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Norway

Aviation

According to media reports, the Norwegian tax authorities are looking into the practice of some low-cost airlines of hiring pilots through contracts with companies owned by those pilots. The question for the tax authorities to consider is whether a pilot flying for an airline is to be regarded as an employee of the airline, rather than self-employed or employed by the pilot's own company.

From the start of 2012 the Norwegian aviation industry will be a part of the EU Emissions Trading Scheme. This will result in various financial and organisational challenges to the industry. The European Commission's proposal will require aircraft operators to monitor and report emissions data arising from aviation activities in compliance with the regime.

A temporary agreement between Norway and Canada signed in October 2010 recently entered into force. It provides for the mutual recognition of certificates and licences relating to the airworthiness of civil aeronautical products, and establishes procedures that make such approvals simpler and more efficient than previously, and thus less expensive.

The Cape Town Convention on International Interests in Mobile Equipment establishes an international arrangement for the registration of mortgage and similar security rights in mobile equipment, including aircraft equipment. The Norwegian Parliament recently approved ratification of the convention and the Protocol on Matters Specific to Aircraft Equipment.

Banking

In 2012 the Ministry of Finance asked the Norwegian Financial Supervisory Authority (NFSA) to evaluate the system for fixing the Norwegian Interbank Offered Rate (NIBOR). The NFSA recently delivered its findings, concluding that it had found no evidence that NIBOR has been manipulated or that there had been attempts to manipulate it; however, it could not confirm that manipulation had not taken place.

Under Norwegian civil disputes legislation, it is a general rule that a party may not grant power of attorney to another party to represent it. The main rule is that the party wishing to obtain a judgment must appear as a party. However, bondholders' trustee Norsk Tillitsmann has tested this general rule by suing bond issuers as a party acting on behalf of bondholders. The Oslo City Court dismissed the lawsuit.

The deposit guarantee scheme, which covers aggregate deposits of each depositor up to Nkr2 million, is mainly funded by member institutions through an annual fee. However, this fee is not paid if the guarantee fund's own capital exceeds the minimum legal requirement. The Ministry of Finance recently proposed to abolish the use of the guarantee fund's upper limit to establish an exemption from paying the annual fee.

Until recently, Norwegian credit institution Eksportfinans ASA administered the government-supported export credit scheme and provided fixed-rate loans to buyers of capital goods – so-called commercial interest reference rate loans. Under the amended Capital Requirements Directive, the Ministry of Finance determined changes to the regulations concerning capital requirements and large exposures.

When dealing with buy-out and cross-border transactions, lenders often encounter financial assistance issues in relation to a proposed guarantee and security package, which may result in the proposed guarantee or security being refused or granted with limitations. If recent proposals are adopted, part of the uncertainty that exists will be removed – to the advantage of lenders.

Regulatory body Finanstilsynet has reported that Norwegian financial institutions enjoyed good results in the first half of 2011, but that uncertainties in the financial markets have resulted in a more challenging liquidity situation for Norwegian banks. They are also believed to be better prepared to weather market turmoil than they were before the financial crash of 2008.

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Company & Commercial

In a recent judgment, the Supreme Court concluded that a payment guarantee was not an on-demand guarantee, but a surety only, under which the guarantor could invoke debtor objections to the payment obligations, despite the fact that the guarantee included language customarily used in on-demand guarantees. The Supreme Court has established stricter requirements to the contents of on-demand guarantees.

The criteria for duty of care have been tightened over the past few years and the courts appear more willing to impose liability on corporate directors. Directors must therefore be careful in how they deal with the company's assets in order to avoid personal liability for damages suffered by third parties, especially when the company is insolvent or threatened with insolvency.

Corporate Finance/M&A

A report recently prepared for the Department of Justice has suggested amending several of the rules governing private and public limited companies, including the financial assistance regulations. In particular, the report recommends changes to the rules on financial assistance to shareholders, financial assistance in relation to the acquisition of shares and penalties.

Employment & Labour

The Working Environment Act allows an employee to remain in his or her role during legal proceedings. The provisions of the act have recently been amended. As of January 1 2010 the employee's right to remain in the role applies to all terminations, including when a business closes down. In such cases the right to remain in the role will never be revoked, regardless of the reasons for dismissal.

