The Transport Finance Law Review: Norway


i Shipping

Norway is a leading nation in the shipping industry, and has long traditions in the sector. Norway has a strong knowledge base in a highly competitive market. Norway ranked as the world's fifth-largest shipping nation by fleet value in 2020. The number of commercial ships registered in the Norwegian ship registry at the beginning of 2020 was 1,514.

Norwegian shipowners have a strong position within offshore supply, bulk, ro-ro and other dry cargo, as well as chemical, gas, shuttle and other oil tankers.

Norway offers a highly stable and favourable regulatory framework. The Norwegian International Ship Registry and the Norwegian tonnage tax regime are among the decisive factors that make Norway a popular shipping nation.

In the ship finance industry, DNB and Nordea are the main debt-finance providers; in addition, foreign banks are both present and active, in particular with regard to syndicated loans. Furthermore, several niche players are active, and new banks are established with a particular focus on the maritime sector.

In recent years, the Norwegian bond market has seen a surge in issuances in the shipping sector, and has been a huge success. Bond issue, through the Nordic Trustee, is an available and highly liquid source of finance.

The Norwegian syndicated shipping project market, with a focus on sale and leaseback transactions, arranged by players such as Pareto, Clarksons Platou, Arctic, Fearnley, NRP and others, is also a well-functioning and liquid source of finance.

ii Aircraft

While Norway is a small country, it has a relatively active air traffic industry. Oslo Airport is Norway's international hub, seeing about 26.6 million passengers in 2019.

Scandinavian Airline Systems (SAS) and Norwegian Air Shuttle (currently undergoing legal restructuring procedures) are the most sizeable airlines operating out of Norway. In addition, Widerøe has a local presence, flying to 40 destinations in Norway. The oil and gas industry requires helicopter support operations. The Norwegian Civil Aircraft Registry had 800 aircraft and 278 helicopters registered at end of 2019.

Most commercial aircraft are financed through foreign credit providers. To the extent Norwegian credit providers are involved, this is on a relationship basis, as opposed to being achieved through asset-driven deals.

iii Rail

In June 2015, the parliament of Norway resolved to reform the railway sector, with effect from January 2017. The purpose was to reform the infrastructure manager (Jernbaneverket), reform the rail operator (previously named NSB, now named Wy) and introduce competition to the market. NSB was separated and divided into three state-owned companies: an operating company (now Wy), a real estate owner and a separate company handling passenger ticketing. Wy is leasing trains from Norske Tog.

As a result of the reform, British Go-Ahead won the tender for Sørlandsbanen, Arendalsbanen and Jærbanen, while Swedish SJ won the tender for Dovrebanen, Rørosbanen, Raumabanen, Nordlandsbanen, Trønderbanen, Meråkerbanen and Saltenpendelen. Flytoget operates the service to Oslo Airport.

Legislative framework

In Norway, there are no specific laws governing the financing of aircraft, ships or rolling stock, and such financing will be governed by generally applicable legislation relating to financing, contracts, security rights and insolvency.

In relation to aircraft, Norway has ratified and incorporated into Norwegian law the Cape Town Convention on International Interests in Mobile Equipment (Cape Town Convention) and the Protocol thereto on matters specific to aircraft in 2011. The Convention and the Protocol have been incorporated into Norwegian law pursuant to the Norwegian Act on International Security Rights in Movable Property.

Norwegian-based banks have for a long period been active in the shipping and offshore financing market, including as arrangers of syndicates. Norwegian law is a common choice of law within shipping and offshore financing both in bilateral and syndicated financing deals, including Norwegian and foreign banks that are arranged or led by banks based in Norway. There are also examples of Norwegian law as the choice of law for aviation financing.

i Domestic and international law and regulation


Norwegian ships and shipping activities are generally regulated by the Norwegian Maritime Code and international conventions. Norway's obligations pursuant to various conventions have been implemented in the Maritime Code and other applicable legislation, thereby securing that Norwegian rules relating to, inter alia, registration of legal ownership and encumbrances, arrest and forced sale are harmonised with international maritime law principles. Norway has implemented a tonnage tax system for shipping companies, and eligible companies within the tonnage tax regime are not subject to general income tax.

