Clarification by the Supreme Court: Repurchase Right Excluded from the Divorce Settlement Division Basis

Case Background

The case concerns a spouse who had transferred valuable shares to their three children approximately three and a half years before the marriage ended. The transfer included a clause that gave the spouse an unconditional right to repurchase the shares at a consideration significantly lower than the actual value of the shares. The giving spouse argued that this right was not intended to be exercised but was to function as a security mechanism in case the children were unable to manage the ownership responsibly. If the right were exercised, it would trigger taxes in the range of 23 to 27 million Norwegian kroner. During the divorce, the other spouse claimed that the repurchase right represented an asset value that should be included in the division basis for the joint property. 

The Judgment Clarifies the Interpretation of the Marriage Act § 61 Letter c

The majority of the Supreme Court, consisting of three judges, concluded that the repurchase right probably did not constitute a real economic value for the husband at the time of the divorce. They considered that the value of the right could be excluded from the division as a personal right under §61 c of the Marriage Act, and it was also doubtful whether the right was an asset at all. 

The minority in the Supreme Court, however, believed that the repurchase right should be interpreted according to its wording and included in the division basis as any other asset. The minority emphasized that the clause could be exercised in practice, and that real considerations suggested that it was important to include the value in the division to prevent circumventions of the joint property regime. 

The decision provides guidance on how such rights will be assessed in future divorce settlements and highlights the importance of carefully considering the economic reality of agreements, including those about generational changes. 

Read the full decision (HR-2024-814-A). 

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