5.2 Liability for Wrongful Arrest
A similar objection was made in relation to liability for wrongful attachment or arrest. When put to the Supreme Court, the court simply noted that the enforcement officer must ensure that adequate countersecurity is put up, before the attachment or arrest order is made. However, the court fails to take into account that the claim for damages may substantially exceed the countersecurity. Arrest in, for instance, rigs or vessels under construction, will cause expensive delays and, potentially, cancellation of drilling contracts or charter parties. This could result in a substantial claim for damages if the arrest order was wrongful. Both the countersecurity and the indemnity,(1) See clause 16.4 (h) of the standard bond terms (n 6). which the Nordic Trustee is likely to have sought from the bondholders prior to initiating any action, may be insufficient to cover such liability.
Again, the Nordic Trustee is the only party directly liable.(2) See section 32-11 of the Civil Procedure Act. Due to the possibly sky-high claims, it is more than likely that the Nordic Trustee will have insufficient funds to cover a potential liability. It is questionable whether the bondholders can be held jointly and severally liable, which may in turn depend on whether the Nordic Trustee was instructed by the bondholders’ meeting to take action or if the Nordic Trustee acted on its own initiative. In general, it may be contended that the bondholders must be identified with the actions of the Nordic Trustee, save for cases of wilful misconduct. Nonetheless, the issuer may expect great difficulties in obtaining settlement. Similar to the ruling on case costs, a judgment against the Nordic Trustee is not likely to be accepted as the basis for direct enforcement against the bondholders in Norway or abroad.(3) See section 4-7 of the Enforcement Act (n 129).