Registration of ships and security rights is offered through the Norwegian Ordinary Ship Registry (NOR) and the Norwegian International Ship Registry (NIS). NIS offers registration to vessels owned by foreign entities.

Norway has ratified a number of conventions, protocols and amendments regarding safety requirements to solidify its position as one of the safest shipping nations in the world. Ships registered in either of the Norwegian ship registers are also subject to Norwegian and internationally recognised technical and nautical standards.


Aircraft registered in Norway are regulated by the Norwegian Aviation Code, including in respect of the operation, safety and registration of security and the Norwegian Act on International Security Rights in Movable Property, which incorporates the Cape Town Convention and the Aircraft Protocol thereto. As Norway is a member of the European Economic Area, Norwegian-registered aircraft are also subject to various EU regulations, and Norway has been a member of the European Aviation Safety Agency since 2005. Further, Norway has ratified the 1948 Geneva Convention on Recognition of Rights in Aircraft and the 1933 Rome Convention on Precautionary Arrest of Aircraft. Both Conventions are, however, subject to the provisions of the Cape Town Convention.

Aircraft with a Norwegian owner may be registered in the Norwegian Civil Aircraft Register, which means that the aircraft will be subject to the Norwegian Aviation Code. Security in an aircraft may either be registered in the Civil Aircraft Register or in the International Register created pursuant to the Cape Town Convention. The Cape Town Convention ranks ahead in any conflict with the national legislation. For smaller aircraft, the Cape Town Convention does not apply and rights over such aircraft may only be registered with the Civil Aircraft Register.


Railway operations are governed by the Norwegian Railway Act. The Act primarily contains regulatory provisions and is thus not relevant for the financing of rolling stock. Unlike ships and aircraft, there is no national register for rolling stock. However, individual registered pledges over rolling stock can be created, or the assets can be pledged as part of a floating charge over a railway company's machinery and plant, in both cases pursuant to the Norwegian Act on Pledges.

Financial regulation

i Regulatory capital and liquidity

Norwegian financial institutions are generally regulated by the Norwegian Financial Businesses Act. The Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD IV) have been implemented in Norwegian law through the Norwegian Financial Businesses Act and, inter alia, the Norwegian Regulation of Capital Requirements and Adaption of CRR/CRD IV, the Norwegian Regulation of Liquidity Management and the Norwegian Regulation of Calculation of Liquid Assets, Payments and Disbursements of the Liquidity Reserve.

ii Supervisory regime

Norwegian banks and other financial institutions are supervised by the Norwegian Financial Supervisory Authority.

Lending is a regulated activity in Norway. Banks and other financial institutions established in Norway and that conduct lending activities in Norway must operate under a Norwegian licence from the Norwegian Financial Supervisory Authority. Banks and other financial institutions conducting cross-border lending activities in Norway from other countries within the European Economic Community (EEC) must have a licence from the relevant EEC country that covers the relevant lending activity and that has been duly notified to the Norwegian Financial Supervisory Authority.

Security and enforcement

i Security


Under Norwegian law, mortgages over ships can be established and are perfected by registration in either NOR or NIS (as applicable). Such registration will give mortgage protection for third parties, including the shipowning entity's creditors or bankruptcy estate. Mortgages can also be established on ships under construction. Ship mortgages also create charges over certain parts of the ship's equipment – for example, navigation or rescue equipment, spare parts and tools – whether the equipment is aboard or temporarily removed from the vessel. However, the mortgage does not create charges over bunkers or other consumables. Ship mortgages and other registered rights in the ship rank behind maritime liens according to the Norwegian Maritime Code, which is based on the provisions of the 1967 Brussels Convention on Maritime Liens and Mortgages. If the shipowning entity goes into bankruptcy proceedings, the bankruptcy estate has a mandatory lien in the ship for an amount equal to the lower of 5 per cent of the ship's value or 805,000 kroner.

Apart from a registered mortgage, ship financing is in many cases secured by, inter alia, assignments of earnings and insurances, account pledges and, if the shipowning company is a special purpose vehicle, a share pledge.

It is not possible to validly create and perfect a security right in a charterparty contract (or any other contract as such) under Norwegian law. If the charterparty is governed by UK law, it is common practice in Norwegian ship financing to create an assignment of charter governed by UK law. It is, however, uncertain whether such a security right will be enforceable if enforcement is initiated before Norwegian courts and, to our knowledge, this issue has never been subject to litigation in Norway.


