The International Arbitration Review: Norway


All arbitration that takes place in Norway – both domestic and international – is governed by the Norwegian Arbitration Act (NAA).2 The NAA is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law (Model Law) and applies to all types of cases, small and large, professional parties and consumers.

Because the NAA applies also to all domestic arbitration cases, the content of the NAA is a bit different to that of the Model Law. Further, the NAA is more detailed than the Model Law.

Some issues that can be highlighted include the following:

i Confidentiality and public access

According to Section 5 of the NAA, arbitral proceedings and arbitral awards are not confidential unless the parties have specifically agreed to this regarding the specific case at hand. The agreement on confidentiality has to be entered into after a dispute has arisen: it is not sufficient to agree to this beforehand in the agreement containing the arbitration clause.

The Model Law does not have such a clause.

ii The arbitration agreement

NAA Section 10 has provisions regarding arbitration agreements and does not require arbitration agreements to be in writing; however, for evidential purposes, it is advisable to have the arbitration agreement in writing, and in practice, most arbitration agreements are in writing. According to NAA Section 10 Paragraph 2, an assignment of a contract also includes the assignment of an arbitration clause if the opposite has not been agreed by the parties.

iii Evidence

NAA Section 28 has regulations regarding evidence. In Paragraph 1, it is stated that the parties to a case have the responsibility for presenting the evidence in a case, and that the parties have the right to submit whatever evidence they want. However, according to Paragraph 2, an arbitration tribunal may refuse evidence that clearly is not significant to a case. Further, an arbitration tribunal may limit the submission of evidence if the amount of submitted evidence is disproportionate to the significance of the dispute for the parties or the significance the evidence can have for the decision of the dispute. However, it is very rare that an arbitral tribunal uses its power according to this provision if a complaint has not been made by either of the parties.

iv Application of law

Although Section 31 of the NAA is based on Article 28 of the Model Law, if the parties have not decided on any substantial law, the arbitration tribunal shall apply the Norwegian conflict of laws rules. The arbitration tribunal can only make its decision based on reasonableness if the parties have explicitly agreed to this.

v Costs

Chapter 8 of the NAA (Sections 39 to 41) contains regulations regarding the determination of costs to arbitration tribunals (Section 39), the allocation of determined costs to arbitration tribunals and parties' case costs between the parties (Section 40), as well as provisions regarding security for costs (Section 41). Such provisions are not found in the Model Law.

According to Section 39, the arbitration tribunal determines its own remuneration and expenses to be covered, if nothing else has been agreed between the arbitral tribunal and the parties. Traditionally, it has been uncommon in Norwegian arbitration to agree on the remuneration of the arbitration tribunal beforehand. However, this seems to have become more common in recent years, as more parties want to have control of this cost element. It is possible to appeal an arbitration tribunal's decision on its remuneration to the ordinary courts within one month of a decision. However, it is very rare that parties do this.

The parties are jointly liable for the costs of an arbitration tribunal,3 but, upon request from one of the parities, the arbitration tribunal can divide the costs of the arbitration tribunal between the parties as the arbitration tribunal finds right.4 According to NAA Section 41, the arbitration tribunal can demand that the parties provide security for the costs of the arbitration tribunal if the opposite has not been agreed between the arbitration tribunal and the parties. It is normal that the arbitration tribunal demands security and that this is divided between the parties. If the demanded security is not provided, the arbitration tribunal can stop an arbitration. However, if one of the parties does not provide its security, the other party can provide the security so that the arbitration is not stopped.

Upon request from one of the parties, the arbitration tribunal can decide that the other party has to cover all or part of the costs of the opposing party to the extent the arbitration tribunal finds this appropriate. Although the regulations in the Norwegian Dispute Act5 do not apply to arbitration proceedings, it has been quite common for arbitration tribunals to look to the regulations regarding costs in the Dispute Act and apply more or less the same principles. The main rule in the Dispute Act is that the party who wins in full or for the substantial part will get its costs covered by the losing party.6 However, there seems to be a tendency in arbitration to let the parties bear their own cost a bit more often than in civil disputes before the ordinary courts.

vi Consumer protection

According to NAA Section 11, arbitration agreements entered into before a dispute has materialised are not binding on consumers. However, a consumer can agree to arbitration after a dispute is a fact. In such a case, an arbitration agreement where a consumer is a party has to be in writing in a separate document signed by both parties.

vii Other issues

That said, in general it is fair to say that deviations from the Model Law are immaterial. It is also possible for the parties to contract out of the provisions of the NAA, and hence adjust deviations from the NAA if desired.

