BAHR Dispute Resolution Insight - no.3/2022

OPENING STATEMENT

We started this quarter with presenting the results from our joint survey with Wikborg Rein on diversity in arbitration, which is the first survey of its kind in Norway. The purpose was to investigate diversity in arbitral appointments by practitioners based in Norway, with a particular focus on gender and age.

The results of the survey indicate that the situation in Norway, in terms of gender and age, is much like the situation internationally; based on similar surveys conducted by the ICC and ICCA. For instance, less than a fifth of arbitrations in Norway over the past two years had a female arbitrator on the panel.

BAHR believes that diversity in arbitral tribunals improves the quality of the tribunal’s decisions. In the same way as with the ordinary courts – diversity also ensures the wider legitimacy of arbitration and awards. In our experience, it is not difficult to appoint very competent and diverse panels and we remain committed to encourage our own clients and push our counterparties to appoint diverse panels. We also remain committed to continuing the work with surveying the development of diversity in Norwegian arbitrations.

For those interested in the full joint report from the survey, please get in touch for a copy.

This issue of BAHR Dispute Resolution Insight

Climate change is a much-discussed topic. In this Dispute Resolution Insight we explore the characteristics of climate change litigation, discuss the exposure corporations may face to such litigation going forward and how the exposure may be mitigated.

Climate change has also played an important role on the Oslo Stock Exchange (OSE), leading to what the OSE has described as a “green wave” of listings over the past two years. This is particularly true of listings on multilateral trade facilities (MTF) which provide a less formal and less regulated route to listing. In our second article we outline the issuer’s exposure to so-called ‘information liability’ when listing on MTFs.

Common to both climate change suits and securities litigation is the exposure to class actions and other forms of multi-party litigation. In our last article in this issue, we discuss the various forms of such actions and how to best organise the defence. In particular, we cover the key learnings from the hundreds of claims raised by passengers against Norwegian Air Shuttle ASA following its restructuring in 2021. BAHR represented Norwegian in the matter, which ended with an important decision in Norwegian’s favour.

As always, we hope this Dispute Resolution Insight provides an interesting read!

Atle J. Skaldebø-Rød Partner / Head of Dispute Resolution

Climate change litigation from a corporate outlook

Climate change is a focal point in our society, as one of its most pressing challenges. Consequently, it is no surprise that climate change litigation has entered courtrooms across the globe. Whilst governments are the most frequent targets, lawsuits are increasingly also brought against corporations. How can businesses mitigate their exposure to climate change litigation?

Introduction

The number of lawsuits concerning climate change has increased drastically. Figures from London School of Economics’ Climate Change Laws of the World (CCLW) database show that whilst a mere 800 climate change lawsuits had been filed worldwide up until 2015, the total number now exceeds 2100. There is no reason to believe that this growth will cease. Quite the opposite, the numbers are expected to rise – and quickly so.

The characteristics of climate change litigation

Climate change litigation is diverse – in claim, merit, parties, scope and objective.

The starting point was claims for damages against polluters. In recent years, lawsuits have increasingly been brought to impose reduced emissions on both governments and corporations. An angle on the rise is strategically aimed lawsuits, where the main goal is not to win the case but to promote climate policy, create public awareness, or change the actions of public authorities and corporations. Another trend is to challenge so-called “greenwashing”.

The growing recognition of the link between human rights and climate, has led to human rights being invoked more and more often in climate change litigation against both governments and businesses. The European Court

of Human Rights (ECHR) will decide several cases that are currently pending, including Greenpeace Norway v. the Government of Norway. The latter concerns the award of petroleum production licences in the Barents Sea, which Greenpeace argues is in breach of inter alia the European Convention on Human Rights Articles 2 and 8. The Norwegian Supreme Court sitting in plenary session ruled in favour of the government. Four of the fifteen judges dissented on procedural grounds. The case has been brought to the ECHR by Greenpeace.

Whilst lawsuits against corporations cannot be brought before the ECHR, the Court’s decisions will affect the development of climate change law and the extent to which human rights provide barriers to the climate related actions and omissions of businesses.

