This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Norway.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration? Are there any mandatory laws?
The Norwegian Arbitration Act 2004 provides the legal framework for arbitration in Norway. The Act applies equally to national and international arbitrations. As only a few of the rules are mandatory, the parties retain autonomy over the dispute resolution process. The Arbitration Act is to a large extent based on the UNCITRAL Model Law.
Is the country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Norway is a signatory to the New York Convention, and ratified the Convention in 1961. There are no reservations to the general obligations of the Convention, and its provisions are incorporated in the Norwegian Arbitration Act of 2004.
What other arbitration-related treaties and conventions is the country a party to?
Norway is currently party to 15 bilateral investment treaties (BITs) and 29 treaties with investment provisions (TIPs). Norway signed the ICSID Convention in 1966, the Energy Charter Treaty in 1995, and the International Energy Charter in 2015. So far, there has been no investment arbitration case against Norway.
Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
The Arbitration Act is based upon and closely follows the UNCITRAL Model Law. There are few significant differences between the Arbitration Act and the Model Law. One major difference is, however, that the Norwegian Arbitration Act does not require that arbitration agreements are entered into in writing.
Are there any impending plans to reform the arbitration laws?
There is currently no impending plan to reform the Norwegian arbitration law.
What arbitral institutions (if any) exist? Have there been any amendments to their rules or are there any being considered?
A particular feature of arbitration in Norway is the extensive use of ad hoc arbitration rather than institutional arbitration. One institution, which is used from time to time, is the Arbitration Institute of the Oslo Chamber of Commerce (OCC). The OCC adopted new rules for arbitration and mediation as of 1 January 2017. The new rules include updated procedures for fast-track arbitration and a remuneration schedule that caps the remuneration payable to the arbitral tribunal.
What are the validity requirements for an arbitration agreement?
An agreement to arbitrate may be made in nearly any commercial matter. The agreement may concern a dispute that has already arisen, or the parties may agree that all potential disputes in a particular relationship, typically a contract, shall be resolved by arbitration. Today, most commercial contracts contain an arbitration clause. There are no formal requirements to such agreements, and even an oral agreement to arbitrate is in principle enforceable. However, the importance normally attached to an agreement to arbitrate, will inevitably lead the courts to look for clear evidence that an arbitration agreement has in fact been entered into. In consumer disputes, arbitration agreements may only be entered into after the dispute has arisen.
Are arbitration clauses considered separable from the main contract?
The Arbitration Act is based on the principle of separability. An arbitration clause or agreement which is included in and forms part of a contract, is treated as an agreement independent of the other terms of the main contract. Thus, a decision by the arbitral tribunal that the contract is invalid does not in itself entail that the arbitration agreement is invalid.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
How is the law applicable to the substance determined?
The parties normally indicate the law applicable to the substance in the arbitration agreement, and this law shall be applied by the arbitral tribunal. Accordingly, the Arbitration Act states that the arbitral tribunal shall apply the rules of law that have been chosen by the parties as applicable to the material issues of the case. A reference in the arbitration agreement to the law or legal system of a country shall, unless otherwise indicated, by construed as a reference to the substantive law of that country and not to its rules on choice of law.
If the parties have not chosen a law in the arbitration agreement, the arbitral tribunal shall apply the rules of law as designated by applying Norwegian choice of law rules. The arbitral tribunal shall only decide a case on the basis of fairness if the parties have expressly authorized it to do so.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
A dispute is considered non-arbitrable if the subject matter is not capable of being settled by agreement between the parties. A dispute is also likely non-arbitrable in cases where a third party’s consent is required, and in some aspects as far as it concerns rights in rem. Furthermore, a claim is non-arbitrable if the relief sought may only be granted by a state authority or the courts. Such cases include declaration of bankruptcy, taxation, the existence and validity of patents, certain competition law disputes such as imposition of fines, ordering a company to cease and desist activities harmful to competition, and granting clearance for acquisitions of businesses.