Regarding the composition of arbitration tribunals, the main rule is a tribunal of three arbitrators. In smaller cases, it is quite common that the parties agree on a single arbitrator. Where the tribunal is to consist of three members, the main rule is that the parties try to agree on all three arbitrators and that the whole tribunal is appointed jointly by the parties without getting to know which of the parties nominated each of the arbitrators. This procedure works quite well and is followed in most cases. The fallback position, if the parties do not agree to the full composition of the arbitration tribunal, is that each party nominates one arbitrator each and that these two jointly appoint the chairperson. If the two nominated arbitrators cannot agree on a chairperson, the chairperson will be appointed by the district court. However, it is quite seldom that this back-up procedure has to be followed.

Arbitration in Norway has historically mostly been, and still is, ad hoc arbitration. A likely reason for this is that there have not been any strong arbitration institutions in Norway. A consequence of this is that most arbitrations in Norway have been domestic arbitrations or arbitrations with at least one Norwegian party. There have been quite a few international arbitrations where none of the parties have been Norwegian.

However, this might be on the brink of changing. The Arbitration and Dispute Resolution Institute of the Oslo Chamber of Commerce (the OCC Institute) has revitalised its rules to make them more attractive, and at the end of 2017 a new arbitration institute, the Nordic Offshore and Maritime Arbitration Association (NOMA), was established. The main purpose of NOMA is to facilitate international arbitration in the Nordic countries, and it has already been used in several cases. This is elaborated on below.

The year in review

i Developments affecting international arbitration


NOMA7 was established in November 2017 on the initiative of the Danish, Finnish, Norwegian and Swedish maritime law associations. The association is registered in Norway, and its members are the maritime law associations of Denmark, Finland, Norway and Sweden. It offers institutionalised arbitration proceedings, although a very light version as compared to those of most other arbitrational institutions such as the ICC, SCC and SCMA. For instance, there are no fees payable to NOMA, and the association is not involved in administrating the proceedings.

The Nordic countries have a long tradition of settling disputes within the maritime and offshore industry by ad hoc arbitration. Nevertheless, for quite some time the industry, as well as the Nordic legal environment, recognised that it would be useful to develop a more common approach to Nordic arbitration and to establish an institutionalised alternative to ad hoc arbitration. One reason was that ad hoc arbitrations, particularly in Denmark and Norway, to a significant degree rely upon non-codified practices and custom developed by the legal community over time. In addition, the Arbitration Acts of Denmark and Norway are fairly general, and most provisions can be deviated from by agreement between the parties. Although these characteristics allow for smooth and often cost-effective proceedings where the parties to a significant degree are in control of the process, it can be challenging for non-Nordic parties to get a thorough understanding of the process, for instance with regard to certain procedural steps such as disclosure and the taking of evidence. With the introduction of NOMA, there is now an institutionalised alternative that aims to give the best of both worlds: maintaining the flexibility that follows from ad hoc arbitration, while at the same time giving users more predictability by using a set of rules without being bound by the strictness often experienced when using institutionalised arbitration.

In 2021, a new set of rules were introduced; however, these are nearly identical to the initial rules implemented in 2017. The NOMA rules are mandatory and based on the Model Law. They are, however, shorter than those of the Model Law, and thus more in line with the Nordic tradition. For NOMA arbitration proceedings that are agreed to take place in Norway, the NAA will apply and supplement the NOMA Rules. However, because the parties to a Norwegian arbitration proceeding are allowed to deviate from most of the provisions in the NAA, the rather comprehensive and all-inclusive nature of the NOMA Rules means that the provisions in the NAA have very limited application.

When it comes to the composition of the tribunal, the default position of the NOMA Rules is the appointment of three arbitrators unless otherwise agreed by the parties.8 The parties shall seek to appoint the arbitrators jointly. If they fail to agree, the parties shall appoint one arbitrator each, who shall jointly appoint the third arbitrator who will act as the chairperson.9 If a party fails to nominate its arbitrator, the other party may request NOMA to appoint such arbitrator.

It follows from the NOMA Rules Article 15 that, subject to the Rules, a tribunal may conduct the arbitration in such manner as it considers appropriate; however, the tribunal shall take the NOMA best practice guidelines (NOMA Guidelines: further described below) into consideration when exercising its discretion. The tribunal may, at the request of a party, grant interim measures ordering a party to, inter alia, refrain from taking action that is likely to prejudice the arbitral process itself, or to provide the means of preserving assets out of which a subsequent award may be satisfied or to preserve evidence.10

The costs of an arbitration shall in principle be borne by the unsuccessful party or parties.11 The fees and expenses of the arbitrators shall be reasonable, taking into account relevant circumstances such as the amount in dispute, the complexity of the subject matter and the amount of time spent by the arbitrators. If the arbitrators have issued terms of engagement prior to their appointment, then these terms may be referred to NOMA for review. Alternatively, if no such terms have been issued, each party may refer the tribunal's fee proposal to NOMA for review. The tribunal may request the parties to deposit an equal amount as an advance for the arbitrators' fees.12