More than 70% of all climate change lawsuits so far have been brought against governments. However, there is a global trend to target corporations as well. Lawsuits against corporate entities are normally filed with national courts, but they may also be brought before, for instance, OECD national contact points.

Regardless of the target, the claimant is usually an NGO, a group of individuals or both. Consequently, extensive knowledge of, and experience with, class actions is crucial in climate change litigation.

Another claimant in climate change cases against corporations, is public authorities. The authorities may take action against a corporate entity if it acts in breach of its climate related duties. Even though such cases primarily are handled in the public administration, they may end in litigation as well.

There are also lawsuits with a different objective, where corporations challenge new legislation aimed at reducing negative climate effects due to the consequences the legislation has or will have on their business. The goal is commonly to claim compensation or to prevent the implementation of such legislation.

Below, we focus on litigation directly related to climate change. However, climate change may also more indirectly result in litigation. One example is that extreme weather caused by climate change impacts a corporation’s ability to deliver

according to contract, resulting in a compensation claim from the co-contracting party.

The impact on corporations: increased litigation exposure

A large portion of the initial climate change litigation against corporate entities concerned claims for compensation for inflicted climate harm. Many of these claims have struggled to succeed because it is difficult to establish causation. Whilst claims for compensation still appear in climate change litigation, claimants are increasingly invoking other damages than climate harm, to make it easier for the courts to establish causation.

Focus in climate change litigation has shifted towards corporate entities’ obligation to protect the climate – for example by reducing emissions or strengthening corporate governance and decision-making. Such cases can draw heavily on experience from similar cases brought against governments.

One example is the class action filed in the Netherlands by seven NGOs and more than 17,000 individual claimants (Milieudefensie et al.) against Royal Dutch Shell plc. In May 2021, the Hague District Court decided that Shell must cut its global carbon emissions by 45 % by the end of 2030, and that Shell has a best-efforts obligation to reduce emissions generated by its business relations, including suppliers and end-users. The claim was based on inter alia the European Convention on Human Rights Articles 2 and 8, and the decision is an example that human rights obligations towards climate protection have been successfully invoked against a corporation. The decision has been appealed, but regardless of the outcome, it is likely that the case will inspire similar lawsuits in other countries.

The lawsuit against Shell also illustrates that the apparent target for climate change litigation against corporations, is oil and gas companies. However, lawsuits are now more frequently filed against corporate entities in other sectors as well – such as transport, finance, plastics, food and agriculture.

For instance, the environmental organisation Friends of the Earth, of which Milieudefensie is part, has announced the shipping industry as a potential target after the win against Shell. As the transport industry accounts for about 25 % of carbon emissions worldwide, second only to the energy sector, it is not surprising that this sector is exposed to climate change lawsuits.

Perhaps more surprising is that litigation is increasingly brought against private finance institutions. The lawsuits target portfolio emissions, which are not emissions from the finance institution itself or

from assets owned or controlled by it, but from entities in its portfolio. For now, the majority of such lawsuits has been dismissed on procedural grounds. However, there is significant controversy regarding legal responsibility for assessing and managing portfolio emissions.

Litigation targeting “greenwashing” is also on the rise, with an increasing number of cases globally. The cases are filed by a new group of claimants, namely consumers. There is an increasing recognition that consumers and their behaviour are crucial to fight climate change, and the growth in such litigation is expected to continue.

“Greenwashing” litigation may be lawsuits for establishing breach of obligations or compensation. Regardless of the claim, the purpose is to hold corporations legally responsible for misleadingly portraying services or products as “clean” or “green”.

In August 2021, a shareholder activist group filed a declaratory lawsuit against the Australian oil and gas company Santos. The claimants allege that Santos’ statements that natural gas is a “clean fuel” and that the company has a credible net zero emissions plan, were deceptive. The case has yet to be decided.

