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The Norwegian Supreme Court has held that a Norwegian court does not have jurisdiction to decide a dispute between two foreign parties simply because one of them is a member of a Norwegian P&I Club.

For a Norwegian court to have jurisdiction over a dispute between two foreign parties certain requirements must be met. Until recently there was some uncertainty surrounding these requirements, which are found in the Norwegian Civil Procedure Act, section 32.1 The Norwegian Supreme Court has now brought this uncertainty to an end.

The case in question2 involved a claim regarding a cargo carried from Antwerp to Tampico, Mexico. The cargo owners were indemnified by the cargo insurer AIG, a Mexican insurance company. The subrogated underwriters then sought reimbursement from the Russian shipowners, who had P&I cover with Oslo-based P&I Club Skuld. AIG hired a claims recovery agency, Proteccion e Indemnizacion Maritima Mexicana (Pandimex), to negotiate a settlement with the owners. A settlement agreement was reached in late July 1999 for the amount of USD 125,000 and payment to Pandimex followed at the beginning of August.

However, Pandimex did not inform AIG that a settlement had been agreed and paid. On the contrary, Pandimex informed AIG that negotiations were still on-going but that a settlement offer amounting to USD 100,000 had been made. In November 2000 communications between AIG and Pandimex ceased. A month later AIG learned that Pandimex had closed down their office. AIG then started proceedings in Oslo against the shipowners for payment of the agreed settlement. Their 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. AIG argued that the shipowner’s membership in Skuld was a capital asset because Skuld is a mutual insurance company owned by its members. Whilst the Oslo High Court reached the conclusion that the requirements in the Civil Procedure Act had been met, the Court of Appeal and the Supreme Court did not agree.

In deciding the case the Supreme Court held that section 32 contained an implied requirement of a connection with Norway in order for a Norwegian court to have jurisdiction. It rejected AIG’s arguments and held that an insurance agreement with a Norwegian mutual insurer did not in itself constitute sufficient connection with Norway. Proceedings could be commenced in other jurisdictions with a closer connection to the dispute, such as Mexico and Russia.

The court also noted that the settlement had been agreed between AIG and the shipowners, and that Skuld was not a party to the deal.

1  Section 32 of the Civil Procedure Act does not apply to parties domiciled within the European Union or the European Free Trade Association, i.e. countries which are parties to the Lugano Convention.
2 AIG Mexico Seguros Inter Americana, S.A. v. Northern Shipping Company; Rt. 2006 s. 242.


Gard News 184, November 2006/January 2007

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Gard News is published quarterly by Gard AS, Arendal, Norway.