Chapter 26 of Kai Krüger, Norsk kjøpsrett [Norwegian Sales Law], Bergen (Alma Mater) 4^th ed. 1999. Reproduced with the permission of Prof. Krüger.

§ 26. International sales under present Norwegian Law

§ 26.1. Introductory remarks. The CISG 1980- SGA 1988 («kjl») transposition disaster. Interlegal scenarios under CISG 1980 Part II / 1955 Hague Convention

§ 26.2. CISG Part II and Nordic formation principles, such as 1918 Formation Act Chap 1, compared

§ 26.3. Agents, importers and local representatives under Norwegian law. UNIDROIT 1983 Convention on Commercial Agents.

§ 26.4. Some interrelated SGA 1988 / CISG 1980 scope issues

§ 26.5. Observation on subjective features - CISG 1980 Art 94 (1)

§ 26.6. Further inter-legal issues in international sales under Norwegian law - EEA aspects

§ 26.7. Remarks on the Scandinavian «soft law» «generalklausul» authorising judicial «reasonableness test» (Formation of Contracts 1918 Act amendment 1983 - § 36)

§ 26.8 Survey over some select CISG 1980 issues and the corresponding rules in the 1988 SGA.

§ 26.9. EEC Procurement Directives and Norwegian law on public contracts - tender bidding.

§ 26.10. Interlegal issues: Proper venue and jurisdiction, choice of law. Recognition of judgements and arbitration awards.

§ 26.11. ICC impact on international sales. INCOTERMS 1990, 1993 UCP 500 etc. 

§ 26.12. A side-step for resident non-Norwegian consumers: Norwegian consumer purchase law - basic elements 71

Concordance: Provisions of CISG 1980 transposed to Norwegian Sale of Goods Act [SGA] (kjl) 1998-05-13 No 26

While the rest of this book is for Norwegian readers, this final chapter has a three-fold purpose. (1) It addresses itself to possible Anglo-American readers with a need to know about the basic rules and principles governing international sale transactions under the combined CISG 1980 and Norwegian law regime. (2) Secondly, it is aimed at Scandinavian readers with a need to appreciate recent developments within the area of international sale of goods law.[1] (3) Thirdly, it is meant to provide some «first aid» information on Norwegian consumer law to residents without or with modest knowledge of a Scandinavian language (infra § 26.12.).

The legal crank shaft within the machinery for international export and import trade is the 1980 UN Convention on Contracts for the International Sale of Goods, adopted in Vienna April 11th 1980 («CIGS 1980»). The Convention came into force in 1988 and has been signed by 55 states (by July 1998).[2] Since 1988, Norway has been a party to the Convention, as are the other Scandinavian countries. Norway is also a party to the 1955 Hague Convention 1955-06-15 on Law applicable to International Sales of Moveable Corporal, directing the dispute to the seller’s land where the parties’ contract does not provide otherwise (Art 3).[3] The two international regimes must be seen in conjunction to get a clear picture of the practical impact of the international rules and principles in the area. The EU/EEA profile within the sales of goods area restricts itself to consumer protection, public procurement («supplies») and fragmented directives on particular issues, such as commercial agents.[4]

What is Norway’s position in the CISG 1980 area?[5]

Norway passed a separate Act 1988-05-13 No 28 on the ratification of the Convention, but the Convention is not by itself made law, although it may seem so; it appears in the official «Norges Lover»[6] as an appendix to the general 1988 Norwegian Sales of Goods statute to be discussed infra.[7]

The relevant Act is titled «Lov om kjøp» (literally «Act on Purchase») dated 1988-05-13 No 26, in force from 1989-01-01 and applicable to contracts concluded after that date (§ 99). For sake of simplicity, the 1988 act will be abbreviated «SGA 1988» infra, allowing for convenience the replacement of the official title with CISG-inspired concept Sale of Goods.

There are no administrative decrees or regulations under the 1988 Act.

In order to appreciate the observations to be made in this chapter, one should observe that Norway is traditionally a «dualistic» country, transposing conventions like the one in focus into domestic statutory law by way of separate «statutory» legislation, not only translating, but adapting and adjusting by amendments etc international texts according to national legislative tradition.[8] This has been particularly apparent in the maritime and transport area of law, but can also be observed in other areas of law, such as in the overall EEA[9] implementation of EU law (although with greater obedience here than in other areas of law). The «transformation» method was also implemented in the particular case of CISG 1980 (contrary to the procedure other Scandinavian countries, where CISG was made law by incorporation).[10]

The question of selecting the appropriate actual legal vehicle for the incorporation of the CISG 1980 Convention turned out to be controversial under the Nordic preparatory work. The issue was tabled already in the 1984 inter-Nordic report («NU 1984:5»)[11] on (a) how to import the 1980 regime and (b) whether to use the CISG 1980 provisions as the basis for a common Nordic law reform replacing an act which had been effective in all Nordic countries since the turn of the century.[12] However, it turned out that this assumption was far to optimistic. The Swedish, Danish and Finnish joint position was that the CISG 1980 should be implemented by way of a general short «blankettlov», only stating that the text of the convention was formally enacted as statute as such, while the Norwegian sole position was that the traditional method of «transformation» advocated since 1972 should be adopted by way of preparing a «consolidated act», including and integrating provisions which in conjunction with domestic rules were meant to reflect the Convention. This was actually done, joining the majority of hearing opinions expressed during the preparation of the draft, cf ministerial annotated draft on the parliamentary proposal in Ot prp nr 80 (1987-88) pp 16-19, arguing that this would prove the easiest way to acquaint Norwegian export industry to the complicated rules of the Convention. Consequently, the CISG 1980 regime was never by itself made part of Norwegian law. The fact that non-resident contract parties not familiar with Norwegian language nor with the internal structure of the Act-to-be was not addressed or commented in the parliamentary proposal.

Denmark, Finland and Sweden, on the other hand, have incorporated the CISG 1980 rules by short statutes giving the text of the convention legal effect within its own scope (SC «blankettmetoden»).[13] Thus, in these countries, there is a clear formal distinction between sales governed by the CISG 1980.

The intention was to replace the outdated Sales of Goods Act from 1905-07 with a modern, but still uniform Act of sales of goods, thus to preserve and prolong long term joint legislative co-operation between the Nordic countries (previous acts 1916 on Agency, 1918 on Formation of contracts, 1930 and 1989 Insurance, from 1893 on and latest 1994 Maritime law). This failed. Denmark preferred to continue under the 1906 Nordic Act and is still adhering to it, except for a range of 1979 consumer protective provisions included in the Danish 1906 Act from § 72 on to the final § 86. The rest of the Nordic countries completed the 1984 project by law reforms, in Finland Act 1987-03-27 No 355, in Norway Act 1988-05-13 No 26, in Sweden with the Act identified as 1990:932. The Finnish/Swedish/Norwegian Acts are often referred to as the Nordic Act on Sales of Goods, but as shown, this is not quite accurate.

The Norwegian concept included the idea of having one encompassing Uniform Act for all sales, both international, national commercial - including consumer purchases. This was done by stating in one of the introductory provisions that the Act has mandatory supremacy in private consumer matters, ruling out contradictory individual agreements,[14] written or oral ad hoc contracts, standard forms or single clauses within the scope of the Act. The mandatory supremacy is only excepted when expressly stated otherwise in the statutory provisions themselves, such as is the case in kjl §§ 11 (2), 22 (2), 30 (2), 41 (4), 79 on different issues.[15] Finland and Sweden, on the other hand, have operated formal distinctions between provisions on consumer sales and commercial sale transactions. Since the major consumer law reforms in the 1970’ies there is tradition in these two countries for legislating consumer issues en separate statutes (SC «konsumentskydd») for the sake of clarity and simplicity.

The method applied in Norway can be seen in the overall observing of the structure of the Act. The SGA 1988 contains three categories of rules on the matter of international sales.

(1) The main rule is that failing specific exceptions, any provision will cover both national and CISG 1980 sales.[16] The majority of the rules are made applicable to international sales as far as such matters are not provided for specifically in Chap XV - or made subject to specific exceptions as mentioned under (2). The assumption and pretension is that the rest of the act, with necessary adjustments in Chap XV, will be in accordance with 1980 CISG.[17]

(2) The rules set out in the final part of SGA 1988 as Chap XV (§§ 87-99) and these 12 provisions deal specifically and exclusively with international sale contracts and were thought necessary and sufficient to provide for rules in matters where the rest of the 1988 Act might not meet the CISG 1980 requirements.

The provisions are:

• SGA § 87 stating the definition of an international sale (unfortunately not placed together with its statutory «sister» § 5 on the scope of the international statuary provisions). The separation of the two provisions ignites the confusion which will follow the un-prepared English reader to the very last provision of the Act;
• SGA § 88 declaring the CISG Art 7 principle of internationally oriented method in the interpretation of the international part of the Act;
• SGA § 89 similarly declaring the CISG Art 8 principle on contract interpretation,
• SGA § 90 on CISG Art 9, the § 91 reflecting and expanding on CISG Articles 11 and 12 on the issue on how to deal with written and oral communication, expressly stating that there are no formal requirements as to how to put a sales contract into legal effect,
• SGA § 92, stating that § 91 will not apply to international sales where a party has its place of business in a state where statutory law refuses to accept other than contracts in the writing, provided that such state has filed a declaration under CISG Art 96;
• SGA § 93 reflecting CISG Art 13 allowing for telegrams and telex irrespective of §§ 91-92, the § 94 definition of fundamental breach of the contract, setting the conditions to avoid the contract at a slightly different basis than the words use in SGA § 39 («defect») according to long customary legal tradition in Scandinavian «law of obligations»,
• SGA § 95 reflecting CISG Art 34 on certain issues in documentary transaction, the § 96 reflecting CISG Art 42 on third party’s intellectual property deficiencies in the sale transaction,
• SGA§ 97 reflecting CISG Articles 40, 43b(2) and 44 and stating different rules on loss of claims failing to give due notice to the other party as compared to the national rules in SGA § 32,
• SGA § 98 reflecting CISG Art 52 on premature delivery issues.