Whilst this lawsuit was brought against an oil and gas company, “greenwashing” cases will also typically target the transport, food and clothing industries. In the United States, where most of the litigation aimed at “greenwashing” has been brought so far, a class action has been filed against H&M. The claim is that consumers have paid premium prices for what they believed was sustainably manufactured clothing, whilst H&M’s clothing was no more sustainable than comparable garments made by the company’s competitors.

In addition to outcome-oriented litigation, we expect a rise in strategically aimed lawsuits with the goal to influence corporations to take more responsibility, rather than winning the case. This exposes corporations to a significant risk to be dragged into comprehensive, yet diffuse litigation, where the counterparty has little downside and will only benefit from rising the case’s complexity, costs and time consumption, as well as publicity.

Mitigating the exposure

Based on the rising trend of climate change litigation – and the growing diversity of the claims and objectives – corporations in all sectors should take the exposure to such cases into consideration in their overall business strategy as well as in their day-to-day operations.

The ground rule to mitigate the exposure is, obviously, to act in compliance with legal obligations relevant to the climate. Corporate entities should have a proactive attitude and understanding to be able to comply with emerging legal norms regarding climate change. It is also important to avoid actions and promotion that may lead to allegations of “greenwashing”.

This does not have to result in an overly cautious approach, especially not at the expense of profitability. Rather, corporations should ensure that they have access to the proper legal and scientific expertise to ensure compliance. This applies both to avoid litigation being initiated in the first place, and to mitigate any negative consequences if litigation is pursued.

Mathilde Lund Meltvedt

Senior

Associate

E mamel@bahr.no M +47 48 00 12 29

Mathilde advises our clients in commercial disputes. Having previously worked in BAHR’s Energy department, she has extensive experience with disputes within the energy sector, and her area of expertise is contract law. Mathilde has also worked as a deputy judge in Oslo District Court, where she mediated and settled a large number of complex commercial lawsuits.

Lene Fjellstad Johnsen

Senior

Associate

E lefjo@bahr.no M +47 932 032 30

Lene is part of BAHR’s dispute resolution team. She works with general dispute resolution and litigation. Lene litigates cases before ordinary courts and arbitral tribunals. She has built up her expertise in dispute resolution and mediation through litigation of numerous cases as a judge and judicial mediator, as well as an attorney.

Simen Skjold Søgaard Partner

E sss@bahr.no M +47 900 21 287

Simen is admitted to the Supreme Court and rejoined BAHR as partner after six years at the Office of the Attorney General (Civil Affairs) in April 2022. Simen represents clients in all forms of commercial disputes with a particular focus on tax and VAT litigation and matters involving public authorities.

Listing on multilateral trade facilities: information liability

Public listing of a company’s shares has long been an attractive way for the company to raise capital and/or for owners to exit their investment in full or in part. Listing on a stock exchange or other regulated markets comes with detailed prospectus and information requirements. Lately, multilateral trade facilities (MTF) have proven a popular alternative to regulated markets and offer a more expedient and less formal route to listing, with more flexible information requirements. However, while the regulatory requirements are less strict, inadequate or misleading information can still lead to civil liability.

MTF as a less formal alternative

Traditionally, public listing of shares has been done on stock exchanges or other regulated markets. Listing on regulated markets come with several requirements, including requirements to the information provided to the market. Generally, listing on a regulated market will require the issuer to prepare a prospectus. This adds to the timeline and costs of listing.

The last few years, listing on an MTF has proved a popular alternative for some issuers, in particular for smaller and mid-sized companies. In the Norwegian market, Euronext Growth has been established as an MTF. Companies opting to list on an MTF enjoy a quicker, simpler listing process. Listing does not require a prospectus. On Euronext Growth, listing rules require the publication of an information document, but the requirements are less strict than the requirements for a traditional prospectus.

The less strict requirements, and the less intensive third-party control, mean that the issuer alone bears more responsibility for ensuring that the information document provides the market with adequate information about the shares, including risks associated with the company and its business plan. Failing to do so could lead to liability for the issuer,

its board members and others involved.