Mortgages in a Norwegian-registered aircraft may be registered in the Norwegian Civil Aircraft Register or in the International Register created pursuant to the Cape Town Convention. Mortgages registered in the Civil Aircraft Register will include certain movable parts such as engines and propellers, even if these are held in 'pools' and not attached to the mortgaged aircraft. A mortgage registered in the International Register in accordance with the Cape Town Convention is not believed to include such equipment. As with ships, registration of a mortgage is necessary to obtain legal protection against third parties, including creditors.

Generally, mortgages and other registered rights in aircraft rank behind salvage charges and costs to preserve the aircraft, which will give rise to mandatory liens and detention rights if the relevant claims are not covered, pursuant to the Norwegian Aviation Code. Further, the non-payment of fees incurred in using a Norwegian airport or fees for services in connection therewith will give the airport owner the right to detain the aircraft or another aircraft owned or used by the same entity to secure payment. Such detention right is, however, subject to the same limitations as are applicable to the arrest of aircraft (i.e., aircraft that are operating a regular route open to the public, or an aircraft that is presently ready for take-off for the purpose of transporting persons or goods, cannot be detained).

As a consequence of the dual system for registration of security rights in aircraft as described above, creditors have a tendency to charge aircraft both in accordance with national legislation and the Cape Town Convention.

Assignments of insurances and earnings, account pledges and other types of security, including a similar security package as described for ship financing, may be established to secure financing of aircraft.


Norway does not have a specific register for encumbrances over rolling stock. However, locomotives, carriages and such like can be pledged individually and registered on the owner's sheet in the national register of movable property. This creates a pledge that closely resembles a regular mortgage, including in relation to protection from third parties.

ii Financing of contracts


Shipbuilding contracts are usually financed through traditional secured credit facilities, typically in a range of 50 to 80 per cent of the purchase price of the new build. The payment of instalments to the yard during the building process will typically be secured by a refund or performance guarantees issued by the yard's bank or an export credit agency; for example, the Norwegian Export Credit Guarantee Agency. Another financing model of building contracts used is sellers' credits granted by the yards, usually secured by guarantees or other security.


In Norway, deliveries of new aircraft are traditionally financed through bank debt or financial leasing, including varieties of sale and leaseback schemes. However, airlines often meet their demand for new aircraft through operational leasing, reducing their need for capital and financing schemes.

Norwegian Air Shuttle has had an expansive order book financed through a mix of export–import guaranteed funding, syndicated bank facilities, bond issues and sale and leaseback transactions.


As previously mentioned, state-owned Wy is the main operator and is largely self-financed. However, Wy issues bonds under its euro medium-term note programme when needed, and has an available syndicated facility of 2 billion kroner.

iii Enforcement

Norwegian enforcement rules are based on the main principle that enforcement of security must be carried out through the courts, and contractual terms of the security to the effect that the mortgagee may enforce the security by way of self-help outside the courts will, as a rule, be deemed invalid.

However, the creditor may agree with the debtor to enforce security by way of self-help remedies following the debtor's default, and such arrangements will be upheld by the courts. Further, in relation to account pledges and share pledges, the parties are free to agree on any enforcement procedure, including self-help remedies, pursuant to the Norwegian Act on Financial Collateral. In relation to assigned claims, self-help remedies are also available by operation of law, by way of taking possession or private sale, according to the Norwegian Enforcement Act.

For security in aeroplanes created and registered pursuant to the Cape Town Convention, the self-help remedies set out in the Convention are available to the creditor without court proceedings or approval.

The most common way to initiate enforcement against a vessel is to apply to the local court for the arrest of the ship while it is in, or bound for, a Norwegian port. If the application is accepted, the vessel will be subject to an obligation to stay in the port. Arrest of ships is a fairly simple procedure to carry out under Norwegian law, and it can be arranged in a timely manner and without excessive costs.

Arrest of aircraft may also be carried out following the above-mentioned procedure. However, aircraft that are operating a regular route open to the public, or aircraft that are currently ready for take-off for the purpose of transporting persons or goods, will not be obliged to stay in the airport if arrest is approved.

