Our dispute resolution team summarizes highlights in dispute resolution and arbitration for Q3 2024 (July to September)
Employment law: Occupational injury coverage for injuries sustained in a home office
On 2 September, the Supreme Court handed down a judgment on whether a doctor was entitled to occupational injury coverage for an injury occurring during a lunch break in the home office.
The majority of three judges held that injuries occurring during lunch breaks in a home office are not covered for occupational injuries, in contrast to lunch breaks at the ordinary workplace. The judgement thus clarifies the scope of an employee's claim for occupational injury coverage in the event of injuries while working from home.
The background was a doctor who injured herself during a lunch break while working from home. The doctor claimed occupational injury coverage, but neither NAV nor the National Insurance Court believed that the injury met the conditions for occupational injury coverage.
Occupational injury is defined as personal injury, illness or death caused by an accident at work that occurs while the member is "covered for occupational injuries", cf. Section 13-3 (1) of the National Insurance Act. In order to be "covered for occupational injuries", the occupational injury must occur while the employee "is working at the workplace during working hours", cf. Section 13-6 (2) of the National Insurance Act.
The majority of the Supreme Court held that the hospital doctor was not "working" when she injured herself during her lunch break in the home office. The wording "is working" requires that the accident must occur while work is being performed. Accidents that occur during breaks at the ordinary workplace are usually considered to have taken place "at the workplace". The Supreme Court held that the same does not apply to breaks in the home office. The doctor was therefore not entitled to occupational injury coverage.
The minority of two judges believed that the doctor was entitled to occupational injury coverage. They pointed out that occupational injury coverage has traditionally included certain everyday hazards that arise in the work situation, such as accidents during meal and rest breaks. The minority also put emphasis on the development with increased use of home offices.
Employment law: The employer's duty to offer other suitable work in the event of dismissal
On 26 June, the Supreme Court handed down a judgment in a case concerning the validity of the dismissal of a health worker in Oslo municipality. The background was that the Norwegian Board of Health Supervision had made a decision to revoke his authorisation as a health worker. This made it impossible for him to continue in the position, and he was therefore dismissed. The employee believed that the dismissal was unjustified, because the employer had not offered him another suitable position.
The question before the Supreme Court was whether the dismissal was invalid because the employer did not make an offer of other suitable work, cf. Section 15-7 of the Working Environment Act. The Supreme Court stated that the employer may have a limited and situational duty to offer other suitable work to employees who are dismissed due to their own circumstances, but that this duty did not apply in this case. The municipality was therefore acquitted.
The judgment clarifies that the employer's duty to offer other work is normally based on the following three prerequisites:
- Firstly, that the reason for dismissal does not hinder other positions. This will typically be if the employee cannot be blamed for the reason for the dismissal. However, the employer has no obligation to relocate if there is a serious breach of duty or other reprehensible behaviour.
- Secondly, it is a prerequisite for the duty to offer relocation that the employee's interest in continuing in the business is particularly strong. The Supreme Court mentions as examples advanced age or dependency burdens, which makes it particularly important to retain income.
- Thirdly, the duty is conditional on the employer having another suitable position in the enterprise vacant. The employer is normally under no obligation to create a new position.
The Supreme Court concluded that the dismissal of the health worker was objectively justified and acquitted the employer. The conditions mentioned above regarding the obligation to offer other suitable work were not present.
Thommessen offers regular updates on news and regulatory changes in the area of employment law with ThommessenTracker (in Norwegian). More information about the service can be found here.
Law of damages: No compensation for years of noise from E18
On 26 September, the Supreme Court handed down a judgment in a case where the owners of five neighbouring properties claimed compensation for noise disturbances related to the construction of the highway E18, from 2022 until 2030. One of the questions raised was whether the neighbours were entitled to compensation due to the temporary noise disturbances. They were not.
The Supreme Court pointed out that it is the "financial loss" that shall be compensated under Section 9 of the Neighbours Act. In this case, the disadvantages were temporary. Amongst other things, the Supreme Court pointed out that a solution which entailed that temporary inconveniences could give rise to compensation, would lead to several difficult assessments of the financial loss. The Supreme Court's majority of four judges concluded that temporary noise disturbances did not constitute a "financial loss" that provided grounds for compensation.