The potential liability

Where a prospectus is required on a stock exchange or other regulated market, the statutory rules provide for both criminal and civil liability for the issuer and persons acting on the issuer’s behalf.

The statutory liability does not apply to listings on an MTF where a prospectus is not required. However, liability for inadequate or misleading information may still follow from the ordinary rules on torts. Under the law of torts, case law has developed principles on so-called information liability. Pursuant to these principles, a person providing information which turns out to be wrongful or misleading may, on certain conditions, be held liable for damages caused to third parties having relied on such information.

The general requirements for information liability have been developed by the Supreme Court during recent years, inspired by similar principles under US law. The Supreme Court has held that three criteria must be met for a person to be held liable:

• The person, acting negligently, provided wrongful or misleading information in a professional capacity

• The person seeking damages had reasonable grounds for relying on the information

The information must be meant for the person seeking damages

The first criterion could be fulfilled e.g. if incorrect information about the issuer and its business is provided in the information document in connection with an MTF listing.

The second and third criteria would be fulfilled if the information is provided in an information document, as this is directed at potential investors. These criteria are intended to avoid “flood gate” scenarios where one instance of wrongful or misleading information could lead to enormous claims from a large and unpredictable group. For this reason, unrelated third parties who may have relied on the information although it was not meant for them, should be restricted from bringing claims. While the group of investors who rely on information provided by the issuer when subscribing for shares can be large, they would often meet these criteria, as information provided in connection with a listing process is meant exactly for them.

In addition to the three criteria discussed above, a person seeking damages must demonstrate that he/ she suffered a loss by relying on the information, i.e. that there is a causal link between the misleading information and the loss. Typically, this would be fulfilled if the claimant can substantiate that the claimant would not have subscribed for (loss-making) shares if the information provided had been adequate.

Examples from case law

The Supreme Court has not yet heard claims for information liability related to public listings. However, some cases have been tried by lower courts.

In a judgment from 2008 (LB-20078844), the Borgarting Court of Appeals considered a claim for damages from a number of investors against the board members of an issuer following a private placement. The private placement was not subject to a prospectus requirement, but information about the issuer was included in an investor memorandum, which the investors claimed did not give an adequate presentation of the issuer’s business.

When reviewing the information in the investment memorandum, the appeal court did not rule out that the prospectus requirements, to a certain extent, could provide guidance when reviewing whether the information provided by the issuer was adequate. The appeal court found that the investor memorandum was misleading as it failed to reflect specific information which investors would expect to receive, and thus was in breach of the issuer’s nonstatutory information obligation towards the investors. However, the appeal court found that the individual board members could not be blamed for this breach, inter alia because the issuer had been assisted by professional advisors.

How could claims be brought?

If the criteria for damages are met, each individual who may be entitled to damages may bring its claim as a separate lawsuit before the courts.

If the share prices develop adversely following a listing, and information provided by the issuer is found to be wrongful or misleading, many investors may potentially have grounds for claims for damages against the issuer. In such scenario it may be possible for the investors to launch a class action against the issuer, potentially as an “opt-out” class action where all or a group of the investors become parties unless they actively choose to opt out.

Daniel Sipos Deputy Head of Dispute Resolution

E dasip@bahr.no M +47 928 55 425

Daniel represents our clients in a range of complex commercial disputes, including banking and finance litigation and post-M&A disputes. Recent cases include an international arbitration concerning a NOK 1.4 billion earnout claim; and representing the borrower under in a NOK multi-billion lawsuit regarding alleged breaches of a loan agreement.

Atle J. Skaldebø-Rød

Partner

/ Head of Dispute Resolution

E atska@bahr.no M +47 922 87 727

Atle is admitted to the Supreme Court and has extensive experience across a broad range of complex commercial disputes. His practice includes post-M&A, directors’ liability, shareholder disputes, company law, financial reporting and marine insurance as well as special forms of judicial proceedings, such as enforcement proceedings, preliminary injunctions and securing of evidence.

