NORWAY Trends and Developments Contributed by: Kristian Lindhartsen, Lilly Kathrin Relling and Tobias Kilde, Kvale Advokatfirma DA
The broker from AM accepted the task but did not formalise the agreement in writing. Initially, the plan was to sell the vessel along with its fish - ing quota, but the negotiations eventually piv - oted to the sale of Stormfuglen AS, the company that owned the vessel, to a consortium of ship- owners led by Kings-Bay AS. The sale was final - ised for NOK270,433,390, a figure that reflected a discount for the buyers. A dispute emerged when AM issued an invoice to Stormfuglen for a broker commission of NOK3.2 million. Stormfuglen made only a partial payment, which led AM to issue a bankruptcy warning. In response, Stormfuglen initiated legal action against AM and the broker, alleging poor execution of brokerage services. The district court found in favour of Stormfuglen, ordering AM and the broker to pay damages and dismiss - ing AM’s claim for the unpaid portion of the com - mission. Both parties filed appeals, and the case was escalated to the Frostating Court of Appeal. The Frostating Court of Appeal’s decision The court underscored that the broker firm and broker, as a professional party, was bound by a strict duty of care. This standard is rooted in established legal practice, which dictates that professionals are expected to uphold the norms and standards of their profession, to which both contractual parties and third parties can reason - ably expect adherence. The broker (and the employer he was associated with) was found to have acted contrary to the best interests of the seller, Stormfuglen. Without the seller’s consent, the broker granted exclusive rights to a buyer group and established a price without conducting a proper market consulta - tion. This was viewed as a significant deviation from the professional conduct expected, par -
ticularly in light of the standards set by The Nor - wegian Shipbrokers’ Association. The court took into account the ethical rules and service guidelines provided by the Norwegian Shipbrokers’ Association. According to these standards, a shipbroker is entrusted with several critical duties. Primarily, a shipbroker is obligated to secure the best possible financial outcome for their client, which entails striving to maximise the client’s interests in any transaction. Furthermore, it is incumbent upon the shipbroker to negoti - ate the most favourable terms and conditions for their client, ensuring that the client secures the best possible deal. Moreover, a shipbroker must avoid any situations that could lead to a conflict of interest with their client. By doing so, they preserve their profes - sional integrity and guarantee that their actions are solely in the client’s best interest. Lastly, a shipbroker is expected to maintain open lines of communication, ensuring that all information is relayed to the client. They must also accurately convey the client’s wishes and instructions to the other parties involved. These rules are designed to maintain trust and profes - sionalism within the shipbroking profession. The court highlighted the broker’s responsibil - ity to communicate effectively and provide all relevant information to the principal (seller). The broker was found to have failed to share crucial market information with the client – information that could have significantly influenced the deci - sion-making process regarding the sale. The court criticised the broker for drafting a contract that obligated the seller to an asset sale if an agreement on share sale pricing was not reached, without obtaining the seller’s clear
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