As a starting point, an arbitration award is confidential, but it may, with the consent of all parties, be made public.13 An award is considered final and binding after 30 days from receipt of the award. A party may, within such 30-day deadline, request the tribunal to correct any error in computation, any clerical or typographical error, or any error or omission of a similar nature.14 Unless explicitly agreed, there is no right of appeal. However, the NAA contains mandatory provisions allowing the Norwegian courts to invalidate an award, inter alia, on grounds that:

  1. one of the parties to the arbitration agreement lacked legal capacity;
  2. the agreement is invalid under the laws to which the parties have agreed;
  3. the award falls outside the scope of the tribunal's jurisdiction; or
  4. the appointment of the tribunal or the composition of the tribunal is incorrect.15

In addition to the NOMA Rules, there are the NOMA Guidelines, which aim to ensure a predictable, transparent, cost-efficient and fair arbitration process within the framework of the NOMA Rules. As noted above, a tribunal shall take the NOMA Guidelines into consideration when exercising its discretion to conduct proceedings as it considers appropriate. The NOMA Guidelines can also be used in ad hoc arbitration proceedings by simply having the parties agree that the proceedings shall follow the NOMA Guidelines.

The NOMA Guidelines, inter alia, provide for a case management conference to be held as soon as possible after a tribunal has been established.16 The object of the conference is to agree on the procedure to be followed to ensure a prudent and cost-effective resolution of the dispute within a reasonable time. During the conference, the parties should, among other things, seek to agree the dates for the main hearing and deadlines for submissions and subsequent pleadings. The NOMA Guidelines also include provisions detailing the format and procedure for conducting oral hearings and rules on the taking of evidence. The latter rules are mainly based on the IBA Rules on the Taking of Evidence in International Arbitration. The parties and the tribunal may adopt these rules in whole or in part, or merely agree to use them as guidelines in developing their own procedures.

NOMA has been well received and must so far be considered a success. An increasing number of ship owners and operators, shipyards and other players in the shipping and offshore industries have already opted for NOMA arbitration in their contracts, and several arbitration proceedings under the NOMA Rules have already been commenced. An important milestone was achieved in late 2018 when the Nordic Marine Insurance Plan adopted NOMA as a dispute resolution mechanism from 1 January 2019. For insurance effected with a non-Nordic claims leader, NOMA is the default dispute resolution option, and it is optional for insurances effected with a Nordic claims leader.

On 1 April 2021, the NOMA Fast Track Arbitration Rules were introduced. The rules apply whenever the parties have agreed to refer their dispute to the NOMA fast track rules, whether before or after the dispute has arisen. In addition, the aggregate amount of the claim and (if applicable) the counterclaim in dispute must not exceed US$250,000 (or such other amount which the parties have agreed). The rules are similar to the 'regular' NOMA rules but with some key deviations to enhance swift and less expensive arbitration proceedings. One key difference from the regular rules is that only one sole arbitrator shall be appointed unless the parties have agreed otherwise. Furthermore, the parties are only allowed to submit one written statement or pleading each in addition to the statement of claim and statement of defence, and such subsequent pleadings must be submitted within a short period of time (14 days). Another important difference is that the proceedings shall be conducted on the basis of documents only (i.e., with no oral hearing), unless otherwise agreed by the parties or if decided by the tribunal upon request from one of the parties. To ensure efficient proceedings, the tribunal is required to render its final award no later than six months after commencement of the arbitration. This deadline can only be extended in 'exceptional circumstances' and after consultation with the parties. Finally, the tribunal's fees must be capped at 5 per cent of the total amount in dispute, however not less than US$10,000 (with some exceptions in case of oral hearings or in the event that three arbitrators are appointed).

OCC Institute

The OCC Institute17 was established in 1984. It provides for various forms of mediation in addition to both ordinary and fast-track arbitration. Its rules have been revised several times, most recently in 2016 when an extensive review was carried out. This resulted in a new set of Rules for Arbitration, which came into force on 1 January 2017 (the OCC Rules). The OCC Rules are harmonised with the Norwegian Arbitration Act and the Model Law.

Arbitrations are initiated by making a request for arbitration to the OCC Institute.18 The OCC Institute will thereafter fix a time limit for the respondent to submit a written response to the request for arbitration. Unless otherwise agreed, the arbitration tribunal shall consist of three arbitrators to be jointly appointed by the parties. Upon failure to reach an agreement, the parties appoint one arbitrator each while the third arbitrator, being the chairperson of the tribunal, shall be appointed by the OCC Institute.19 An oral hearing shall be conducted unless the tribunal considers it unnecessary and it has not been requested by any of the parties.20 The tribunal may, at the request of a party, order any party to take such interim and conservatory measures as the tribunal considers necessary.21

The administrative fees payable to the OCC Institute are based on fixed fees depending on the amount in dispute. The tribunal shall determine its own remuneration based on the OCC Institute's remuneration schedule, which operates with minimum and maximum fees depending on the amount in dispute and where the co-arbitrators each receive 60 per cent of the fee of the chairperson. The costs of the tribunal, as well as the costs of the parties, are allocated between the parties as the tribunal finds appropriate.

