International Academy of Comparative Law
XVIII International Congress of Comparative Law
Washington, from 25 to 31 July of 2010
Norway – Catastrophic Harms/ Catastrophic damages – liability and insurance
Professor dr juris Erik Røsæg, University of Oslo, Scandinavian Institute of Maritime law
I.
Harms and catastrophes: defining “catastrophic harms”
1. May we ask you, please, to provide us with a generic definition of “catastrophic
harms” well fitted to your own legal culture?
In Norwegian law, one tends to avoid generic and abstract definitions. The definition of
“catastrophic harms” therefore only would appear meaningful within a certain legal
context, e.g., if a legal remedy depended on whether “harm” that was “catastrophic” were
inflicted on someone. However, there are no legal rules that refer to “catastrophic harm,”
so a definition of legal harm that would appear meaningful within our legal culture is
difficult to envisage.
In respect of “harm,” the starting point is that only economic loss is protected by the law, 1
but there are exceptions for lasting bodily harm. 2 Pain and suffering can be compensated in
case of gross negligence resulting in bodily harm or infringement. 3 Punitive damages are
not awarded. 4 There is not a distinction in principle between physical and non-physical
harm. 5
In principle, the same rules apply in case of “ordinary” and “catastrophic” damage unless
there is an agreement to the contrary or implied. 6 Claims can generally be mitigated if they
are unreasonable. 7 A force majeure event may make a claim unreasonable, at least if not
foreseeable, as well as circumstances making the enforcement of the claim a ”catastrophe”
in the personal economy of the person claimed.
II.
Catastrophic harms and Statutory Law
2. Please, provide the main legal requirements in your own legal systems used to
build the concept of legally relevant catastrophic harms.
1
2
3
4
5
6
7
Lov nr. 26/1969 om skadeserstatning §§ 3-1 and 4-1.
L.c. § 3-2.
L.c. § 3-5.
See footnote 1.
See, e.g., Rt. 1955.872 and Rt. 1960.357.
See as an example of a war exception in (charterparty) contracts Lov nr. 39/1994 om sjøfarten
(sjøloven) § 358, and as an example of early termination of a (labor) contract because of natural
disaster Lov nr. 62/205 om arbeidsmiljø, arbeidstid og stillingsvern mv. (arbeidsmiljøloven) §
15-3(10).
Lov nr. 26/1969 om skadeserstatning § 5-2 and Lov om avslutning av avtaler, om fuldmagt og
om ugyldige viljeserklæringer 31. mai 1918 nr. 4 § 36.
The more common concepts are references to what is insurable, 8 war and warlike
conditions 9 or more elaborate “inevitable event of nature, act of war, exercise of public
authority or a similar force majeure event.” 10 In private law, the term catastrophe is only
used as a term of art in acts based on international Instruments. 11 It is difficult to establish a
general concept, as the evaluation very often will be tainted by individual circumstances
like what is foreseeable and what is reasonable for an individual to bear, or by the concept
of subjective or objective impossibility.
In Norwegian public law, there are no powers to declare a “state of emergency,”
“catastrophic zone,” etc with legal implications.
III.
Insurance System
3. Is an event of catastrophic harm, which may severally affect the company or
may eliminate it, contemplated somehow by insurance policies or, even, by
statutory law?
War and force majeure clauses are common in many different kinds of insurance, also in
mandatory schemes, 12 but general references to “catastrophes” seem uncommon.
Cumulation of risks in liability insurance, including catastrophic risks, is limited by rules
on limitation of liability in transport law13 and nuclear law 14 (but product liability is not
limited 15). These rules are modeled on international conventions. Similarly, insures’
liability for property damage caused by natural phenomena is limited, and there is a
mandatory pooling system for Norwegian as well as foreign insurers. 16
The main protection of insurers seems to be careful underwriting to avoid accumulation of
risks and monitoring of solvency based on probabilities. 17
It should be noted that in situations in which many persons have claims against an insurer,
e.g., after a major shipping incident, the claims tends to be settled by an ad hoc scheme of
8
9
10
11
12
13
14
15
16
17
Lov nr. 7/1994 om sikring mot og erstatning for naturskader (naturskadeloven) § 1.