Insurance law: The right to refuse insurance to a motorcycle club affiliated with Hells Angels
On 26 June, the Supreme Court handed down a judgment in a case concerning the refusal to extend a property insurance. The question was whether an insurance company could refuse to renew the insurance because the premises were used by the motorcycle club Hells Angels MC Bergen. The insurance company refused renewal because the company believed there was reason to believe that the motorcycle club was involved in organized crime.
The Supreme Court unanimously concluded that the matter did not provide grounds for denial of insurance. The decision provides guidance on insurance companies' right to refuse renewal of an insurance contract.
Pursuant to Section 3-5 of the Insurance Contracts Act, refusing to extend insurance can only take place if there are present "special reasons that make it reasonable to terminate the insurance relationship". Individuals and businesses need to take out insurance to protect themselves against financial loss. Thus, the threshold for refusing renewal of insurance policies is high. The Supreme Court found no basis in law for insurance companies to terminate insurance policies due to the insurance company's changed confidence in the policyholder, or due to the insurance company's general social responsibility or commercial interests. A lack of general trust due to the policyholder's connection to a criminal environment could not justify refusing renewal.
A prerequisite for refusing renewal is that the insurance company must be able to demonstrate circumstances that have a specific impact on the insurance relationship in question.
The termination of the insurance contract was therefore invalid. Even though the Hells Angels could be considered "associated with certain criminal acts", it was not claimed that the motorcycle club in question or individual members of the club engaged in criminal activity of direct relevance to the insurance relationship. Moreover, the insurance had run for almost 10 years without any remarks, and no obligations had been breached.
Constitutional question: The imposition of a reverse violence alarm was in violation of the Constitution
On 27 September the Supreme Court ruled in a case concerning the imposition of a reverse violence alarm (electronic monitoring) under Section 222 g of the Criminal Procedure Act. The question was whether the imposition of the reverse violence alarm violated the prohibition against retroactive legislation in Article 97 of the Constitution.
The background was that a reverse violence alarm had been imposed on an individual A because she had been charged with violating a restraining order against her former psychologist before Section 222 g of the Criminal Procedure Act came into force. The Supreme Court concluded that the imposition violated Article 97 of the Constitution.
The Supreme Court based its reasoning on recent case law regarding Article 97 of the Constitution concerning economic rights. In our view, this suggests that the judgment's clarifications of the rule can be applied to various areas of law.
The case law the Supreme Court relies on distinguishes between so-called "actual retroactivity" and "non-actual retroactivity". "Actual retroactivity" refers to cases where an event that occurred before the law came into force directly leads to a legal consequence. Such retroactive effect is only permissible if justified by strong societal considerations. "Non-actual retroactivity" refers to cases where an existing legal position is affected by the new law. This type of retroactivity is permissible as long as it is not particularly unreasonable or unfair.
The Supreme Court held that the use of the reverse violence alarm was not a clear case of actual retroactivity, but bore strong similarities to it. This was due to the close connection between the suspicion of previous violations of the restraining order and the imposition of the reverse violence alarm, even though the suspicion alone was not sufficient for the imposition. The Supreme Court also emphasized that the violation of the restraining order could not be reversed by adapting to the new Act.
Due to the strong similarities with actual retroactivity, the Supreme Court concluded that the provision could only be given retroactive effect if it was justified by strong societal considerations. The Supreme Court specified that it was not sufficient that the provision itself was based on strong societal considerations. What was decisive was that these considerations did not justify the need to grant the provision retroactive effect.
The Supreme Court therefore concluded that the imposition of the reverse violence alarm violated Article 97 of the Constitution.
Consumer law: Limitation period for standard compensation claims after cancelled flights
On 26 June, the Supreme Court ruled in a case concerning standard compensation after cancellation of flights. The question was whether the claim was time-barred. The Supreme Court concluded that the claim was not time-barred.
The background to the case was a SAS flight from Oslo to Bodø on 26 April 2019, which was cancelled due to a pilot strike. When a flight of up to 1500 kilometres is cancelled, each passenger is entitled to 250 euros in compensation according to the Air Passengers Rights Regulation (APRR), which has been implemented in Norway through the Aviation Act.
