Simonsen Vogt Wiig analyse how foreign insolvency claims can be pursued in Norway and the implications of Brexit on the enforcement of judgments between Norway and the UK
Insolvency-related claims in Norway
Pursuing foreign insolvency-related claims in Norway can be somewhat challenging. Except for the Nordic countries, which will not be discussed in this article, there are currently no rules or treaties governing foreign insolvency-related claims. However, new rules have been adopted and will come into effect from 1 July 2021, that will make this much easier. For bankruptcies from before 1 July 2021 and/or that falls outside the scope of the new rules, insolvency-related claims cannot be pursued in Norway. Thus the question is, what can, or cannot, businesses or bankruptcy estates do if they want to pursue insolvency-related claims against Norwegian companies or in assets situated in Norway, that fall outside the scope of the new rules? The new rules will be discussed at the end of this chapter.
Foreign judgments can be enforced in Norway if (a) the parties have agreed to the jurisdiction of the foreign court or (b) there is a treaty between Norway and the relevant foreign country on the enforcement of judgments. Generally speaking, there is only one treaty relevant for the enforcement of foreign commercial judgments in Norway; the Lugano Convention.
According to the Lugano Convention Article 1 item 2 b, the convention does not apply to ‘bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’. This implies that the convention does not apply to judgments deriving from such proceedings either, and those judgments cannot be enforced in Norway. It does not matter whether the claim is adjudicated based on insolvency proceedings or ordinary court proceedings, as long as the claim itself is considered derived from insolvency rules.
In a decision of 28 June 2017 (HR-2017-1297-A), ING Bank v The Bankruptcy estate of Bergen Bunkers, the Norwegian Supreme Court stated that one had to consider whether each claim in a case was sufficiently bankruptcy-related to fall within the scope of the exemption. The Supreme Court further stated that the assessment of the claims should be made in accordance with the guidance found in the ECJ judgment Gourdain v Nadler (C-133/78), where the court inter alia stated that: ‘it is necessary, if decisions relating to bankruptcy and winding-up are to be excluded from the scope of the convention, that they must derive directly from the bankruptcy or winding-up and be closely connected with the proceedings’.
In a decision of 20 March 2019 (LA-2019-16503), Agder Court of Appeal considered whether a German judgment could be enforced in Norway, when the claim was brought in an ordinary suit, but based on the insolvency-related rule in GmbHG paragaph 64. The bankruptcy estate of Emerald Biodiesel Neubrandenburg GmbH had filed a claim of damages against the former CEO of the company, based on the CEO having made payments from the company after the company was insolvent. Pursuant the GmbHG paragraph 64 the CEO could then be held liable. The claim was decided in the estate’s favour by a default judgment by the Landgericht Berlin in Germany. The judgment was then sought enforced in Norway, but the Norwegian Court of Appeal found that the claim was bankruptcy-related, and therefore not enforceable in Norway.
Even if one could sue the Norwegian entity in Norway, Norwegian courts will not recognise a legal basis for the claim which is based on foreign insolvency-related rules.
Furthermore, Norwegian courts do generally not even recognise foreign insolvencies, with the effect that a foreign bankruptcy estate will have difficulties filing a claim before Norwegian courts if the claim is based on insolvency-related rules. This applies even if Norwegian courts in general have jurisdiction over the claim, which they will often decline if the bankruptcy estate is foreign. In other words, even if one could sue the Norwegian entity in Norway, Norwegian courts will not recognise a legal basis for the claim which is based on foreign insolvency-related rules.
This means that if a foreign estate wants to claw back a payment made to a Norwegian company, a foreign judgment on the claw back claim will not be enforced, and a claw back claim made before Norwegian courts will be a lost case. At least this applies so long as the claw back claim is based on insolvency-related rules.
In order to be able to pursue insolvency-related claims in Norway, one possibility might be to structure (or restructure?) the claim as a regular civil claim not based on insolvency rules. This is obviously not always possible, but in some cases, it is our experience that insolvency-related claims might also be based on regular civil rules. If it might be necessary to pursue an insolvency-related claim in Norway, either by enforcing a judgment in assets in Norway or by initiating proceedings in Norway, it must be thoroughly considered what the basis for the claim is prior to initiating proceedings.
For instance, it could perhaps have been possible for the bankruptcy estate of Emerald Biodiesel Neubrandenburg GmbH, as mentioned above, to have structured its claim against the CEO as a claim based on tort (delict), and not on insolvency rules, and if so the judgment could have been enforced in Norway.
The agreement ensures the mutual recognition and enforcement of judgments in civil matters, thereby securing one part of the future relationship between Norway and the UK.
There has been adopted changes to the Norwegian Bankruptcy Act related to international insolvency, that will come into effect from 1 July 2021. One of the changes is that certain foreign bankruptcy proceedings will have effect also in Norway, inter alia depended on reciprocal protection. This will make it easier to pursue some insolvency-related claims after the changes have come into effect, either by enforcing foreign judgments or by initiating Norwegian proceedings. For the bankruptcies outside the scope of the changes, and for all claims related to bankruptcies from before the changes have come into effect, the current situation will still apply.
Enforcement of British judgments in Norway in civil matters post-Brexit
The United Kingdom left the European Union on 31 January 2020, which means that the Lugano Convention no longer applies with respect to jurisdiction and enforcement of judgments between Norway and the UK.
On 13 October 2020, the Norwegian government announced that Norway and the UK concluded an agreement to revive a bilateral treaty from 1961 regarding the recognition and enforcement of judgments in civil matters. The agreement ensures the mutual recognition and enforcement of judgments in civil matters, thereby securing one part of the future relationship between Norway and the UK.
The 1961 treaty was essentially replaced by the Lugano Convention, to which the UK will not remain a party after Brexit, unless the UK becomes an independent party to the Lugano Convention. The United Kingdom applied to join the Lugano Convention in April 2020. However, acceding to the Lugano Convention requires unanimous consent from all parties, including the EU. The EU has not yet confirmed whether it will agree or object to the UK’s application. For the time being, the new agreement between Norway and the UK ensures for mutual recognition and enforcement of rulings in civil matters in Norway and the UK.
Marte Sønstevold
Ørjan Salvesen Haukaas