Year in Review: Dispute Resolution

| Insight

2019 has been an exciting year for our litigation team. Our lawyers have contributed to several landmark Supreme Court decisions, including the Fosen-Linjen dispute which probably is the one having drawn most attention during 2019, not only due to the subject matter of the dispute, but also due to the interaction between the Norwegian courts and the EFTA Court. Below you will find a speedy flashback to some of our litigation highlights during 2019:

Loss of hire under the Nordic Plan – LA-2018-35513

In February 2019, the Supreme Court refused to grant leave to appeal over Agder Court of Appeals’ decision in November 2018 in a loss of hire cover dispute. Frithjof Herlofsen (Litigation team) successfully represented an Italian shipowner against Gard.

The loss of hire cover policy taken out with Gard was based on an agreed daily amount of EUR 50 000, cf. the Nordic Plan Clause 16-6. The MV «Hamburg» grounded in 2015, and went off-hire for a period of about 90 days due to repairs. A few weeks into the repair period, the owners of the MV «Hamburg» hired another vessel to replace the damaged vessel at daily hire rate at approx. EUR 33 500.

The Court of Appeals made it clear that the Nordic Plan 2013 allows for full compensation for the covered period as long as the insured vessel is off hire due to a covered incident, and that there was no basis for setting aside the agreed amount during the repair period. Further, the Court of Appeals rejected that the owners were only entitled to the costs of hiring a «substitute vessel». The Supreme Court refused to grant Gard leave to appeal, meaning that the Court of Appeal’s decision in favor of the owners is final.

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Carriers’ liability for failing to comply with sellers’ notice of stoppage in transit – HR-2019-231-A

In February 2019, the Supreme Court gave judgment in a landmark decision on carriers’ liability for failing to comply with sellers’ notice of stoppage in transit. Tage Brigt A. Skoghøy (Litigation team) successfully acted on behalf of the Canadian seller against the Chinese carrier.

The carrier had delivered the goods to the Norwegian buyer despite the seller’s instruction that the delivery to be stopped. The buyer’s subsequent bankruptcy entailed a loss for the seller (non-payment of the purchase price for the goods), which claimed damages from the carrier. The two main issues were, first, whether the seller had a right of stoppage in transit vis-à-vis the buyer pursuant to the CISG Article 71, and, second, whether the carrier had a duty to comply with the seller’s notice of stoppage and could be held liable towards the seller.

The Supreme Court held that the seller’s right of stoppage applies until the goods have been handed over to the buyer. It was recognised that the carrier’s agent may have a dual role and at some point of the transport transcend into being a representative of the buyer and take delivery on his behalf, however, in order to ensure notoriety and transparency, such transition in roles must be clearly agreed, marked and documented. There was no transition in the matter fulfilling these criteria, and thus the carrier’s agent could not be considered as having taken delivery on behalf of the buyer. Accordingly, the seller had a right of stoppage vis-à-vis the buyer.

The Supreme Court held that the carrier has a general duty of care towards the seller, similar to the duty that arises under a contract, irrespective of the seller not having any contractual link with the carrier. The carrier had acted negligently in failing to comply with the seller’s instructions to prevent the handing over of the goods to the buyer, and was held liable for the seller’s loss.

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Carrier’s limitation of liability for multimodal transport – HR-2019-2-A

In May 2019, the Supreme Court gave judgment in a dispute regarding the carrier’s liability for cargo damage occurring under the sea transit of a multimodal transport. Frithjof Herlofsen (Litigation team) successfully acted on behalf of the contracting carrier (Pentagon Freight Services) and its insurer (Gjensidige Forsikring ASA) against inter alia the owner of the damaged goods (Nexans Norway AS).

The main issue before the Supreme Court was whether the carrier’s liability for cargo damage occurring under the sea transit of a multimodal transport, was subject to the Norwegian Carriage of Goods by Road Act (the CMR Convention) or the Norwegian Maritime Code.

The contractual carrier had issued a CMR waybill to cover the multimodal transport from Norway to England, which included both the road and the sea transport. The Supreme Court found that even if the contract of carriage as such was subject to a CMR letter, the exception provisions in the Carriage of Goods by Road Act Section 4, 2nd paragraph was applicable, with the effect that the liability issue was subject to the provisions of the Maritime Code.