The passenger transferred his claim to Airhelp Limited, a German company specializing in compensation claims against airlines. Airhelp filed a claim against SAS on July 2, 2019, which SAS rejected the same day, citing "extraordinary circumstances" under Article 5 of the APRR. Nearly three years later, Airhelp submitted a complaint to the Conciliation Board. After the case was discontinued, Airhelp took it to the District Court.
SAS argued the claim was time-barred since the conciliation complaint was not filed withing the two-year limit in Section 10-29 of the Aviation Act. Airhelp however, argued that the three-year limit in Section 2 of the Limitation Act applied, making the claim valid. The key issue was the interpretation of "the right to damages under this chapter" in Section 10-29. SAS maintained that the two-year limit also applied to regulation-based claims, while Airhelp argued it only pertained to liability grounds included in the Aviation Act itself.
The Supreme Court's majority found that Section 10-29 could be interpreted in both ways. However, they noted that the history and intent of the provision suggested that claims under the APRR are not subject to the two-year limit. The Court further emphasized that the regulation aims to protect passengers and that SAS's interpretation could disadvantage consumers. The Court concluded that Airhelp's claim for standard compensation was not time-barred, as it fell under the general three-year limitation period.
Tax law: On the interest limitation rule and the relationship to freedom of establishment in the EEA
On 26 June, the Supreme Court delivered a judgment in a case brought by the State represented by the tax authorities (Nw: Skatteetaten) vs PRA Group Europe AS. The Supreme Court ruled in favour of the company and found that the interest limitation rule, in combination with the group contribution rules, constituted a special restriction on the freedom of establishment in the EEA.
The case concerned a claim for a deduction from taxable income for interest on debt. The question before the Supreme Court was whether the limitation on the right to deduct that previously followed Section 6-41 of the Taxation Act was contrary to the freedom of establishment in Article 31 of the EEA, cf. Article 34. The background to the question was that the interaction between the interest limitation rules and the group contribution rules meant that Norwegian groups could avoid or reduce the limitation by making group contributions, which foreign companies cannot do.
The case at hand concerned a Norwegian company in an international group that was financed with a mixture of loans and equity from the parent company in Luxembourg. The company claimed a deduction for the interest on debt. On the basis of the previous interest limitation rules, NOK 144 million of the interest was cut off.
The District Court asked the EFTA Court to issue an advisory opinion on whether the Norwegian rules as a whole constituted a restriction within the meaning of Article 31 of the EEA, cf. Article 34. The Court concluded that the Norwegian interest limitation rules, together with the group contribution rules, constituted a special restriction on the freedom of establishment in the EEA. The Supreme Court's decision is in accordance with the advisory opinion from the EFTA Court.
Thommessen offers regular updates on news and regulatory changes in the area of tax law with ThommessenTracker (in Norwegian). More information about the service can be found here.
"The procedural corner"
In the "procedural corner", we focus on practical procedural decisions. This time, we focus on two decisions on the Court of Appeal's right to refuse appeals against judgments from the District Court. The starting point is that a party has the right to have a District Court judgment reviewed by the Court of Appeal. However, Section 29-13 of the Disputes Act sets out limitations on the right of appeal, partly because the amount in dispute is low and partly because the appeal will not be successful (office translation):
"(1) An appeal against a judgment in an asset claim shall not be referred for hearing without leave of the court of appeal if the value of the subject matter of the appeal is less than NOK 125,000. In determining whether to grant leave, the court shall, among other things, take into consideration the nature of the case, the parties' needs for review and whether there appear to be flaws in the appealed ruling or the hearing of the case.
(2) The court of appeal may refuse leave to appeal against a judgment if it finds it clear that the appeal will not succeed. Refusal may be limited to certain claims or grounds of appeal."
Two new rulings from the Supreme Court shed light on the practice of this provision.