Class actions and multi-party litigation: organising the defence

As previously discussed in this issue of BAHR Dispute Resolution Insight, certain situations and legal questions may give rise to disputes regarding uniform claims brought by or against multiple parties. Unless efficiently organised, such complex litigations may entail considerable legal and practical challenges, in addition to unnecessary legal costs.

Recently, BAHR successfully represented Norwegian Air Shuttle ASA in bringing lawsuits against hundreds of defendants. In this article we discuss and share our experience from lawsuits brought by or against several parties and on how such lawsuits should be organised.

The alternatives

When disputes involving uniform claims and multiple parties arise, there are several alternatives on how to organise such proceedings, including;

i. class actions (Nw.: gruppesøksmål );

ii. multiple parties being claimants or defendants in the same action, either by an initial joining of claims (Nw.: opprinnelig subjektiv kumulasjon), or by a subsequent joinder of new claims against third parties into an ongoing action (Nw.: etterfølgende subjektiv kumulasjon);

iii. requesting the court to consolidate separate cases for joint hearing (Nw.: forening), and;

iv. requesting the court – or alternatively enter into an agreement with the opposite parties – to suspend all cases except one, with the effect that the remaining “test case” in reality decides the outcome of all cases (Nw.: pilotsak).

Which alternative that may and should be chosen - and whether certain alternatives should be combined –depends on the case at hand.

Class actions

Upon uniform claims involving multiple parties, class action lawsuits under the Norwegian Dispute Act Chapter 35 may be advantageous as it enhances efficiency and lower costs compared to separate proceedings. Also, class actions reduce the risk of different courts delivering incompatible rulings on similar issues.

A class action presupposes court approval, cf. the Dispute Act Section 35-1 (2) and 35-4. When receiving a submission, the court will decide whether to approve or reject the action. In its assessment, the court will consider;

i. whether several legal parties have claims or obligations for which the factual or legal basis is identical or substantially similar;

ii. whether the claims are suited to be heard by the court with the same composition and predominantly pursuant to the same procedural rules;

iii. whether a class action is the most appropriate method of hearing the claims;

iv. whether the parties could have brought or joined an ordinary action before Norwegian courts, and;

v. if it is possible to nominate a class representative pursuant to the Dispute Act Section 35-9.

Also, if approved, the court will consider whether the class action shall be organised as an “opt-in” or "opt-out” process. Any person with a claim falling within the scope of the class action may either opt in or opt out of the action, cf. the Dispute Act Section 35-8. However, decisions and judgements will be binding only for class members at the time of the ruling, cf. the Dispute Act Section 35-11.

The typical class action is multiple claimants bringing an action. Bringing

claims against multiple defendants as a class action is also an option under the Dispute Act Section 35-15. However, this alternative is (in most cases) impractical. This is mainly due to the claimant not being entitled to “force” defendants into such procedure, and that the courts are likely to refuse class actions if the number of class members are limited and/or parts of the case relates to individual issues and considerations, cf. LB-2013-169072 and LB-2017-163624. Consequently, despite the option to bring class actions was introduced in Norway in 2008, it has been relatively low number of class actions before Norwegian courts.

Accordingly, parties to a dispute regarding uniform claims will normally choose one of the procedural alternatives discussed below.

Multiple parties as claimants or defendants in the same action

Under the Dispute Act Section 15-2, a claimant is entitled to join claims against several defendants in the same action. Similarly, several claimants may join claims against one or more defendants in the same action. However, such a joinder of claims presupposes certain conditions being met, cf. the Dispute Act Section 15-2 (1);

i. all claims must be subject to Norwegian jurisdiction;

ii. the lawsuit must be filed with a court that is the correct venue for at least one of the claims, and;

iii. the claims must be suited to be heard by the court with the same composition and predominantly pursuant to the same procedural rules.

If these conditions are met and none of the parties object, the claims may be joined in one action without further process. If any of the parties object, the court must consider whether the claims are so closely connected legally and factually that they should be heard in the same action. If the answer is affirmative, the court may decide to allow the claims to be joined in one action regardless of the objections.

