Although third party litigation funding is still an uncommon concept in Norway, recent years have seen increased momentum in the market. Several pending claims are publicly known to be backed by third parties and, in June 2018, a Norwegian court of first instance handed down Norway's first-ever court judgment in a funded matter.
As at September 2020, there is only one professional provider of third party funding services based in Norway: Therium Capital Management Nordic AS (Therium Nordic). The company, which is partly owned and funded by UK-based Therium Group Holdings Limited, was established in 2016. There are other providers of third party funding in Norway, although they are not actively promoting their services in the market at the time of writing.
Further, a number of foreign-based funders are said to be assessing Norwegian cases. By way of example, in 2020 the Swiss funding company Nivalion AG is funding private investors in a liability claim of 150 million Norwegian kroner in an action against the state of Norway. The claim is based on the state's interpretation of European Economic Area (EEA) regulations on the export of certain seafood products.
While an increasing number of Norwegian legal practitioners are advertising the benefits of third party funding to their clients, many still appear sceptical about the concept. Moreover, a study published in 2018 reported that Norwegian buyers of legal services are less likely to resort to third party litigation funding in the near future than their Danish, Finnish and Swedish colleagues. These perceptions may change as third party funding arrangements become more common in Norway and elsewhere in the Nordic countries.
Claims purchase arrangements are less rare than third party financing arrangements and are widely accepted throughout the Norwegian legal industry.
Legal and regulatory frameworki Absence of legislation explicitly regulating third party funding
As at September 2020, there is no legislation or other mandatory rules in Norway explicitly regulating third party funding.
Third party funding is neither addressed in the procedural law governing civil litigation nor in the most common procedural rules of arbitration. In addition, there is no case law discussing regulatory issues or the legality of third party funding arrangements.
Because of the lack of regulation, claim owners and funders are generally free to negotiate the particulars of their contractual relationship. The same applies for transfer agreements between claim owners and claims purchasers. Parties need to be mindful, however, of general principles set out in statutory law and case law that would apply to all types of commercial agreements governed by Norwegian law. For instance, as further explained in Section III, courts and tribunals may revise or even set aside unreasonable terms of an agreement.ii Compliance with the Code of Conduct
Lawyers acting in funded matters, however, have to take extra care to comply with the Norwegian Bar Association's Code of Conduct for Lawyers (the Code of Conduct). In the following, we will discuss only the most practical issues, as all the legal and ethical dilemmas that may arise in relation to third party funding cannot be addressed within the scope of this chapter.
First, one of the main principles of the Code of Conduct is that a lawyer cannot undertake assignments in which he or she would risk breaching the duties of loyalty, confidentiality and independence towards his or her client. Consequently, a lawyer cannot act on behalf of both the funded party and the funder as there is a clear risk of these clients having conflicting interests in certain aspects of the case. Similarly, a lawyer representing a funded party must never allow the interests and influence of the third party funder to affect his or her advice to the client. As explained in Section III, the litigation funding agreement should be drafted with these principles in mind.
Second, the Code of Conduct prohibits lawyers from entering into contingency fee arrangements and, to a certain extent, conditional fee arrangements. Agreements where lawyers receive a percentage of the recovered amount are prohibited, as are any agreements where the lawyer's personal economic interest in the outcome might conflict with his or her independence or the client's best interests, or both. 'No cure no pay', 'good cure good pay' and similar arrangements are permitted as long as the fee structure is reasonable and does not render the lawyer conflicted or financially dependent on the outcome.iii Licensing requirement for third party funding
In general, any financing activity in Norway is subject to the grant of a licence by the Norwegian Financial Supervisory Authority (FSA) or a cross-border passport under the Capital Requirements Directive (known as CRD IV) (for credit institutions within the EEA). The FSA has newly confirmed that professional third party funding also constitutes a financing activity and thus is subject to the requirement for an FSA licence.iv Legal and regulatory framework summary
In summary, third party funding is a largely unregulated practice but requires extra prudence on the part of the lawyers involved.