Important rules on how to interpret the internationally relevant provisions of the statute and in the interpretation of contracts in this area are set out in §§ 88 and 89. In other words: One and the same provision of the SGA 1988 may have to be interpreted in one way applying tradition Norwegian legal method and in a different way when that provision is to be applied to an international sales transaction. No doubt, the potential for confusion and misunderstanding is overwhelming: A potential Supreme Court decision on the international «side» of the Act may logically differ from the interpretation of the exact same words when the identical provision is to be applied domestically.[18]

(3) Finally, the 1988 Act makes 6 specific exceptions within the provisions otherwise common for national and international sales, stating that provisions otherwise applicable shall not apply to international sales.[19] They deal with issues such as scope provisions departing from the wording of the Convention (§ 5 (3)), on conditions for the repudiation of the contract in delayed delivery situations (§ 26), the otherwise adopted distinction between «direct» and «indirect damage» (§ 27 (4), the post-delivery repudiation of the contract on part of the seller (§ 54 (4)), the rule on enrichment compensation in the repudiation of the contract (§ 66 (2)), and finally the foresee ability condition for the award of damages and the restricted use of court’s discretion in ad hoc mitigating the amount of damage to be paid (§ 70 (3)).

These exceptions are made in order to prevent violation of the 1980 Convention regime. It is, however, somewhat confusing that these provisions are set out separately from the rest of the provisions governing the international sales in Chap XV.

The dualistic method thus applied means that the interpretation of the SGA 1988 in international matters subject to Norwegian law includes not only the elements made relevant in the CISG 1980 itself by Art 7, as provided for in 1988 SGA § 88, but also the exact wording of the Norwegian Act and the comments in the preparatory works (alas - in Norwegian), since these are traditionally as relevant here as in any other Norwegian statutory interpretation.

In this author’s opinion, the method for adaptation of the CISG 1980 into Norwegian law was a major mistake.[20] One simply tried to do something which can not be done properly. Firstly, the reading of the Act is a very complicated task, surfing over almost 100 provisions in order to find out what really is the Norwegian «dualistic» version of CISG 1980. Secondly, the method has resulted in blatant discrepancies in the wording of statutory sales of goods law, supported by Norwegian legislator’s comments which raise the question of method: When has the legislator intentionally departed from the CISG 1980 so that «dualism» would direct the courts to apply the national version[21] - and when is there a plain mistake, where one could safeguard CISG 1980 unity by presuming that the CISG 1980 rule itself is to be applied?[22]

This all means that the law on certain issues departs either intentionally or by mistake from what it should have been under the CISG 1980 regime. Thirdly, the traditional inter-Nordic common approach to sales of goods law, originating in the beginning of the 20th century, was broken within the CISG 1980 area. The Norwegian version of the law on international sales of goods is since 1988 no longer even part of Scandinavian law, but has been made exclusively Norwegian national law. The effect of this mischief is augmented by the interlegal «IP» choice of law effect of the 1955 Hague Convention 1955-06-15 on Law applicable to International Sales of Moveable Corporal Objects (translated from the French authentic language) as expressed in a 1964 Norwegian statute (1964-04-03 No 1).[23] This rules direct disputes to be solved under law of the seller’s land (Art 3) when the contract does not rule otherwise.[24] In certain issues, the seller is actually placed in a less favourable position compared to the CISG 1980 rule, which surely could not have been the intention of the Norwegian Parliament.[25] The EC 1980 Rome Convention on the Law applicable to Contractual obligations was not made part of the EEA Agreement and is not effective in Norwegian law.

In spite of the virtual legal «mine field» laid out by the legislator, the Norwegian courts will hopefully not find many discrepancies between the wording of the 1980 Convention and the 1988 Act, pressing delicate supremacy issues in these matters. There are so far to this author’s knowledge yet no Norwegian published judgements in disputes over a CISG 1980 regulated issue.[26]

CISG 1980 Part II (Arts 14-24) deals with formation of contract issues.[27]

The option under CISG 1980 Art 92 (1), cf Art 101 (1), has been availed of by all the Nordic Countries, so that the whole of Part II of the Convention on the formation of contract issues is not made into neither Norwegian, nor Swedish. Danish or Finnish law. The adoption of CISG 1980 Part II would have necessitated major changes in substantive Scandinavian law as stated under the 1918 Act.[28] The Nordic law on formation of contracts is basically case-made law, although an old 1918 Scandinavian statute (1918-05-31 No 4) deals with some issues on the consecutive exchange of offer and acceptance constituting a contract (Chap 1 of the Act).[29]

The advisable effect of the 1955 Hague Convention is that a dispute over whether there is a binding contract under an otherwise CISG 1980 scope sale should be solved under the law of the potential («disputed») seller’s land. The principle stated in the Convention Art 2 3rd para does not provide the exact answer to this; the provision deals with a different problem: The disputed agreement referred to in Art 2 1st para (on whether or not there is an agreement on the choice of law issue). Extending this principle seems to be the better solution, and is advocated by writers.[30] In that case, a Norwegian importer or buying entity might experience that the contract in dispute is to be solved under another CISG 1980 country which has signed CISG 1980 including Part II.[31]

In Nordic law on formation of contracts, it is fundamental that parties exercise complete pre-contractual autonomy on which rules to «play by». This principle is stated in the 1918-05-31 No 4 Formation of Contract Act § 1, expressing the rule that the statutory provisions contained in the act (Chap 1) will yield when parties have agreed on different methods for conducting the negotiations and final conclusion - and that a similar principle applies to customs of the trade («handelspraksis»). A very practical example of this is seen in the law of tendering for contracts, where very specialised rules partly (but not wholly) replace the statutory provisions, cf infra).

Comparing the CISG 1980 and Nordic/Norwegian law, there are significant differences between Part II principles and the 1918 Act. The most important are to be displayed infra.

The starting point in any legal system on formation of contract must be the identification of messages with potential communicative legal effects as opposed to «conversation», «gentleman’s promises» never meant to be legally binding. In the first decades of the century, when the Nordic 1918 act was prepared and conceived,[32] there were academic disputes as to whether the offer's intention to be bound should be the relevant decisive element («viljesteorien») - or whether one should rather put emphasis on the offeree’s reasonable comprehension of the other party’s behaviour («erklæringsteorien»). The 1918 legislation was meant to be a compromise, but the subsequent development in commercial contract law has shifted the weight in favour of the good faith comprehension on the offeree’s side. There is abundance of Scandinavian authority to the principle that even mistake and non-intention of the offeror might result in a legally effective binding offer. The distinction between binding and non-binding communication in this respect is often expressed as a question of whether there is a «dispositivt utsagn» (offer or communication intended to commit the sender or reasonably understood as such by the receiver).[33]

CISG Art 14, however, defines an «offer» by requiring expressed intention of the offeror to be bound in case of acceptance, by way of indication of goods and express or implied determination of quantity and price. If, on the other hand, the offer is meant to be irrevocable under Art 16 (2), it must indicate, whether by stating a fixed time for acceptance or otherwise, that it is meant to be irrevocable. If the offeror has reason to rely on the offer as being irrevocable, and the offeree has acted in good faith reliance on this, the offer may also be considered irrevocable under Art 16 (2). Thus, a non-qualified unilateral offer under CISG 1980 can be revoked if the revocation reaches the offeree before he has dispatched an acceptance (Art 16 (1)). Under Nordic law, adversely, the unilateral offer is legally binding if it is reasonably so apprehended by the offeree. This is the underlying assumption in the 1918 Act § 7 and customary law, whereas the «offer» under CISG Art 15 (2) is only a potential offer, revocable as long as it is not accepted, Art 16 (1). Consequently, the «qualified» offer under Art 16 (2) and the distinction between ordinary and qualified offer is unknown in Nordic law and could form part of the reluctance to admit these alien principles to invade Nordic contract law.[34]

CISG 1980 Articles 15 (1), Art 16 (1), Art 17, Art 18 (2), Art 20 (1), Art 22 all deal with the word «reaches» as the decisive criterion on whether a communication carries a legal effect. The Nordic statutory solutions distinguish between communication which is legally binding for the receiver («påbud») and communication which purports to bind the sender, such as an offer or a binding acceptance of a preceding offer. The Nordic solutions operate with «knowledge» («kunnskap») as the decisive criterion for unilateral autonomously binding «utsagn», which means that for instance the CISG 1980 Art 15 (1) offer (or even the qualified Art 16 (2) offer) might release its legal effect when it reaches the offeree - while the Nordic rule is that the communicative message must somehow have been apprehended or appreciated on part of the offeree in its nature and contents before legal effects will follow. A unilateral offer is otherwise legally binding from the time it reaches the knowledge of the offeree - 1918 Act § 7 (with two possible exceptions: (a) a limited «re integra» excuse for withdrawal in § 39 and (b) the authority for the courts to terminate both offers and contracts which carry an unreasonable effect, see infra).

Modern development of formation principles, not expressed in the 1918 Act, seem to extend the requirement of actual intention to release legal effects to situations where the person or undertaking is to blame for not having prevented another party in good faith to rely on what appeared to be a binding offer. Similarly the failure to prevent a «quasi»agent to «act» on behalf of a «principal» might under certain conditions amount to the equivalent to an actual intention to delegate negotiating capacity to that intermediary.

[35]From a technical point of view, the CISG 1980 rule is a far better solution than the 1918 Act § 7 knowledge rule. However, in the law of tender procedures (public or private), it is generally appreciated that the tender offer may not be revoked after the expire of the time limit set for submittal of the tender, even if it has by this time not yet been opened by the offeree. The position under modern electronic means of communication (fax, e-mail, Internet «click orders» etc) is not clarified as yet under present Norwegian law, directed to the 1918 Formation act for finding the legally valid answer leads one into an area of obsolete provisions on telegraphic errors, messengers not conveying notices according to instructions etc (1918 Act § 32).

