October 7th, 2009

Continental European Legal Update: An Introduction to Norwegian Liability Law

Posted at 12:15 AM ET

recentlegislationDavid Lewin, Managing Director

For a claimant to successfully file a claim under Norwegian law, three cumulative criteria must be fulfilled:

  • Basis of liability
  • Causation
  • Economic loss


Basis of Liability

For liability to be established under Norwegian law, it must be shown that the injuring party acted negligently (culpa). Either an act or the omission of performing an act may form the basis for liability, and whether either can be regarded as negligent must be evaluated based upon the prevailing facts. The injuring party will be liable if the actions or lack of actions by the injuring party are of a lower standard than objectively is to be expected by the bonus pater familias under similar conditions.

There are two other categories that could form a basis of liability, specifically: strict liability or strict liability for actions performed by a third party that has acted negligently, so that a basis of liability could be established in accordance with the main rule described above. Strict liability is either based upon legislation or non-statutory law.

Strict liability established by non-statutory law has been established by the courts. Whether a claim for damages can be based on such strict liability is determined by an individual assessment of the situation in which the damage occurred. Based on the prevailing facts and the injuring party’s actions, the court will decide whether the injuring party shall be liable for damages — without establishing whether the injuring party has acted negligently. The decision will be based on several aspects of the facts.

Foremost is what actually caused the damage, as well as whether high risks were involved or accepted by any of the parties. If damage is inflicted in an expectable manner (based on the activities performed), strict liability is more likely to be determined than if the damage is regarded as unforeseeable. This is due to the ability of the injuring party to take action to minimize risks. From the claimant’s point of view, the assessment is the other way around: if a materialized risk is clearly visible to the injured party, the opportunity to successfully achieve indemnification is reduced. In such situations there is a substantial possibility of the risk actually being accepted by the claimant. Also, whether and to what extent the involved parties have or could have purchased insurance coverage is relevant as a part of the evaluation of each party’s ability to sustain the loss caused. The assessment focuses on which party is closest to cover the losses inflicted by the damage under the particular setting.

Norwegian legislation has also established strict liability for injuring parties regardless of whether they have acted negligently. The most important, in which substantial losses are foreseeable, and which therefore are most relevant to the insurance industry, are related to traffic accidents and environmental damage caused by pollution.

In addition, with regard to strict liability for actions performed by a third party who has acted negligently in accordance with the main rule, the most important issue for insurers is the statutory strict liability employers have for negligent acts performed by their employees.


The main rule under Norwegian law, in regards to causation, is one of substantial-factor. When damage inflicted results from multiple necessary causes, the responsibility will be placed on the primary cause — i.e., the cause that played the dominant or most significant role. However, other causes required for the damage to materialize could also lead to liability. Those not required for the damage to materialize will not lead to liability. This applies both where the causes are simultaneous and when the causes occur subsequently.

Economic Loss

Under Norwegian law, only economic damages can be claimed. In some cases, the plaintiff will have a statutory right to damages for non-economic loss; however, the sizes of such losses are limited under Norwegian law to the point where they are of no importance for the insurance industry.

With regard to the economic loss, this shall be based on the loss each individual claimant has suffered. The loss will in short be a comparison between the situation with the damage and what the situation would have been if the tortious act had not occurred. However, the courts will perform an adequacy test if the losses are of extraordinary character or magnitude.

Compensation Levels

In 2005, the Norwegian mining company Store Norske experienced a fire in one of its coalmines in Svalbard/Spitsbergen. The fire led to a demanding rescue operation. Subsequently, Store Norske took legal action against its insurer. Both the district court and the court of appeal ruled in favor of Store Norske, and the final award remained at NOK612 million (EUR70.3 million). Following a large fraud case, the so-called Finance Credit Case of 2005, an audit company became liable for NOK613 million (EUR70.4 million).

These are some of the largest claims in Norway to date. Although varying a great deal, the compensation level in general is lower than in other Continental European jurisdictions. The risk of large claims tends to be highest in the offshore and energy sectors. This is due to the risk of environmental damage and the general value of the installations. The major Norwegian companies in these sectors have set up captives, thereby gaining access to reinsurance coverage.

For personal injury cases, the compensation level in Norway is fairly low for individuals (compared to the rest of Europe) and is normally related to compensation for extra costs and the loss of future earnings. The largest insurance claims regarding personal injury on an individual basis are around NOK10 million (EUR1.2 million).

Group Proceedings/Class Action

The new Norwegian Civil Procedure Act (in effect from January 1, 2008) Chapter 35 enables group proceedings. The group may be located either on the plaintiff side or on the defendant side.

The requirements are that:

  • The legal entities forming the group must have their claim or responsibility based on the same facts and legal basis — either exactly or in a “substantially similar” manner.
  • There must be a representative for the group.
  • Members of the class must be eligible to be parties in a common lawsuit in Norway. Group proceedings may be raised by “anyone” who is entitled, within the framework of the proceeding. This includes both physical and legal persons.

The general rule for group participation is the “registration option.” This means that the individual who claims within the scope of the proceeding may join the legal proceedings at his or her own discretion. Group proceedings are open to individuals without registration. With this alternative, all entities within the group automatically become plaintiffs or defendants without having to sign up in advance. With this approach, a party would have to resign if it does not want to participate in the proceedings. This is intended for proceedings for smaller claims that may affect a large group of individuals. Examples include cases involving interest rates or electric rates.

Under both types of group proceeding, it is possible to divide a group into subgroups, where different categories of “special question” may be addressed. There are no criteria as to how many legal entities must be involved to use the group proceeding method. When legal proceedings involve the registration method, as mentioned, each group member will have to sign up, but may be passive after that, as the representative will act on behalf of the entire group. At registration, the members will be responsible for a certain maximum amount of costs - to be determined by the court and which will have to be paid in advance.

Members in group proceedings without registration may be totally passive. Any binding judgment will be enforceable for all group members. Such group members have no responsibility for costs.

Click here to download the report >>

Click here to register for e-mail updates >>

AddThis Feed Button
Bookmark and Share

Related Posts