When do you need to request state courts to refer the parties to arbitration when an action brought to state courts is subject to an arbitration agreement?
New decision from the Supreme Court of Norway HR-2023-2055-A
Pursuant to Section 7 of the Norwegian Arbitration Act, which is based on Article 8 of the UNCITRAL Model Law, the state courts shall refer the parties to arbitration if a party so requests not later than when submitting his first statement on the substance of the dispute.
In today’s decision by the Supreme Court of Norway, the Supreme Court addressed the issue of whether the respondent’s objection to arbitration was lost by requesting it too late.
The case was initially commenced at the Conciliation Board in Norway. The Conciliation Board is a part of the judicial system in Norway serving as a preliminary forum prior to the District Courts (first instance). The Conciliation Board must be used e.g., if one of the parties is not represented by a lawyer when the case commences. The Supreme Court of Norway has in previous case law confirmed that the Conciliation Board is considered a court within the meaning of Section 7 of the Norwegian Arbitration Act.
In this case, the proceedings were discontinued by the Conciliation Board after the respondent’s response, as the decision power for the Conciliation Board is limited in cases where the disputed amount is above NOK 200 000 (approximately EUR 17 000). The case was thereafter commenced for the district court. In its statement of defence, the respondent requested the District Court to dismiss the case with reference to an arbitration agreement.
The Supreme Court of Norway held that the objection to arbitration was time barred because the respondent, in its response to the Conciliation Board, addressed the substance of the case, without explicitly requesting the dispute to be referred to arbitration.
It may be of interest in other jurisdictions that the Supreme Court of Norway came to this conclusion regardless of the fact that the respondent only had rejected the claim without further reasoning of the rejection. According to the Supreme Court of Norway, that was deemed to be in line with Article 8 – ‘not later than when submitting his first statement of substance of the dispute’. In our opinion, based on decisions in other jurisdictions, that was not an obvious outcome.