to secure the claim, such as arrest of goods or injunctions prohibiting the respondent from certain actions, etc.

Strictly speaking, there is no opportunity under Norwegian law for the parties to apply for an early judgement. However, the parties may request the court to decide to split the proceedings. This means that the court decides that a particular claim or points in the dispute shall be heard in a separate hearing. This is typically relevant for questions such as whether a claim is time barred or whether the claimant has legal interest. Depending on the outcome of that proceeding, the substantive hearing of the claim may lapse.

As noted, the court decides whether the proceedings shall be split, and the decisive should be whether the court finds it to be the most suitable way to execute the proceedings.

In the Norwegian legal system, there are systems similar to the Anglo-American system of dispositive motions.

Firstly, as mentioned in 4.2 Early Judgment Applications, the parties may request the court to split the proceedings. This gives the opportunity to decide on issues such as whether the claimant has legal interest before the substantive hearing of the claim.

Secondly, the parties may request the court to rule by following simplified judgement proceedings, see the DA Section 9-8. The threshold to decide on such procedure is very high and it must be evident that either the claim or the objections to it are unsustainable.

Finally, if a party is unlawfully absent, the other party may normally request the court to rule on the case by way of default, see the DA Section 16-10. Being unlawfully absent is a broad term which also includes the defendant failing to submit a written reply to the writ of summons.

In some cases, an interested third party may join an existing lawsuit either as a party or as an intervenient.

To join as a party, the third party must submit a claim either concerning the subject matter of the dispute in action or that is closely linked to the original claim, see the DA Section 15-3. Such joinder is dependent on their claim being subject to mainly the same procedural rules as the original claim.

Joinder as a third party is done by filing an independent writ to the court which also states that the party wants to be added to the particular lawsuit.

Before the pre-trial work of the case is closed, the third party shall be accepted if either both parties accept the intervention or the claims are strongly linked. After the pre-trial work of the case is closed, additional criteria must be met to be accepted and the threshold is significantly higher.

A third party may intervene without becoming a party. An intervenient supports one party and may take procedural actions for the benefit of that party.

The requirement of becoming such intervenient is that either the third party's own legal position may be affected of the ruling, or the intervenient must be an organisation which particularly works on promoting interests affected by the case, see the DA Section 15-7 for further details.

To become an intervenient this must be declared in pleadings or at a court hearing prior to the ruling of the case.

If the claimant is domiciled outside the EEA, the defendant may demand that the claimant shall pay a sum of money as security for their potential liability for the defendant's costs. Such provision of security cannot be granted if it would seem disproportionate in view of the nature of the case, the relationship between the parties and other circumstances.

In certain cases where the defendant originally was the claimant (and still is for that claim), the defendant may not demand security for their costs. Such security may neither be granted in cases with limited right of disposition for the parties, eg, child custody proceedings. 

The courts mainly deal with the costs of interim applications/motions in the same way as in the main proceedings, see 8 Settlement.

The parties may not request that an interim application/motion is dealt with on an urgent basis. However, the DA requires the court to deal with such applications/motions as soon as possible.

Under Norwegian law, the parties have a general obligation of truth and disclosure, see DA Section 21-4. However, discovery arrangements to that extent as in Anglo American countries doesn't exist under Norwegian civil cases.

The obligation of disclosure under Norwegian civil cases is limited to important evidence, see DA Section 5-3, first paragraph, and Section 21-4, second paragraph.

If a party does not fulfill their obligation of disclosure, the court may order that party or a third party to answer questions about their knowledge of the existence of items of evidence and to make necessary investigations in such respect. They may also be ordered to produce extracts, etc, of information that may be gathered from items of evidence, see DA Section 26-5. The formal procedure for this process is that the parties must request a formulation for access to evidence, see DA Section 26-6.

Such a request must deal with evidence of relevance for the case. Further, the request must be specified in such detail that it is clear which evidence the request concerns. The court may reject the request if such access would incur expenses that are not reasonably proportionate to the dispute, see DA Section 26-5, third paragraph. Accordingly, so-called fishing expeditions are not allowed under Norwegian law. As recently as May 2019 (HR-2019-997-A), the Supreme Court has held that it has not been the intention of the legislator to allow for discovery proceedings tantamount to those known in Anglo-American law.

