Henrik Hagberg
Advokatfirmaet Thommessen, Oslo

Sofie Mæland Tykvenko
Advokatfirmaet Thommessen, Oslo

 

In Norway, the recognition and enforcement of both court decisions and arbitral awards are subject to the ordre public restriction. This legal principle serves as a safeguard to prevent the recognition and enforcement of foreign decisions that would be contrary to fundamental principles of the Norwegian legal system.

Court decisions

Foreign court decisions are, as a starting point, not recognised or enforceable in Norway, unless statutory law or international treaty (to which Norway is a party) provide otherwise, or the parties have expressly agreed on the jurisdiction of a foreign court in accordance with the requirements of the Dispute Act section 4-6 (cf the Dispute Act section 19-16). The most important international treaty is the Lugano Convention on jurisdiction and recognition, and enforcement of judgments in civil and commercial matters between the signatories, which are the European Union Member States, Norway, Iceland, Denmark and Switzerland.

The ordre public restriction is included in the Dispute Act section 19-16 subsection 3, and in the Lugano Convention Article 34, No 1. In practice, despite certain differences in wording, the scope of the ordre public restriction under the Lugano Convention and the Dispute Act section 19-16 should be considered equal.

The ordre public restriction is a narrow exception aimed at preventing results that would be considered contrary to fundamental principles of the Norwegian legal system. Even though the Dispute Act section 19-16 subsection 3 refers to conflicts with 'mandatory law' as a bar to recognition, the provision is commonly understood among Norwegian legal practitioners as an expression of the ordre public restriction, and there is consensus that it should not be understood as a bar to recognising judgments that have been decided contrary to what would have followed from Norwegian mandatory law.

Norwegian courts have the authority to apply the ordre public restriction ex officio, meaning it can be applied by the court without being invoked by any of the parties to the proceedings. The courts determining the scope of the ordre public restriction would put emphasis on international public law sources, such as the exercise of the ordre public principles in other Lugano Convention states. The practise of the scope of the ordre public restriction under the Lugano Convention could be considered relevant even for cases that are not formally subject to the Lugano Convention, as Norwegian courts would consider the ordre public scope as an international principle. The preparatory works of the Dispute Act clarifies that the intention is to have a consistent system, where the restriction is applied equally both pursuant to the Lugano Convention and pursuant to Norwegian statutory law.

However, each state's courts determine which principles are considered 'fundamental' to its legal system. Norwegian courts determine whether or not a principle is 'fundamental' to the Norwegian legal system, and therefore also the application of the ordre public restriction. Nevertheless, in the context of the Lugano Convention, the European Free Trade Association (EFTA) Court's opinions on what must be considered within the scope of the ordre public restriction would have a substantial influence on Norwegian courts.

When exercising the ordre public restriction, the main question is whether the result of the recognition and enforcement of the decision would be contrary to fundamental Norwegian legal principles, not the application of the laws that the decision is based on. For example, a judgment involving punitive damages could be considered contrary to ordre public, but if the damages awarded were not actually exorbitant in the specific case, then the recognition and enforcement would not be contrary to ordre public in Norway.

In cases involving claims for damages for breach of contract, the court may nevertheless review more than just the result (payment of damages). The court may need to consider whether enforcing an award would uphold a contract that would be contrary to ordre public on a case-by-case basis considering all circumstances, including the public interest in upholding the effectiveness of the legal system and the parties' choice of law. In certain cases, Norwegian courts have declared agreements void and refused to enforce judgments based on such agreements due to the ordre public restriction, especially when the agreements have sought to thwart third parties' interests. For example, in a case involving a shareholders' agreement between shareholders in a Norwegian company, which would be unlawful pursuant to Norwegian law, but not under the chosen law, the agreement may be considered contrary to the ordre public if its purpose is to eradicate the rights of other shareholders in the Norwegian company.

Arbitral awards

Norway's recognition and enforcement of arbitral awards are based on Article 35 of the United Nations Commission on International Trade Law (UNCITRAL) Model Law (the 'Model Law'). The Arbitration Act sections 45–47 implement Article 36 of the Model Law (and the New York Convention) into Norwegian law. Arbitral awards are recognised and enforced irrespective of the state of origin of the award. The ordre public restriction can be invoked to refuse recognition and enforcement of an arbitral award if the award is considered contrary to fundamental principles of the Norwegian legal system (cf the Norwegian Arbitration Act section 46 subsection 2 (b)).

Therefore, a court can refuse the recognition and enforcement of an arbitral award if it is contrary to ordre public, and the court can also apply the ordre public restriction ex officio. The threshold for setting aside arbitral awards based on ordre public is equally high for arbitral awards as for court decisions. Examples of cases involving legal principles that have been considered 'fundamental' when applying the ordre public restriction in arbitral awards include principles included in the Norwegian Constitution, human rights and third-party rights in, for example, company law and insolvency law.

Potential application of ordre public to the Beijing Convention

As of yet, Norway is not a signatory to the Beijing Convention on the International Effects of the Judicial Sale of Ships. If Norway becomes signatory and that convention is implemented into Norwegian law, Article 6 regarding the 'International effects of a judicial sale' would provide a basis for the recognition and enforcement of a judicial sale for which a certificate referred to in the convention has been issued. Additionally, court decisions for judicial sales should be recognised and enforceable pursuant to the 'international treaties' basis in the Dispute Act section 19-16. The ordre public restriction would still apply, however, as the purpose of the treaty would be to establish a harmonised regime for giving international effect to judicial sales, the treaty itself would have to be taken into account in the case in which a Norwegian court would determine the scope and applicability of the ordre public restriction.