In addition to the arrest rules set out in the 1952 Arrest Convention, which has been adopted by Norway, it is generally a requirement under Norwegian law that the creditor can demonstrate a probable cause for arrest. However, in practice an important exception is made for mortgage claims in a vessel or an aircraft that are due, which are accepted as a basis for arrest without applying a test for probable cause. For aircraft, the above exception only applies if the mortgage is duly registered.

The holder of a registered mortgage over a vessel may request that the court initiates judicial sales proceedings, either by way of a court-supervised private sale or an auction. Generally, both sales methods will free the vessel of all encumbrances and debts, except encumbrances with a better priority (if any) than that of the enforcing creditor.

As a starting point, only the ship from which the claim arises can be arrested under Norwegian law. However, Norway recognises the right to seek sister ship arrests in accordance with the Arrest Convention; that is, if two vessels are owned by the same legal entity being the debtor of the relevant claim, an arrest can be initiated against either of the vessels in respect of a claim related to one of the ships. If each of the sister ships is owned by single-purpose companies that are both owned by the same holding company, the arrest of one sister ship for claims against the other sister ship will not be available.

Arrest of vessels may be made for security only, and the creditor does not have to initiate substantive proceedings in Norway regarding the claim; for example, if proceedings have been initiated in a different jurisdiction.

iv Insolvency regulation in Norway

Bankruptcy and insolvency proceedings are regulated by the Norwegian Bankruptcy Act, which incorporates two formal procedures: debt settlement and bankruptcy proceedings.

However, after Norway's ratification of the Cape Town Convention, some aspects of the insolvency regulation have undergone changes. Among other things, Norway has adopted Alternative A of Article XI of the Convention's Aircraft Protocol. The provision is relevant in the event of the bankruptcy of airlines and sets a maximum waiting period of 60 days, after which the bankruptcy estate is obliged to hand over the aircraft and its equipment to the mortgagee.

Current developments

i Recent cases

There are no recent cases specifically related to financing of ships, aircraft or rolling stock.

ii Developments in policy and legislation

In 2018, the Norwegian Financial Supervisory Authority drafted a consultation memorandum and a proposal for amendments in Norwegian legislation to implement the rest of the CRR and the CRD IV. The proposed amendments to the legislation have not yet been passed.

On 7 December 2017, the group of governors and heads of supervision of the Basel Committee adopted a global standard for capital adequacy. The provisions that are laid down will most likely affect prospective capital adequacy in Norway as well, including, inter alia, a new standard for credit risk with an increased degree of risk sensitivity and a new output floor equivalent to 72.5 per cent of the calculation basis.

The EU taxonomy for sustainable activities is being incorporated into Norwegian law and will, over time, direct investments towards sustainable projects and activities.

iii Trends and outlooks


Norway maintains its position as one of the largest shipping nations in the world. The number of ships sailing under the Norwegian flag has increased, and the Norwegian International Register has gained considerable strength over the past year. The average age of the Norwegian fleet continues to drop, indicating strong fleet renewal, and the Norwegian fleet has also grown in deadweight tonnes over the past year.

Many Norwegian shipowners have a strong focus on developing sound environmentally friendly solutions as well as autonomous navigation solutions. Such initiatives are supported by governmental strategies, and shipowners believe this focus on technology will give them a competitive advantage in the international sphere.

The offshore supply segment has seen a sharp downturn since 2015. Revenues have decreased substantially, and many shipowners have a considerable part of their fleet laid up. Few are optimistic about a rapid recovery, and the covid pandemic has further worsened the situation. Restructurings are expected to continue within this segment. Consolidations have already taken place, and further consolidation is also expected.


The recent expansion of Oslo Airport is expected to facilitate continued growth in capacity and activity in the Norwegian aviation industry. Prior to the covid pandemic, SAS registered an increased part of its fleet in the Norwegian Civil Aviation Registry.

Norwegian Air Shuttle is undertaking a legal restructuring process. It has presented a plan to reduce its scope of business, and to focus on the Scandinavian market.


Norwegian railway infrastructure is being reformed, with several new participants in the market. Wy, the state-owned operator, has lost several tenders because of price, and it will be interesting to see further developments as additional sections of the railway become subject to competitive tenders.


1 Jostein Moen is a partner and Christian B Østlie is a senior lawyer at Kvale Advokatfirma DA.

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