NORWAY Trends and Developments Contributed by: Kristian Lindhartsen, Lilly Kathrin Relling and Tobias Kilde, Kvale Advokatfirma DA
acceptance in a written and agreed form. The court deemed this to have limited the seller’s negotiating power and potentially reduced the sale price. The court determined that the client, Stormfu - glen, had suffered an economic loss as a result of the broker’s actions. The price per 100 base tons of fishing quota, which was sold along with the company owning the vessel, was substan - tially lower than the prevailing market price. Additionally, the buyer was granted an exces - sive discount on shares, which was not aligned with the seller’s best interests. The court concluded that there was a direct caus - al link between the broker’s negligent actions and the financial loss incurred by Stormfuglen. It was deemed likely that a higher sale price could have been achieved had the broker adhered to professional standards. The majority of the court found the broker’s negligence to be gross due to his prioritisation of the buyer group’s interests over those of the seller, which represented a significant departure from the expected standard of care. The court concluded that the broker seemed to be more interested in pleasing the buyers rather than act - ing in the best interest of the client. The court estimated the economic loss by com - paring the actual sale price with the potential market price that could have been attained with proper brokerage services. The court also took into account the possibility of a more favourable outcome had the seller not been constrained to an asset sale. The court noted that under the law, both the employer (AM) and the employee (the broker) could be held liable for the damages caused.
In conclusion, the Frostating Court of Appeal found that the broker, identified as A, acted neg - ligently and in a manner that grossly deviated from the professional standard expected of him, resulting in economic loss for Stormfuglen. The court ruled that the conditions for compensation were met, and Stormfuglen was entitled to dam - ages for the financial loss incurred. Key takeaways and the broader implications The court’s decision places significant empha - sis on the ethical rules and service guidelines provided by the Norwegian Shipbrokers’ Asso - ciation. The overarching theme is the broker’s obligation to prioritise the customer’s best inter - ests. One of the main arguments supporting this, from the Frostating Court of Appeal’s perspec - tive, was that the broker granted exclusivity to a group of buyers at a set price that had not been authorised by the client. Although the client was concerned with maintaining confidentiality, she clearly stated that she had never granted any exclusivity. Her mandate was for the broker to reach out to as many potential buyers as possi - ble and to maintain an overview of the interested parties. Additionally, the court viewed the broker’s fail - ure to adhere to regular standards of formality and verifiability unfavourably. The broker did not formalise an assignment confirmation between the client and broker. Furthermore, the broker did not obtain a formal approval of engagement with the buyer, as an email that could be deemed as a formal offer was sent to potential buyers without presenting it to the client (seller) before sending it. Moreover, the court highlighted the broker’s lack of transparency and the insufficient flow of information to the client. The client was not adequately informed about the sales process,
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