Further, if the above-mentioned conditions are met, one or more parties may join claims against third parties into an ongoing action regarding similar claims, cf. the Dispute Act Section 15-2 (2). However, both the original parties and the potential new

claimants and/or defendants are entitled to object against such a joinder. Still, the court may decide to allow the joinder regardless of the objections, provided the factual and legal connection between the original claims and the new claims are sufficiently close. Also, the court may deny the subsequent claims to be brought if the joinder will significantly delay or thwart the existing court proceeding, cf. the Dispute Act Section 15-2 (3). The conditions for such court refusal are however strict and will only apply in special circumstances.

Following the completion of the preparatory stage of a court process, new claims against third parties may as a main rule not be joined into an ongoing action. Further, the option to join new claims against third parties into an ongoing action only applies in the first instance process before the district court. As such, new claims against third parties may not be joined into an action that has been appealed to the appellate courts, except in cases where an asset to which the action relates has been acquired by a third party, cf. the Dispute Act Section 15-2 (5).

Finally, claims that have already been filed may not be joined into another action. If uniform claims have been brought in different actions, the respective parties should instead consider requesting a consolidation of cases for joint hearing in accordance with the Dispute Act Section 15-6 and/or use one of the cases as a “test case”.

Consolidation of cases for joint hearing

There are different reasons why uniform claims may be brought in different actions. For example, uniform claims do not necessarily arise at the same time, and due to judicial deadlines it may be necessary to file them separately to avoid time bar. In such events it will not be possible to join all claims in the same action under the Dispute Act Section 15-2. Instead, the respective parties should consider requesting the court to consolidate the cases for joint hearing in accordance with the Dispute Act Section 15-6.

It is up to the courts’ discretion whether to allow such consolidation of cases. When making the decision, the court will consider whether the claims are suited to be heard by the court with the same composition and predominantly pursuant to the same procedural rules, and whether the cases raise similar factual or legal issues. Normally, the decisive element is whether there are such fundamental similarities between the cases that a joint hearing will be economically and procedurally preferable. This is obviously a consideration the parties should make before filing the request.

The main difference between joining claims in one action in accordance with the Dispute Act Section 15-2 and the consolidation of cases for joint hearing in accordance with Section 15-6, is that the latter entails that the cases remain separate. Consequently, it is in the court’s discretion whether to resolve the cases in one judgement or whether to issue separate judgements for each case. In contrast to a joinder of claims in one action, the question of legal costs will also be determined separately for each case. In addition, the fact that the cases remain separate may entail other challenges and uncertainties related to procedural questions and appeals

compared to bringing cases in one action.

Depending on the case at hand, we consider both consolidation for joint hearing and joining claims in the same action to be effective organisational alternatives that will increase efficiency, reduce costs and lower the risk for incompatible rulings in similar cases. However, where it is possible to choose between the two, the latter will – in most cases - be the preferable option, inter alia as a joinder of claims in one action enables the parties to focus its resources on one case.

It could also be an alternative to combine the two alternatives. The number of cases can be reduced by joining claims in the same action where possible and thereafter consolidating the action with other uniform cases for joint hearing.

In the above-mentioned lawsuits between Norwegian Air Shuttle ASA and hundreds of defendants, we experienced that such a combination of alternatives was the only available option. Firstly, the respective claims had been processed separately by the conciliation board over a long period of time, and thus had to be handled according to different timelines. Secondly, the sheer number of claims, defendants and cases were too high for the court’s computer and filing system to register in one action or in one joint hearing.

Despite the joinder and consolidation, the number of separate cases was still considered too high. To reduce the number of ongoing cases – and thus reduce legal costs, increase efficiency, and lower the risk for incompatible rulings – we chose to use one of the cases as a “test case” that would decide the outcome in the other cases.

The use of a “test case” as an organisational alternative

In addition to the alternatives described above, the respective parties have the option to request the court to temporarily suspend all cases but one, or alternatively, to enter into an agreement with the opposite parties regarding the same. If successful, the one case that continues will serve as a “test case” where the court’s decision will have a decisive effect for those who were suspended. Like the alternatives, running a “test case” may reduce legal costs, increase efficiency and lower the risk of incompatible rulings.