If a third party does not comply with such a court order, the court may rule that the order shall be enforced. For the parties, the consequence would normally be that this can negatively affect weighing or assessment of the evidence in the case matter. It can also affect the costs of litigation. See further in 11 Costs. Costs on how the arrangement of costs works under Norwegian civil procedure law.

See 5.1 Discovery and Civil Cases for the legal position in Norway when it comes to discovery. 

See 5.1 Discovery and Civil Cases regarding the legal position in Norway in respect of discovery. 

See 5.1 Discovery and Civil Cases regarding the legal position in Norway in respect of discovery. 

The Penal Code Section 211 stipulates that breach of lawyers' duty of confidentiality is a criminal act that is subject to penalty. Further, the obligation of confidence is also protected according to The Constitution of Norway.

The DA Section 22-5 (1) states that there is prohibited to bring evidence for the court about something that is confided to the lawyer in their professional capacity. This also includes information which subordinates have obtained knowledge about. The content of the term confided is widely interpreted in case law. The prohibition concerns information that is confided to the lawyer in their professional capacity. This only regards information with connection to the role of a legal counsel.

The relationship between DA Section 22-5 and confidentiality for in-house counsels may arise difficult questions. Confidentiality is conditioned by that the counsel exercises a function as a lawyer. For example, the Supreme Court decision HR-2000-1353 held that an internal strategic document was considered confidential.

The DA Section 22-5 (1) provides that the one who is entitled to confidentiality after the provision may consent to the evidence being brought for the court.

The DA Chapter 22 contains many sections about evidence that individuals are not allowed to bring for the court, for example, legal privileged information (see 5.4 Alternatives to Discovery Mechanisms) and evidence of trade or business secrets (the court may order such evidence to be available).

Injunctive relief may be granted based on interim applications or motions as described in 4.1 Interim Applications/Motions. Provisional security may either be granted as an interim court order instructing a party to refrain from action, accept an action, or to act in a particular manner, or as an attachment of property/arrest of goods.

This is not applicable in our jurisdiction.

If delay poses a risk, an interlocutory order for provisional security may be issued without an oral hearing and prior to informing the respondent of the injunctive relief, in which case the court shall inform the parties of their right to demand a subsequent oral hearing.

The applicant may be held liable for any loss that the respondent suffers as a result of a provisional security if the security is set aside or lapsed, and it transpires that the claim submitted did not exist when the security was ordered.

According to Section 4-8 of the DA, the Lugano Convention of 30 October 2007 applies as Norwegian law. The Lugano Convention authorises the recognition and enforcement of judgments by a court in a Lugano country. The parties to the Lugano Convention are the EFTA States Norway, Iceland and Switzerland (Liechtenstein is not a party), the EU and Denmark (which is outside EU judicial cooperation). The Lugano Convention gives the decisions the force of law and coercive power with a few restrictive exceptions which are exhaustively specified in Articles 34 and 35 respectively, see Article 45.

The courts of a Lugano country are obliged to regard the decisions of the courts of all other Lugano countries as equivalent to their own decisions. Among other things, they must assume that other Lugano countries' courts apply the EEA/EU law loyally.

The exception that is most of interest here is that the decisions can be denied acknowledged and enforced if they contravene public order.

The order public reservation is statutory in Article 34 (1) of the Lugano Convention, which sets out the reasons that may prevent the recognition of a judgment delivered in another Lugano country: "recognition will obviously violate the legal order ('order public')" in the recipient state.

Injunctive relief may only be obtained against a party to the proceedings, not against third parties who are not respondents.        

An injunction constitutes a basis for execution that the Norwegian enforcement authorities may enforce. Interim measures shall be executed by an execution officer as soon as the claimant requests execution.

Non-compliance with an injunction may be punishable according to Section 170 of the Norwegian Penal Code.

Trials in Norway may be characterised especially by two features.

Firstly, trials are normally based on oral argument and oral and immediate presentation of evidence. This entails that evidence must be presented in the main hearing either by the parties reading or showing it to the court or by witness examination.

Secondly, the judge may only base the ruling on the evidence and arguments presented in court during the proceedings.

Before the main hearing, there is a pre-trial phase which is conducted mainly in writing. During this period, the parties exchange written pleadings which explain the parties' point of view and present the evidence they plan to present in court.

As opposed to the main hearing, case management issues are normally decided on a written basis. However, pursuant to the DA, such issues may also be subject to an oral hearing if it is necessary to ensure a fair and just procedure.