Provisions (cf UCC § 2-207) are found in CISG 1980 Art 19, comparable to the Nordic 1918 Act § 6, dealing with internal discrepancies in the exchange of offer and accept. The «mirror rule» in Art 19 (1) is similar to 1918 Act § 6 first para. But the exception in Art 19 (2) goes beyond the present statutory Norwegian rule. The «last shot» principle, stating (1) that contract is concluded even if there are minor discrepancies between offer and the reply purporting to be an acceptance and (2) that the contents of the contract is in accordance with the differing acceptance, may seem doubtful, but one should have in mind that the scope of the «last shot» rule is narrowed down and limited in scope by provisions under Art 19 (3), dealing with the limits for material alterations. It states that alterations as to price, payment, quality, quantity, place and time of delivery, extent of liability, settlement of disputes are always considered as material alterations.

The 1918 Norwegian statute is hopelessly obsolete on this issue. There are some provisions granting the parties the option to withdraw from would-be contracts in case of discrepancies, as well as very vague and therefore technically unsatisfactory solutions on certain subjective conditions for advising the other party that the contract is off (1918 Act §§ 4 and 6). But the core of the matter, how an otherwise valid contract should be interpreted when there are discrepancies between offer and acceptance is not dealt with, leaving the courts three possible solutions, where the first one is probably the one best in line with case law: (1) «last shot», putting the latest communication on top when there is no reasonable expedient objection from the other party, (2) «first shot» opening up for supremacy of the earliest communication in the procedure, stating that the other party may not amend or alter - only accept or refuse to accept. (3) The third solution might be the policy-wise most rational: To simply let the courts base the contract solutions on the common position as far as it can be ascertained by the communication - and «from there on» apply general or specialised statutory or customary contract law on the matter.[6]

The 1994 UNIDROIT Principles of International Commercial Contracts have received considerable attention in the Nordic academic and commercial environment, providing a possible viable alternative to the deadlock situation created by the Nordic joint refusal to accept the CISG Part II provisions on Formation.[37] Many of the provisions are already familiar to Nordic law, others might improve the present somewhat hard-to-identify situations, not necessarily because the present status is undesirable. (On the contrary, Judiciaries in all Nordic countries have demonstrated intention, competence and willingness to develop contract law on a case-by-case basis, even where legislator has failed to take action (good examples of this are judge-made clarifications on «letters of intent», «letters of comfort», «battle of form», «quasi-agency», precontractual negligence just to mention some). In this, the uniform law tradition in Scandinavia really means more than just the position in each state; there is room for a modern Scandinavian Contract law doctrine common even for EU-members like Denmark, Finland and Sweden on the one side and non-members like Norway and Iceland on the other. In the previous chapters of this book, references are made - and are meant to be almost equally relevant - to Norwegian as to non-Norwegian Nordic material (i a Supreme Court jurisprudence and literature).

The main problem, however, for an outside observer or actor, is the fact that the only statute dealing with formation issues is really outdated and only validly informative of a minor and less practical part of formation law in the commercial world of national and inter-Nordic legal communication.

UNIDROIT principles have not as yet appeared in court litigation in any Nordic Supreme Court.

If the parties desire the applicability of the principles, one could either contract in the regime by explicit reference before starting negotiations, or alternatively as a suggestive proposal in the forwarding of an offer. Failing explicit reference, the Norwegian courts would not imply the reference to the Principles unless this can be based heavily on practice in the trade or in the actual usage between the very parties to the subsequent dispute. This should be seen in light of general reluctance to adopt even widely used standard forms like the ECE third generation Nordic NL 92 and NLM 94 clauses, the NSAB forwarding agent conditions (NSAB 1985 now updated as NSAB 2000 from 1998-06-01) and others.

Whether UNIDROIT or CISG conditions is to be preferred for conducting negotiations and pre-contractual exchange of offers and acceptance is difficult to answer simply by comparing one to the other.

The desirability of the adaptation of the CISG 1980 Part II system has been advocated in Scandinavia and, indeed, attempts have been made to persuade the legislator to prepare a repeal of the 1918 formation of contract system. However, the slim prospects for a possible neo-Scandinavian legislative unanimity on a modern reform of the present fairly outdated 1918 act, has resulted in a joint negative position by the legislator, fearing that not reaching a common position in this area, is worse than having one uniform Scandinavian Act, even if it admittedly needs legal rehabilitation, if not by legislator, then by courts and arbitrators by way of discrete updating in the day-to-day contemporary interpretation of the statutes. This author believes that the reluctance to join in on international main stream trends puts the Norwegian and Nordic countries hopelessly offside in fora for modern global contracting procedures and that an acceptance of CISG Part II would have been far better than the present state, thus excluding a set of principles widely adopted around the commercial world. However, many writers have advocated a solution to this, namely the express contract incorporation clause in order to apply either the CISG Part II principles when appropriate - or the «lex mercatoria» principles such as stated in the UNIDROIT of International Commercial Contracts (1994) as well as modern systems for IT pre-contractual communication, such as the EU-Commission Recommendation 94/820 EC On the commercial use of interchange agreements for electronic data interchange agreements for electronic data interchange (standard clauses) «relating to the legal aspects of electronic data interchange» with Annex (1),[38] as an avenue for achieving a «European Model EDI (Electronic Data Interchange) Agreement».[39] A similar procedure could incorporate the ICC Uniform Rules of Conduct for Interchange of Trade Data by Teletransmission (1997) (UNCID).[40]

As to the formation of contracts, the basic principle in Norwegian (and Scandinavian) law is the rule of «disclosed» principal. A party negotiating a contract will become subject to contract obligations unless it is made externally apparent that the negotiating party is acting on behalf of a principal different from himself, either by way of formal documentation, by way of usage for professional occupation («stillingsfullmakt»), by way of signalling specifically that the contract is concluded for someone else - or by way of a principal's negligent disregard of the third party's bona fide assumption that the contract is negotiated on behalf of that very principal. Neither the broker nor the commercial agent is presumed to have authority to act on behalf of the principal. Courts often deal with the question whether the agent or broker has been authorised in a way which carry the solutions set out in the 1918 Act Cap II.[41]

When the contract is negotiated on behalf of the principal, the negotiating agent will have no duties or obligations under the contract. However, if the agent acts without authority he will be liable for the loss incurred to the third party attributable to the fact that the contract cannot be enforced against the «pseudo» principal (cf similarly UNIDROIT 1983 Convention Art 16).

The common law privilege of directing a contract claim towards the «undisclosed principal» is alien to the Scandinavian conception in these matters. For this reason, it is doubtful whether the UNIDROIT attempt (1983 Convention On Agency in the International Sale of Goods) to establish a compromise between the Anglo-American agent principle and the Continental law of agency will succeed in Scandinavia (Art 9, 12-13). The general reaction to the 1983 Convention has so far been reluctant, although the matters are under consideration in connection with the reform of the 1918 Uniform Scandinavian Act on Formation of Contracts.[42]

Distributorship contracts have not been made subject to any specific legislation in Norway, although lawyers have voiced the need for a better protection of local dealers, particularly in view of the intensified parallel legislation to improve the status of the commercial agent in present law. It is somewhat doubtful whether the «generalklausul» avtl § 36 could be invoked in contracts which are unreasonable, particularly in respect of economical settlements when these contracts are ended by termination by the importer or foreign producer.

a. Deciding the scope of any convention, it is of importance to ascertain which restrictions the clarification of scope puts on-to the law. Within its scope, the CISG is meant to exclude contradictory legislation, but has no direct effect on parties’ autonomous capacity to tailor-sew the contract which suits them best (CISG Art 6 with one exception in Art 12). The CISG has no mandatory effect in other respects than that which pertains to the legislator. The consumer dimension is absent since consumer transactions are explicitly excluded in CISG 1980 Art 2 (a).[43] The parties may even «buy more» of CISG 1980 if they so wish; a sales transaction falling outside the formal scope provisions might be included by way of incorporating contract clauses.

In the following discussion, one should appreciate the distinction between question one on which contracts fall outside both CISG 1980 and SGA 1988 as opposed to question two, which is to ascertain the contracts which are subject to the SGA 1988 but not to the CISG 1980 (the reverse situation seems less conceivable).

b. The basic concept of sale expressed or implied in CISG 1980 decides which contract will fall under either of the two acts. The method in CISG corresponds probably to a large extent to the half-way definitions which can be extracted from the SGA 1988. The exclusion of real estate transfers appears from the CISG 1980 title «Goods» and to the very first introductory provision Art 1 (1), whereas the SGA 1988 does not identify «goods» in the title, but excludes those contracts by specific provision in § 1 (1).[44] The distinction between sales and services is solved similarly in CISG 1980 Art 3 and SGA § 2 (1) and (2).[45]

The Nordic tradition has been to rely on statutory SGA provisions for physical as well as for abstract positions such as intellectual property, contract positions in rental, service and similar values. Even the 1988 Act includes stocks, and there are references in other legislation which imply that claims for money can be transferred subject to sales law principles.[46] The word «goods» does not appear in the title of the Act.

The scope of the 1988 SGA is somewhat wider than the scope of the Convention, since express exclusions made in CISG 1980 Art 2 are adopted only to exclude such contracts in international transactions, SGA 1988 (§ 5 (3)) and not in the Act governing domestic or inter-Nordic transactions.[47]

CISG 1980 Art excludes certain sales from the scope of the Convention. There are some interpretation issues on the Norwegian adaptation of this provision. As long as a contract is excluded from CISG, there seems to be no problem. On the other hand: What is the position if an international sale of goods contract does not fall outside the scope of CISG 1980 where the EU directives deals with the buyer’s legal position by mandatory rules?