An arbitration award is final and enforceable, although a party may ask that the tribunal corrects an award that, because of clerical or arithmetical errors, or similar manifest errors, has not been formulated in a manner that reflects the intention of the tribunal.22 In addition, the Arbitration Act, which supplements the OCC Rules, includes invalidity provisions in the NAA's Chapter 9 that allow a Norwegian court to set aside an award. The OCC Rules contain no provisions concerning confidentiality. Thus, it follows from the NAA that unless explicitly agreed otherwise, arbitration proceedings, as well as arbitration awards, are not subject to any confidentiality requirements.

The OCC Rules also contain provisions for fast-track arbitration that apply subject to agreement between the parties.23 Under such Rules, the tribunal shall consist of one arbitrator appointed by the OCC Institute. The number of pleadings are limited, and an oral hearing may normally not exceed three days.

Due to the tradition of ad hoc arbitrations in Norway, only a limited number of cases have been referred to arbitration conducted through the OCC in the past. It is, however, believed that, with an increased understanding of the benefits of conducting institutionalised arbitrations in Norway, coupled with the recently revised set of OCC Rules paving the way for an efficient and cost-effective means of conducting arbitration proceedings via the OCC, the number of referrals to the OCC will increase in the years to come.

ii Arbitration developments in local courts

Only a limited number of lawsuits regarding arbitration matters are brought before the ordinary courts. However, it occasionally happens, and in the past few years, including 2020, there have been some interesting decisions. Some of these are discussed below.

Regarding the range of an arbitration clause

IM Skaugen Marine Service Pte Ltd v. MAN Diesel & Turbo SE, Man Diesel & Turbo Norge AS 24

In late 2017, the Supreme Court decided on the range of an arbitration clause in a contract between a Chinese shipyard and a German engine supplier.25 The summary of the Supreme Court's decision reads as follows:

A Norwegian shipping company that had ordered ships from a shipyard in China had decided to use engines from a German supplier. The shipyard entered into a contract with this supplier. The contract contained a provision for arbitration in China. Later, the shipyard entered into a contract with the engine supplier's Danish subsidiary regarding purchase of more engines. This contract contained a provision for arbitration in Denmark. The Supreme Court heard the case in chambers, and dismissed the shipyard's claim for damages against the engine supplier with regard to the engines that had been purchased by the Danish subsidiary, since the claim was covered by the arbitration clause, see the Arbitration Act section 7 subsection 1. The fact that the claim was based on non-contractual liability was not deemed decisive, as there was a sufficiently close connection between the claim and the contract entered into. On the other hand, the claim for damages was not dismissed with regard to the engines that had been supplied to the shipyard in China. The relevant arbitration clause governed the relationship between the shipyard and the engine supplier, and the shipping company was not party to this contract. The claim for damages was also a different claim than the one the shipping company could have filed against the engine supplier.

It should be noted that in its decision, the Supreme Court states that, in principle, Norwegian courts must comply with the Norwegian procedural rules – lex fori – when deciding on their jurisdiction. However, this is only a starting point.26 The Supreme Court continues to state in Section 65:

When assessing whether a legal relationship is subject to arbitration abroad, and whether the arbitration agreement is invalid, one must seek to reduce the risk of miscarriage of justice or double hearing. It would be highly unfortunate if an action is dismissed in Norwegian courts because the case, under Norwegian law, is regarded as subject to arbitration, whereas under the rules the arbitration court itself will apply, it falls outside the scope of the arbitration agreement. It would also be unfortunate if both Norwegian courts and the arbitration court, under different sets of rules, should find that they have jurisdiction in the dispute.

The Supreme Court also emphasised that it is an international principle that an arbitration agreement or an arbitration clause is an independent agreement separated from the underlying contract – the separation principle – with reference to, for instance, the House of Lords decision of 17 October 2007 in Premium Nafta Products Limited and others v. Fili Shipping Company Limited and others, Paragraph 17. Further, the Supreme Court noted that under Norwegian law, this principle is applied in the NAA Section 18, and that this entails that the arbitration clause as a starting point will persist even if the underlying contract is found to be invalid. Nor could the Supreme Court find any invalidating factors of the underlying contract that could be transferable to the arbitration agreement.27

Regarding the question of whether Skaugen was bound by the arbitration agreement between Man and the shipyard, the Supreme Court stated that it was not obvious which country's law is applicable. Because the case had mainly been litigated based on Norwegian law, the Supreme Court applied Norwegian law. However, the Supreme Court added that foreign sources of law may be relevant by virtue of their argumentative value, especially in connection with arbitration where Norwegian rules are by far adjusted to international rules.