The Universal Applicability of Collective Agreements Act intends to ensure that foreign employees are subject to equal wage and employment terms and conditions as Norwegian employees. The act ensures that employees do not carry out work under terms and conditions that are considerably worse than those stipulated in applicable national collective agreements for the occupation or sector in question.

It is set out in non-statutory law that where there is a permanent absence of a certain scope in the undertaking, the employer must employ on a permanent basis in preference to temporary employment. A recent Supreme Court judgment clarified the state of the law both in this regard and with regard to the regulation on temporary employment that lasts for more than four consecutive years.

A 'lay-off' is a temporary suspension of the employment relationship and is typically used when an undertaking must reduce or halt its activities for a limited period of time. Temporary lay-offs may be used as an alternative to a permanent reduction of the workforce when it is clear that the company will need the workforce again following a period of reduced need.

New regulations on employers' access to employee emails recently came into force. The new regulations are part of the Regulations on the Processing of Personal Data, which are permitted by the Personal Data Act, and provide more detail than previous legislation. However, the regulations comply to a certain extent with what was previously considered applicable under non-statutory law and the practice of the Data Inspectorate.

Recent amendments to the Annual Holidays Act secure employees' annual holiday leave. Both employer and employee now have greater obligations to ensure that annual holiday is taken each year, an upper time limit has been introduced to the agreements concerning the taking of holidays in advance and the date affecting which employees are eligible for six working days of extra holiday has been changed.

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Environment

The Norwegian authorities have proposed a new regime for carbon compensation for all large-scale industrial consumers of electricity in Norwegian industry in order to reduce the risk of carbon leakage resulting from the cost of the EU Emissions Trading Scheme allowance being passed onto consumers. The proposals follow guidelines to the scheme which were published last December.

The Borgarting High Court recently handed down a judgment regarding liability for offshore field operators to pay nitrogen oxide tax under the Act on Excise Duties and its relating regulations. The court had to consider whether liability to pay tax for nitrogen oxide emissions from mobile drilling installations on the Norwegian continental shelf rested with the owner of the rig or with the field operator.

The Norwegian Parliament recently agreed on a new climate policy for the coming years. The agreement is referred to as the Climate Settlement and concerns certain additions to the White Paper on Climate Efforts. The parties to the agreement have undertaken to reduce greenhouse gas emissions on a national level and step up technological development.

The Svalbard Treaty recognises the full and absolute sovereignty of Norway over the Svalbard archipelago. The increased interest in the natural resources around Svalbard and the northern regions poses a threat to the environment. Thus, the government has passed amendments to the relevant environmental legislation in order to counteract any potential negative effects that new activities may have on the Arctic environment.

The legal effects of contravening the legislative provisions on the export of waste for disposal or recovery to developing countries can be substantial. The Norwegian Climate and Pollution Agency recently proposed an increase in the criminal penalties for illegal export of waste.

In light of substantial sea discharges of produced water and oil from the petroleum industry, new guidelines have been issued that require operators on the Norwegian continental shelf to implement procedures for environmental monitoring in order to obtain information on the actual and potential environmental impact of their activities.

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Insolvency & Restructuring

In regard to most contractual relations, the estate may choose whether to assume the position of the debtor in non-performed contracts. This right to choose is limited to the estate and the co-contractor cannot reject the estate's performance of contracts. However, some agreements are of such nature that the estate cannot force the co-contractor to accept it as a contractual party.

Legislation provides that a concession for the breeding of fish or shellfish will be nullified following the bankruptcy of the concessionaire. However, a draft proposal provides that the bankrupt estate may obtain a temporary concession and the new owner will be entitled to a new concession. The concession thus becomes an asset which can be realized by a bankruptcy estate.

The Supreme Court recently decided that the Norwegian courts had jurisdiction in a bankruptcy petition filed against a Norwegian citizen who had been living abroad for 13 years. The fact that the creditor took reasonable measures to trace the debtor's place of residence, but failed, proved decisive.

Several limitations in the Copyright Act prevent creditors from claiming an interest in the IP rights of debtors. However, the restrictions only apply to the IP right itself, so creditors remain free to seek satisfaction from any proceeds derived from the right.

Different types of unsecured claims have been given different priority by statute. This update emphasizes the usefulness of written agreements in determining a loan's status in the event of a bankruptcy.

Insolvent debtors are often under statutory duty to file a petition, either for bankruptcy or another type of insolvency proceeding. This article describes the debtor's duty to act and how a failure to act may result in financial liability for the company's directors.

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