The CISG Art 2 (d) exclusion of «stocks, shares, investment securities, negotiable instruments and money» (SGA § 5 (3)(d)) is of some importance in this respect since it indicates that the title of the convention should not be read too literally: «Shares» would allegedly not at any rate have fallen under the term «goods», so the exception in Art 2 (d) seems superfluous unless a more liberal and less restrictive approach is adapted towards the potential scope limitation expressed in the CISG 1980 Title. The Art 2 (d) «stocks, shares...» etc exception means that the international regime is of no interest to transactions governed by the Norwegian 1997-06-19 No 79 Act on «stock» transactions («verdipapirhandel»). Nor will purchase or sale of currency be subject to the rules.

The Art 2 (d) exception has been transposed in a slightly different wording of the SGA 1988 § 5 (3). «Shares» reappear in the text of the statute as «rettigheter», which in this author’s opinion excludes from the convention something substantially more than the corporate legal term «shares», that is, however: If the sentence is really meant to be decisive on the scope issue. Adversely, a «rettighet» in Norwegian means any legal position, for instance under an existing contract, under a joint venture arrangement etc. For instance, the Norwegian concept «rettighet» would include the transfer of a rental contract as well as a sale of a production licence in the oil and gas industry, while this can only with intellectual energy and dedicated purpose be put under the term «share» or under the concept «goods» in CISG 1980.[48]

Sub-contracts involving the delivery of non-marine components, materials etc would presumably not fall outside the scope of the Convention, for instance when a diesel engine is purchased from France for delivery to a Norwegian shipyard under a main shipbuilding contract.[49]

The contracts for fabrication and construction of equipment for the offshore oil industry («fabrikasjonskontrakt») do not fall within the term «vessel» or «ship». On the other hand, there is some doubt as to whether the SGA will apply on main contracts within this area, the objection being partly that the purchaser supplies a substantial part of the relevant materials for the fabrication (CISG 1980 Art 3 (1)), partly that one may question whether a contract for placing production structures more or less permanently on the sea bed is a construction contract rather than a sale of goods contract (even though the Art 3 accepts supply and construction as a part of a contract governed by the convention). Unless the Art 3 exception for materials supplied by the owner is applicable, it is this author’s contention that the contract will fall under the 1988 SGA regime. At any rate, the subcontracts under construction projects would in this author’s opinion no doubt be subject to the Act and the Convention.

The «ships, vessels, etc» exception in CISG 1980 Art 2 (e) is somewhat obscure in certain respects. A glance at the official commentaries to the CISG exception seems to clarify that the reason for this exception was the great variety in register systems in the signing states.[50] This probably means that the concept «ship» must really be read as a relative reference to ships subject to national register arrangements such as the Norwegian International Ships Register (NIS) or the regional register systems provided for in the 1994 Maritime Code Chap 2.[51] This means that both registered ships and the contracts for shipbuilding fall outside the scope of CISG 1980, possibly also objects which are not ships, but subjected a statutory analogy to the same rules as ships, such as drilling units provided for in the Maritime Code § 507. The Maritime Code takes a very broad view on the concept of ships in other relations,[52] but this might not have any bearing on the interpretation of the CISG 1980 Art 2 (e) exceptions. For instance: Pleasure crafts will undoubtedly fall under the scope of many of the 1994 statutory provisions, but it seems pretty clear that the import to a local dealer ordering a fairly big boat for display or sale to an already existing a customer should fall within the scope of the Convention.[53]

The exclusion of «ships» and «vessels» in Art 2 (e) means that both sale and shipbuilding contracts are excluded from the convention regime. In Norway, shipbuilding enterprises are universally negotiated on the basis of a standard (agreed) contract form last revised 1981 (in this book referred to as «Skip 1981» 1998-99 agreed reform of the contract expected). Statutory provisions deal with security arrangement, registering etc (partly reflecting international convention on ship mortgage). It is worth nothing that the expression «fartøy» in 1988 SGA § 5 (3)(e) somewhat surprisingly will imply that the commercial export and import of pleasure crafts to and from Scandinavia falls outside the direct scope of the Act. Cf the expression «vessels» in CISG 1980 Art 2 (e).

Sale of vessels under the Norwegian MOA Saleform 1993 will fall under the exception - as will the regular shipbuilding contracts which under Norwegian classification formally is considered to be a sale for later production and delivery («tilvirkningskjøp» - «Werkslieferungsvertrag») and not a contract for the rendering of a service (CISG 1980 Art 3). More doubtful is the question in relation to contracts for the fabrication of installations in the oil and gas industry, such as are the subject to the Norwegian Fabrication Contract 1992 («NF 92»). These contracts are very extensive and detailed, leaving not many issues to be solved by reference to statutory law. But if a classification has to be made, for instance for the object of deciding scope of time limits for claims under contract, statutory provisions differing from one category of contract to the other, then the final classification has to be made.

Firstly, it could be argued that irrespective of the nature of the object in a traditional fabrication contract, it is not a contract for sale («supplies») but for «works», which would mean that the CISG 1980 does not apply without having to go further on other scope issues. The EU Council «Utility» Directive 93/38 EEC co-ordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors[54] classifies «works» contracts to cover generally all «[g]eneral building and civil engineering work», probably to be understood so that the «works» threshold values set out in Art 14 will apply (and not the considerably lower value limits for «supplies»). This, however, does not decide whether the contract can be treated as a sale of goods contract applying CISG 1980 Art 3. Construction contracts for the erection of buildings or other permanent objects on land («entreprise» or «bygg- og anleggskontrakter») are normally described as contracts for the incorporation on-to real estate. However, the typical fabrication contract take-over is normally done afloat, which means that the construction contract approach fails. The classification within «sales» has recently been supported indirectly by statutory provisions introducing obligations on how to dismantle and remove the installations when the production is to be terminated.[55] Finally, a contract for the supply of design, raw materials etc from the customer to the contractor for production and redelivery is not a sale of goods contract, and if this is the case, then the CISG 1980 is not applicable. The conclusion seems to be that the contract is contract for delivery of movable although of considerable size and of considerable resemblance with land construction.

The second CISG 1980 classification issue pertains to the Art 2 (e) exception itself. It could be argued that the official comments reference to register system problems referred to in the official comments equally apply to these contracts, which may be registered under rules equivalent to ships and shipbuilding contracts. In this author’s view, this seems to be the better view - and there is support for the argument in the preparatory works.[56] The conclusion, therefore, seems to be: The fabrication contract like the NF 92 as well as the sale and transfer of these objects fall outside the scope of CISG 1980.[57]

«Electricity» (f) is not mentioned specifically since the Norwegian act does not apply to electricity at all.[58] Comments in the Norwegian preparatory works settles an old issue: The purchase of electricity is meant to fall outside the scope of the Norwegian Act, wherefore the word electricity does not appear in the SGA 1988.

Consumer contracts are excluded in CISG Art 2 (a) and SGA § 5 (3)(a), even though such contracts may very well be of an international nature.[59] The consumer exception in Art 2 (a) does not quite coincide neither with the assumed meaning of SGA 1988 § 5 (3)(a) nor with the EU conceptual approach to consumer sales in respect of the applicability of the growing number of consumer protection directives (see list with transposition references in Norwegian law infra).

The EU directives refer to physical persons while the CISG 1980 Art 2 (a) refers to goods bought for personal purposes as defined.[60] Furthermore, where the seller lacks knowledge of the status of the buyer, this means that a private contract might be treated as a non-consumer contract under CISG 1980, while the EU does not deal with good faith on part of the seller.

The general approach to the CISG 1980, SGA 1988 and EEA consumer issues seems to be regulated in the EU Treaty Art 234 as far as CISG 1980 is concerned within the Union and in EEA Agreement Art 120.[61] Member States and EEA states such as Norway will not violate the Treaty (EEA Agreement) by conflicting agreements or treaties signed before accession or signing of the EEA agreement. In other words: The possible inclusion of a sale of goods contract within the CISG 1980 means that the CISG rules will apply, although EU principles might still be applicable as long as there is no discrepancy between the two sets of rules.[62]

The term «international sale» adopted in the 1988 Norwegian Sale of Goods Act 1988 («SGA 1988» = «kjl 1988» elsewhere in this book) § 87 is taken from CISG 1980 Art 1 (1), but as the Nordic countries have made reservations under Art 94 (1), inter-Nordic sales transactions will fall outside the scope of the Convention regime, cf SGA 1988 § 5 (2). The exception under CIGS 1980 Art 94 (1) regarding neighbour states is, however, according to the text of the Convention, based on the assumption that the «Contracting States» in question «have the same or closely related legal rules» in the matters regulated under the Convention. This was true during the former regime under the 1905-1907 Uniform Scandinavian Sale of Goods Act, and would still have been true if all the Scandinavian countries had adopted the draft of new Scandinavian legislation subsequent to the 1984 proposal (Nordiske Utredninger 1984:5). Legislation based on the 1984 draft has been enacted in Finland (1987), in Norway (1988) and in Sweden (1990). Denmark, on the other hand, has implemented the CISG 1980 for international transactions, but has not adopted the 1984 Scandinavian draft in national law - and has probably no intention to do so. The fact that Denmark has abstained from adapting the 1984 joint Nordic Report NU 1984:5 on the sales of goods law reform, is clearly violating the assumption in the CISG 1980 Art 94.[63]

An international sale under the Norwegian Act § 87 will cover sale contracts between parties whose place of business are in different states (outside Scandinavia), provided that this appears from the contract, from previous business relations between the parties - or from information exchanged prior to or at the time of the conclusion of the contract.

The term «international sale» goes beyond the scope of the Convention: Contracts with parties in non-Convention states are subject to the special regulation in 1988 SGA, not only when the contract involves genuine Vienna Convention countries both on seller's and buyer's side.[64]

CISG 1980 is not mandatory in the same way that international transport conventions normally are. The national legislator may not provide for other solutions, but the parties may do so. This can be done specifically or by adopting standard contracts or single clauses like national versions of the original ECE 188 General Conditions for the Supply of Plant and Machinery (1953), ICC single clauses (like Publ 421 on Force Majeure), or by incorporating relevant trade terms from INCOTERMS 1990.[65]

A genuine international perspective should consequently take into consideration frequent practice and procedures in contract routines: In the import trade of automobiles, in the fish export trade, in the energy and oil industry sector etc.