Are there any restrictions in the appointment of arbitrators?
The Arbitration Act requires that the arbitrators be impartial and independent of the parties, and be qualified for the appointment.
Are there any default requirements as to the selection of a tribunal?
As most arbitrations in Norway are ad hoc, the parties will normally agree on a panel of arbitrators. The panel will as a main rule consist of three arbitrators, and it is not uncommon that the parties reach agreement on all the arbitrators. The advantage of such procedure, is that the arbitration tribunal will have the necessary expertise. Alternatively, each of the parties may nominate one arbitrator, who then together appoint the third arbitrator.
Alternatively, the parties may agree on a neutral body to make default appointment.
Can the local courts intervene in the selection of arbitrators? If so, how?
The courts may not intervene in the selection of arbitrators. However, if the arbitrary panel cannot be constituted in accordance with the arbitration agreement or as described in item 13 above, each of the parties may request that the local courts appoint the missing arbitrator(s). The appointment made by the court cannot be appealed.
Can the appointment of an arbitrator be challenged? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
The appointment of an arbitrator may only be challenged in the event that there is firm basis for justifiable doubt as to the independence or impartiality of the arbitrator, or if the appointed arbitrator does not possess the necessary or agreed qualifications. The challenge of the appointment of an arbitrator may only take place if the challenging party became aware of the basis for challenge after the appointment was made.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
When the mandate of an arbitrator terminates, for instance due to lack of impartiality, a substitute arbitrator shall be appointed according to the rules that were applied when appointing the arbitrator who is being replaced.
All previous arbitral proceedings forming part of the basis upon which the case shall be decided, shall be repeated if a substitute arbitrator is appointed.
Are arbitrators immune from liability?
There is no provision to the effect that arbitrators are immune from liability. There is a general consensus that an action based upon error in fact or in law, will not succeed. However, there may be basis for a claim against an arbitrator in the event of serious misconduct or breach of the criminal law, such as corruption. There have been no such cases in Norway.
Is the principle of competence-competence recognised? What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
The principle of competence-competence is recognized in Norway. The arbitral tribunal rules on its own jurisdiction, including objections with respect to the existence or validity of the arbitration agreement.
If the arbitral tribunal rules that it has jurisdiction, each party may, within one month of having received that ruling, bring the issue before the courts. The arbitral tribunal may continue the arbitral proceedings and determine the dispute even though the issue of the arbitral tribunal’s jurisdiction is pending before the courts.
If a party commences litigation in apparent breach of an arbitration agreement, the courts shall as a principal rule dismiss the case. The court shall, however, hear the case if it finds that the arbitration agreement is invalid or for other reasons cannot be implemented.
How are arbitral proceedings commenced? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
The arbitration process is normally initiated by the issuance of a “notice to arbitrate”. This is a formal letter from one of the parties to the other where particulars of the dispute are given, and a request to resolve the dispute by arbitration is made. A particular point to note is that such notice will prevent prescription of a claim.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?
If the respondent, without reasonable grounds, fails to submit a reply to the claimant’s statement of claim, the arbitral tribunal shall continue the arbitration. However, the failure to submit a reply shall not be considered to be an admission of the claimant’s claim.
If a party, without reasonable grounds, is absent from an oral hearing or fails to submit documentary evidence, the arbitral tribunal may continue the arbitration and make the award based on the evidence already presented.
The local courts cannot compel the parties to arbitrate, nor can they order third parties to participate in arbitration proceedings.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
In the event that the Norwegian state or a state entity has agreed to arbitration, it will not invoke state immunity in connection with the commencement of arbitration proceedings. However, it should be noted that the state, and indeed certain state entities, are generally reluctant to enter into arbitration agreements.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award?
Even though the principal rule is that only the parties are bound by the arbitration agreement, there are certain situations where third parties or non-signatories may be bound the agreement. This is quite a complex issue, but one example is that the arbitration agreement shall be deemed to be transferred together with any transfer of the legal relationship to which it applies, unless otherwise agreed.