It also seems to be in line with an international arbitration trend that these issues are resolved based on what one may refer to as a denationalised approach and freer deliberations regarding the parties' common qualifications and fair expectations. 'The Law Applicable to the Arbitration Clause', from the collection Improving the Efficiency of Arbitration Agreements and Awards: 40 years of Application of the New York Convention,28 mentions that the question of to what extent an arbitration agreement is binding on parties other than those immediately bound by it is often subject to a denationalised approach, which has also partially influenced parties' litigation before the Supreme Court to the extent Norwegian law has not been applied. Under any circumstances, Norwegian judges' views on which conclusions can be drawn from a denationalised approach will to some extent be coloured by the habitual Norwegian legal approach.

With regard to international matters, a third party may also be bound by an arbitration agreement based on implied consent. A third party in most developed legal systems may be bound by an arbitration agreement without explicitly having consented to it:

Where a party conducts him or herself as if it were a party to a commercial contract, by playing a substantial role in negotiations and/or performance of the contract, it may be held to have impliedly consented to be bound by the contracts. In the words of the Swiss Federal Tribunal 'a third party who interferes in the execution of the contract containing the arbitration agreement is deemed to have accepted it, by way of conclusive acts'.29,30

Nevertheless, in the concrete assessment the Supreme Court found that Skaugen was not bound by the arbitration clause in the engine supply contract between the Shipyard and MAN Germany. Hence, Skaugen's claim for compensation based on non-contractual performance against the respondent MAN entities was not dismissed from the Norwegian courts.

Regarding the range of an arbitration clause

Mitt Verksted AS and Stian Andre Andersen v. Dot Not Nameisp NR 80 and BSR Svenska AB31

In this case, Borgarting Appeal Court referred to and used several of the principles drawn up by the Supreme Court in the case mentioned above regarding the range of an arbitration clause. The main facts can be summarised as follows:

Stian André Andersen established the limited liability company Mitt Verksted AS in 2010. Shortly after, the company changed its name to BSR Norge AS, before it, in 2017, changed its name back to Mitt Verksted AS. Mr Andersen is also the owner of the sole proprietorship Quality Wheels & Tuning Stian André Andersen. In 2010, this sole proprietorship registered the domain name

BSR Norge AS entered into an oral distribution agreement with the Swedish firm BSR Svenska AB in 2010, where BSR Norge AS was to be distributor in the Norwegian market for car parts for the Swedish firm. In 2012, the oral agreement was formalised in a written distribution agreement for the period running from 25 May 2012 to 25 May 2017. The distribution agreement contained an arbitration clause.

In January 2017, the authorisation code for the domain name was transferred to BSR Svenska AB, with the consequence that the domain was no longer registered on Quality Wheels & Tuning Stian André Andersen. The parties disagreed on whether this change of registration was agreed to or not. Norwegian domains can only be used by subscribers with a Norwegian postal address. Hence, the domain was re-registered on the enterprise Dot No Nameisp Nr 80 NUF – a Norwegian registered branch of foreign enterprise Dot No Nameisp Nr 80 Ltd – on behalf of BSR Svenska AB.

In March 2017, BSR Svenska AB terminated the distribution agreement with BSR Norge AS with immediate effect.

The Oslo County Court rendered a preliminary injunction on 22 August 2018 that forbade Dot No Nameisp Ltd to control or use the domain name.

On 1 September 2018, Mitt Verksted AS submitted a writ to Oslo District Court against Dot No Nameisp Nr 80 Ltd and Not No Nameisp Nr 80 NUF, claiming the reversal of the right to use the domain name. The name of the claimants and the defendant were changed several times. In November 2018, the claimants were Quality Wheels & Tuning Stian André Andersen and Mitt Verksted AS, while the defendants were Not No Nameisp Nr 80 NUF and BSR Svenska AB. The claim was also expanded to include compensation for breach of contract and adjustment for returned goods.

Dot No Nameisp Nr 80 Ltd and BSR Svenska AB demanded the case be dismissed from the District Court because of the arbitration clause in the distribution agreement, Section 30, which was worded as follows:

Any dispute, controversy or claim arising out of or in connection with this contract, or the breach, termination or Invalidity thereof, shall be finally settled by arbitration in accordance with the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. The arbitral tribunal shall be composed of a sole arbitrator. The place of arbitration shall be Växsjö, Sweden. The language to be used in the arbitration proceedings shall be English.

The Appeal Court stated, with reference to the Supreme Court in HR-2017-01932, that whether the arbitration clause applied or not had to be decided by an objective interpretation of the wording of the arbitration clause, and thus the connection between the claims and the arbitration clause. The Appeal Court concluded – as the District Court had done – that both the claims regarding compensation for breach of contract and adjustment for returned goods, as well as the claim regarding reversal of the right to use the domain name, were connected to the contract with the arbitration clause, so that the arbitration clause applied.

