Arbitration
Introduction
As a general rule, any civil matter may be referred to arbitration in Norway. The arbitration must be founded on an agreement between the parties.
Traditionally, arbitral proceedings in Norway have predominantly been conducted on an ad hoc basis, rather than through institutional arbitration. As ad hoc arbitrations are not publicly accessible or registered to the same extent as ordinary court cases, no public statistics are available to fully reflect the frequency of arbitration in Norway. However, certain legal practice areas – such as construction, transport, oil and gas, franchising, reinsurance and others – stand out with a preference for arbitration. In these areas, the prevailing standard contracts typically include arbitration clauses.
Arbitral awards are usually not published, with a few exceptions such as for maritime and marine insurance matters.
Ad hoc arbitrations in Norway usually involve the exchange of written submissions and an oral hearing akin to a main hearing before the ordinary courts. In most cases such arbitral proceedings are conducted within approximately one year of initiation. However, the conduct of ad hoc arbitration varies considerably.
For many Norwegian entities, ad hoc arbitration is considered to be more efficient, flexible, and less costly than institutional arbitration. Furthermore, Norway has a large pool of experienced arbitrators, including retired judges, academics, experienced litigators and other legal professionals.
Even though ad hoc arbitration remains predominant in Norway, institutional arbitration has been gaining traction in recent years. Norwegian arbitrations are also influenced by international trends. As one example, written witness statements (combined with cross-examinations) are becoming increasingly common.
Overview of institutional arbitration in Norway
The Arbitration and Dispute Resolution Institute of the Oslo Chamber of Commerce, established in 1984, provides institutional arbitration in Norway. The Institute provides regular arbitration, fast-track arbitration and mediation for all fields of commercial law. The current version of its Arbitration Rules, dated 2017, is harmonised with the Arbitration Act of 2004 and the UNCITRAL Model Law. The arbitration administration fee charged by the Institute is calculated based on the amount in dispute, ranging currently from NOK 10,000 to NOK 70,000.
The Nordic Offshore & Maritime Arbitration Association (NOMA was established in 2017. NOMA arbitration is also considered as institutional, or at least semi-institutional, arbitration. NOMA was been established by the national maritime law associations in Denmark, Finland, Norway, Sweden and is based on an institutional framework comprising a board with members from all Nordic countries, which may intervene in specific matters if requested by the parties. Despite its name, NOMA is well suited for all commercial arbitrations.
There are no administrative fees for NOMA arbitration. Further, the parties are free to choose the seat of arbitration, the nationalities of arbitrators, the language of the arbitration, and other procedural aspects. The Association has also published rules based on the UNCITRAL Arbitration Rules, as well as Best Practice Guidelines. These Guidelines are comprehensive and frequently relied upon in arbitrations in Norway. They have been recently updated and incorporate the IBA Rules on the Taking of Evidence in International Arbitration.
Although institutional arbitration is still less common than ad hoc arbitration, there are clear signs of increased use of institutional rules. NOMA's Rules and Guidelines are frequently used. As such, non-Norwegian parties should be reassured that Norway and the other Nordic countries are good seats for commercial arbitrations. Arbitrations in Norway are usually cost-efficient and the final award can be expected within a reasonable time.
Pros and cons of arbitration
Pros
Expertise
A significant benefit of arbitration is the access to a tribunal with specialist expertise. As the arbitrators are appointed by the parties, the parties have the opportunity to choose from a range of candidates based on their preferred expertise and experience, whereas the judges in the ordinary courts are generalist judges who are appointed more or less randomly, on the basis of availability and other factors without any influence by the parties. There are no specialised courts in Norway, save for a few exceptions, none of which are particularly relevant to commercial disputes.
Efficiency
A second benefit is efficiency. Receiving a final arbitral award may be significantly more time efficient than receiving a judgment from the courts. In an efficient arbitration, the arbitral tribunal may produce an enforceable award within approximately one year from initiation, whereas obtaining a final and binding judgment from the courts may take several years, mainly due to lengthy case-processing and appeals.
Professionalised case management
A benefit, typically associated with institutional arbitration, is professionalised case management, by applying the rules and procedures of the institute and using case management conferences and procedural orders to structure the proceedings and set the appropriate milestones.
Common language
In international arbitrations, the parties often agree upon a common language, such as English, for the preparations and proceedings, which may be preferred in international cases.
Not open to the public
Arbitral proceedings are not open to the public as opposed to proceedings before the courts. Furthermore, the parties may agree to confidentiality in respect of the award, see further below.
Expedient enforcement
Another benefit is more expedient enforcement, see the section on "Enforcement of Norwegian and non-Norwegian arbitral awards" below.