For interim motions concerning provisional security (as described in 4.1 Interim Applications/Motions), the DA however requires an oral hearing, see Section 32-7. Only under special circumstances may such issues be decided on a written basis. 

Regarding the management of the timetable, the DA instructs the parties and the court to conduct a meeting which may be carried out in the form of a telephone conference. In this meeting the parties and the court shall discuss and decide on how the further proceedings shall be carried out.

Jury trials are not available in Norway.

As a starting point, all evidence that might be relevant for the ruling may be presented in the court. There are no general restrictions regarding the form of the evidence.

However, there are rules that may lead to the exclusion of evidence in specific situations.

Firstly, there are procedural rules which inter alia require the evidence to be relevant and to provide new information. Furthermore, the court may restrict the parties' total presentation of evidence to ensure effective progress of the proceedings. Also, as the main hearing shall be oral and the presentation of evidence shall be immediate, testimonies shall normally be given orally in court, not by a written statement. 

Secondly, the DA includes provisions on the exclusion of evidence because of the content of the information or the way the evidence was obtained. Some of these rules prohibits the evidence to be presented, such as evidence containing attorney-client privileged information, and some of them leave it up to the court to decide. See the DA Chapter 22 for further details. Norway is a signatory to The Haag Convention (1970) on the Taking of Evidence Abroad in Civil or Commercial Matters allowing foreign authorities to obtain evidence located in Norway.

Expert testimonies are permitted in Norwegian trials. An expert may either be appointed by the court on its own initiative or upon the request of a party, or a party may present an expert as a witness. There are no rules requiring the opponent's consent to present expert testimonies.

In both situations, the expert witness is subject to rules which to some degree deviate from the rules applicable for other witnesses. For instance, the expert witness may be present throughout the entire hearing.

However, the rules concerning expert witnesses appointed by the court and appointed by the parties are not entirely concurrent.

Except for in particular cases concerning family affairs, ie, divorce cases or cases regarding the custody of children, the main rule is that hearings are open to the public.

The court may, however, make exceptions to this rule if special interests necessitates it. For instance, the consideration of the state's affairs or someone's private life, may in a particular situation justify a limitation of the public's access to the hearing. The threshold to decide that the hearing will not be public is high.

In addition to oral proceedings being public, the public may also demand access to court records, records of judicial mediation, judicial rulings and statements of costs pursuant to Section 20-5 of the DA, see the DA Section 14-2.

Furthermore, concerning court decisions that are not heard entirely in writing, the public also have access to certain other documents, see the DA Section 14-2 for further details. For instance, the public may require access to all evidence invoked at an oral hearing.   

In civil disputes, the main rule is that the parties are in control of the case. This means inter alia that it is the parties who decide which issues shall be discussed and which evidence shall be presented. The role of the judge is therefore primarily to decide the case within the framework provided by the parties.

However, the DA requires the judge to ensure effective progress of the case and satisfactory case management. Therefore, the judge is given the right to intervene by guiding the parties, see especially the DA Section 11-5.

The main judgement is pronounced after the hearing. Other case management issues shall be solved as soon as possible. If the issue is raised in a court hearing, depending on the circumstances and complexity of the issue, the court may decide such issue in the hearing.

The timeframes for proceedings will vary a lot depending on the scope of the case and the court's work load. The DA, however, establishes some starting points regarding the different timeframes.

According to Section 9-4, the date of the main hearing shall be within six months of the date of submission of the writ of summons. This rule applies correspondingly for the appellate courts.

Furthermore, the ruling shall normally be pronounced within four weeks of the conclusion of the main or appeal hearing. If there was only one judge, the ruling shall normally be pronounced after two weeks.

The length of the hearings will mainly depend on the length of the case. Note that, as the judge may only base their ruling on the evidence and facts presented in the main hearing, the main hearing may be more lengthening than in other jurisdictions.

Nevertheless, the timeframes stipulated in the DA is unfortunately often exceeded. This especially applies to the appellate courts.

Court approval is not required to settle a lawsuit in civil cases in Norway. This is a result of the parties being free to dispose of the content of the dispute and they decide if they want to bring the dispute to the courts. Accordingly, the parties may enter into a settlement at any time during the legal process. However, to end the case, the parties must jointly apply to the court for a decision to that effect.

There are two ways to settle a lawsuit in civil cases in Norway. Firstly, the parties can enter into an in-court settlement, see DA Section 19-11. This is a settlement that will be set up in the courts in a defined form. Such in-court settlements are not confidential. This must be taken into consideration when discussing settlement in civil cases.