The Appeal Court also concluded that both Mitt Verksted AS and Stian André Andersen were bound by the arbitration clause. Mitt Verksted AS was the same company as had entered into the distribution agreement with the arbitration clause (BSR Norge AS), and it had only changed its name. Further, Stian André Andersen was the real claimant, because he had filed the lawsuit and claimed the right to get back the domain. Hence, Mr Andersen was so closely connected to the domain and distribution agreement that the arbitration clause applied, with reference to the Supreme Court's arguments in HR-2017-01932 Sections 115 to 117. In addition, the Appeal Court stated that the arbitration clause applied to Dot No Nameisp Nr 80 Ltd because BSR Svenska AB (the direct party to the distribution agreement with the arbitration clause) could not have held the domain, as it was necessary to hold a Norwegian organisation number. Dot No Nameisp Nr 80 Ltd established the NUF entity solely for this purpose. The entity was a party because of the agency relationship and was so closely linked to BSR Svenska AB that the arbitration clause had to apply also for the Ltd entity.

Further, the Appeal Court stated that the arbitration clause had not lapsed because of the termination of the distribution agreement. The Appeal Court referred to HR-2017-01932 Section 96, and the principle that the arbitration clause is a separate agreement disconnected from the main agreement as such. Further, the defending parties had not acted disloyally in any way that gave ground to set the arbitration clause aside according to the Contract Act Section 36.

Regarding the validity of an arbitral award

Fevamotinico Sàrl v. Boa Imr AS32

Lawsuits before the ordinary courts regarding the validity of arbitration awards have been rather rare in Norway. However, in 2018 an arbitration award was challenged in Sør-Trøndelag District Court.33 The arbitration was held in 2017 between a Norwegian company, BOA IMR AS (BOA), and a Luxembourg company, Fevamotinico Sárl (Feva).

In 2015, BOA entered into a shipbuilding contract with the Norwegian shipyard Noryards Fosen AS. It was presupposed that there should be a share capital augmentation in BOA. The delivery date of the ship was agreed as 1 March 2017 and the purchase price was 720 million Norwegian kroner. Feva committed itself to guarantee up to 104 million Norwegian kroner in favour of BOA as security for the shipyard's duty to repay the prepayment in the event that BOA rightfully cancelled the shipbuilding contract.

The building of the ship was to be financed through a building loan by the Norwegian bank DNB, with an equity capital of 296 million Norwegian kroner. BOA was a wholly owned subsidiary of BOA Offshore AS. It was agreed that the Ukrainian businessman Konstyantin Zhevago, who indirectly owned and controlled Noryards Fosen AS, should invest in BOA. Zhevago made the investment in BOA through Calexco Sàrl (Calexco), which is the parent company of Noryards Bergen AS, which further owned Noryards Fosen AS. Both these companies and the guarantor, Feva, were controlled by Zhevago through different trusts. The investments were governed by an investment agreement among the involved parties. In the investment agreement it was agreed that BOA Shipping AS, BOA Offshore AS and Calexco should contribute with equity against shares in BOA. The equity contribution from BOA Shipping AS was contribution in kind which was valued at 92,390,811 Norwegian kroner. BOA Offshore AS should contribute with a cash amount of 4,909,189 Norwegian kroner. Calexco should contribute with a cash amount of 104 million Norwegian kroner in five instalments, which were due after BOA Shipping AS had made its share deposit.

In a side agreement, BOA was given the right to cancel the shipbuilding contract if Calexco breached its obligation to pay its share deposit. Calexco breached its obligations, so BOA cancelled the shipbuilding contract and claimed from Feva under the guarantee. Feva refused to pay under the guarantee, and BOA initiated an arbitration. The arbitration panel voted in favour of BOA and ordered Feva to pay 107,379,053 Norwegian kroner under its guarantee to BOA.

Feva challenged the arbitration award before the District Court claiming that it was against the public order, and hence that the arbitration award should be rendered invalid according to the Arbitration Act Section 43 Second Paragraph.

Feva argued that the valuation of the contribution in kind that BOA had used as its equity contribution was in breach of the Limited Liability Companies Act Section 10-12 First Paragraph, and that to accept an arbitration award based on such a mistake would be against the public order.

Both the District Court and the Appeal Court dismissed Feva's claim in this respect.

The District Court noted that Feva had brought the same arguments before the arbitration panel regarding the legality of the share deposit as they did before the District Court, and stated that the ordinary courts could not reexamine the assessment of evidence made by an arbitration panel regarding the character and valuation of the share deposit.

The Appeal Court did not agree to this legal starting point. The ordinary courts are not bound by an arbitration panel's assessment of evidence. However, the Appeal Court also made it clear that the ordinary courts' right to declare an arbitration award invalid is very limited. Although breach of fundamental company law rules is an area where the public order rule can be used as a reason to invalidate an arbitration award, the Appeal Court stated that it did not know of any judgment where this has happened in Norway. The Appeal Court further stated that invalidation of an arbitration award should be limited to situations where errors regarding the assessment of facts or law are so aggravating that this would seriously diminish trust in the principle of a state governed by the rule of law if an arbitration award is upheld.