Cons
One disadvantage is that arbitration may be more expensive than litigation in the first instance before the ordinary courts, as arbitration involves fees for the tribunal and may necessitate guarantees or deposits in advance. However, the total costs of arbitration are usually lower than the total costs of litigation in both the district court and the court of appeal. In term of costs, arbitration may therefore be competitive.
The main disadvantage is that there is no right to appeal. Contrary to some jurisdictions, there is in principle no room for challenging an arbitral award due to (clear) errors in the application of the law, for instance that the tribunal has (clearly) interpreted statutory provisions wrongly. However, this can be mitigated by appointing qualified arbitrators and ensuring due process, including by applying recognised rules and guidelines for arbitrations.
Additionally, the means for imposing a clear duty on the opponent party to give access to evidence are more limited in arbitration. However, it is now frequently agreed on appropriate procedures for filing requests for production of documentary evidence. The tribunal may in such cases grant or decline a party's requests. Thommessen's experience is that these processes are generally handled very professionally in arbitrations.
Appointment of arbitrators
In most other jurisdictions, the default rule is that the parties appoint one arbitrator each, and that those two arbitrators shall appoint the leader of the tribunal. In Norway, on the other hand, the general rule under the Arbitration Act, is that the parties are to appoint the arbitrator or arbitrators jointly. This is a very special feature in Norway, which usually works well and is meant to ensure both parties' trust in the tribunal.
The tribunal normally consists of three arbitrators, but a sole arbitrator is agreed upon in some cases. The arbitrators are primarily chosen on the basis of their merits, reflecting their expertise and experience within the relevant business area, the claims in question, and the nature of the dispute. Usually, the arbitrators have legal expertise (e.g. judge, lawyer or professor of law).
In practice, and in line with the default rule under Norwegian law, the parties often send a joint inquiry on the appointment as arbitrator(s) to the candidate(s) in question. Alternatively, if they have not succeeded in agreeing on the arbitrators, the parties appoint one arbitrator each, who will then appoint the presiding arbitrator.
Confidentiality
The arbitration and arbitral award are not confidential unless confidentiality is specifically agreed by the parties in connection with the initiation of the arbitration. Consequently, an arbitration clause pre-agreeing on confidentiality will in principle not suffice, unless the parties also agree on confidentiality when referring a specific matter for arbitration. Confidentiality is normally discussed in the first case management conference and should thereafter be included as one of the items in the tribunal's first procedural order (PO1).
Costs
The general rule is that the tribunal shall determine its own remuneration and the settlement of its expenses. The tribunal may order the parties to provide security for the costs of the tribunal in advance of the proceedings.
The determination of costs shall be included in the award or the order terminating the case, and the amount falls due for payment one month after the award or order is made. If requested by either party, the tribunal shall allocate the tribunal's costs between the parties as it sees fit.
Furthermore, the tribunal may order one of the parties to pay all or part of the other party's costs if this is requested by the other party (which is normally always requested). In practice, the main rule is that the successful party is awarded legal costs, either in full or in part. This is also the clear starting point in accordance with NOMA's Rules for arbitration.
Enforcement of Norwegian and non-Norwegian arbitral awards
Both Norwegian and non-Norwegian arbitral awards are enforceable under the Enforcement Act, in the same manner as a judgement handed down by the ordinary courts. Norway is a signatory to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. It should be noted that even arbitral awards which are handed down in a state which is not signatory to the New York Convention will, as s starting point, also be recognised and enforceable in Norway. If the award is not made in English, Norwegian, Swedish or Danish, a certified translation of the award is required for enforcement in Norway.
Generally, enforcing a Norwegian arbitral award abroad is more efficiently done through applying the New York Convention, rather than enforcing judgments from the ordinary courts abroad. If enforcement abroad is challenged, an arbitral award rendered following institutional arbitration is more likely to be accepted.
Arbitral awards are rarely set aside
An arbitral award may only be set aside based on the following grounds:
- lack of legal capacity
- invalid arbitration agreement
- non-compliance with the principle of adversarial proceedings
- award outside the jurisdiction of the tribunal
- incorrect composition of the tribunal
- arbitral procedure contrary to law or agreement where it is likely that this has had an impact on the decision
The courts may set an award aside of their own motion if the dispute is not capable of settlement by arbitration under Norwegian law, or if the award is contrary to public policy (ordre public).
If the grounds for invalidity affect only part of the award, only that part will be deemed invalid. The time limit for bringing legal action to set aside an arbitral award is three months from the date on which the award was received by the party. The Norwegian courts are generally reluctant to set aside arbitral awards, and this has only occurred in a handful of reported court cases in Norway.
