Legal costs
Introduction
Norwegian rules on legal costs are similar to those under English civil procedure law. Generally, costs "follow the event", meaning the party prevailing in a legal action is entitled to cost reimbursement. This general principle applies at all levels of the court system. As such, the Norwegian rules differ from those found in the United States, where state courts generally have no common law right to award costs to the successful party.
Compensation only cover "necessary costs". In short, the court may reduce a party's cost claim if it considers the costs incurred to be excessive.
Claims for cost are determined alongside the final ruling on the merits at each level of the court system, i.e. not successively during the course of case preparation.
The general rules on legal cost awards
The prevailing party is entitled to compensation
The main rule is that a party prevailing in a legal action is entitled to full compensation for its legal costs from the opponent.
A party is considered to have prevailed if the court either (i) finds in favour of the party "in the whole or in the main" or (ii) the opponent's claims are dismissed or quashed.
In cases involving multiple claims or partial success, the court will consider the overall outcome. If neither party has prevailed “in the main”, each party will normally bear its own costs.
Whether the party has prevailed "in the whole or in the main" is ultimately at the court's discretion.
Exceptions from the main rule of full compensation
1.
If neither party has prevailed "in the whole or in the main", the general rule is that each party bears its own legal costs.
However, a party considered to have prevailed in part may, under "compelling grounds", be awarded full or partial legal costs. The "compelling grounds" threshold is strictly.
2.
The losing part may also be exempted from liability for the prevailing party's legal costs if the court finds that "compelling grounds" justify such an exemption.
Again, the "compelling grounds" test is applied restrictively.
3.
Finally, in certain exemptional circumstances, a party may be awarded legal costs in full or in part, irrespective of the outcome of the case.
Only "necessary" legal costs are awarded
The court has the discretion to determine which of the prevailing party's legal costs qualify for compensation. Full compensation shall cover all "necessary" costs incurred by the party in relation to the action.
In addition to legal fees and court fees, recoverable costs may include, inter alia, expenses for expert opinions, travel and other similar outlays. Where a party's own efforts in the proceedings have been particularly extensive, reasonable compensation for such efforts may also be awarded.
In assessing necessity, the courts will consider whether it was reasonable to incur the costs in light of the nature, complexity and value of the case. The value of the claim in dispute will be an important, though not decisive, factor in this assessment.
Cost statements must be submitted at the end of the main hearing, or – if the case is decided in writing – with the final pleading. The court must examine the amount claimed even if no objections are raised – however, in the absence of objections, reductions are uncommon.
In recent years, Norwegian courts have adopted a somewhat more active approach to reviewing cost claims, partly due to a general rise in litigations costs.
Appealing legal cost rulings
Each court that adjudicates the underlying dispute will issue its own ruling on legal costs. If a lower court's decision is reversed or amended on appeal, the higher court will also determine the allocation of costs for the lower instance(s). A ruling on legal costs may be appealed either together with an appeal on the merits or as a separate appeal confined to the question of costs.
Security for legal costs from foreign claimants
If the claimant is not domiciled in Norway, the respondent may request that the court order the claimant to furnish security for any potential liability for legal costs. This applies regardless of the respondent's domicile.
However, security cannot be required if (i) the claimant is domiciled in an EEA (European Economic Area) state, (ii) it would violate an international law obligation relating to the equal treatment of foreign and domestic parties, or (iii) requiring security would be disproportionate in view of the nature of the case, the relationship between the parties and other circumstances.
The exception for international law obligations relating to the equal treatment of parties blocks any claim for security to be furnished by claimants resident in a country that is a signatory to the Convention of 1 March 1954 on Civil Procedure, to which Norway is a signatory.
The right to a fair trial under Article 6 of the European Convention on Human Rights may, in exceptional cases, prevent a claim for security. The threshold for blocking such a claim under the disproportionality principle is very high.
Furthermore, none of the exceptions permit limiting the security amount to only what the claimant is able to raise.
If the conditions for requiring security are met, and none of the exceptions apply, the case will be dismissed if security is not furnished. The court determines the amount of security by reference to the costs likely to be awarded to the respondent if the respondent prevails on the merits.