Following an assessment of the evidence presented before the Appeal Court, the majority34 of the court agreed with the evidence assessment of the arbitration panel in question. Hence, the requirements for invalidation according to the Arbitration Act Section 43 Second Paragraph were not fulfilled. The majority also noted that the fact that expert witnesses had different views regarding valuation of the contribution in kind under no circumstances could be said to affect the fundamental or basic principles of the state being governed by the rule of law.

Feva appealed to the Supreme Court, but the Supreme Court refused to try the appeal.35

Regarding time bars in direct action claims

Assuranseforeningen Skuld v. Assuranseforeningen Gard and SwissMarine Services SA: the Mineral Libin36

In a judgment of February 2020, the Norwegian Supreme Court considered the question of time bars in direct action claims. The claim arose from a collision in the port of Fancheng, China, in 2007 involving the vessel Mineral Libin that resulted in significant damage to the vessel. There was a long chain of back-to-back time charter parties where the ultimate time charterer, Transfield ER Cape Limited (Transfield), had taken out protection and indemnity (P&I) insurance with Skuld, while the owner under the charter party with Transfield, SwissMarine Services SA (SwissMarine), had taken out P&I insurance with Gard.

The parties commenced arbitration in London to determine whether Transfield (charterer) was liable for the damage caused to Mineral Libin. Transfield became insolvent in 2010. In July 2016, the arbitration tribunal held that Transfield was liable for the damage by reason of the port being unsafe. In September 2016, SwissMarine brought a direct action claim against Skuld before the Norwegian courts, and Gard subsequently joined in the proceedings. The Norwegian Insurance Contracts Act permits such direct action claims against the liability insurer of the tortfeasor when the tortfeasor is insolvent. Skuld rejected the claim on grounds that it was time-barred. The general limitation period in Norway is three years. However, if a claimant lacks sufficient knowledge of a claim then there is an additional one-year time bar period that commences from such time when the claimant obtained such sufficient knowledge. SwissMarine and Gard argued that they only obtained sufficient knowledge of the direct action claim once the London arbitration award was rendered, while Skuld argued that the claimants had already obtained sufficient knowledge in 2010 when Transfield became insolvent.

According to the Supreme Court, the key question was when the claimants had sufficiently certain information to have reason to bring a claim against the defendant with the outlook of a positive result. After a fact-specific assessment of the particular circumstances of the case, the court found that the claimants had reached a level of sufficient knowledge about the direct action claim at the latest on 18 November 2015, which was the time when the master of the vessel gave his witness statement in the London arbitration proceedings. Although the court held that sufficient knowledge was obtained prior to the actual arbitration award, it was nevertheless at this late date that the claimants had commenced legal proceedings within the one-year additional time bar period. Thus, the court concluded that the direct action claim against Skuld was not time-barred.

Regarding interim measure pending decision on validity of arbitration award

Hans Reidar Njåstad v. Karl Oskar Njåstad et al.37

By arbitration award dated 2 March 2020, the Norwegian shipping partnership Johrema DA was decided to be dissolved pursuant to the Norwegian Maritime Code Section 116 first paragraph. After the award was rendered, one of the part owners (Hans Reidar Njåstad) commenced proceedings before Bergen district court, claiming that the arbitration award was invalid as the arbitration tribunal had exceeded its competence.

Shortly thereafter, Njåstad submitted a petition to Bergen district court for interim measure by staying the dissolvement process of the partnership pending a final decision on the validity of the arbitration award. He also submitted a petition for adjournment of the enforcement process of the award pursuant to NAA Section 47.

Both petitions were rejected by Bergen district court and appealed to Gulating court of appeal. For the court of appeal, the petitions were united for joint consideration together with claims concerning reinstatement of the managing owner of the shipping partnership.

To decide on the interim measure, the court of appeal, inter alia, had to consider whether Njåstad – on the balance of probabilities – had a 'claim', being that the arbitration award was invalid. As such, the court of appeal made a preliminary ruling on the validity of the arbitration award and whether the arbitration tribunal had exceeded its competence. In this regard, the court of appeal considered whether a provision in the partnership agreement providing that 'potential disputes concerning the understanding or implementation of this partnership agreement' was referred to arbitration, would render the arbitration tribunal competent to decide on a claim for dissolvement pursuant to the Maritime Code (MC) Section 116.

The court considered that a claim for dissolvement pursuant to the MC Section 116 was not directly comprised by the provision, but stated that according to legal theory and case law, there are some questions that are in such close connection with matters that are subject to an arbitration agreement, that these question must also be considerd as subject to arbitration. However the majority of the court (two of a total of three judges) found that a claim for dissolvement pursuant to the MC Section 116 did not have such close connection with what was comprised by the partnership agreement that the issue could be considered as subject to arbitration. The court, inter alia, referred to the fact that it was not necessary to interpret or asess any items or criteria to assess whether the conditions in MC Section 116 were fulfilled. As such, the majority found that the arbitration court had exceeded its competence in rendering the arbitration award. The interim measure was, however, denied as the other conditions were not considered fulfilled, inter alia, as the court of appeal in any event considered that the other part owners were entitled to dissolvement of the partnership, and as such that the the only thing Njåstad would achieve with the interim measure was to delay the process.

