4.1 Introduction
Norwegian law recognises a general basis of liability in torts, in principle also applicable to the State, for the creation of false expectations that cause someone to suffer a loss.(1) See Viggo Hagstrøm, ‘Informasjonsansvar - Om villedning av annen enn kontraktspart’ TfR 1989 pp. 196-220, especially p. 206. The general perception seems to be that the State is liable for false expectations created by misleading information, according to the same conditions as for private persons.(2) See e.g. Bjarte Thorson, Erstatningsrettslig vern for rene formuestap (Gyldendal Akademisk, 2011), p. 91 et seq. As discussed above, the general basis of government liability is generally considered to be wrongfulness and/or negligence in accordance with the Torts Act section 2-1. In the following, we shall however discuss somewhat further the basis of government liability for breach of legitimate expectations.
A limited basis for such liability is recognised in principle under EU-law, and somewhat more extensively under international law relating to protection of foreign investments.(3) Also under the first additional protocol to the European Convention of Human Rights, a principle of legitimate expectations is recognised, where it serves to broaden the scope of what constitutes a protected possession, cf. Kopecky v Slovakia, Application no. 44912/98 Judgment 28 September 2004; Pine Valley Development and others v. Ireland, Application no. 12742/87, Judgment 29 November 1991; and see generally Stig Solheim, Eiendomsbegrepet i den europeiske menneskerettighetskonvensjon (Cappelen, 2010) p. 285. EU law normally requires “precise and specific assurances” causing someone to “entertain justified hopes”, for a legitimate expectation to exist.(4) Paul Craig, EU Administrative Law (Oxford University Press, 2nd edn. 2012) p. 567. Under normal circumstances, this excludes anyone being able to entertain legitimate expectations on the basis of a general regulation or government policy, which it must ordinarily be expected can be subject to change.(5)Ibid. p. 573. To a limited extent, the ECJ has however held that regulations may also provide legitimate expectations that they will be reasonably and consistently applied, although primarily in the form that individual departures from a general policy may violate legitimate expectations.(6)Ibid. p. 578. It is more uncertain whether a change in regulatory policy may in itself violate legitimate expectations, although it does not seem inconceivable that the ECJ might, in special circumstances extend the principle to seemingly disproportional and arbitrary changes of policy which fail to take into account reasonable expectations created by an existing regulatory framework. Underlying the principle in EU law is a general proportionality standard, which will allow for the disregarding of prima facie legitimate expectations if required by overriding public interests.(7)Ibid. p. 584. Presumably, one may also envisage this standard as having some bearings on the question of whether there is a legitimate expectation in the first place.
A somewhat more extensive principle of respect for legitimate expectations has been developed by arbitral tribunals, interpreting the so called fair and equitable treatment standard under international law in relation to the protection of foreign investments.(8) See generally Ivar Alvik, Contracting with Sovereignty (Hart Publishing, 2011) p. 159-237 and p. 261-272. An example is a recent SCC(9) The Arbitration Institute of the Stockholm Chamber of Commerce. case against Spain, concerning a change of regulated tariffs for solar power plants. Here, the tribunal found that a change of tariffs could violate legitimate expectations “even in the absence of specific commitments, when the receiving State performs acts incompatible with a criterion of economic reasonableness, with public interest or with the principle of proportionality.” And it further held that “an investor has a legitimate expectation that, when modifying the existing regulation based on which the investment was made, the State will not act unreasonably, disproportionately or contrary to the public interest.”(10)Charanne and Construction Investments v. Spain, SCC Case No. V 062/2012 (unofficial translation from Spanish by Mena Chambers) available at https://www.italaw.com/ sites/default/files/case-documents/italaw7162.pdf, para. 513-514.
These international sources illustrate that it is not inconceivable that a concessionaire may, under certain circumstances, be deemed to have legitimate expectations regarding a certain tariff level, even if there are no specific commitments or assurances from the government in this regard. In the following we shall discuss the basis under Norwegian law for such a liability for breach of legitimate expectations. It should be emphasised that the kind of liability we envisage here is distinct from a contractual liability, or a protection of the expectation interest as such. What we envisage is a liability for the negative interest, i.e. loss and damage that the concessionaire has suffered through relying on the legitimate expectation. We first discuss some fundamental considerations before examining legal literature and case law.