Norway collection profile

 

Norway
       

Norway

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Complexity of collecting debt:

grading
notable High Very High Severe


Executive summary

  • The payment behavior of domestic companies is good, with payments within 30 days on average, and domestic courts are fairly efficient in dealing with disputes in a timely manner.
  • Having said this, negotiation and compromises are considered as a pre-requisite to legal action and obtaining effective support in this regard is important.
  • In the event of insolvency recovering the debt becomes practically impossible as debt renegotiation schemes are not effective and the priority rules set forth in liquidation proceedings make it unlikely for unsecured creditors to receive any part of the proceeds.
 
General Information GENERAL INFORMATION arrow-transparent
 
Collection Practices COLLECTION PRACTICES arrow-transparent
Court Proceedings Court PROCEEDINGS arrow-transparent
 
Insolvency Proceedings INSOLVENCY PROCEEDINGS arrow-transparent
 
General Information 

GENERAL INFORMATION

Days Sales Outstanding (DSO)

Payments in Norway take place within 30 days on average and the paying behavior of local companies is exemplary.

 

Late payment interest

Even though Norway is not an EU Member State, the country has aligned its regulations with the principles laid down by EU Directive 2011/7/EU which stipulates that payments in the EU must be made within 60 days. In accordance with the Norwegian Act relating to Interest on Overdue Payments, late payment interest may be claimed the day following the due date of the accounts receivable. Unless a contract provides a specific interest rate, the reference rate of the Norwegian Department of Justice (reviewed every six months), increased by 8 percentage points, and may be applied. Interest is normally paid by the debtor but may also be used as a negotiation tool in order to preserve the business relationship.

Debt collection cost should be charged to the debtor in accordance with the Norwegian Debt Collection Act. In accordance with the EU directive, collection costs of EUR 40 may also be claimed, but these would be deducted from the debt collection fees paid by the debtor under the Debt Collection Act. Collection specialists will systematically obtain payment of such costs.

 
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collection practice 

COLLECTIONS PRACTICES

Orchestrated negotiation first

Amicable settlement opportunities always ought to be considered as an alternative to formal proceedings. In addition, before starting legal proceedings against a debtor, assessment of assets is important as it allows verification as to whether the company is still active and whether recovery chances are at good. In addition, it is essential to be aware of the debtor’s solvency status: if insolvency proceedings have been initiated, it indeed becomes impossible to enforce a debt (see below). The Norwegian regulations provide strong incentives to use a financial conciliation mechanism (Forliksradet) under the auspices of the Conciliation Boards. The board is forwarding this information to the debtor, who is obliged to provide its views in writing to the board. The parties will thereafter meet together with the Conciliation Board in order to reach an agreement (this process is often done without lawyers). If the parties achieve no agreement but the claim is legitimately grounded, or if the debtor fails to respond within three weeks, the Board may decide for the parties and render an enforceable Order. Otherwise, the claim is sent to court and leads to ordinary legal action. This procedure often takes up to one year.

 
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Court Proceeding 

COURT PROCEEDINGS

Norway has a Civil Law system in which the rules are codified rather than established by the case law. The country is part of the European Economic Area Agreement, therefore most EU regulations are now implemented in Norwegian law. 

The judiciary divides into Conciliation Boards (present in most cities) and 66 District Courts (tingrett) spread over the country, which are competent to deal with both civil and criminal cases. All commercial disputes are handled by the district court as there are no specialized courts in the country.

Disputes below NOK 125,000 where the parties are not represented by a lawyer must normally be brought to the Boards prior to being submitted to the District Courts. The six Courts of Appeal and the Supreme Court (located in Oslo) then respectively act as the second instance and final jurisdiction courts.


If the debt is certain and undisputed, a bailiff is first entitled to issue a Payment Order which is given the same value as a court judgement. Thus, if the debtor does not pay as requested, the bailiff may commence forced execution. If the debtor disputes the debt, however, the case must be solved through the Conciliation Board or through an ordinary lawsuit. The creditor would normally file a claim with the District Court which would invite the parties to a meeting in order to identify the parties' claims, and organize hearings to collect evidence and arguments prior to rendering a decision. Courts in Norway would normally award remedies in the form of damages, interests and litigation costs. Punitive damages are not available.

 
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insolvency Proceeding 

INSOLVENCY PROCEEDINGS

In order to apply for insolvency proceedings (Konkurs) in Norway, the debtor needs to be both insolvent and ‘insufficient’. Whilst insolvency (illikvid) refers to the permanent inability to pay outstanding debts as they fall due, insufficiency rather describes a situation where the debt exceeds the company’s assets. The main Norwegian insolvency legislation is built upon two main pieces of legislation. The 1984 Creditors Recovery Act (The Recovery Act) regulates debt recovery procedures, sets out relevant deadlines, and clarifies priority issues. The 1984 Debt Reorganization and Bankruptcy Act (the DNB-Act) rather regulates voluntary and compulsory debt settlement proceedings as well as bankruptcy proceedings. All District Courts in Norway handle bankruptcy proceedings. In Oslo, however, there is a specialized court that handles all bankruptcy proceedings.

 
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