The other way to enter into settlements is through an out-of-court settlement. Such settlement has the effect of a regular contract, whereby the parties can decide that the settlement shall be confidential. 

In-court settlements have the effect of a final judgment according to Section 4-1 of the Enforcement Act. Accordingly, such settlements can be enforced. 

An out-of-court settlement cannot be enforced. If the parties want the settlement to be enforceable they must sign a cognovits note (judgment note).

In-court settlements may be set aside through the rules concerning the invalidity of contracts, see DA Section 19-12, second paragraph. The same applies to out-of-court settlements.

Under Norwegian law, claimants may obtain awards in three types of actions: Enforcement proceedings; action for declaration; and action for modification of legal relationships. The purpose of an action for declaration is to establish what is correct in the relationship between the parties, while the purpose of an enforcement proceeding is to obtain a basis for execution that may be legally enforced. The purpose of an action for modification of legal relationships is to carry out a change in the legal situation between the parties, eg, in a divorce.

According to Norwegian non-statutory law, there are four conditions that must be met in order for a party to be entitled to damages:

  • there must be a basis for liability;
  • there must be a causal relation between the basis for liability and the damage;
  • there must be adequacy in the sense that the damage had to be foreseeable; and
  • there must be a financial loss by the party who suffered damage.

The party who suffered damage must substantiate that these four conditions are met.

There is no rule limiting maximum damages, but the party who suffered damage is not entitled to damages exceeding their financial loss. Within contracts, it is common for parties to agree on monetary or percentage-wise limitations on damages. Such limitations will generally be upheld unless the damaging party has acted in gross negligence or willful misconduct, in which case the courts may set aside the agreed limitations. If the damaging party has not upheld their obligation to limit their financial losses or acted in contributory negligence, damages may be reduced.

A successful party is entitled to interest on overdue payment according to the Interest on Overdue Payments Act in the period from the deadline for payment and until payment is made. If a deadline is not agreed, a payment falls due 30 days after notice requiring payment has been given.

According to Norwegian case-law, a successful party may also collect interest for the period before judgment is entered, even if the claim had not fallen due prior to the judgment. Entitlement to such pre-judgment interest is set out inter alia in the Supreme Court's judgment in Rt. 2002 p. 71. The creditor (injured party) was awarded an interest allowance (depreciation interest), and the interest rate was set at the loss the creditor had suffered because they did not have the funds owed by the other party at their disposal.

A domestic judgment may be enforced by the Norwegian enforcement authorities according to the Enforcement Act. The enforcement authorities may inter alia attach or seize property or financial instruments in order to ensure compliance with a judgment.

Judgments from foreign countries are recognised and enforced to the extent such countries have agreements with Norway on mutual recognition and enforcement of judgments. The Lugano Convention applies as Norwegian law, see Section 4-8 of the DA.

The Norwegian legal system is based on a two-instance principle. This entails that a litigant party will, as the main rule, have the opportunity to have its case tried in two instances, as all rulings are subject to at least one appeal.

The starting point is that a judgment, interlocutory order or decision by the District Court can be appealed to the Court of Appeals. The ruling of the Court of Appeals can later be appealed to the Supreme Court, which is the highest court level in the Norwegian legal system.

As a main rule, judgements can be appealed to the Court of Appeals based on the appellant claiming there has been an error in the evaluation of the actual facts in the case, an error in the application of the law or an error in the procedure prior to the judgement, see DA Sections 29-2 and 29-3.

However, consent from the Court of Appeal is required if the materialistic value of the appeal object is less than NOK 125 000, see DA Section 29-13.

For an appeal to the Supreme Court to be tried, permission is required in all cases. Permission is only granted for cases of importance beyond the issue disputed or for cases of otherwise great importance, see DA Section 30-4.

An appeal against a judgment that would normally be tried by the Court of Appeal may, with permission, be appealed directly to the Supreme Court. Permission may only be granted if the case rises particularly important issues of principle which it is important to promptly have the Supreme Court's view on, and if regard for the need for a sound hearing does not weigh against direct appeal.

The courts ensure ex officio that the case fulfills the requirements for appeal.

An appeal shall be lodged with the court that delivered the ruling that the party intends to appeal.

As a main rule, the appeal shall be submitted in writing and shall provide the basis for both the court and the counterparty to make a proper consideration of the case.