Turning to contract law, the European Community as such has not moved into the core of general contract law on contracts for supplies and services.[66] Possibly, the 1994 UNIDROIT Principles avenue and the «lex mercatoria» suggestions of the Lando-Beale Commission[67] will be considered as a realistic alternative to achieve better unity and harmony within the EU. The present EU concern is limited to certain areas, an in particular these two: Consumer protection and regulated Public Contracting.[68] Public procurement shall be dealt with infra, now only a few reminders on the consumer legislative status in Norway.

The question of who is a consumer directive could be a matter of definition (supra). Having that in mind, the list of presumable nearly fully implemented EC and EU consumer protection directives within the sales of goods area in Norway looks like this (as pr July 1998):

Transposed as: 1988-12-23 No 104 Lov om produktansvar (pal)

Transposed as: 1972-06-16 No 47 Lov med kontroll om markedsføring og avtalelevilkår (markedsføringsloven) §§ 1-3

Transposed as: 1972-03-24 No 11 Lov om angrefrist ved visse avtaler om forbrukerkjøp mm (angrefristloven)

Transposed as 1985-06-21 No 82 Lov om kredittkjøp m m and
1988-06-10 NO 40 Lov om finansieringsvirksomhet
§ 2-12A (regulations not in place as pr July 1998 - ministerial hearing document 94/2976 dated 18.12.1996 cf also - NOU 1994:19 with proposal for an extensive finance law reform within which the implementation will probably take place)

Transposed as 1918-05-31 No 4 Lov om avslutning av avtaler, om fuldmagt og om ugyldige viljeserklæringer §§ 36 and 37
1972-06-16 No 47 Lov med kontroll om markedsføring og avtalelevilkår (markedsføringsloven) §§ 1-3

Transposed as 1997-06-13 No 37 Lov om salg av tidsparter i fritidsbolig (tidspartloven)

No transposition as yet (NOU 1994:19)

No transposition as yet

EU proposal for directive expected through the EEA «pipeline»

Commission Proposal for a European Parliament and Council Directive on the sale of consumer goods and associated guarantees COM(1998) 217 final - 96/0161(COD) 1.4.1998 (OJ 1998 No C 148/12 14.5.1998
(replaces COM(95)final) OJ 1996 No C 307/ 8)
(Appendix 2 in this book - abbr (Norw) EU Forbrukerkjøp Dir utk 1998)

The «pipeline» COM(1998) 217 final On the sale of consumer goods and associated guarantees might prove to have a major impact on the structure and contents of present statute on consumer sales, in fact the SGA 1988 turned mandatory in consumer transaction. In the previous chapters of this book considerable attention has been addressed to this proposal, discussing possible expected law reforms and suggesting possible interpretation in the SGA 1988 perspective within the area of consumer purchases.

The 97/55 Directive is presumed to be in accordance with the present law, since fair comparative competitive advertising has been accepted for many years in Norway under the 1972-06-16 No 47 Act on marketing § 1.[69]

One important and far-reaching amendment to the 1918 Formation of Contracts Act was enacted in the 1970- and 1980'ies, when all the Nordic countries at different occasions introduced the so-called «generalklausul» in § 36, authorising the courts to employ a discretionary test of reasonableness in any private law contract contested in litigation or otherwise within the formal scope of the 1918 Act (private agreements, contracts, consumer or commercial contracts).[70] The wording of the provision is very wide, and should for comparison be related to similar provisions in other recent legislation, such as the German AGB 1976, the English Unfair Contract Terms Act 1977, the UCC § 2-302.[71]v The § 36 provision can unofficially be translated:

This ultimate «soft contract law» high peak in the Nordic countries is not limited to the quality of the contract or clause at the time of the conclusion of the contract. It covers also the actual effect estimated at the time when it is being invoked - or even negative consequences occurring after the contract has been performed.[72]

There is no formal requirement that the § 36 provision can only be invoked in court litigation or in other fora for judicial review. The vague and discretionary format of the provision seems to make it less suitable to the settlement of disputes outside courts.

Council Directive 93/13 on unfair terms in consumer contracts[73] is a «minimum» directive, leaving the Member states the option to extend the provision and judicial authority furthermore.[74] The Norwegian position has been that the Formation Act § 36 read in conjunction with the administrative statutory «Forbrukerombud» and «Markedsråd» authority to prohibit undertakings the use of unreasonable standard clauses in all professional consumer service and goods contracts (1972-06-16 No 43 Act on Marketing § 9a) satisfies the requirements in the 93/13 directive.[75] 1991 draft seems not to create any problems in contracts otherwise subject to the CISG 1980 regime, since the convention explicitly states that it is inapplicable to consumer contracts (Art 2 (a)).[76]

The § 36 provision applies to any contract, not only sale of goods contracts - and both within and outside the consumer area. It applies to international sale of goods transactions, both within the consumer and the commercial area, but there are so far no court decision explicitly within this field in Scandinavia.[77] One question could be to which extent the provision in CISG 1980 Art 7 (1988 SGA § 88), referring to the need for uniformity when applying the 1980 Convention, simply excludes by supremacy a domestic judicial discretionary test of reasonableness like the Nordic § 36 provision in international transactions. However, courts and arbitrators have applied the provision in typically commercial transactions, both within fabrication contracts with international flavours not involving foreign parties - and in other areas of commercial contract law.[78]

It is, however, an impression that courts and arbitrators have employed the provision fairly restrictively, so that the possible international anxiety over far-reaching Scandinavian «soft law» dissolution of otherwise fairly predictable commercial contract law in Scandinavia is by far exaggerated. It is rightfully thought that courts and arbitrators will be extremely reluctant to apply § 36 in sale transactions governed by 1980 CISG, thus violating the principle of unity expressed in Art 7, cf also Art 8.[79]

The method for interpreting the provisions on international sales contracts is set out in 1988 SGA §§ 88-90, reflecting CISG 1980 Art 7-9. The CISG 1980 philosophy is that even when the Convention leaves a question open, the courts should adapt principles based on the international character of the contract and the need to promote uniformity in its application - and give such observations supremacy before resorting to domestic law otherwise applicable.[80]

The wording of the statutory provisions in Chap XV transforming CISG 1980 Art 7 differ somewhat from the similar general provisions set out in the introductory provisions in 1988 SGA § 3, but in the author’s opinion it is probable that the courts would have applied the method prescribed in the convention anyway, even if there had been no provisions expressly stating this. The international «flavour» of a contract will always serve as a guide-line when interpreting contracts and basis legal rules in this area.[81] To which extent the forthcoming developments in courts´ practice will emphasise continuity based on existing abundant case-made law not formally abolished in 1988 SGA, and to which extent courts (or rather the lawyers arguing the cases and supplying the relevant material for the judge) will in fact do what CISG 1980 requires them to do, namely look for international guidelines in settling future sale of goods law disputes - as suggested in CISG 1980 - still remains to be seen.

b. Provisions dealing with lack of conformity («mangel») issues of various kinds, CISG 1980 Art 35 et seq, correspond to provisions in 1988 SGA §§ 17 et seq. It was generally considered to be a methodological improvement that the statute now - as a state of the art - lists expressly the criteria for classifying shortcomings in the goods as defects in the legal sense of the word. Particularly, it should be noted that the «purpose» principle in Art 35 (2)(b) reflected in SGA § 17 (2)(b) corresponds very well to Scandinavian post-war jurisprudence and arbitration practice dealing with wrongful advise or «mal-recommendation» of products or technical solutions when sellers acts as a combined seller and consultant for customer, advising him on what to buy and why. The interpretation of these provisions will probably not represent any radical departure from previous Scandinavian jurisprudence in these matters.

The number of cases dealing with the concept «mangel» (i e lack of conformity) is abundant and evidently enormously varied in contents and effect. In the preceding Norwegian part of this book (supra § 8.), the analysis of cases has been structured along the following main pattern: Moving from the contract and contract documentation, via lack of conformity as a matter of non-conformance with the expectations created by informative marketing further on to the very practical provisions on abstract and individual functional risk of in § 17 (1) (a) and (b).

In the same case, the Supreme Court questions the contents of CISG 1980 Art 35 (2)(a)-inspired statutory provision SGA § 17 (2)(a) by demonstrating obvious problems applying the assumption than any defect which is not rooted in the express or implied contract terms must be classified under the cited «purpose» criterion, since there is no other way to deal with lack of «satisfactory quality» etc. One might agree that the concept based on purpose operates as a straight jacket for many prosaic claims’ situations, so that the whole general approach is somewhat better expressed in the only EU non-CISG state UK with its 1979 Sales of Goods Act Sect 14 (2) «satisfactory quality» concept[82] and which, in fact, seems to have been the prevailing view in Norwegian court practice throughout most of this century in a period when the 1907 Act in its provisions did not touch upon the concept of «defect» or «lack of conformity» at all.

The SGA § 17 (2)(b) provision on buyer’s purpose should have reflected the CISG 1980 Art 35 (2)(b), but in fact does not reflect that Article. The CISG Art 35 (2)(b) requires that the buyer’s purpose must have been made known to the seller at the time of the conclusion of the contract» (emphasis added), whereas the Norwegian statutory version goes further in favour of the buyer: The delivery is considered to be in lack of conformity if the seller knew or must have been aware of this purpose or intent. The difference means that the CISG version requires some active interpellation on part of the buyer, while more knowledge is enough under the Norwegian version. The situation covered by the cited provision seems to be very practical and will cover not only deliveries with inherent functional or suitability defects of the object, but also construction errors and explicit or implicit des-information on the actual suitability of the product.