Third parties and non-signatories will have to respect the arbitration award to the same extent as they would be bound by an agreement between the parties to the arbitration case.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
Unless otherwise agreed between the parties, an arbitral tribunal has the power to order the parties to undertake certain measures, such as preserving assets or the production of evidence. An order to this effect, however, is not enforceable. Failure to comply with an order made by the tribunal, may influence on the assessment of the evidence. The parties may ask the ordinary courts to issue an order for interim relief. Such court order will be enforceable.
The arbitral tribunal may request the ordinary courts to take depositions from witnesses and to make an order for the production of documentary evidence. The arbitrators have the right to attend the court hearing when the witnesses are examined, and they may ask questions.
Interim measures that are available include measures for the conservation of goods or preservation of properties forming the subject-matter of the dispute and for the security of costs (section 13 of the ACA). The High Courts have powers to issue interim measures pending the constitution of an arbitral tribunal. Further, Article 26 of the Rules empowers a court approached by a party to arbitral proceedings to grant interim relief and such a request will not be deemed incompatible with the agreement to arbitrate, or as a waiver of that agreement.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
The parties are responsible for clarifying the facts of the case, and are entitled to present the evidence they wish. The arbitral tribunal may refuse to consider evidence which is obviously irrelevant to the case, and the tribunal may also limit the presentation of evidence if the extent of the evidence offered is disproportionate to the significance of the evidence and the case.
The arbitral tribunal, or a party with the consent of the arbitral tribunal, may request the courts to obtain statements from parties and witnesses, as well as other evidence.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings?
There are no formal ethical codes or other professional standards applicable to arbitrators. Counsel in an arbitration are, of course, bound by the ethical code of the profession. Breach of any general ethical standard will most likely lead to challenge of the award in the ordinary courts.
How are the costs of arbitration proceedings estimated and allocated?
The arbitral tribunal determines its own fees and settlement of expenses, and the parties are jointly and severally liable for these costs, unless otherwise agreed between the arbitral tribunal and the parties.
The arbitral tribunal shall, upon request from a party, allocate the costs of the arbitral tribunal between the parties as it sees fit. Likewise, the arbitral tribunal may, upon request from a party, order the other party to cover all or part of the costs of the requesting party if deemed appropriate.
In practice, both with regard to the arbitral tribunal’s own fees and a party’s legal costs in connection with the arbitration, the main rules of the Norwegian Civil Procedure Act are often followed. These rules state that the losing party shall cover the costs of the case, though there are several exceptions.
Can pre- and post-award interest be included on the principal claim and costs incurred?
Issues regarding pre-award interest arise in most cases where damages are awarded. Typically tribunals assess damages as of a date in the past, and interest is applied to this amount up to the date of the award. Whether pre-award interests are due, will depend on the agreement of the parties, or on the applicable law. The general rule is that interest follows the principal.
Tribunals often award post-award interest in addition to the amount specified in the award. Post-award interest is added until the award is actually paid. The starting point for post-award interest is normally 14 days after receipt of the award. Post-award interest is often applied at the same rate as late payments. This reflects the view that a higher interest rate will generally discourage late payment.
What legal requirements are there for the recognition of an award?
An arbitral award shall be recognized and enforceable, irrespective of the country in which it was made. Recognition and enforcement of an award requires that an original or certified copy of the award is made available. In addition, if the award has not been rendered in Norwegian, Swedish, Danish or English, the party shall also provide a certified translation. Documentary proof of the arbitration agreement or other basis for arbitration may also be requested.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
The law does not impose any limits on the available remedies. In principle, an arbitration tribunal has the same power as the ordinary courts. The most common remedy in commercial disputes is damages in the event of breach. However, the arbitration tribunal may also grant the remedy of specific performance, which will be enforced by the relevant authorities. The only limit to the power of the arbitration tribunal is interim measures, cf. question 23 above.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
Arbitration awards may not be appealed to the local courts unless otherwise agreed by the parties. The award may only be challenged on the grounds that it is invalid. An exhaustive list of grounds for invalidity is provided in section 43 of the Arbitration Act. The list is in accordance with Article V of the New York Convention. Examples of reasons for invalidity are that the award falls outside the scope of the tribunal’s jurisdiction, or that the composition of the tribunal was incorrect.