Thus, the appeal must include necessary information on, among other things:

  • the decision that is appealed;
  • whether the appeal concerns the entire decision or only certain parts thereof;
  • the claim that the appellate case is regarding and a statement of claim;
  • he alleged errors made in the decision being appealed;
  • the actual and legal basis for the existence of such errors;
  • the evidence that will be adduced;
  • the basis for the court to consider the appeal if there is any doubt; and
  • the appellant's view of the further process of the appeal.

The ordinary time limit for a party to lodge an appeal is one month from the day the party was served or informed of the ruling that they wishe to appeal.

If a case is appealed to the second instance, there will be a complete re-hearing of the case. Thus, the Court of Appeal may try both the lower instance's evaluation of the actual facts in the case, its application of the law and the case procedure. As a main rule, the re-hearing shall be oral and witnesses shall give their testimonies directly before the court.

This is somewhat different in regard to the Supreme Court, where the main rule is that only judgements are subject to oral re-hearings, while appeals against interlocutory orders and decisions normally shall be subject to written hearings. 

The rules regarding whether new arguments may be introduces at an appeal are stricter for the Supreme Court than for the Court of Appeal, see DA Sections 29-4 and 30-7. For the Supreme Court, new claims cannot be asserted, the assertion in respect of existing claims cannot be broadened and new facts or evidence cannot be submitted unless the Appeals Committee of the Supreme Court finds that special grounds suggest otherwise.

For the Court of Appeal, the rules on asserting new claims are less stringent, and there are several exceptions from the main rule that only claims that have already been tried by the lower instance, can be tried by the Court of Appeal. The assertion in respect of existing claims can be broadened if the opposite party consents, if the amendment is based on circumstances that became known to the party after the main hearing in the district court or if it otherwise seems reasonable to allow the amendment.

The court cannot impose any conditions on granting an appeal. However, the notice of appeal must contain and fulfill the substantive requirements stated in DA Section 29-9 and keep the deadlines stated in 10.3 Procedure for Taking an Appeal.

The Court of Appeal shall settle an appeal by way of judgement or interlocutory order pursuant to DA Section 29-23, see Section 19-1. The appeal shall be dismissed if the Court of Appeal finds that it cannot succeed.

The appealed ruling shall be set aside if an appeal against procedure succeeds or if the Court of Appeal, at its own initiative, gives effect to a procedural error pursuant to DA Section 29-21. The Court of Appeal may decide that the further hearing of the case after the appealed ruling is set aside, shall take place before a different court or different judges.

If an appeal on the merits of a ruling succeeds, the Court of Appeal shall make a new ruling on the merits if it has a basis for doing so. In all other respects, the case shall be rejected and the case must be tried again before the District Court.

The rules on the court's powers are much the same for the Supreme Court. After hearing an appeal, the Supreme Court may set aside the ruling or make a new judgement. Pursuant to DA Section 30-14, the appealed ruling shall be set aside if the hearing demonstrates that there are or may be errors in the factual or legal basis for the appealed ruling, but the Supreme Court does not have a sound basis for making a new ruling on the claim to which the case relates. If so, the case will be returned to the Court of Appeal for a new hearing.

As the main rule, a party who prevails – in the whole or in the main – in a case before the ordinary courts, is entitled to "full compensation" for their legal costs from the opposite party. Full compensation shall cover all of the party's "necessary costs" related to the case. At the end of the oral hearing, the parties must present an overview of the costs which the party claim to have a right to be reimbursed from the other party. If such costs are not presented, the party risks to lose the reimbursement claim.

The parties are given the opportunity to accept or dismiss the counterparty's costs claim. The court will have the final say in the question as to whether the costs of a party has been "necessary" for preparing and conducting the case, see 11.2 Factors Considered When Awarding Costs.

In principle, a party who has won the case fully or substantially has the right to claim the counterparty to cover all necessary legal costs related to the trial. However, the court can reduce the amount if it finds that the costs have not been necessary for the case, for example the court may find that attorney's fees are too high given the significance of the case.

In particular, the court shall take into account three aspects when assessing if the costs have been necessary, the first one being whether there was just cause to have the case heard because the case was doubtful or because the evidence was clarified only after the action was brought. Secondly, the court will consider whether the successful party can be reproached for bringing the action or whether the party has rejected a reasonable offer of settlement. Third and finally, the court can reduce the amount if it finds that the case is important to the welfare of the party and the relative strength of the parties justifies an exemption.