Lack of conformity in formal documentary matters is of growing importance even outside the tendering of documents in connection with the dispatch of goods. European standard formulas for quality assurance - like the -EN ISO 9001.[83] - provide means of controls for the buyer. Application of standards for assessing conformity issues means that the EEC standard development is of relevance not only within the construction contract area, but in sale of goods to be put into production for the buyer as well. Unsettled issues seem to be the extent of vicarious liability in these cases, i e how far the CISG places a risk or possibly even liability for information provided by third parties responsible for attestation, certificates, survey reports etc.[84]

c. The specific performance provision in 1980 CISG Art 46 et seq represents a novelty in the common law tradition. In Scandinavian law, the specific performance remedy has been open to the buyer in cases of non-delivery (delay) (1907 SGA § 21), but up until 1988 the remedy in disputes on non-conformity was limited to cases where - a guarantee clause commitment was absent - substitute delivery («omlevering») could satisfy the contract requirements (1907 SGA § 43). The Convention in reality leaves the specific performance remedy to domestic law (Art 28), and it should be noted that the 1988 SGA § 34 now affords the buyer with the corrective specific performance remedy even in disputes over defective delivery.[85] If a rectification of a defect - or a duty to deliver - in courts' discretion places an unreasonable burden on the seller, the remedy cannot be invoked and the buyer will have to claim damages (§ 34 (1), cf § 23 (1)). This would be the case in international transactions as well.[86]

The 1988 Act makes no changes in contracts where the buyer can rest his claim on a «guarantee clause» such as the ECE 188 (1953) Art 9. The principal question in such a case will be whether the normal exemption from liability for consequential loss will be effective and valid, a question which is particularly pressing when the defects in question are of a serious nature. Scandinavian courts are reluctant to recognise exemption clauses when the existence of non-rectified defects frustrates the purpose and intent of the contract.[87]

d. A contentious issue during the preparation for the Convention was the question which is now regulated in CISG 1980 Art 39, obliging the buyer to notify the seller within reasonable time of any lack of conformity (Norw «reklamasjon»). The provision is probably of Scandinavian origin, for it is well in line with former Uniform Scandinavian SGA 1907 § 52. To common law, however, the provision is a novelty, since notification rules have only occurred in connection with repudiation.[88] The reduction of price in defect claims is a well established remedy under Nordic sales of goods law. To some of the CISG countries, such as the common law tradition, this must have meant a considerable change in legal substance.

e. The «impediment» rule in Art 79 relieves a party from liability to perform in cases where an impediment originates from outside the party's «control sphere» («kontrollsfæren»), provided that the party in question has acted reasonably, both when «forecasting» the conditions under which the contract was to be performed - and dealing with the impeding contingency itself when it occurs. Compared to older principles of liability under Scandinavian Uniform Sale of Goods legislation (1907 Act § 24), there is much good to be said about the liability conditions explained in the ministerial proposal prp (1987). The crucial passage on whether the contingency is within or outside the seller’s risk «field» is in Norwegian CISG 1980 law inherent in the modality expressed in the word «in principle»: If the performance is adversely affected by an impediment of the kind that the seller in principle will deal with in the normal course of things, then liability for delay or lack of conformity lies with him.[89] This is meant to be something more than error, but at the same time something less than strict liability. One can overlooking the many intricate legal observation which could be made - and indeed have been made[90] - on the obscurity of the Art 79 compromise within the convention framework. However, it is hard to excuse the unbelievable intentional, negligent - or may be rather politically motivated? - omission to state clearly beyond any reasonable doubt the contents and extent of what must be conceived of as the core issue in any legislator’s - national or international - pretension to regulate a sale of goods transaction, namely: Is there or is there not basis for liability towards the buyer for damage? If the drafters of a convention cannot - or forget to - agree on an intelligible answer to this, one is tempted to ask with due respect whether it was worthwhile to spend time, expertise and public money on what might have otherwise been achieved.[91]

To this author, the obvious sound policy rationale underlying the impediment rule as voiced by the Ministry of Justice, is the shift from vicarious liability for employees to «vicarious» liability for technology, acquired IT and other machinery of the «robot» type replacing the former employees. The SGA 1988 §§ 27 and 40 places the risk for «internal» human and technical shortcomings where it belongs.[92] In some respects the Art 79 will intensify the sellers liability for delay, in others it will relieve from liability compared to former law.

Since the Art 79 bridges the former distance between contract practice and legislation, the issue now seems to be whether standard clauses of the «force majeure» model - containing words and expressions not always identical to the wording of Art 79 - will be interpreted by courts and arbitrators in the same way as the CISG 1980 and 1988 SGA provision on the matter.

f. A pending issue under Norwegian law is the selection of legal criterion for accepting «economic force majeure» as an excuse not to perform a contract - or as a basis to escape liability. The alternatives consist of the following possibilities: (a) to direct the issue to truly international law according to the directions in CISG Art 7, (b) to read the impediment principle on what are reasonable efforts to overcome the impediment as a reference to national legal tradition - or - as the case is in Norway - (c) to direct the considerations to the 1918 (1983) Formation of Contract reasonableness provision § 36, since this provisions seems to concentrate and thus facilitate the general contract law questions on frustration: When is there a justifiable cause for relieving the contractor from performing the contract in return of the agreed price? The old SGA 1907 scenario displayed in numerous mid-war cases in all Scandinavian countries the German «Unmöglichkeit» test inspiring the joint Nordic legislators by the turn of the century, which meant that up until post-war Scandinavia nothing short of financial obstacles or market changes equivalent to impossibility would excuse.[93] That is no longer the law, but it is very unclear what really is the law on the matter. The ban on domestic law development underlying CISG Art 7 (SGA § 88) may seem inadequate if no genuine international authorities emerges.[94]

g. Another challenging issue in connection with breach involving non-conformity is the question of damages, i e the basis for liability and rules on the calculation of damages to be paid by seller when the buyer is suffering economic losses.

Substantial formal changes were made in the adaptation of the CISG 1980 articles into the 1988 act, maybe not in substance, but definitely in formal respects.

CISG 1980 Art 45 provides that buyer may exercise i a his right to damages in defect and delay situations as set out in Art 74-77. The insertion of the tiny word «as» is fundamentally ambiguous; does it state that there is to be liability or does it only refer to the provisions where such basis for liability is expressed? Turning to the provisions referred to, the reader is struck with amazement. There is no authority for liability whatsoever! The articles only deal with calculation issues and provide no guidance on whether we are dealing with the common law strict «breach» concept or if something else was had in mind of the legislators. The bewildered reader’s return to Art 45 poses the question again, but this time in a binary fashion: If Art 45 is the only possible rule on when the seller incurs liability the answer, then the answer to question Is there basis for liability? must be either YES or NO. I remind the reader of the already canvassed disappointment of the meagre achievement in the 100 articles in the rest of the document if the Art 45 question does not afford an answer.

Where and how does the «impediment» principle in Art 79 fit into this picture? The rule specifically deals with failure to perform, excusing the seller in some contingent situations. But the provision does not answer the question of possible consequences of the obstacle not amounting to an impediment according to the definition.

In this situation, the combined reading of Art 45 (b), the Articles 74-77 (on calculation of loss) and Art 79 gives a shocking observation: The CISG 1980 Convention on International Sales of Goods simply fails to supply the national legislator, the actors of the trades, the lawyers and the courts of the predominant with clear answers to the two questions asked by anyone within the area of sales of goods:

The reason for this seems to be that the reference in Art 45 via Art 79 assumes that the «obligation» referred to is very precisely defined. That seems not to be the case. The indication of any kind of liability seems to be the wording of the Art 45, assuming that there is some kind of (common law based?) strict liability when certain obligations are not performed - as long as Art 79 does not relieve the seller. The obligations referred to seem to be stated in a common strict liability tradition in Articles 30 et seq. In the genuine CISG 1980 situation of international transaction, the fiction that a seller is obliged to deliver goods in due time and without defects may operate. The «impediment» rule in Art 79, however, worded in the force majeure format, leaves so many open-ended questions that there is no way telling plainly whether a trivial latent defect in the goods shipped to the buyer will incur liability or not.

In view of this, there may be room for forgiveness for a national legislator which, failing to ascertain liability issues from all the 100 articles of the Convention, simply prefers to legislate within the lacunas created by the Convention's «parents».[95]

In the Scandinavian acts for national sales (Finland, Norway and Sweden, Denmark excepted) delay and non-conformance are dealt with under provisions covering both situations - §§ 27 and 40. These provisions may possibly depart from the 1980 CISG, since the «impediment rule» in Art 79 by some Anglo-American writers may not to cover lack of conformity.[96]

h. The calculation of loss takes place according to principles stated in 1988 SGA § 67 (1), cf §§ 70 (1) and (2), corresponding to the «foreseeability» principle stated in CISG 1980 Art 74. Specific domestic limitations in Norwegian law as to «indirect damages» («consequential loss») are made non-applicable to international transactions in 1988 SGA § 27 (4) and § 40 (2). In fact, this means that the international principles of loss calculations are the same under Norwegian law as they were before the 1988 reform, when the distinction between «direct» and «indirect» damages was introduced in domestic transactions where liability does not involve error on part of the seller.

i. Questions on anticipatory remedies («antecipert mislighold») are dealt with in CISG 1980 Art 71-72, covering two situations: The suspension of performance due to anticipatory breach on behalf of the other party (Art 71) («tilbakeholdsrett») - and the avoidance of the contract (Art 72) («hevning»). The corresponding provisions in 1988 SGA are found in §§ 61-62, where the difference in probability should be emphasised. According to § 61 it is sufficient to justify suspension that it «becomes apparent» that the other party will not perform (§ 61 (1) «framgår...at han ikke kommer til å oppfylle»), while the requirement for avoidance under Art 72 is that it «is clear» that the other party will commit a fundamental breach (§ 62 (1) («klart at det vil inntre kontraktsbrudd som vil gi en part hevningsrett»).