Lov nr. 39/1994 om sjøfarten (sjøloven) § 192.
Lov nr. 72/1996 om petroleumsvirksomhet § 7-3 (translation:
http://www.npd.no/regelverk/r2002/Petroleumsloven_e.htm#_Toc68503460).
Lov nr. 28/ 1972 om atomenergivirksomhet § 24 and Lov nr. 57/1995 om pakkereiser og
reisegaranti (pakkereiseloven) § 4-1.
Lov nr. 39/1994 om sjøfarten (sjøloven) § 192.
See, e.g. l.c. Ch. 9.
Lov nr. 28/1972 om atomenergivirksomhet § 30.
Lov nr. 104/1988 om produktansvar, compare Council Directive 85/374/EEC of 25 July 1985 on
the approximation of the laws, regulations and administrative provisions of the Member States
concerning liability for defective products Art. 16.
Lov nr. 70/1989 om naturskadeforsikring §§ 3 and 4. The insurance cover is a mandatory part of
fire insurance of real property, etc. The overall limit per incident is NOK 12.5 bn or almost EUR
1.5 bn (Forskrift No. 1335/1989 om egenandel og ansvarsgrense ved naturskadeforsikring § 2).
Insurers have a legal obligation to monitor their own solvency, and this is monitored by a
Government agent, see Lov nr. 44/2005 om forsikringsselskaper, pensjonsforetak og deres
virksomhet mv. (forsikringsvirksomhetsloven) Ch. 6.
2
standardized damages. This cuts the litigation costs, but tends to enhance the level of
compensation compared to the general level in Norway.
4. Does your national legal system distinguish as between damages covered by
insurance policies and those ones which are legally excluded?
No.
5. Even if some catastrophic damages may be legally covered by insurance
policies, which are the events more commonly excluded by standard forms of
insurance policies in your own jurisdiction?
See the answer to question 3 above.
6. Is there in your country any legally established fund covering, among others,
extraordinary risks? If so, or if there is more than one, please, list the most
relevant three, adding short comments about contributors, amount of
contribution, management and coverage.
a) Natural disaster fund, government funded. 18 There is no maximum liability per event.
b) International Oil Pollution Compensation Fund, financed by a levy on discharge of oil
which varies depending on the funds expenses. 19 The Fund’s liability is limited in amount
and some catastrophic events are excluded.
c) In nuclear liability law, there is government liability for excessive damages, and this
could perhaps be seen as a special fund. 20 Similarly, the government will clean up pollution
if the polluter does not do so, and thus government resources are made available in
catastrophic cases. Perhaps also the very developed social security system could be seen as
government funds being made available also to mitigate the effects of catastrophic events.
7. How do the levels of risk concentration and risk magnitude translate into
insurance policies and rates? When answering, please, consider which levels
make reinsurance or coinsurance a good practice, and the existence of
compulsory reinsurance or coinsurance or similar meaningful features you
think may be of interest.
As an EEA member, Norway participates in the EU solvency monitoring schemes. 21 The
premiums charged and the reinsurance arrangements vary according to branch, company
and policy year, and rates are in some cases individually negotiated.
18
19
20
21
Lov nr. 7/1994 om sikring mot og erstatning for naturskader (naturskadeloven)
Lov nr. 39/1994 om sjøfarten (sjøloven) §§ 201-202.
Lov nr. 28/1972 om atomenergivirksomhet.
See http://ec.europa.eu/internal_market/insurance/solvency/index_en.htm.
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8. How does your system distinguish as between sudden accidents and long term
risks? If so, please, provide us with a very short list of statutory or case law
defining latency and distinguishing between sudden accidents and long term
risks.