However, the use of a “test case” raises certain legal and procedural challenges, notably uncertainties regarding the legal effect of the court’s decision. As the procedure of running a “test case” is not regulated by law, the court’s decision will not legally bind other parties than those in the “test case”. There are, however, two grounds that may entail that the “test case” has a binding effect for the parties in the cases that have been put on hold.

Firstly, the court’s decision in the “test case” may establish legal precedent and therefore in effect decide the outcome of the cases put on hold. This however (normally) presupposes that the final decision in the “test case” has been made by the Supreme Court or appealed to the Supreme Court but been denied. A situation may arise where the parties to the “test case” will accept the ruling by a lower court and, as such, decide not to exhaust all options to appeal.

If so, the parties in the cases on hold will still be able to appeal the decision in their respective cases, and the higher courts are not bound by the conclusions of the lower courts. Thus, it is uncertain whether the decision in an unappealed “test case” will affect the outcome of the cases on hold. In such situations, the parties may not achieve the desired advantages of running a “test case”.

An example of a “test case”decision establishing legal precedent and thus having binding effect for cases on hold, is HR-2008-420-U (the “Shell case”). The matter of the relevant disputes was similar tax claims that Shell and several other oil companies had brought separately against the Norwegian government. The claimants and the Norwegian government agreed to designate the Shell case as a “test case”, and to put all other cases on hold. Despite the agreement between the parties to run the Shell case as a “test case” and Shell winning the “test case” before the Supreme Court, the Norwegian government chose to litigate the cases on hold. The Supreme Court however denied

the appeals as it found it clear that they were without merit. The reason was that the decision in the “test case” was issued by the Supreme Court and thus established legal precedent. The Supreme Court stated: … there were apparent assumptions by the parties on both sides that the decision in the pilot case should prevail – irrespective of the outcome of the case. A possibility of a “rematch”, and a potentially different tax treatment of the oil companies cannot have been anticipated by any of the parties” (office translation)

Secondly, the court’s decision in a “test case” may be binding for cases on hold based on an agreement between the parties. If arranged correctly, this may lead to the parties being contractually bound to respect the decision in the “test case”. The legal requirements for establishing such agreements are however uncertain. Despite being argued by Shell in the above-mentioned case, where the Supreme Court did not need to consider it, the requirements for establishing such arrangement have not been considered by the Supreme Court. Statements from the courts of appeal however indicates that – as a minimum - the agreement between the parties must explicitly state which legal consequences the decision in the “test case” shall have for the cases on hold, cf. LB-2006-102981. “To simply refer to one of the cases as a “test case” and placing additional cases on hold, will likely be considered too vague to establish a legally binding contract The wording of the agreement between the parties is thus key to obtain the desired effect of running a “test case”.

In addition to the legal effect of the court’s decision, the claimant should consider the effect on legal costs before deciding to run a “test case”. As the outcome may decide the outcome in other cases, the courts

have accepted that “test cases” are more comprehensively argued and consequently entails higher legal costs, cf. HR-2013-642-S Section 133. However, as the opposite party normally will be ordered to cover the prevailing party’s costs, this may entail that the opposite party(ies) in the “test case” must cover costs that otherwise would have partially been covered by the additional parties in the suspended cases. As the court will put emphasis on the parties’ ability to cover legal costs, this entails a risk that the prevailing party is not awarded legal costs in full. Accordingly – when considering the use of a “test case” as an alternative –the respective parties should consider the inherent risk related to legal costs and consider whether the parties in all cases should agree that legal costs in the “test case” should be distributed among them.

Key elements to consider

To ensure an effective dispute resolution process when disputes regarding uniform claims brought by or against multiple parties arise, each of the procedural alternatives discussed above should be carefully considered.

The respective parties should also be aware of - and consider seeking advice on - the various legal and practical questions that may arise under each alternative. This includes the importance of unambiguous agreements between the parties and the risks related to increased legal costs when designating one case as a “test case” and putting additional cases on hold.