1) Requirement for justification when an appeal is denied because it is "clear that the appeal will not succeed"
The first ruling is from 26 July and concerned whether the Court of Appeal's reasons for refusing an appeal submitted pursuant to Section 29-13, second paragraph, of the Dispute Act were sufficient to show that the court had carried out a genuine review of the appeal. The Supreme Court's Appeal Committee came with dissent (2-1) to the conclusion that the Court of Appeal's justification for the refusal to appeal, with reference to the District Court's reasoning, was sufficient, and that there were therefore no procedural errors in the Court of Appeal's decision.
The majority of the Appeal Committee pointed out that the Court of Appeal's decision must be read in its entirety. The Court of Appeal had provided sufficient reasons in that it: (1) correctly based its decision on the types of errors invoked in the appeal and what they consisted of, (2) referred to the District Court's assessment of the evidence and conclusion on the central issue in the case, and (3) stated that the appeal did not bring anything new to the case that could lead to a different result.
In our view, the minority had a more principled approach to the issue. The minority pointed out that the right to review decisions on the merits is an important guarantee of due process, and that the requirement for justification is intended to ensure that the court makes a genuine and independent assessment where the decision is verifiable and can be reviewed effectively. It was problematic, according to the minority, that the Court of Appeal's reasoning only showed that the Court of Appeal had perceived the errors invoked, while the Court of Appeal's assessment of the errors was only expressed by a standard and general justification of one sentence. Thus, it was impossible to verify that the Court of Appeal had made an independent assessment. The grounds did not explain why the Court of Appeal found that there was a clear preponderance of probabilities that the appeal would not succeed.
In our view, the majority's decision indicates that the requirements for grounds for refusal of appeal are relatively low. However, we note the majority's statement that the requirement for the justification may vary depending on the nature of the case, so the requirements for the scope of the justification may therefore be higher in other cases.
2) Requirements for grounds for refusing appeals on the basis of the low value of the subject matter of the dispute
The second ruling is from 19 July and concerned the question of refusal to appeal in a case where the value of the subject matter of the appeal was less than NOK 250,000, cf. Section 29-13, first paragraph, of the Dispute Act. The question before the Supreme Court was, among other things, whether the grounds given by the Court of Appeal for the valuation were sufficient to be able to assess whether the decision was based on the correct application of the law.
The Supreme Court's Appeal Selection Committee unanimously concluded that the Court of Appeal's grounds for judgment were inadequate and the Court of Appeal's decision was therefore set aside.
The subject of dispute in the case was whether a private individual had the right to hunt on someone else's property. The important question for the valuation of the hunting right was which capitalisation rate should be used to assess the present value of the hunting right. The Supreme Court pointed out that the standard interest rate in court proceedings to calculate the present value of future cash flow is 4 %, and that a lower or higher interest rate may exceptionally be applied (see the judgment in Rt 2014 page 1202). The Court of Appeal, on the other hand, had assumed a capitalisation rate of 6 % on the grounds that "the income from hunting is more uncertain, and will vary more than the long-term return on agriculture and forestry".
For the Appeal Selection Committee, it was unclear what uncertainty the Court of Appeal was referring to, and why the uncertainty warranted a higher capitalisation rate. The uncertainty did not in itself provide a basis for applying an interest rate other than the standard interest rate. The grounds did not make it possible for the Appeal Selection Committee to assess whether the application of the law was correct, and this constituted procedural errors that had to lead to revocation.
The ruling shows that the grounds for the valuation must provide a basis for genuine verification, which in our view is in accordance with current law.
Arbitration news – the validity of an arbitration award due to a connection between one of the parties and one of the arbitrator's law firm
The Norwegian Court of Appeal recently ruled on the validity of an arbitration award. The party challenging the award argued that the tribunal was incorrectly composed because one of the arbitrators, who is partner at the Norwegian law firm Wiersholm, was not sufficiently independent and impartial. The potentially disqualifying event was Wiersholm's ongoing relationship with one of the parties, as they, by other lawyers in the firm, were assisting that party in an environmental law matter, where Wiersholm had invoiced approx. NOK 1.9 million.
The Court of Appeal was split in two factions: The majority held that the arbitrator was not disqualified. The minority, however, held that the connection was disqualifying and that the award should be set aside as invalid.
