Kvale lawyers important contributors to a new textbook on regulatory and contractual issues related to oil and gas activities in Norway

Our partner Yngve Bustnesli is the co-editor and author of various chapters (overview of the Norwegian petroleum framework, overview of the standard joint operating agreement and introduction regulatory and contractual requirements for direct and indirect transfer of production licences) in the new publication “Oil and Gas Activities in Norway – Regulatory and Contractual Framework.” Senior Associate Marte Kapstad Roen has contributed as co-author on a topic related to offshore vessel time charters – Supplytime.

This is the first book giving a comprehensive overview of the Norwegian petroleum regulatory regime and model contracts used in the petroleum industry. The publication is now available in paper format and will also be available as an electronic book with active links to sources.

To view the table of contents, click here: https://www.gyldendal.no/faglitteratur/jus/selskapsrett/oil-and-gas-activities-in-norway/p-832171-no/

The book can be ordered here: https://www.ark.no/boker/Yngve-red-Bustnesli-Oil-and-gas-activities-in-Norway-9788205507531

The Norwegian Supreme Court with final clarification

Norwegian jurisdiction for claim against foreign owners in direct action case against Norwegian liability insurer

The Norwegian Supreme Court has now put an end to the long-lasting jurisdiction dispute following the collision between “Stolt Commitment” and “Thorco Cloud”. The case has provided numerous clarifications of principle nature for the marine insurance industry. Previous decisions have clarified that Norwegian courts have jurisdiction to try direct action claims against Norwegian liability insurers under the Lugano Convention, even if the case has no other connection to Norway. In a recent decision, the Supreme Court maintained that the underlying tort action between the foreign owners could be joined into the direct action for joint proceedings in Norway.

Background of the case

The claims relate to a collision in Indonesian waters between the vessels “Thorco Cloud” and “Stolt Commitment”. Following the collision, the foreign owners of the “Thorco Cloud” commenced proceedings in Norway against “Stolt Commitment’s” liability (P&I) insurer Gard. The Thorco companies also commenced an action for damages against the foreign owners of the “Stolt Commitment” at Gard’s court of domicile (Agder District Court). Gard and the Stolt companies disputed jurisdiction in an attempt to escape the higher Norwegian global limitation rules.

Final clarification

After more than five years of litigation, the Norwegian Supreme Court has rendered a decision dated 27 April 2021 (HR-2021-902-U) which confirms that the Thorco companies’ action for damages against the  Stolt companies shall be heard before Agder District Court, and tried together with the direct action against Stolt’s liability insurer Gard. The Supreme Court’s appeal committee unanimously found that the appeal over the Court of Appeal’s decision could clearly not succeed and dismissed the Stolt companies’ appeal. The Court of Appeal’s decision that the tort action between the owners can be heard jointly by Norwegian courts is thus legally binding.

The joinder of the claims is the based on article 6 no. 1 of the Lugano Convention. The Court of Appeal found that the Thorco companies could invoke the jurisdiction rules of the Convention, even though the owners of the vessel was not domiciled in a contracting state. The Court of Appeal further concluded that the exhaustive rules on jurisdiction in matters relating to insurance were not applicable in this case, and that the joinder issue relied upon an interpretation of the general rule on joinder in article 6 no. 1. The case between Thorco and Stolt was not to be considered a matter relating to insurance under the Convention.

The Court of Appeal found that the conditions for joinder were met pursuant to article 6 no. 1. That the Thorco companies main objective with the Norwegian proceedings was to obtain a judgment against the Stolt companies under the Norwegian global limitation rules did not invoke the application of the theory of misuse.

Implications for the Norwegian marine insurance industry

The decisions in the Stolt Commitment matter has contributed to clarify the injured party’s access to join its claims against the tortfeasor and its liability insurer into joint proceedings before Norwegian courts. The established interpretation of the Lugano Convention is that the injured party following an incident in foreign waters between foreign registered vessels, were both owners are foreign entities, may establish Norwegian jurisdiction for its claim against the tortfeasor by joining the tort claim into the direct action proceedings against the tortfeasor’s Norwegian liability insurer.

Jurisdiction of the court first seised

Following international incidents involving international parties, numerous forums may be applied, e.g. the place where the loss occurred, the domicile of the injured party or the domicile of the tortfeasor. Pursuant to the Lugano Convention, any other court than the court first seised shall decline jurisdiction if jurisdiction of the court first seised is established. If an injured party wishes to apply the high Norwegian global limitation rules, it is therefore crucial that proceedings are brought here as soon as possible following an incident.

* * *

Kvale regularly assists clients in relation to direct action proceedings against liability insurers and other matters relating to insurance.

Kvale with strong results in Legal500

We are delighted that we have once again achieved very strong results in the Legal 500 EMEA ranking for 2021. We have maintained high rankings in all our important areas of work. In addition, we are proud that we have improved our rankings in Corporate M&A. Legal 500 is considered as one of the most precise and reliable law firm rankings, as the results are based on interviews and surveys among clients and other lawyers.

