NORWAY Law and Practice Contributed by: Elise Johansen, Tonje Hagen Geiran and Lene Marita Berg Hermann, Wikborg Rein Advokatfirma AS
9. Lender Liability 9.1 Financial Institutions/Lenders
and criminalises violations, and the Penal Code ( Straf- feloven ), Sections 240–242, criminalising intentional or grossly negligent serious environmental crimes. It is possible for directors and officers to obtain insur- ance (directors’ and officers’ liability insurance) that covers certain claims, including environmental liability. The Pollution Control Act ( Forurensningsloven ) allows authorities to require security (which could include insurance) as a permit condition. Pursuant to the Norwegian Natural Disaster Insurance Act ( Naturskadeforsikringsloven ), property insured against fire damage is also insured against damage caused by natural disasters, provided the damage is not covered by another insurance policy. This includes damage resulting from landslide, storm, flood, storm surge, tidal wave, meteorite impact, earthquake, or volcanic eruption. It does not, however, include dam- age to property such as forest, unharvested crops, goods in transit, motor vehicles and trailers, and simi- lar items. Other types of damage not mentioned in the Act are generally not covered by the definition of natural dis- aster damage. If there is any doubt as to whether the natural damage falls within the scope of the law, the case may be submitted to the Natural Damage Appeals Board. The Board’s decision is final and can- not be appealed. 8. Insurance 8.1 Environmental Insurance Certain sectors or activities, such as companies handling hazardous waste, may be subject to per- mit conditions requiring financial security, which may include insurance. However, there is no general legal requirement for compulsory environmental insurance for contamination, nuisance or similar environmental damage.
Financial institutions and lenders are generally not liable for environmental damage or breaches of envi- ronmental law in Norway unless they carry out, own or exercise actual control over the polluting activity. Under the Pollution Control Act ( Forurensningsloven ), liability attaches to “the responsible party”, being the party who has, does or initiates the polluting activ- ity. This is normally the owner of the facility causing pollution, but can include lessees with full control or other rights holders. The test is whether the lender has decisive influence over decisions necessary to take measures against pollution. Relevant factors include: • operational control; Merely holding security, board representation or con- tractual approval rights would not meet this threshold. However, actively exercising step-in rights to assume operational management, or appointing directors who exercise day-to-day control over environmental deci- sions, could create liability. Indirect contributors are only liable if intent or negli- gence is proven. 9.2 Lender Protection The key protective principle under Norwegian law is to avoid exercising actual control and authority over the borrower’s operations such that the lender has decisive influence over decisions necessary to take measures against pollution. Contractual oversight, monitoring rights and reasonable risk controls are per- mitted, as parties who contribute indirectly through control or supervision are only liable if intent or neg- ligence is proven. However, step-in rights should be designed and exercised with extreme caution. Actively assuming operational management or day-to-day control over environmental decisions could cause the lender to be classified as a party who “operates, uses or possesses” the polluting activity, triggering strict liability for compensation and public law obligations to investigate and remediate pollution. The assess- • influence over environmental decisions; • economic interest in the activity; and • ability to take necessary measures.
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