3 A Representative’s Lack of Title to Sue and be Sued
Under Norwegian law, the main rule is that a representative cannot sue or be sued in its own name.(1) Jens Edvin A. Skoghøy, Tvisteløsning (3rd edn, Universitetsforlaget 2016) 444 Consequently, a party can only sue or be sued in connection with his or her own private rights and obligations.(2) For public law matters, the rule is not as stringent, see for instance Camilla B. Hamre, ‘Tilknytningskravet for rettslig interesse i privatrettslige forhold - Tendenser til oppmykning i Høyesterettspraksis?’ LOR-2011-142, 144 This rule was established in case law based on the predecessor to section 1-3 of the Civil Procedure Act of 2005,(3) The Civil Procedure Act 1915 sections 53 and 54 although the courts have not been fully consistent.(4) Case law has not been entirely consistent on the issue of a representative’s right of action. Rt.1971 s. 425 allowed an action in the name of the representative, but this case was expressly distinguished by Rt. 1989 s. 338. In Rt. 1989 s.1140 the Supreme Court left it undecided as to whether two French bankruptcy trustees could sue in their own names. The main rulings in Rt. 1989 s 338, Rt. 1994 s. 524 and Rt. 2006 s 238 have all dismissed lawsuits filed by a representative. Since 1989, the Supreme Court has regularly dismissed actions filed by a representative of the real party in interest. A brief analysis of the two central cases relating to this is necessary before turning to the long line of cases pertaining to the Nordic Trustee’s right of action in the following section.
The first case, Rt. 1989 s. 338 (Eviction), concerned an application for eviction that was dismissed by the Supreme Court, because the party submitting the application was the manager of the property, i.e. only a representative.(5) Rt. 1989 s. 338, 341 distinguishing Rt. 1971 s. 425 The application would need to be submitted by the property owner itself, since the real party in interest is the only person or entity with title to sue.(6) ibid The Supreme Court held that this principle formed a mandatory rule of law and that the courts would disregard any agreement on title to sue.(7) ibid Any exception to this rule would require explicit legal authority.(8) ibid Moreover, the court noted that allowing lawsuits from representatives would raise numerous concerns as to (i) the court’s impartiality, (ii) the binding effect of a judgment upon the real party in interest, (iii) responsibility for case costs, and (iv) the consequences following the death, bankruptcy or loss of legal capacity on the part of the real party in interest.(9) ibid
These four concerns were reiterated in the second case, Rt. 2006 s. 238 (American receiver).(10) Post 2010-case law, it is at least arguable that the Supreme Court would have allowed the suit by the American receiver in Rt. 2006 s. 338 had it been faced with the case today. In this case, the Supreme Court was faced with the question of whether an American receiver could sue in its own name on behalf of a group of creditors. An American attorney was appointed as receiver by a US District Court and was granted power of attorney to represent a group of creditors subject to fraud by a Norwegian entity. The Court of Appeal looked up the definition of “receiver” in Black’s Law Dictionary and concluded that a receiver could be compared to a trustee in a bankruptcy estate, and allowed the suit.(11) Unpublished ruling of 12 December 2005 by Borgarting Court of Appeal referenced within Rt. 2006 s. 338 [4], [18]-[19] The Supreme Court, on the other hand, bluntly dismissed the lawsuit, holding that the receiver did not have title to sue in its own name.(12) Rt. 2006 s. 338 [20]-[23]
Noting its judgment in Rt. 1989 s. 338 (Eviction), the Supreme Court emphasised that a bankruptcy trustee is not itself a party to the court proceedings, but that the bankruptcy estate is such a party.(13) ibid [20] The appointment as receiver and the power of attorney simply vested the receiver with authority ad litem;not a right to sue in its own name on behalf of the real creditors in interest.(14) ibid Although there were certain practical considerations in favour of allowing the action, the court found that the four concerns mentioned, together with the uncertainty pertaining to a large group of unknown claimants and statutory limitation, had to prevail.(15) ibid [21]
Despite these two rulings, it appeared that the stakeholders in the Norwegian bond market considered it safe to rely on the no-action clause, paired with the Nordic Trustee’s exclusive right of action. Prior to the emergence of the high-yield market, the role of the Nordic Trustee was perhaps not as fundamental. It was only when the Nordic Trustee’s role changed into one requiring the active management of bond issues, that the no-action clause and the legal status of the Nordic Trustee were put to the test. As the next section will discuss in detail, the question of the Nordic Trustee’s title to sue was not straightforward.