We are again ranked as Top Tier in the following categories:

In addition, we are also recognized in the following 10 practice areas:

Below are some of our clients’ statements.  We place great value on our clients and their confidence in us.  We strive to provide an excellent service and we are proud of their feedback:

‘The firm is highly responsive with a broad commercial understanding. The team consists of highly qualified lawyers. In addition, the firm’s focus on work-life balance reflects positively on how it executes its assignments and is something that is important for us as clients.’

‘We are very impressed by the highly-skilled team at Kvale. What makes them stand out is the combination of legal expertise, business understanding and pragmatism. Also how they delivered as a strong team.’

A number of our partners have again received recommendations and included among the top Norwegian lawyers in their respective fields.

Hall of fame:

Leading individuals:

Next generation partners:

Thank you to our clients for your continued trust in us.

Read the full review here.

 

Impressive results in Chambers and Partners Europe 2021

Chambers published the European 2021 ranking today. Kvale is recommended in 9 practice areas, and our lawyers have achieved 16 individual rankings in this year’s edition.

Kvale is recommended within:

We are very pleased with the continued highest ranking (Band 1) within Restructuring/Insolvency, and that six of our partners have individual rankings in this category.

Clients states;

Impressed clients describe the team as “very experienced, practical and creative.”

Another satisfied client describes the lawyers as “service-minded and efficient.”

Individual rankings:

Thank you to our clients for their continued trust in us.

Read the full Chambers Europe 2021 here

Misuse of patent procedures and exclusionary disparagement – a possible abuse of dominance

The European Commission investigates Teva, a global, pharmaceutical company, for possible, anti-competitive abusive conduct, partly by artificially extending its patent-based exclusivity relating to Copaxone – a bestselling drug in the treatment of multiple sclerosis – and partly by exclusionary disparagement of competing products. The latter alleged abuse is the first of its kind investigated by the European Commission, while possible misuse of patent procedures is in line with previous cases and the report from 2019.

Teva is a global pharmaceutical company operating in the EU/EEA-area and produces a wide-range of molecules and a large portfolio of products, spanning generics, specialty and over the counter medicines. One of their best-selling drugs, Copaxone, contains the active pharmaceutical ingredient glatiramer acetate. This ingredient is widely used for the treatment of multiple sclerosis (“MS”), and was covered by Teva’s basic patent until 2015.

In 2019 and 2020, the European Commission (the “Commission”) carried out unannounced inspections at several of Teva’s premises in the EEA-area.

According to the Commission’s press release 4 of March 2021, misuses of patent procedures and alleged exclusionary disparagement have frequently been reported as important barriers to entry for generic or biosimilar medicines.

On this background, the Commission has opened formal investigation to assess whether Teva may have artificially extended the patent protection and thereby Teva’s market exclusivity of Copaxone by “strategically filing and withdrawing divisional patents, repeatedly delaying entry of its generic competitor who was obliged to file a new legal challenge each time“. Investigations for this type of possible abuse is in line with the Commission’s findings and priorities set out in its report “Competition Enforcement in the Pharmaceutical Sector” from 2019. Kvale has previously commented on this report.

The statement from the Commission also indicates another possible abuse; whereby Teva is alleged to have launched a communication campaign primarily directed at healthcare institutions and professionals which “may have targeted competing products to create a false perception of health risks associated with their use, even following the approval of these medicines by competent public health authorities“.

It is worth noting that the Commission highlights the possibility for there to be an abuse by the use of communication campaigns aiming to prevent competition by spreading false information about health risks of competing products. This type of conduct is usually sanctioned by other prohibitions relating to false advertising. To our knowledge this is the first time the Commission will consider this type of behaviour as a possible abuse.

Kvale has extensive experience in advising clients in anti-competitive as well as pharmaceutical regulatory issues and pays high attention to the following developments in the case.

Gas Regulation 2021

Partner Yngve Bustnesli in Kvales oil and gas team has contributed to an article about the Norwegian gas regulation in the international publication “LEXOLOGY GTDT – GAS Regulation 2021“, which include a  collection of articles from 24 countries.

Read the article here.

Yngve Bustnesli has in-depth knowledge of the oil and gas industry, and is recognized as one of the leading Norwegian practitioners within petroleum law, joint operating agreements, offshore projects, license transactions with due diligences, offshore contracts, gas sales contracts, decommissioning of offshore installations and health, safety, environmental issues.

Biosimilars on the substitution list? Update

In our article published here we informed about the proposal from the Norwegian Ministry of Health and Care Services (“the Ministry”) regarding amendments to the Norwegian Pharmacy Act Section 6-6, suggesting that biosimilars (a biologic medicinal product similar to another already approved biological medicine) may be included on the substitution list.

The public consultation ended September 30, 2020 and the majority of the bodies entitled to comment on the proposal supports the Ministry’s proposed amendments.

The Ministry presented their proposition to the Norwegian Parliament (bill) last week, 16 February, and the Health and Care Committee is appointed to give their report on the amendments within 8 April 2021.

Read more about the proposed amendments in our previously published article.