The majority emphasized that the client relationship between Wiersholm and the party was of limited significance and did not create justified doubt about the arbitrator's impartiality. The minority disagreed and held that even if the law firm was not financially dependent on the client, the relationship could still undermine confidence in the arbitrator's independence.
The judgement has been appealed and it remains to be seen whether an appeal will be heard by the Supreme Court. This case may contribute in clarifying when a lawyer should not be appointed and act as arbitrator, if the lawyer's law firm has an ongoing relationship with one of the parties to the arbitration case. Even if the majority held that the arbitration award was not invalid, the Court of Appeal unanimously held that that such a connection between one of the parties and the arbitrator's law firm must be disclosed when a lawyer is requested to be appointed as arbitrator.
Thommessen in the Supreme Court: How to prepare cases before the Supreme Court
In October, Thommessen represented Tryg Forsikring in a lawsuit brought by Å Energi claiming an insurance settlement for damage to an impeller chamber in a hydropower plant in 2019. The power plant had to be closed from December 2019 to February 2021, and incurred repair costs and costs for downtime totalling approximately NOK 77 million. The owner of the power plant demanded insurance coverage, and a dispute arose as to whether the damage was covered by the insurance.
The main question in the case is whether the damage can be considered "sudden" when it developed over several decades, but without affecting the operation of the plant until 2019. Tryg Forsikring won the case before both the District Court and the Court of Appeal, but the case was admitted to the Supreme Court and was heard on 15-16 October. The question is important for both the power and insurance industries, since it concerns a basic term that is used under most property damage insurance contracts. Hence, the case has received a lot of attention.
Our colleagues, Managing Associate Vetle Nordstoga and Associate Lucie Fossum Simonsen, who are part of the legal team in the case, describe in this article the case preparations for the Supreme Court (in Norwegian).
"Coming up" in the Supreme Court: Construction law and Jordal Amfi:
On 23 April 2024, the Borgarting Court of Appeal handed down a judgment in a final settlement dispute between NCC Norway AS and Oslo municipality following the construction of the new Jordal Amfi. Several of the issues in the case concern the so-called 15% limit in Section 31 of NS 8407, which has been a controversial topic in a number of construction cases in recent years. Our previous coverage of the case can be found here.
By decision in HR-2024-1736-U on 27 September 2024, the Supreme Court decided to hear the case.
A question that will be particularly interesting to see how is dealt with by the Supreme Court, is what the consequence is if a contractor chooses to carry out alteration work after the 15% threshold has been exceeded. The Court of Appeal held that the contractor could unilaterally set new prices as long as they did not exceed the "normal price". In our opinion, there is reason to question the conclusion. In our view, neither Section 31.1 of the NS 8407 nor the rules on remuneration adjustment in Section 34 provide support for such a solution. On the contrary, the latter rules state that remuneration adjustment shall take place by agreement, by use of (adjusted) unit prices, or by means of calculation work. However, the contractor has not been given any unilateral right to determine the price level in connection with alteration work.
If the Court of Appeal's solution is upheld by the Supreme Court, it could, in our view, lead to many disputes about what constitutes the "usual price" for alteration work. The assessment of what constitutes a "fair price" is a legal standard with a significant element of discretion. Such a rule could therefore create conflicts. An alternative to a "normal price" rule that we believe should be considered is to stick more faithfully to the wording of NS 8407 and the rules for remuneration adjustment. In that case, this means that if the 15% threshold is reached, the contractor may refuse to carry out further additional work pursuant to Section 31.1 of the NS 8407. If no agreement is reached on a remuneration adjustment for the alteration work in accordance with the rules in Section 34, the client must in the extreme case engage a new contractor to carry out the work. However, it could be expensive for the developer. For public developers, it may also have an aspect to the procurement regulations. For the already engaged contractor, an additional contractor on the plant could also have negative consequences in the form of reduced efficiency and increased parallelism. Since it is usually not desirable for either party to engage a new contractor, we believe that a solution where the remuneration adjustment in the event of exceeding the 15% rule follows the rules in Section 34, will lead to an agreement in most cases.
Thommessen's dispute resolution team is eagerly following the outcome of the case.