The provisions represent a more thorough regulation in a field where the 1907 SGA only provided for a partial and incomplete set of rules. It is believed that the 1988 Act reflect general principles applicable in contract law, where the requirement for avoidance of contract in cases of anticipatory breach always must be fairly narrow.

Objections to the principles laid down in the CISG 1980 have come from Third World countries, advocating that the anticipatory breach regulation favours the commercial well-established Western World party to the transaction.[97]

The internationally global and European community law perspective on pre-contractual activities is dominated by the general objectives to monitor and regulate in a very detailed way the step-by-step decision-making process leading up to the actual award and conclusion of public, semi-public or utility contracts with private contractors. Such overriding rules and principles have to a large extent replaced - or gained their strong impact on - previous existing national systems of the same kind for the management of public contracts. The international dimension includes generally equivalent - but in detail not conjunctive - principles adopted within World Trade Organisation (WTO) through the so-called 1994 Government Procurement Agreement (GPA), which is now about to be integrated formally into the EU and EEA procurement directive regime.[98] In a global perspective reference could also be made to the UNCITRAL 1994 suggestive model legislation on public procurement[99] as well as to the World Bank’s 1996 obligatory Guidelines for the management of contracts through procurement under IBRD Loans and IDA credit’s.[100]

The policy objectives of a strongly regulated public procurement regime are somewhat different in nature. In a Third World perspective the pester of corruptive mal-procedure may substantiate rigid rules on procedures in the spending of public money such as financing acquired through international aid schemes or IBRD loans. Discretionary autonomy for decision-makers within a public or semi-public area in dialogue and communication with private potential contractors may under given circumstances in itself induce a climate for potential corruptive counter-productive briberies. The 1994 UNCITRAL and 1996 IBRD procurement model rules and guidelines are specifically aimed at these aspects of public contracts. Similar considerations might underlie the EC community regulation, but since the issue in connection with corruption seems to be mainly affecting supervision of public state finances, national member state policies and not EC principles may prevail in this respect. The more specific WTO and community law based counter-discriminative call for international competitive tendering seems to be the underlying rationale for both EC and GPA policy principles. The main objective in these statutory regimes is to open up formerly protected internal markets for public contracts by the equalising of resident potential contractors with non-resident EC, EEA and GPA undertakings on a truly competitive basis, thus ruling out the domestic, national or regional pursuit of national preferences in these activities. In the EC/EEA context the principle of non-discrimination on national criteria is the overriding rule; in the GPA context the principle of is expressed in GPA Art III.[101] The means to reach a satisfactory practice subject to efficient review and supervision consist of mandatory requirements as to the uniform procedure for the early notice and informative advertisement of all documentation pertaining to contracts which are meant to be open for private undertakings,[102] furthermore systems for a high degree of preferably euro-standardised non-preferential technical specifications in contract documentation, transparent minute recording of step-by-step regulated decision-making process leading from selection of contract candidates through pre-qualification and suitability test procedures via qualification tests up to the final decision on which candidate among the tenderers who can offer «best value for money», either by lowest price for the object or service in demand or by otherwise submitting the economically most advantageous offer among competing candidates. Strong emphasis is put on petty formalities by regulated procedures with highly restricted possibilities to exercise otherwise normal commercial negotiation discretionary and autonomous options since the procedure is subjected to potential concurrent subsequent legal review very much in detail.

The non-discrimination principle embodied in the (consolidated) Art 12 (ex Art 6 EC) is the first of a range of provisions in the EC Treaty itself which have relevance to public procurement - such as the provisions on inner market mobility for goods - Art 28 (ex Art 30) (trade restrictions), Art 43 (ex Art 52) (right of establishment), Art 59 (ex Art 49) (free movement of services) etc.[103] In a public contract context, the provisions on trade restrictions (Art 28 EC) and free movement for services (Art 49 EC) are the most important since the contracts in question will be either a supply or a service contract within the meaning of the Treaty (construction «works» to be classified as a service in this respect). A further statutory basis for procurement is provided by a set of 6 consolidated voluminous directives, 4 dealing with procedural matters and 2 with Remedies and sanctions in the procurement area. Add to this more than 30 ECJ court cases from the early 1980'ies and a corresponding national level legal material supplementing community law sources.

The GPA provisions corresponding to EC law is found in the «no less favourable» principle stated in GPA Art III.;

The IBRD Guidelines on the issue of non-discrimination are not as restrictive as in EC and GPA law. The 1996 Guidelines Art 2.54. opens for some domestic preferences in contract awards, but always «[a]t the request of the Borrower, and under conditions to be agreed upon under the Loan Agreement...».

Turning now to the EEA perspective, in the pre-EEA situation, there were no specific statutory regulation on the matter under Norwegian law, but within the state sector, a set of internal regulations from 1978 set out the basic principles on the procedure for contract awarding when the purchaser was a state entity.[104] In municipal local government law (Norw «kommune»), the normal procedure would be to adopt similar provisions as in the state area. The overruling principle of acquiring «best value for money» under competitive procedures was stated both in state and local government contract awarding, including, however, rules authorising the public under certain conditions, to award contracts for district policy purposes, requiring decision by relevant ministry (Næringsdepartementet).[105]

The obligation to establish supremacy for community law «acquis comunautaire» expressed in EEA Agreement Protocol No 35 is reflected in the Norwegian EEA Agreement Act 1992-11-27 No 109 § 2, stating that all implemented EEA law as expressed in statutes and regulations shall prevail over other national (Norwegian) law, both preceding and subsequent EEA legislation. The 1992 implementation of the EEC law within the procurement area, succeeded by the WTO GPA (former «GATT») amendments in 1996, introduced major changes in public procurement law in some areas, less in others. The 4 procedural directives consolidated in 1992 on «works», «supplies», «services» and «utilities» («excluded sectors»), later on both the «remedy» directives for «classical» and «utility» sectors, were all implemented by legislation. The statute 1992-11-27 No 116 is a short with only 7 provisions, defining scope (§ 2) and authorising administrative regulations within each sector. The «remedy» options in the EC directives have resulted in a system for judicial review. Both remedy directives have been carefully placed within already existing legislation on civil procedure, adding a few provisions in the 1992 No 116 act itself (§§ 4-6). The rules came into force in 1994 (utilities from 1995).

Thus, there is no need to go into detail on the scope or EC threshold provisions for applicability, since these reflect basically general EU law on the matter. Worth mentioning, however, is that the EC Directives’ options for Member states have been used by Norway in these respects;

Within the originally excluded sectors, the «utilities» are defined in a way which goes even further. Both state owned enterprises (such as state controlled Statoil, Saga, Norsk Hydro) and non-resident operators in the industry will fall under the provision in the Dir 93/38 EC, either as public entities owned by the state or as private entities which

Consequently, Norwegian offshore oil and gas industry activities - and the whole area of fabrication contracts such as the NF 92 scenario - fall within the regime of EEA regulated procurement.[107] This meant a major change in the legal position compared to the pre-EEA era.[108] Previous statutory provisions, licence practices, contracts for the industry and administrative regulations had to wipe out all remnants from the «buy Norwegian» era of the industry, in fact turning 180 degrees what had been up until then official parliamentary policy for the North Sea activities since the early 1970’ies, all as a result of the non-discrimination principle stated in EEA Art 4 and other provisions of the agreement dealing with free movement for goods and services.[109]

All EC public procurement law applies in Norway, which means that there are no significant differences between EU and EEA law on the matter.[110] Technically speaking, the EEA area includes both the last EFTA Members Norway, Liechtenstein and Iceland and the whole EU with Member States at any time.

The purpose and intention of the present EU/EEA directives regime within EEA/EU is somewhat varied. One could possible concentrate on these:;

The signing of the WTO GPA («Government Procurement Agreement») has enlarged the commitments for both EU member states and EEA. Norway signed the GPA and implemented the provisions into the existing statute public contract by amendments through law reform 1996-11-27 No 15.

Some EEA basic principles will apply beyond the procurement regime thresholds. The non-applicability of any of the formal directives does not excuse a public or a local government entity from operating award procedures which are in fact violating the EEA Art 4 non-discrimination principle nor the free movements provisions. This is not yet quite appreciated within the great number of small municipalities in Norway. Previous court cases on mal-procurement before EEA [111] are now succeeded by cases where decision-making procedures in the outsourcing of ex-public services are dealt with without applying competitive economical criteria for the award. The pre-EEA system of state regulations (1978 «REFSA» on i a «supplies») is still in existence, as is the standing «Normalinstruks» recommending local government entities to apply the state rules. Litigation is mainly seen within the local government sector. So far, no state entities or authorities has been challenged with procurement infringements in reported Norwegian cases.

The directives intensify various non-discrimination and counter-mobility aspects of public contracting much more in detail than the Treaty. Principles aiming at the overall establishment of fair and just transparent equality between candidates are found in provisions dealing with the ex ante advertising of detailed information on forthcoming contract to be expected, its exact object and extent by volume and substance, the contract conditions, the parameters for evaluation of tenderers and tenderers' bids. The reserving of actual decision-making to subsequent discretion in matters which could have been elucidated in advance is minimised. A large part of the directives' singular provisions deal with the technical specifications in order to eliminate conditions for the contract which are preferential to candidates from any particular country (and in particular that of the contracting entity). Criteria for rejecting and excluding candidates are listed exhaustively, as are criteria for authorisation, qualification and the establishment of evidence for ability in terms of skills, efficiency, experience and reliability. The zest of the directives in this respect is the splitting up of transparent succeeding fragmented part-decisions in these matters so that the final award can be narrowed down to very few, very visible and truly controllable parameters for subsequent community law review initiated by the passed-over contract candidate(s) or in serious cases of violation by the Commission (or alternatively in EEA the ESA). While the Treaty regime excludes decision-making by reference to its potential negative discriminatory or trade-restrictive effects, the EC directives’ approach as well as the GPA approach is to limit the final discretion furthermore by reference to award criteria specifically listed: In the EC context either «lowest price» or «economically most advantageous tender», in the GPA context «the most advantageous» (Art XIII para 4(b).