A claim that an arbitration award is invalid must be made in the form of a lawsuit before the courts, and the lawsuit must be filed within three months from the day the party received the arbitral award.
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
The parties may not by agreement waive the right to challenge an award before the dispute has arisen. The statutory provisions on the right of challenge to an award are therefore mandatory. It is generally assumed that waiver would violate the basic principles of justice and fairness, and that the statutory grounds for the setting aside of an award are minimum rights in a democratic society. The Norwegian act does not adopt the view that waiver of the right to challenge may be based in the principle of party autonomy.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
As indicated in the answer to question 21 above, the Norwegian state and certain state-owned entities are generally reluctant to enter into arbitration agreements. However, if the state does enter into an arbitration agreement, the arbitration award will not be challenged at the enforcement stage based upon state or sovereign immunity.
To what extent might a third party challenge the recognition of an award?
The principal rule is that only the parties are bound by an arbitration award. Third parties are not bound by the award, and therefore generally not in position to challenge an award. Third parties will, however, have to respect the arbitration award to the same extent as they would be bound by an agreement between the parties to the arbitration case.
Have there been any significant developments with regard to third party funding recently?
There has not been any significant legal development with regard to third party funding in Norway recently. However, it is to be noted that third party funders emerge and try actively to promote their services. Our impression is that these providers mainly direct their services towards litigation in the ordinary courts, not so much towards arbitration. As far as commercial arbitration is concerned, the parties will more often than not be self-sufficient with funds to conduct the necessary proceedings.
Is emergency arbitrator relief available? Is this frequently used?
The Arbitration Act does not contain provisions regarding emergency arbitrator relief, for instance provisions similar to those contained in the ICC Arbitration Rules article 29. However, as mentioned in the answer to question 2 above, the arbitral tribunal may upon request order a party to take any interim measures the tribunal deems necessary based on the content of the dispute. This measure is not frequently used as such interim decisions by the tribunal cannot be enforced. Consequently, if a party requests emergency relief, it is more common to petition the courts to grant an application for a preliminary injunction. The courts have the power to grant preliminary injunctions even if a dispute is subject to arbitration.
Are there arbitral laws or arbitration institutional rules providing for simplified or expedited procedures for claims under a certain value? Are they often used?
So-called small-claims arbitration exists, but it is rarely used. Parties taking part in arbitration will often hesitate to embark upon a procedure that does not ensure full and proper assessment of the case. In small claim matters, the parties may agree upon a sole arbitrator in order to save costs.
Have measures been taken by arbitral institutions to promote transparency in arbitration?
In accordance with recent developments in international arbitration, the OCC has adopted a new remuneration schedule which limits the arbitral tribunal’s fees and expenses. By using the schedule, the parties can calculate the costs of the arbitration proceedings with increased certainty. This transparency with regard to costs, gives the parties an improved basis for making an informed decision with regard to whether or not to initiate arbitration proceedings.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted? If so, how?
Our impression is that competence, experience and quality are the key factors in the selection process, rather than diversity in gender, age and origin.
Have there been any developments regarding mediation?
There have not been any recent rule changes regarding mediation. The Norwegian Civil Procedure Act of 2005 contains rules on both court-sponsored and out-of-court mediation. However, there is increasing focus in legal circles on using mediation in order to avoid time-consuming arbitration and litigation. Another development is that parties to extensive projects, typically large construction projects, agree to use so-called project integrated mediation to resolve disputes immediately during the course of the project rather than after the project is completed.
Have there been any recent court decisions considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?