Although there are some distinctions of this kind in the Norwegian legal system (notably in
the social security system 22 and nuclear liability law 23), the general rule is that sudden
accidents and long term risks are dealt with in the same way both in insurance law and
torts law. The general Statute of Limitation provides a liberal time limit, 24 and in
insolvency procedure there is a possibility to set aside an amount to cover liabilities arising
from long term effects which are not yet manifest. 25 However, when insolvency procedures
are closed or special compensation funds are finally distributed, the rules of res judicata will
prevent claims arising at a later tame to be compensated. 26
9. May you describe new statutes, if any, in your legal systems triggered by global
catastrophes as the above-mentioned ones and new statutes driven by national
local events?
There are no new statutes of this kind.
10. Was legal change triggered by case-law itself? If so, please, may you quote the
leading cases?
There are no new statutes of this kind.
IV.
The Law of Torts
11. Do “catastrophic harms” generate criminal, administrative, civil or labor
liability? If so, which are the main legal sources or the leading case law?
The distinction between criminal, administrative, civil, labor or other kinds of liability is
not important in Norwegian law, as both the court system and the torts law is uniform.
There is no special basis of liability for “catastrophic harms.” Negligence liability will, of
course, generally not include harms caused by a catastrophe rather than negligence, and
harms of a catastrophic extent may be considered not foreseeable so that liability does not
arise even if there is a basis of liability.
22
23
24
25
26
Lov nr. 19/1997 om folketrygd (folketrygdloven) §§ 13-1 and 13-1 and Lov nr. 65/1989 om
yrkesskadeforsikring § 11, The point here is to distinguish damage caused by the workplace and
other damage, and is not relevant in catastrophe law.
Lov nr. 28/1972 om atomenergivirksomhet § 42. The point here is to distinguish damages which
should have been claimed before the time bar and other damage, and is not relevant in
catastrophe law.
Lov nr. 18/1979 om foreldelse av fordringer (foreldelsesloven) § 9 (up to 20 years).
Lov nr. 58/1984 om gjeldsforhandling og konkurs (konkursloven) § 133.
L.c. Ch XV and Lov nr. 39/1994 om sjøfarten (sjøloven) § 245.
4
There are many rules of strict liability in Norwegian torts law. Generally, there is no
exemption for catastrophic events, but the general rules of mitigation of liability due to
unreasonableness apply. 27 (It is, however, questionable whether the mitigation rule is in
conformity with EEA law in respect of product liability. 28) In the court-made rules on strict
liability for industrial risks, there is an obiter dictum suggesting that they do not apply in
cases of the force majeure kind. 29
12. Do administrative fines or criminal punishment preempt civil claims?
No.
13. Which standard of liability governs catastrophic harms claims?
See the answer to question 11 above.
14. Are co-injurers jointly, severally or joint and severally liable? If there is a joint
and several liability standard, is there a right to contribution and, if so, how is it
regulated?
The co-injurers are jointly and severally liable. 30 There is a right of contribution at the
courts discretion with particular reference to the basis of each co-injurer’s liability. 31
15. Are class actions regulated in your procedural system? If so, can you shortly
define its main features?
Class actions are allowed The Dispute Act provides: 32
Section 35-2 Conditions for class actions
(1) A class action can only be brought if
a) several legal persons have claims or obligations whose factual or legal basis is
identical or substantially similar,
b) the claims can be heard by a court with the same composition and in the main
pursuant to the same procedural rules,
c) class procedure is the most appropriate way of dealing with the claims, and
d) it is possible to nominate a class representative pursuant to section 35-9.
27
28
29
30
31
32
Lov nr. 26/1969 om skadeserstatning § 5-2.
Lov nr. 104/1988 om produktansvar § 2-5; a provision which is not found in Council Directive
85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative
provisions of the Member States concerning liability for defective products.
Rt. 1972.965 (”very strong wind”).
Lov nr. 26/1969 om skadeserstatning § 5-3(1).
L.c. § 5-3(2).