Even if neither party wins the case, a one party can still be ordered to partially reimburse the other. Another possibility is that neither party compensate the other party, and the parties must bear their own legal costs.

Interests will automatically accrue on the litigation costs, and are awarded by judgment. According to the Norwegian Interest Act, the interests will accrue from the due date when this is set in advance. It often follows from the court's judgement that the litigation costs (and any other amount to be paid by the losing party) are due two weeks after the ruling is announced. The default interest rate is set semi-annually by decree, and is from 1 July 2019, set to 9.25 %.

Mediations and arbitrations are frequently used forms of alternative dispute resolution (ADR) in Norway. These are based on agreements between the parties involved in a dispute. In certain areas of the finance industry, such as banking and insurance, there are procedures available as ADR, offered by The Norwegian Financial Services Complaints Board (FinKN), but this is optional for the claimants to use or not.

In-Court mediations are strongly promoted by first and second instance courts, see the DA Chapter 8. It is, however, not compulsory and contingent upon agreement by all parties. In their reply to a claims submission, the defendants are usually required by the court to inform if they are willing to participate in an in-court mediation or not, see DA Section 9-4 (2) (a), but there are no direct sanctions if a party refuses.

There are mainly two Institutions offering ADR in the form of arbitration, fast-track arbitration and mediations in Norway. One is the Arbitration and Dispute Resolution Institute of the Oslo Chamber of Commerce. This institution offers both mediation, arbitration, and fast-track arbitration. The other is the Nordic Offshore & Maritime Arbitration Association, however, this is not a Norwegian institution but a pan-Nordic institution with members from Denmark, Finland, Norway and Sweden. This institution offers arbitration and is in progress with developing also frames for mediation and fast-track arbitration.

Arbitration under Norwegian law is regulated by the Arbitration Act of 2004, which again is based on the UNCITRAL Model Law from 1985. This Act regulates the formation and conduct of arbitrations as well as the validity and enforcement of arbitral awards in Norway.

As a starting point, any civil matter may be referred to arbitration in Norway. The arbitration must be based on an agreement between the parties, however, there are some mandatory rules restricting arbitration agreements in certain consumer-related contracts. Theoretically, the Norwegian Act on Formation of Contracts from 1918, Section 36, may set aside arbitration clauses if they are clearly unreasonable to enforce, but this rule has not to date been applied to invalidate arbitration clauses.

An arbitral award may only be set aside based on the grounds listed in the Arbitration Act Section 43. These grounds are:

  • lack of legal capacity;
  • lack of reciprocity in presenting opposite views;
  • award outside jurisdiction of the tribunal;
  • wrongful composition of tribunal; and
  • arbitration procedure contrary to law or agreement when likely that this had an impact on the decision.

Furthermore, the courts may on their own initiative set an award aside if the dispute is not capable of settlement by arbitration under Norwegian law, or is contrary to public policy (ordre public).

If the grounds for invalidity only affect a part of the award, only such part will deemed to be invalid. The time limit for bringing action to set aside an arbitral award is three months after the award was received by the party. Norwegian courts are, in general, reluctant to set aside arbitral awards, and there is only a handful of reported court cases to this effect in Norway.

Both domestic and foreign arbitral awards are enforceable pursuant to the Norwegian Enforcement Act, see Arbitration Act Section 45, in the same manner as a regular court award. Norway is a signatory to the New York convention of 1958 on the recognition and enforcement of foreign arbitral awards. If the award is not written in English, Norwegian, Swedish or Danish, then a certified translation of the award is required for enforcement of it.

Advokatfirmaet Thommessen AS

Haakon VIIs gate 10
P.O. Box 1484 Vika
NO-0116 Oslo
Norway

+47 23 11 11 11

+47 23 11 10 10

firmapost@thommessen.no www.thommessen.no
Author Business Card

Trends and Developments


Authors



Advokatfirmaet Thommessen AS was established in 1856 and is considered to be one of Norway’s leading commercial law firms. The firm has offices in Oslo, Bergen, Stavanger and London. The firm provides advice to Norwegian and international companies as well as organisations in the public and private sectors, ranging from SMEs to large multi-national corporations. Thommessen covers all business related fields of law. 260 people work at Thommessen today. Approximately 180 of them are lawyers. The firm has extensive experience in resolving disputes both in and outside the courts. Many disputes are a fight over the facts and Thommessens's lawyers find what is necessary. Project management is critical, team selection is essential. Thommessen has cutting edge expertise and versatility. Its litigation specialists work closely with the firm's technical professionals and market experts. The right people get involved at the right time in the process. The use of resources should always correspond to the importance of the case and Thommessen takes neither shortcuts nor any detours.

