4.2 Fundamental considerations
As mentioned above, it has sometimes been held that a lower standard of accountability should apply to questions of state liability, and such concerns may also have some application to expectations created by the conduct or representations of state organs. In particular where information is provided as a part of public service and control functions exercised by state organs, it is not necessarily reasonable that the same high standards of care may be expected as from a private service rendered for payment on a commercial basis. The state has a multitude of functions that have to be prioritised against each other, on the basis of limited public funds. What can be expected of a particular public function or service is, to a large extent, dependent on how much is invested in building the capacity of that function, which, to a very large extent, is of course and should be a matter of political priorities. Such concerns were, inter alia, relied on by the Supreme Court in Rt. 1991 p. 954, where the State was not considered liable for insufficient control measures against a travel agency that operated without a so-called travel guarantee, later causing loss to its customers. Since it was proven that the relevant authority had known that the travel agency operated without a guarantee, the case applies a quite lenient standard.
A special concern relating to government power is also that the government must have a large measure of freedom to regulate in the public interest at any given time. Government power is exercised in the public interest, and it is therefore not subject to private autonomy in the same manner as the freedom of action of private legal persons. For this reason, contractual restrictions on the future exercise of government powers have generally been considered problematic under Norwegian administrative law, and the extent to which government organs may undertake such commitments is generally held to be quite restricted.
Many of the same concerns that underlie this restrictive approach to government commitments also apply to the state’s liability for legitimate expectations. The required freedom of the government to act in the public interest at any given time, suggests that the scope is quite limited as to how far anyone should be able to legitimately expect the government to act in a given manner, based on an existing policy or conduct. Public interest may require a change of government policy, even if it disappoints settled private expectations. Moreover, it is first and foremost up to the government to determine what the public interest requires at any given time. As long as a change of policy is applied consistently and indiscriminately to everyone affected, the underlying principle, that the government must be free to act in the public interest at any given time, will often strongly suggest that the mere change of policy in itself does not provide a legitimate ground for complaint.
However, it is also a general concern that information provided as an element of exercise of public authority should be trustworthy. Moreover, private parties may expect that information received from the government is generally adequate for assessing and predicting their legal position with some certainty. In Rt. 2009 p. 1357 (Nordea), the Supreme Court held that what could be expected from the government in this regard had to be determined, inter alia, on the basis of the guidance requirement in the Administration Act section 11. The guidance requirement entails that government authorities have a general duty to provide guidance “within their area”, in order to give parties and third parties the opportunity to take care of their interests in the best possible manner. This entails at its core a duty to provide correct, sufficient and adequate information to a party or third parties that is or will be affected by a decision in an individual case. The guidance requirement may consequently suggest a heightened standard of government accountability for disappointed expectations due to inaccurate or inadequate information, in circumstances where it does apply.(1) A similar argument was made by the claimants in the Gassled-case before the Court of Appeal, although without success, cf. LB-2016-5707.
A requirement of respect for legitimate expectations is already part of the administrative law protection against revocation of favourable government decisions, and the constitutional protection of property and established rights that follows from §§ 97 and 105 of the Constitution and the ECHR, first protocol article 1. Whether a given legal position is protected against legislative or regulatory change, may sometimes be seen as a question of legitimate expectations. The crucial question will then usually be whether the legitimate expectation is sufficiently strong and conclusive to constitute a kind of property right of which the concessionaire cannot be deprived unless adequate compensation is paid. In cases of regulatory interference with concessionary rights, the concept of legitimate expectations will mainly be an argument about the interpretation or content of the allegedly protected right, and whether it is sufficiently clear and conclusive to enjoy constitutional protection.
Even though a legitimate expectation does not in this sense constitute a protected right, some of the same concerns underlying constitutional protection could also be seen as requiring that the state could be liable for loss or damage suffered by someone through reliance on legitimate expectations. A fundamental concern is that government entails power being exercised over individuals and private legal persons in the interest of the public at large, but it does not mean that anyone should have to sacrifice their individual interests for this reason. If the public interest requires an individual to suffer damage, the principle of equality, underlying e.g. § 105 of the constitution, requires that the individual should be fully compensated. If someone has acted reasonably in reliance on government representations or conduct, and the government later changes policy, perhaps even for valid reasons, it could thus be argued on the basis of the principle of equality that the damage sustained should nonetheless be borne by the public at large.
Such an argument is, moreover, further strengthened by the concern that private persons should generally be able to trust the government to act consistently, transparently and in a predictable manner. Crucially, this is not only out of concern for the individual suffering damage after having acted in reliance on some government conduct or representation. It also undoubtedly represents a significant public value, that every private person is able to conduct his affairs in reliance on the government acting consistently, and that the government is able to assume that its conduct and representations are trusted by the public.
This concern for trust and predictability does not of course mean that the government should be unable to change policy. It is possible to consider freedom of authority to be a main concern, while at the same time considering that legitimate expectations ought to be protected. Holding the state liable for breaching legitimate expectations can in this regard be seen as an intermediate position between considering the state’s authority to be completely restricted, on the one hand, or completely without restriction, on the other.