Supreme Court Clarification: Seizure Cannot Be Used to Secure Anticipated Legal Costs in Civil Litigation

Case Background: Dispute Over Securing Legal Costs

The case arose when the plaintiff sought to impose a seizure on the defendant’s vacation property to ensure payment of expected legal costs that might be awarded in the underlying dispute.   

Initially, the District Court approved the plaintiff’s request for seizure based on written submissions. However, following oral proceedings, the court reversed its decision, nullifying the original ruling and denying the seizure request. The plaintiff appealed, and the Court of Appeal overturned the District Court’s decision, reinstating the seizure order pending further oral hearings. The defendant then appealed to the Supreme Court, raising the pivotal legal question: Can seizure be used to secure future claims for legal costs?   

Legal Framework: Key Provisions of the Norwegian Dispute Act

The Norwegian Dispute Act (Tvisteloven) governs the rules for seizure and legal costs.   

Seizure Requirements (§ 32-1 and § 33-2)  

Under § 32-1, only a party who “has” a monetary claim against another may request seizure to secure the claim. Additionally, § 33-1 requires the claimant to demonstrate a valid “reason to fear” that enforcement of the claim would otherwise be frustrated or significantly impeded. This condition, often referred to as the “security interest,” must be substantiated for the seizure request to be granted.   

Legal Costs (§ 20-2 and § 20-11)  

 The general rule under § 20-2 is that the prevailing party is entitled to compensation for legal costs. However, § 20-2(3) allows the court to exempt the losing party from liability for legal costs if compelling reasons make such an exemption reasonable. Additionally, § 20-11 provides a specific provision allowing defendants to demand security for future legal costs when the plaintiff resides outside the European Economic Area (EEA).   

The central issue in this case was whether seizure could be used to secure future legal costs outside the specific scenario outlined in § 20-11, including for plaintiffs and without restrictions to non-EEA residents.   

Court of Appeal vs. Supreme Court: Diverging Views

The Court of Appeal had previously ruled that the Dispute Act’s provisions on legal costs did not preclude the use of seizure to secure future claims. The court reasoned that legal costs could be treated as a monetary claim similar to other claims that may be secured through seizure, even if the claim is contingent or has not yet matured. The Court of Appeal further held that the general conditions for seizure, including substantiation of the claim and the security interest, must be met.   

However, the Supreme Court’s Appeals Committee disagreed, adopting a stricter interpretation of the law.   

Supreme Court’s Decision: Future Legal Costs Are Not a Valid Claim for Seizure

In a 2-1 decision, the Supreme Court’s Appeals Committee concluded that seizure cannot be used to secure future claims for legal costs. The Committee overturned the Court of Appeal’s ruling, providing clarity on the scope of seizure provisions under the Dispute Act.   

Majority Opinion

The majority emphasized the wording of § 32-1, which requires that a party “has” a monetary claim. They argued that a claim for legal costs only arises once it has been awarded in a judgment or ruling. Therefore, at the time of the seizure request, the court cannot determine whether a party has a valid claim for legal costs.   

The majority also highlighted the court’s discretion under § 20-2(3) to exempt the losing party from liability for legal costs, introducing an element of uncertainty that cannot be resolved until the underlying dispute is adjudicated.   

Additionally, the majority referred to the Dispute Act Committee’s recommendations during the drafting of the Act, which concluded that there was no basis for introducing a general rule requiring security for potential legal costs for parties residing in Norway:   

“Allowing seizure in this context could be misused to force a prejudicial assessment of the parties’ claims and positions in the case. Permitting seizure to secure future legal costs would also be inconsistent with the system. The absence of examples in case law further indicates that the statutory framework has been understood in this way.”   

Dissenting Opinion

The dissenting judge argued that claims for future legal costs are not fundamentally different from other claims for compensation asserted at the time of a seizure request. The dissenting opinion also held that the court’s discretion to deviate from the general rule on legal costs does not create such uncertainty as to render a claim for future legal costs invalid.   

By analogy, the dissent noted that other claims for compensation may also be subject to partial or full reduction under specific circumstances. The dissent concluded that the question of whether a party can request seizure to secure future legal costs should be assessed under Chapters 32 and 33 of the Dispute Act.   

Key Takeaways: Supreme Court’s Ruling on Seizure and Legal Costs

This decision provides critical clarification on both the rules governing seizure and the provisions related to legal costs under the Norwegian Dispute Act.