Trends in General Litigation

The courts have become more efficient

In Norway, we see an increasing number of complex commercial disputes being litigated –eg, disputes relating to professional liability, construction contracts, patents, directors' and officers' liability, insurance, as well as shipping and offshore related matters.

Norwegian courts have, over the years, become more efficient and, albeit dependent on the size and complexity of the matter, a hearing before the court of first instance (the District Court) will normally be held within six to 12 months from the filing of the case. All decisions of the District Court are subject to appeal to one of the six regional appeal courts and, in the vast majority of cases, the appeal court will hold a full hearing at which it evaluates all relevant evidence. The appeal hearing will normally be held within 12-18 months from the filing of the appeal. Decisions of the appeal courts are subject to further appeal to the Supreme Court. However, the Supreme Court operates a strict leave to appeal system under which, on average, only one in seven appeals is allowed. Appeals that are granted leave will most often be heard by the Supreme Court within five to eight months of the filing of the appeal. Thus, a case appealed all the way through the Norwegian court system will normally take at least two to three years before it is finally decided.

The Supreme Court has voiced a desire to determine a higher number of commercial disputes

On average, the Supreme Court hears about 60-65 civil case appeals per year. Leave to appeal is only given in cases that raise matters of principle relevant beyond the specific dispute at hand. Historically, disputes concerning taxes and other administrative law, labour law and torts have dominated the case log, but recently the Chief Justice voiced her desire to increase the number of commercial matters determined by the Supreme Court. A challenge in this respect is that complex commercial disputes tend to turn on the facts as much as on the law. As the Supreme Court, apart from court-appointed experts, does not hear witnesses, and is reluctant to allow hearings of more than two to three days, appeals in complex commercial litigation will have to be angled and adapted to meet the Supreme Court's criteria. Even if the Supreme Court's ambition is to entertain more commercial disputes, we do not envisage the Supreme Court deviating from its strict practice of allowing only appeals of significant general interest.

One example of the Norwegian Supreme Court's recent decisions in civil cases involves refining and developing the law on disclosure of documents, which is of particular importance in commercial litigation. One field where the Supreme Court's desire to determine a higher number of commercial disputes may already have had an effect is construction law, from which the Supreme Court has traditionally been reluctant to admit disputes. Two construction disputes have been decided by the Supreme Court so far in 2019, and a third dispute has been admitted and will soon be heard by the court. One of the construction law judgments already rendered addressed the principles of how to substantiate both disruption claims and claims for additional compensation due to acceleration, which are very common types of claims in most construction disputes.

Discovery under Norwegian law

Norwegian law, as opposed to the Anglo-American system, does not recognise the principles of full discovery, in which parties may access large amounts of unspecified documents. Pursuant to the Civil Procedure Act of 2005 (the CPA) Section 26-6, a request for access to evidence (eg, documents) must be specified in sufficient detail to clarify which items of evidence are to be disclosed. Both in travaux préparatoires and in several Supreme Court rulings, reference is made to the Anglo-American discovery procedure, and it is emphasised that the CPA does not provide for an equally wide access to evidence. As recently as May 2019 (HR-2019-997-A), the Supreme Court has cited the travaux préparatoires and held that it has not been the intention of the legislator to allow for discovery proceedings tantamount to those known in Anglo-American law.

Under Sections 21-7 and 21-8 of the CPA, requests for disclosure are also subject to relevancy and proportionality requirements. The relevancy requirement was confirmed and emphasised by the Supreme Court in a case from May 2019. In extension to that principle, the Supreme Court underscored that parties requesting evidence must specify what the requested documents are intended to prove and how they are relevant to the dispute. In practice, these two principles form a relatively significant limitation on the duty to disclose information.

Furthermore, under CPA Section 26-5, paragraph 3, the court can deny motions for disclosure on the grounds that the expenses incurred would be disproportionate, having regard to the importance of the dispute and the potential significance of the evidence.

The CPA also provides for means to secure and gain access to evidence outside and prior to the trial – ie, without having first filed a formal claim on the merits with the courts. Such securing and access to evidence is decided by the court upon written application and executed by the bailiff, typically by copying of servers, etc. These regulations were introduced into Norwegian law in 2004 and are, after a few more or less dormant years, now in frequent use.