The Supreme Court held that the shipowner is the specialist on securing cargo for sea transport and cannot rely on the road carrier’s securing on an open trailer, and therefore must perform independent controls and perform adequate and necessary securing operations in accordance with the general distribution of liability provisions in the Maritime Code. Thus, the Supreme Court found that the damage was not caused by an act or omission of the carrier by road, but was a result of the sea carrier’s defective securing of the goods during the sea transport and the listing of the vessel due to rough sea, which was an event which could only have occurred in the course of and by reason of the sea carriage. The Supreme Court concluded that the carrier’s liability for the cargo damage was subject to the provisions of the Maritime Code.

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Validity of decisions/regulations on rejecting payments from third party payment service providers to Norwegian individuals due to gambling relations – TOSLO-2018-78344-1

In August 2019, the Oslo City Court rendered judgment in a dispute regarding the validity of the Norwegian Gaming Authority’s (Lotteritilsynet) decision instructing Norwegian banks to reject payments from/to the Maltese bank Entercash’ bank account to/from Norwegian individuals, due to Entercash’ payment of gambling winnings in to Norwegian individuals. Together with Jan Magne Langseth (EU/EEA & Competition law), Tage Brigt A. Skoghøy (Litigation team) acts on behalf of the European Gaming & Betting Association («EGBA») and Entercash Ltd. against the Norwegian State. The dispute is still pending for the Norwegian courts.

The three main questions are, first, whether the Gambling Authority had sufficient legal authority in the Gaming acts and regulations at that time to make such a decision, second, whether the decision is contradictory to the Payment Service Directive, and third, whether the decision is in violation of the EEA Article 36 and 40. The hearing was split up, and the Oslo City Court have decided the first two allegations only.

The Court held that the Gaming Authority had sufficient legal authority and that the decision was not contradictory to the Payment Service Directive. Thus, the court found for the State. The judgment was appealed in September and is pending before the Borgarting Court of Appeals.

Under the proceedings before the Oslo City Court, Norwegian authorities have passed a new Gambling Regulation in order to define the obligation of the Norwegian banks in respect of gambling transactions and the Gambling Authority’s legal authority for future decisions. It remains for the Oslo City Court to decide on the validity of the new regulation.

Case of Fosen-Linjen v. AtB. Conditions for compensation after cancellation of tender for public procurement – HR-2019-1801-A

In September 2019, the Supreme Court decided the landmark Fosen-Linjen dispute concerning the conditions for compensation after cancellation of tender for public procurement. Together with Anders Thue (EU/EEA & Competition law), Christian Reusch (Litigation team) represented the tenderer (Fosen-Linjen) in a claim for compensation against the procurement authority (AtB).

The case concerned claim for compensation after the cancellation of a tender for a ferry service. The tender was cancelled. Fosen-Linjen, who had participated as one of three qualified tenderers, claimed compensation for loss of profit or in the alternative compensation for bid costs.

The case was heard, for an exceptional second time, in the EFTA-court in May. The Supreme Court heard the case in August. Næringslivets hovedorganisasjon (NHO) intervened in favour of Fosen-Linjen. The General Attorney intervened on behalf of the Ministry of Justice, de facto in favour of the procurement authority (AtB). Fosen-Linjen was awarded compensation for bid costs, although not for loss of profit.

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Libel for tweeting – case of Hodlonaut, Satoshi Nakamoto and Bitcoin

In 2019 we have represented a Norwegian citizen who had tweeted, through the handle @Hodlonaut, that a UK citizen had fraudulently claimed to be Satoshi Nakamoto, the inventor of Bitcoin. The claim to be Satoshi Nakamoto is a controversial claim in the Bitcoin community, and the UK citizen had been suing several people that have said that he had fraudulently claimed to be Satoshi. Our client issued his own proceedings in Norway, and Oslo District Court ruled in December 2019 that Norwegian courts had jurisdiction to hear the case. The decision is not yet final. Parallell proceedings in the UK are also still pending. Our client is represented by Ørjan Salvesen Haukaas from our litigation team.

Pro bono work for Mennesker i Limbo – undocumented refugees

In 2019 we have done pro bono work for the non-profit organisation Mennesker i Limbo (Human Beings in Limbo), who works for the rights of undocumented refugees in Norway. Mennesker i Limbo is assisted by Christian Reusch and Ørjan Salvesen Haukaas from our litigation team.

This article is part of a series of articles where the different practice groups in SVW will summarize the most important regulatory happenings in Norway in 2019.