Chambers Global Practice Guide: Insurance & Reinsurance 2021

Partner Kristian Lindhartsen og lawyer Marte Kapstad Roen has authored the chapter for Norway in this years “Chambers Global Practice Guide: Insurance & Reinsurance 2021.”

Chambers Global Practice Guides: Definitive global law guides offering comparative analysis from top-ranked lawyers.

The chapter can be read here.

 

Kvale top-rated in WTR 1000

Kvale once again receives top ratings in WTR 1000 (World Trademark Review).

With gold in the category “Prosecution and strategy” and silver in the category “Enforcement and litigation”, we cement our position as the choice one-stop shop for all trademark-related issues ranging from dispute resolution to portfolio and transaction work. In addition to the team as a whole, four of our lawyers are recommended as leading practitioners, Marie Vaale-Hallberg, Anne Marie Sejersted, Ingvild Hanssen-Bauer and Lars Trygve Jenssen.

At Kvale, we combine a strong performance culture with a strong collaborative culture to create the best results, and in a year that has been anything but ordinary, feedback like this from our clients inspires us to keep up the good work:

“Driven by team spirit and dedication, the lawyers at Kvale work together seamlessly and effectively.”

The full ranking can be accessed her:

https://www.worldtrademarkreview.com/directories/wtr1000/rankings/norway

Using FIDIC Yellow Book for Offshore Wind Projects

FIDIC, the International Federation of Consulting Engineers, is the global representative body for national associations of consulting engineers. FIDIC has developed international standard forms of contract for use on national and international construction projects. These forms of contract were developed for use on onshore projects, but are increasingly used also on offshore wind projects. There are several issues with this, as offshore work comes with different risk factors that require different considerations.

Authors: Gry Bratvold and Sanne Kjær Bygholm

Unfamiliar Risk Allocation

Contractors who traditionally have operated in the oil service segment have in the recent years also offered their services and equipment to the offshore wind market. These contractors have considerable knowledge and expertise from offshore work, valuable for the less mature offshore wind market. Contractors coming from an oil service background, should be aware of the different risk allocation provided for in the FIDIC forms of contract compared to the contracts traditionally used on offshore projects.

FIDIC Yellow Book

The FIDIC Plant and Design-Build Conditions of Contract, also called the FIDIC Yellow Book, is reportedly the FIDIC form of contract most commonly used for offshore wind projects. Typical amendments to make it more suitable for offshore work include provisions regulating weather risk, the involvement of a marine warranty surveyor, the use of marine vessel spread and the inclusion of a knock for knock indemnity regime. Another key issue that should be carefully considered, is the concept of “rely upon information”.

Rely-upon Information

Contractors will perform its engineering, procurement, construction and services based on certain available information. Some of this information will generally be provided by the company, and the contractors will need to know which parts of the information can safely be relied on, and what information the contractor is expected to verify himself. If any data identified as “rely upon” should change or is later discovered to be incomplete or incorrect, contractors will generally expect a variation order for any impact this may have on the price and/or schedule. Furthermore, the contractor may want to expressly exclude liability for any defects caused by incorrect rely upon information from its warranties.

Site Data

Data regarding the site where the services are to be performed or the goods are to be installed, is essential for the design and engineering of offshore installations and for timing services to be performed. Such data could include the water depth, soil conditions and current, wave, sea level and meteorological data (metocean data) that requires particular expertise and can be costly to verify. Where the company provides such information, contractors with offshore background will generally expect this to be rely upon information.

Under the FIDIC Yellow Book, contractors are not only expected to inspect and examine the site, including e.g. its sub-surface conditions, but will also be deemed to have performed such inspection before having submitted its tender. Although there are provisions in the Yellow Book modifying the contractor’s risk for site data, the overall exposure is nevertheless likely to be unacceptable to most contractors. When used in the context of an offshore project, the parties may therefore agree that this regulation is not suitable, and include special terms (called ‘Special Provisions’) more suitable for an offshore project.

Shifting the Risk

When amending the risk allocation envisaged in the FIDIC Yellow Book for a given risk factor such as site data, several other provisions of the standard will need to be amended as a consequence to avoid ambiguity and inconsistencies with other related terms. The parties will also need to negotiate and amend or include mechanisms in the ‘Special Provisions’ to provide for what the consequences shall be of any errors or omissions in rely upon information. How to best structure and draft these mechanisms will depend on what risks the parties are willing to accept as well as the particulars of the project. Some examples of issues that the parties generally would need to consider are: the measures the contractor shall take if an error in the rely-upon information is discovered at different stages of the project; the mechanism for dealing with any impact the error or omission may have on cost or schedule and the implications such errors shall have on the contractor’s warranties. These are just examples, and there may be several other implications, depending on the circumstances.

Conclusion

Tailoring the FIDIC Yellow Book into a suitable contract for an offshore wind project, requires careful consideration and drafting. FIDIC has reported that it is looking at launching a set of standard particular conditions of contract for renewable energy projects/offshore wind, but it is unclear when this may be expected. In the meantime, it remains crucial that the necessary adjustments are made when using the FIDIC Yellow Book for offshore wind projects.