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.

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