5.3 Troubles with Enforcement: The Anonymous and Shifting Class of Bondholders
Pursuant to Norwegian law, a ruling on case costs or a decision on liability for wrongful arrest will, as mentioned, only serve as grounds for direct enforcement against the Nordic Trustee. Thus, enforcement proceedings will have to be initiated against the individual bondholders, if the Nordic Trustee fails to settle its liability. However, the bondholders are spread across various jurisdictions, and they are numerous and largely anonymous. The issuer will therefore face a wide range of challenges should such enforcement proceedings prove necessary in Norway or abroad.
First, the issuer will have to overcome the obstacles relating to the bondholders’ anonymity. The difficulties of establishing the identity of the bondholders are explained in section 2 above. In addition, the bonds are traded on the open market,(1) E.g. the stock exchange, OTC or other regulated market place. rendering the class of bondholders a shifting group. Divestment of and investment in bonds may affect the individual bondholder’s liability, but these questions are too complex to be adequately dealt with within the limits of this article.
Furthermore, foreign jurisdictions may not accept that the individual bondholders are liable for any costs or damages in excess of the amount settled by the Nordic Trustee and the enforcement proceeding would fail even though a bondholder’s identity and jurisdiction have been identified. It is needless to say that the litigation costs and risk on the part of the issuer are immense.