Trends in Arbitration

Increased use of arbitration – ad hoc and institutionalised

Within, for example, the shipping, offshore, energy and construction sectors we have, in recent years, seen a growing number of cases decided by arbitration tribunals seated in Norway. 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. Arbitration has proven to be efficient, with a typical timespan from notice to award of nine to 15 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 United Nations Commission on International Trade Law Model Law. Traditionally, most arbitration in Norway has been ad hoc rather than institutionalised. The number of institutionalised arbitration cases does however seem to be on the rise, with both the Oslo Chamber of Commerce and the newly established Nordic Offshore and Maritime Arbitration Association processing an increasing number of cases. The latter institution has also published a set of detailed Best Practice Guidelines, which is often applied in ad hoc arbitration as well. 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).

Characteristics of Norwegian arbitration: predictability and emphasis on oral hearings

Institutionalised as well as ad hoc arbitration in Norway is, for many, 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. 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. However, the parties may agree on a different procedure – eg, by choosing written statements from witnesses with only oral cross-examination, written post-hearing closing arguments, or an arbitration conducted entirely in writing.

Under Norwegian law, the parties may agree to the arbitration awards being kept confidential, however it is not sufficient that this is agreed in the arbitration clause of a contract. According to Section 5 of the Norwegian Arbitration Act, confidentiality must be specifically agreed for the particular arbitration when the dispute arises. Third parties may, however, not attend the arbitral hearing unless this is specifically agreed to by all parties.

Common Trends for Litigation and Arbitration

Technological developments – digitalisation

A trend both in Norwegian litigation and arbitration is the increased use of digital solutions. All ordinary courts are now using an electronic web system where information and documents pertaining solely to the relevant cases are exchanged electronically. During hearings, all documentary evidence is collected in an electronic file used instead of printed case documents. This system is today mandatory for case preparation at the ordinary courts, thus rendering a substantial part of the procedure paperless. It is also quite common for the major Norwegian law firms to establish electronic data rooms for case preparation, shared with the clients. 

Increased use of alternative dispute resolution mechanisms

Another trend within Norwegian commercial litigation, 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", where one or more mediators follow projects throughout project execution with the aim of resolving disagreements before disputes arise. Typical topics of such mediations are claims for additional payment or time extensions.

Advokatfirmaet Thommessen AS

Haakon VIIs gate 10
P.O. Box 1484 Vika
NO-0116 Oslo
Norway

+47 23 11 11 11

+47 23 11 10 10

firmapost@thommessen.no www.thommessen.no
Author Business Card

Law and Practice

Authors



Advokatfirmaet Thommessen AS was established in 1856 and is considered to be one of Norway’s leading commercial law firms. The firm has offices in Oslo, Bergen, Stavanger and London. The firm provides advice to Norwegian and international companies as well as organisations in the public and private sectors, ranging from SMEs to large multi-national corporations. Thommessen covers all business related fields of law. 260 people work at Thommessen today. Approximately 180 of them are lawyers. The firm has extensive experience in resolving disputes both in and outside the courts. Many disputes are a fight over the facts and Thommessens's lawyers find what is necessary. Project management is critical, team selection is essential. Thommessen has cutting edge expertise and versatility. Its litigation specialists work closely with the firm's technical professionals and market experts. The right people get involved at the right time in the process. The use of resources should always correspond to the importance of the case and Thommessen takes neither shortcuts nor any detours.

Trends and Development

Authors



Advokatfirmaet Thommessen AS was established in 1856 and is considered to be one of Norway’s leading commercial law firms. The firm has offices in Oslo, Bergen, Stavanger and London. The firm provides advice to Norwegian and international companies as well as organisations in the public and private sectors, ranging from SMEs to large multi-national corporations. Thommessen covers all business related fields of law. 260 people work at Thommessen today. Approximately 180 of them are lawyers. The firm has extensive experience in resolving disputes both in and outside the courts. Many disputes are a fight over the facts and Thommessens's lawyers find what is necessary. Project management is critical, team selection is essential. Thommessen has cutting edge expertise and versatility. Its litigation specialists work closely with the firm's technical professionals and market experts. The right people get involved at the right time in the process. The use of resources should always correspond to the importance of the case and Thommessen takes neither shortcuts nor any detours.

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