Lov nr. 90/2005 om mekling og rettergang i sivile tvister (tvisteloven) (translation:
http://www.ub.uio.no/ujur/ulovdata/lov-20050617-090-eng.pdf).
5
(2) Only persons who could have brought or joined an ordinary legal action before the
Norwegian courts may be class members.
16. May the victims or their estates sue directly the insurance company (direct
action)? If so, please, quote the relevant Statute.
Yes. There are several special rules on this, but the general rules in the Insurance Act
provide: 33
Section 7-6 (position of the injured party under liability insurance)
When the insurance covers the liability of the Assured, the injured party may claim
compensation directly from the Insurer. The Insurer and the Assured are obliged to
inform the injured party upon request whether liability insurance exists.
When a claim for compensation is advanced against the Insurer, he shall notify the
Assured without undue delay and keep the Assured informed about the further
handling of the claim. Any admissions by the Insurer to the injured party are not
binding on the Assured.
If legal action is brought against the Insurer, he may request that the injured party bring
action against the Assured in the same case.
The Insurer may raise those objections against the claim which the Assured has as
regards the injured party. The Insurer may also raise his own objections against the
Assured unless the objections are related to the Assured’s circumstances after the
insurance event occurred.
An action against the Insurer pursuant to this section must be brought in Norway
unless otherwise follows from Norway’s obligations under international law.
The provisions of this section shall not preclude a person who does business with the
Assured waiving the right to claim compensation for a business loss directly from the
Insurer. Such an agreement will nevertheless not be legally enforceable in the event of
the Assured’s insolvency.
Section 7-7 (the position of the injured party under mandatory liability insurance)
When the person effecting the insurance has taken out liability insurance in order to
comply with an order issued in or pursuant to law (mandatory liability insurance),
section 7-6 shall apply correspondingly to the extent that the position of the injured
party is not specifically regulated.
The Insurer may nevertheless not raise objections which he might have been able to
raise against the person effecting the insurance or the Assured when he knows or ought
to know that mandatory liability insurance is involved. If mandatory liability insurance
has been cancelled or otherwise ceased to apply, this will take effect in relation to the
33
Lov nr. 69/1989 om forsikringsavtaler (forsikringsavtaleloven) (translation:
http://www.cefor.no/insurance_cond/documents/InsuranceContractsAct.pdf),
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injured party one month after the relevant authority has received notification of the
matter
Section 7-8 (position of the injured party in connection with major business
activities, etc.)
When an insurance as mentioned under section 1-3, second paragraph, covers the
liability of the Assured, the Insurer is liable towards the injured party for ensuring that
the compensation is not paid out to the Assured until the latter provides evidence that
the claim from the injured party has been covered. The Assured’s claim against the
Insurer cannot be made the subject of legal action for the recovery of claims other than
the claim for compensation.
In the event that the Assured is insolvent, the provisions of sections 7-6 and 7-7, cf.
section 8-3, second and third paragraphs, shall apply.
The provisions of this section cannot be departed from to the detriment of the injured
party.
Section 1-3 (the mandatory nature of the provisions)
Unless otherwise stated, the provisions of part A may not be departed from to the
detriment of the person who derives a right against the Insurer from the insurance
contract.
With the exception of liability insurance pursuant to section 7-8 the provisions may
nevertheless be departed from in the case of insurance relating to commercial business:
(a) when the insurance relates to undertakings which at the time of concluding the
contract, or at subsequent renewals, meet a minimum of two of the following
requirements:
(1) the number of employees exceeds 250
(2) the sales earnings are a minimum of NOK 100 million according to the most
recent annual accounts
(3) assets according to the most recent balance sheet are a minimum of NOK 50
million
(b) when the business takes place mostly abroad
(c) when the insurance relates to a ship that is subject to registration, cf. section 11 of the
Maritime Act, or to such installations as referred to in section 33, first paragraph, and
sections 39 and 507 of the Maritime Act,
(d) when the insurance relates to aircraft, or
(e) when the insurance relates to goods in international transit, including transportation
to and from the Norwegian Continental Shelf.
