Norwegian Courts Reject Insurance Forum

Tuesday, August 22, 2006
Wikborg Rein, a Norwegian law firm, said Norway's Supreme Court has closed a door to claimants attempting to act against foreign shipowners insuring themselves in Norway. Anders Faerden, a partner in Wikborg Rein's Oslo office, said, "A Mexican insurance company has unsuccessfully brought a claim in Norway against a major Russian shipowner. The claimant tried to sue the Russian company in Norway because it had its P&I cover with Oslo-based Skuld. The claim was based on Section 32 of the Civil Procedure Act, which states that a party domiciled outside Norway can be sued in Norway if it has an asset in the country. The Mexicans argued that the shipowner's membership in Skuld represented a capital asset in itself, as Skuld is a mutual insurance company owned by its members. They would have liked to act against the Russians in a Norwegian court, rather than in Russia, but the Supreme Court rejected the forum shopping. It held that an insurance agreement with a Norwegian mutual insurance company did not in itself constitute a sufficient connection with Norway. It also held that the claimant's allegation that Skuld was jointly liable with the shipowner did not constitute a sufficient connection with Norway."

A valid unpaid claim under an insurance agreement is an asset which is relevant under Section 32. Claims for return of premium or similar claims may also constitute an asset. However, Section 32 cannot apply to parties domiciled in a country which is party to the Lugano Convention. Therefore, Section 32 is not applicable to parties domiciled in the European Union or the European Free Trade Association member states. And in this case, the Supreme Court has also ruled that an insurance agreement with a Norwegian mutual insurance company did not in itself constitute a sufficient connection with Norway.

"Shipowners placing their P&I cover with Norway's two major P&I clubs can sleep a little easier," says Faerden. "Claimants will have to look elsewhere to act against them."

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