In contrast to regular commercial business-wise full-scale negotiation of contracts, the procurement regime within the «works», «supplies» and «services» area is firmly based on the idea of fragmenting the decision-making procedure to step-by-step elements which may be reviewed separately and therefore subject to effective supervision. The main rule is contracting by «open or restricted tender procedure», which means that one cuts down otherwise commercially preferred communication routines between the parties on how to negotiate, what to agree upon and when to assume a binding contract.[112] One could observe that pre-contractual communication on the public side is aligned with principles of public administrative law regulated decision-making. The fundamental idea is that the tenderers' price bid put next to the comprehensive tender invitation - with a minimum of clarification and explaining - will suffice for establishing the contract. Contractually, the principles of procurement procedure could be described as an advanced set of rules for pre-contractual behaviour, very much functioning as specific post-contractual standards for «good behaviour» or equivalent quality standards set for the professional performance of contractual obligations.[113]

After having proceeded through the decision-making process from defining the contract, selection of acceptable candidates in terms of qualifications, competence, skills and abilities, the ultimate decision remains as to the actual award decision. That decision does not in itself establish the contract, but the communication to the selected candidate will normally conclude a contract binding on both sides.[114] From then on, matters of dispute are taken out of public procurement law and become matters for possible contract interpretation of the notified contract conditions, standard (possibly «agreed» in the industry) clauses - or reliance on statutory provisions on the actual contract category, such as the CISG 1980 rules on International Sale of Goods.

While the Treaty and EEA provisions put restrictions on the public entity's discretionary decisions with respect to discrimination and counter-effective measures restricting community law mobility for goods, services and construction projects, all the 4 procedure directives state in an impressively positive manner a very limited range of options for criteria in the form of acceptable reasons for the final selection of the actual successful candidate in the contract award. The traditional «lowest price» award is made an optional alternative to an award based on the economically most advantageous tender. In this, the EU and EEA rules differ from the GPA regime (Art XIII.4.(b)), where the issue is to select the tender which

thus leaving out the EU/EEA overriding condition that only economical parameters are relevant and acceptable.[115]

The law of public procurement is in the transition. The Commission’s 1996 «Green Book» on cross-roads’ policies («Exploring the way forward») invited for and received reaction from Member states. The present position is stated in the COM (98)143 final 1998-03-11 Communication from the Commission «Public Procurement in the European Union»,[116] states the agenda for the time to come. Key words on the communication are adapting rules to market changes, developing favourable environment for business, in particular SMEs and the complementing and achieving of synergy with other community policies. Reacting to criticism on «red tape» and time-consuming work in advertising TED etc, the Commission announces the introduction of electronic tendering (SIMAP=«Systeme d’information pur les Marches Publics»).[117]

Member states may still exercise national policies within the Treaty principles and the framework of the directives. The quest for a more «soft» social policies autonomy has been voiced by many, and the Commission’s answer seems to be that such policies may very well be reconciled with the procurement procedures, such as in the defining the object of the contract, its purpose, the conditions on which the contract should be performed, by statutory requirements on environmental qualities of the tenderer. However, in the final decision to award a contract to the «economically most advantageous tender», the Commission has vigorously opposed any dilution of the «classical» considerations of strictly economic, commercial, cost-effective criteria.[118]

The Norwegian legislator too, is on the move. After having gained experience with the pre-EEA and the post EEA regulated procurement within different sectors, a commission submitted its recommendations for statute amendments in a 1997 report NOU 1997:21 («Offentlige anskaffelser»).[119]

The first reported Norwegian cases on refused tenderers challenging the procedures adapted by the entity originate in the 1960’ies, but it took 30 years before the issue on mal-procurement damages was litigated in Supreme Court.[120] In the years from 1994 to 1998 no less than 4 cases have been heard.

Two of the cases deal with the question of binding award of contract. In Rt. 1994.1222 («Sjøen»), the question was raised in connection with a pending award situation, in which the entity after having received and opened the submitted tenders, instructed one of the tenderers to commence a control of the contract quantities (Norw «massekontroll» under NS 3430; to ascertain correspondence between specifications and drawings). Since this was a «classical» tender procedure, no direct negotiations nor amendments in the tender bid would have been acceptable. Under those circumstances, and applying the Scandinavian 1918 Formation of Contract, the Supreme Court decided that the instruction to commence the «massekontroll» was equivalent to a formal accept of the tenderers bid. Since the entity in fact had in the meantime awarded the contract to someone else, the entity was held liable for loss of contract, amounting to appr NOK 1.2 mill. The case is generally appreciated as clarifying and in conformance with sound policies to avoid long time staggering of the procedure. In the Rt. 1997.1922 («Loddefjord Kirkegård»), the question on whether a binding contract was reached came up in a subcontractor scenario. The main tenderer communicated with a potential subcontractor in a rather informal manner, and the question was whether this de facto was a tender procedure. The city municipality of Bergen had invited for tenders for the work in question (grave yard maintenance) and recommended the invitees to collect tender bids for subcontract. The actual communication between the tenderer and its invitee did, however, in Supreme Courts opinion, not amount to a tender procedure situation. In fact, the exchange of notices on the possible work to be done was rather informal, so the question was whether the main tenderer which actually later was awarded the contract was already bound to employ the subcontractor. Supreme Court stated that the situation did not have the tender procedure ingredients and that there was in fact no legal acceptance on part of the main tenderer to employ the subcontractor. The claim was therefore dismissed.

The more remarkable case is the Rt. 1997. 574 «Firesafe» judgement, coincidentally the third case originating in Bergen on tender issues in the period 1994-1997. The facts of the case did not come under the EEA agreement since the crucial events took place just before the date when the agreement with (then) EC came into force (1994-01-01). However, the case displayed the first discussion in principle over the issue of economical loss for mal-procurement. The Norwegian legislator’s position in connection with transposing the two Remedy» directives, Directive 89/665 EEC and Directive 92/13 EEC [121] for «classical» and «utilities» sectors has been that case-made law at least in the «classical» sector was not changed by the EEA arrangement [122] so consequently, the «Firesafe» case carries bearing on the Norwegian assumption that the law will apply equally to EEA tender bid procedures.

The facts of the case were simple: The municipality of Bergen invited for tender bids for fire securing installations in publicly owned facilities. The contract documentation carried an apprentice clause normal for the 1980’ies, committing the contractor to operate under a frame agreement with the Norwegian state, allowing for state subsidised apprentice employment. After opening the bids, it turned out that the lowest bid came from one firm which did in fact not operate under the state apprentice arrangement. In spite of this, the contract was awarded to this tenderer. Six competing candidates challenged the decision, invoking a breach of the tender procedure rules set up by the municipality and claiming damages. The case succeeded in city court. All six tenderer were awarded costs for having prepared their bids, trusting that the entity would stick by his own rules. Supreme Court rejected these claims. The decision is based on a line of causation reasoning, the Supreme Court stating that under 1980 market conditions, any tenderer would have participated in a competition for public contracts, whether or not the entity in question would have played by the rules or not. Admitting some leniency in the general approach to the matter of burden of proof on part of the unsuccessful tenderers in view of the fact that there was a clear and manifest infringement of procedure, the Supreme Court still had to accept that the line of causation was broken. The claims were consequently rejected.

The «Firesafe» case raises a number of procurement law issues. Under a Norwegian perspective, it suffices to observe that the Remedy Directives 89/665 EEC undoubtedly leaves matters of calculation of loss - possible also the issue of range of protected interests - to national law. In this respect, the «Firesafe» decision clarifies the legal position in view of a great number of reported Norwegian pre-EEA subordinate cases, namely to award damages for «negative interest» costs without really appreciating the basic requirements for causation even in mal-procurement.[123] On the other hand, the succeeding «Remedy II» directive expressly departs from causation requirements by accepting (a) a breach and (b) the infringement affecting the chance of the tenderer in question (not requiring actual loss of a contract which would otherwise have been awarded). So one must ask: Is not conceivable that the Remedy II Directive stands for the later more sophisticated true view of the Commission on matters of award of damage in cases of mal-procurement? If so, why persist in having two formal set of rules for procurement, one for «classical» and another for «utilities»?

In this author’s view, strong policy principles support the «Remedy II» approach, leaving considerable flexibility on the causation issue. The title of both remedy directives indicate that deterrent considerations are of essence, and that mal-procurement generally should carry economical consequences. Contrary to the situation in competition law, where policing of the rules is made an administrative task for the Commission and the ESA, the public procurement monitoring is put into the hands of the private parties contesting the decision-making from case to case. In view of this, the «Firesafe» decision seems to underestimate the danger that in fact market conditions will decide whether or not infringements of the rules will carry sanctions with it or not. To put it directly: In a buyer’s market the temptation to exploit the negotiating position of the entity the violations of procurement procedural principles will not lead to damages, following the «Fireside» reasoning. In times when market is more favourable to the «sellers», there is no temptation to brake the rules.

In Commission’s 1998 Communication, the possible simplification of the directives is put on the agenda. One of the issues which in this author’s view should be taken up for consideration, is the need to state more clearly whether Member state national law principles implicitly referred to in the «classical» sector Remedy directive, like the one applied in the Norwegian 1997 «Firesafe» case, is really in line with the advocated need for a more effective policing set-up of regulated public procurement.

General rules on proper venue are found in the 1915-08-13 No 6 Norwegian Civil Procedure Act §§ 17 et seq (Chap 2). Litigating international contract disputes, the venue fora of particular interest may be the place of fulfilment of written obligation (§ 25), place of business for branch or subsidiary office (§ 27), place where respondent possesses values of any kind («tooth brush» - «tannbørsteverneting») § 32,[124] venue in jo