As for the claim for adjournment of the enforcement of the arbitration award, the court considered whether the conditions in NAA Section 47 were fulfilled. The NAA Section 47 provides that in certain situations where an action has been brought to set aside an arbitration award, the court may adjourn its ruling on recognition and enforcement if it considers it 'proper'. The court of appeal stated that the assessment on whether the conditions in Section 47 are fulfilled, is based on a 'broad overall assessment of the circumstances and factors that apply' and that the underlying circumstances are to be considered in the assessment.

It was considered that, if the only thing that could be achieved by an adjournment was delay, there was a strong argument against deciding on a temporary arrangement to stay the process. The court also referred to its previous assessments and conclusions that there was legal and factual basis for the partnership to be dissolved, irrespective of the validity of the arbitration award. On the basis of an overall assessment, the court thus concluded that it would not be proper to adjourn the enforcement process.

The court's conclusion was, thus, that neither the petition for interim measure nor the claim for adjournment could succeed. Njåstad appealed to the Supreme Court, but the Supreme Court refused to try the appeal.38

iii Investor–state disputes

Norway has not entered into many investor–state bilateral treaties, and the most recent treaties were entered into in the early 1990s. Currently, there is one claim against Norway pending under the International Centre for Settlement of Investment Disputes (ICSID) arbitration rules.39 It is a claim from the Latvian company SIA North Star and a Latvian citizen, Peteris Pildegovics, under a bilateral investor treaty between Norway and Latvia dating from 1992. The subject of the dispute is a food products enterprise. The case was registered on 1 April 2020 and a tribunal was constituted on 10 August 2020. Further, a case involving the Norwegian company Staur Eiendom AS as claimant was concluded under the ICSID arbitration rules on 28 February 2020. This was a dispute with the Republic of Latvia, also under the bilateral investor treaty between Norway and Latvia dating from 1992.40

Outlook and conclusions

The use of arbitration has been quite stable in Norway over the past few years. Although arbitration in Norway traditionally has been mostly domestic ad hoc arbitration, Norway is well suited to host far more international arbitrations. The creation of the NOMA, and the introduction of the new OCC rules, mean that it is much easier to perform institutional arbitration in Norway than it once was. Hence, there is currently optimism regarding arbitration in Norway going forward.


1 Carl E Roberts and Norman Hansen Meyer are partners at Advokatfirmaet Selmer AS. Also, senior associate Eline Hellem Langeland has contributed to the 2021 update.

2 Norwegian Arbitration Act of 14 May 2004 No. 25.

3 NAA Section 39 Paragraph 2.

4 NAA Section 40 Paragraph 1.

5 Act 17 June 2005 No. 90 regarding mediation and procedure of civil disputes.

6 Dispute Act Section 20-3.

8 NOMA Rules Article 5.

9 NOMA Rules Article 7.

10 NOMA Rules Article 23.

11 NOMA Rules Article 37.

12 NOMA Rules Article 38.

13 NOMA Rules Article 30.

14 NOMA Rules Article 33.

15 NAA Chapter 9 (Sections 42–44).

16 NOMA Guidelines Clause 3.

18 OCC Rules Article 4.

19 OCC Rules Article 8.

20 OCC Rules Article 14.

21 OCC Rules Article 20.

22 OCC Rules Article 29.

23 OCC Rules Articles 34–36.

24 The Supreme Court HR-2017-1932, IM Skaugen Marine Service Pte Ltd v. MAN Diesel & Turbo SE, Man Diesel & Turbo Norge AS.

25 HR-2017-1932-A.

26 Section 64.

27 Sections 96–98.

28 Blessing, The Law Applicable to the Arbitration Clause, from the collection Improving the Efficiency of Arbitration Agreements and Awards: 40 years of Application of the New York Convention, 1999, pages 168–88.

29 Born, International Commercial Arbitration, second edn, volume 1, 2014, pages 1428–9.

30 Sections 113–115.

31 Case number: LB-2019-44488.

32 Frostating Appeal Court case No. LF-2018-123987, Fevamotinico Sàrl v. Boa Imr AS.

33 Sør-Trøndelag District Court Case No. TSTRO-2018-2016.

34 One of the judges of the Appeal Court agreed on the conclusion of the majority but had a different reasoning.

35 Case reference of the Supreme Court's dismissal: HR-2020-313-U.

36 Case number HR-2020-257-A.

37 Gulating Appeal Court case No. LG-2020-84018,

38 Case reference of the Supreme Court's dismissal: HR-2021-498-U.

39 ICSID case No. ARB/20/11.

40 ICSID case No. ARB/16/38.

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