7
The provisions of Section 3-10 shall not apply to insurance applicants who fall within
the scope of the second paragraph.
17. According to the Collateral Source Rule and if the law does not provide
otherwise, any amount of compensation paid to the victim or their states is not
to be taken into account to decrease the liability of the injurer. How is this rule
applied in your legal system?
A Collateral Source Rule does not apply in Norwegian law, but other payors may subrogate.
In personal injury cases, most of the damage is covered by the social security system, and
that system does not bring recourse actions. 34 There are also restrictions on insurers’ right
of recourse. 35
18. Is the State of the Art Defence (Risk of Development) regulated by your own
jurisdiction? Is it generally accepted as a defence? Is it excluded in some
economic activities or in public sectors?
The general rule is obviously that, without special rules to the contrary, the State of the Art
Defence will be allowed in negligence liability, but not in strict liability (such as pollution
liability).
The Product Liability legislation, based on the EU Directive, 36 provides liability if the
product is not as safe as one could reasonably expect. 37 This will generally allow the State
of the Art Defence if adequate warnings are given.
The general rule for government liability is a modified negligence rule, as one should also
take into consideration reasonable expectations to the activity. 38 It is disputed whether this
increases or reduces liability, but it may disallow the State of the Art Defence in certain
cases. 39
V.
Regulatory Agencies and Liability
19. If victims have a tort claim, must they wait until the regulatory agency decision
is taken or reviewed or can the victims merge their tort claims with general
administrative proceedings? If so, please, quote shortly relevant legal sources
and case law.
34
35
36
37
38
39
Lov nr. 26/1969 om skadeserstatning § 3-8, which theoretically allows recourse against persons
who have caused personal injury willfully.
L.c §§ 3-8 and 4-2 et seq.
Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and
administrative provisions of the Member States concerning liability for defective products.
Lov nr. 104/1988 om produktansvar § 2-1.
Lov nr. 26/1969 om skadeserstatning § 2-1
Bent Liisberg: Erstatningsansvaret for offentlig servicevirksomhet : kritikk av en juridisk
vranglære (Bergen 2005).
8
Tort claimants can and must raise their claim independently of administrative law
proceedings. There is neither a rule that compels them to wait until the regulatory agency
decision is taken or reviewed nor a rule that allow them to merge their tort claims with
general administrative proceedings.
Before proceedings are brought one must, of course, give the defendant a chance to fulfill
voluntarily. 40 This applies also if the government is the defendant.
Some claims are tried by administrative tribunals in first instance, also if the claims arise
out of a catastrophic event, notably medical malpractice cases and social security cases. 41
20. Is there a general preemption clause in your own legal system? Are there
specific preemption clauses?
There is no general preemption clause in Norwegian law. Negligence can be found even if
all formal safety rules are complied with. 42
In a few cases claims against an insurer replaces a claim against the liable party. 43 In
addition, there are some rules on channeling of liability 44 (which preempt tort claims
against some tortfeasors). The general rule on the claimant’s duty to mitigate damages 45
may imply that tort actions for claims that can be covered by social security are preemted.
40
41
42
43
44
45
Lov nr. 90/2005 om mekling og rettergang i sivile tvister (tvisteloven) (translation:
http://www.ub.uio.no/ujur/ulovdata/lov-20050617-090-eng.pdf) Ch. 5.
Lov nr. 53/2001om erstatning ved pasientskader mv. (pasientskadeloven); Lov 16. desember
1966 nr. 9 om anke til Trygderetten.
Peter Lødrup: Lærebok i erstatningsrett (Oslo 2009) pp. 136-141.
Lov nr. 65/1989 om yrkesskadeforsikring § 8.
E.g., Lov nr. 39/1994 om sjøfarten (sjøloven) § 193; Lov nr. 28/1972 om atomenergivirksomhet
§ 27.
Lov nr. 26/1969 om skadeserstatning § 5-1.
9