7.2 Legal Action against the Nordic Trustee concerning Actions Performed in its Capacity as Bond Trustee
An exception to the abovementioned main rule is required in order to allow a legal action against the Nordic Trustee in respect of actions performed in its capacity as bond trustee (or security holder) on behalf of the bondholders. Both Rt. 1989 s. 338 (Eviction) and Rt. 2006 s. 238 (American Receiver) made it clear that explicit legal authority is necessary if one were to make such an exception. However, there has been some development in case law, as evidenced by the three Thule Drilling cases and Rt. 2010 s. 646 (IPR Manager), pertaining to a representative’s right of action, provided that it has authority to make dispositions independently with binding effect upon the real party in interest. This development may make it easier to establish a right to sue the Nordic Trustee in its own name in respect of actions carried out in its capacity as bond trustee.
As to the requirements of section 1-3 of the Civil Procedure Act, there is undoubtedly a genuine need to allow suits against the Nordic Trustee in respect of actions performed on behalf of the bondholders. The alternative – having to sue the bondholders individually and thereby obliging them to instruct the Nordic Trustee to refrain from or to carry out certain actions – would be virtually impossible due to the anonymous and shifting nature of the class of bondholders.
The preparatory works to section 1 of the Financial Collateral Act, referred to above in sub-section 4.5, presume – although indirectly – that the Nordic Trustee can be sued in its own name by a creditor challenging the commercial outcome of the enforcement of secured assets.(1) Ot. Prp. Nr. 22 (2003-2004) ‘Om lov om finansiell sikkerhetsstillelse’ 28, 53 In the midst of the Thule Drilling cases, the Nordic Trustee even voiced a similar assumption.(2) Letter form the Nordic Trustee to the Ministry of Finance dated 27 March 2009 (n 12) The functionality of the role as bond trustee requires that the bond trustee can be sued in its own name in respect of its actions performed as bond trustee (or as security holder) on behalf of the bondholders.
In both the UK and the US, the bond trustee can be sued in respect of actions performed in this capacity. A trustee’s right to sue and be sued in its own name is undisputed in those jurisdictions. This fact may serve as an argument in favour of allowing the Nordic Trustee to be sued in its own name in respect of actions performed in its capacity as bond trustee on behalf of the bondholders; especially when the Supreme Court has vested the Nordic Trustee with a right to sue in its own name. If an exception is made to the main rule and a representative is allowed to sue in its own name, one must – in order to ensure symmetry – accept that an action can be taken against that representative in respect of its acts performed on behalf of the real party in interest.
Although, there is no Supreme Court case dealing with this question, some guidance can be sought from a District Court case from 2009,(3) Ruling of 4 April 2009 by Oslo District Court (Nw. ‘Byfogden’) (TOBFY-2009-62739) where the issuer sought an interlocutory order against the Nordic Trustee. The issuer aimed to reinstate the dismissed board of directors and to have the notice of an event of default withdrawn, together with seeking an injunction to prevent the Nordic Trustee from exercising any remedies due to an alleged event of default. Neither the parties nor the court discussed the Nordic Trustee’s right to be sued in its own name. This is probably because the Nordic Trustee was the entity performing the challenged actions. It was the Nordic Trustee that had declared an event of default and dismissed the board of directors. Consequently, the legal action had to be filed against the Nordic Trustee, although it acted on behalf of the bondholders.
In light of the above arguments, the requirement of section 1-3 of the Civil Procedure Act as to a genuine need on the part of the claimant to sue the Nordic Trustee in its own name is evidently fulfilled in this regard. Hence, there are sufficiently strong arguments in favour of another exception from the main rule. Consequently, the Supreme Court – if faced with this question – is likely to allow the Nordic Trustee to be sued in its own name in respect of actions performed on behalf of the bondholders in its capacity as bond trustee (or security holder).