Although certain challenges and questions may arise, it is our experience that all the options discussed abovedepending on the case at hand - can be resource- and cost-effective alternatives to handling multiple ongoing court cases regarding similar claims.

Christopher Thue Jerving Senior Associate

E chjer@bahr.no M +47 456 64 410

Christopher advises on a broad field of complex and international disputes regarding, inter alia, company law, commercial contracts, torts and post M&A. In addition to ordinary court cases, he works with enforcement, securing of evidence, interim measures, seizure and arbitration. Recently, he represented Norwegian Air Shuttle ASA in court cases against hundreds of creditors regarding the binding effects of a reconstruction plan sanctioned under the Norwegian Reconstruction Act (2020).

Maria Elisabeth Angell Associate

E melisa@bahr.no M +47 482 72 240

Maria is an associate in BAHR’s dispute resolution team. Together with the team, she advises on a broad field of cases regarding dispute resolution and litigation. In addition, she has experience within company law, M&A and capital markets. Maria was a part of the team that recently represented Norwegian Air Shuttle ASA in court cases against hundreds of creditors.

Jan B. Jansen Partner

E jbj@bahr.no M +47 934 94 306

Jan is admitted to the Supreme Court with a practice focused on tax litigation (in particular matters under the Petroleum Tax Act), oil and gas disputes, insurance and professional liability matters.

BAHR’s dispute resolution practice

BAHR’s dispute resolution group handle the full range of corporate and commercial disputes our clients may face and is consistently instructed in the highest value and most complex cases in Norway. BAHR is regularly ranked as one of Norway’s top litigation and arbitration practices and is recognised for protecting clients’ interests with firmness and skill.

We represent leading companies, financial institutions, private equity firms and investors in domestic and international arbitration and litigation.

Our practice group brings together some of Norway’s most established and experienced Supreme Court counsels, rising stars and promising talents to provide our clients with unyielding representation in courts and arbitration, mediation and negotiations. We tailor our litigation teams to the specific characteristics of each case with hands-on and continuous partner involvement throughout. Our litigation teams draw on the full expertise of the firm through close cooperation with our transactional and advisory colleagues in the industry groups, enabling focused and strategic advice within all sectors.

For more information on how we can help you, please get in touch with one of our key points of contact.

Represented AS Norske Shell in a NOK 460 million tax dispute regarding allocation of R&D costs under the arm’s length principle.

Representing DNB Bank in disputes over alleged wrongful payments of several hundred million NOK from the government to one of DNB’s customers.

Represented Equinor Energy AS in proceedings against a Norwegian municipality regarding the validity of an administrative decision to levy property tax.

Represented HitecVision in a USD 100 million post-M&A dispute concerning an "earn out" triggered by a major oil discovery in the Barents Sea.

Represented Norwegian Air Shuttle ASA in disputes against hundreds of creditors claiming to be unbound by a courtsanctioned reconstruction plan.

Represented stakeholders in Gassled in a NOK 34 billion Supreme Court case concerning the Norwegian government’s decision to reduce gas transportation tariffs.

Represented Ice Group in a USD multi-billion dispute against US hedge fund lender over several alleged breaches of a loan agreement, likely the largest claim ever filed in Norwegian courts.

Represented Future Production Holding managed by Norvestor (a significant Norwegian private equity firm) in a post-M&A dispute regarding indemnification for patent infringements under a SPA.

Represented OMV (Norge) AS in a deferred compensation dispute arising out of a tie-in agreement on the Norwegian Continental Shelf.

Represented Sognekraft AS in a NOK 100 million post-M&A disputeregarding termination of an international transaction based on a long stop regulation in the SPA.

Represented Coast Seafood AS in disputes regarding breach of an agreement on sale of salmon and trout and a shareholders agreement.

Represented Sval Energi AS in a large claim brought by a seismic data provider following the termination of a Master Geophysical Data-Use License (“MLA”).