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The new VBER entered into force on 1 June 2022.

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Q&A on Distribution Agreements

Part 1: Legislative framework

Q1. Please specify the legislative framework generally applicable to the conclusion and execution of distribution agreements (a)? Please include a link to the official publication of the applicable rules (e.g., relevant link to the Official Gazette) (b) and, if available, to the English translation of the legislative framework (c).

a.  Legislative framework:

The Norwegian Competition Act (and the EEA Competition Act)

Art. 10 and 11 Norwegian Competition Act [the Competition Act] (LOV-2004-03-05-12) are generally applicable to the conclusion and execution of distribution agreements. Art. 10 (anti-competitive agreements) corresponds to Art. 53 (1) of the EEA-agreement and Art. 101 TFEU. Art. 11 Norwegian Competition Act (abuse of dominance) corresponds to Art. 54 EEA-agreement and Art. 102 TFEU.

There are also Norwegian regulations transposing EU Block Exemptions, such as:

  • The block exemption for specialisation agreements etc. [the Specialisation Block Exemption] (FOR-2012-04-20-343), in force until 31 December 2022;
  • The block exemption for research and development agreements etc. [the Research and Development Block Exemption] (FOR-2012-04-20-342), in force until 31 December 2022;
  • The block exemption for motor vehicle agreements etc. [the Motor Vehicle Block Exemption] (FOR-2010-08-24-1214), in force until 31 May 2023;
  • The block exemption for categories of vertical agreements etc. [the Vertical Block Exemption] (FOR-2010-06-21-898), in force until 31 May 2022.

In addition, Norway has opted for certain additional exemptions on the applicability of Art. 10 Norwegian Competition Act, in particular:

  • Regulations on exemption for cooperation in agriculture and aquaculture (FOR-2004-04-23-651).*
  • Regulation exempting the applicability of Art. 10 Norwegian Competition Act relating to cooperation with regards to the sale of books (FOR-2014-12-19-1716).

* Generally, agricultural policy is not a part of the EFTA cooperation, and agricultural products are therefore (generally) not covered by the EEA Agreement. This exception is implemented and evident (somewhat indirectly) from the HS codes listed in Art. 8 (3) of the EEA Agreement, since the goods/commodities which fall under Chapter 1-24 HS Nomenclature are (mostly) agricultural products.

The EEA Competition Act

The Norwegian EEA Competition Act [the EEA Competition Act] (LOV-2004-03-05-11) transposes (together with certain regulations) the competition rules of the EEA Agreement.

General contract law

The Norwegian Act relating to Conclusion of Agreements etc. (LOV-1918-05-31-4), in particular Art. 36. Art. 36 provides the legal framework for revising and/or invalidating the whole or parts of an agreement which meet the applicable threshold (unreasonableness).

The Norwegian Sale of Goods Act

The Norwegian Sale of Goods Act [the Sale of Goods Act] (LOV-1988-05-13-27) applies to the sale and purchase of goods where the purchaser is not a consumer, and except as otherwise resulting from contract, established practice between the parties, or trade usage or other custom which must be regarded as binding between the parties.

The Norwegian Commission Act

The Norwegian Commission Act [the Commission Act] (LOV-1916-06-30-1) specifies that the parties are free to derogate from the provisions of the Commission Act, unless otherwise explicitly stated within a particular provision.  

The Act on Good Business Practice in the Grocery Sector

The Act on Good Business Practice in the Grocery Sector [the Good Business Practice Act] (LOV-2020-04-17-29) regulates the distribution relationship regarding delivery of groceries.

b. Link(s) to official publication:

The Competition Act is accessible via this link.

The Specialisation Block Exemption is accessible via this link.  

The Research and Development Block Exemption is accessible via this link.

The Motor Vehicle Block Exemption is accessible via this link.

The Vertical Block Exemption is accessible via this link.

The Exemption for agriculture and fisheries is accessible via this link.

The Exemption for the sale of books is accessible via this link.

The EEA Competition Act is accessible via this link.

The Agency Act is accessible via this link.  

The Act relating to Conclusions of Agreements etc. is accessible via this link.  

The Sale of Goods Act is accessible via this link.

The Commission Act is accessible via this link.

The Good Business Practice Act is accessible via this link.

c. Link(s) to English translation:

Although there are no official English translations of Norwegian Acts and Regulations, certain unofficial translations have been made available by e.g. Lovdata (a Norwegian foundation which e.g. provides free, public access to all Norwegian laws and other judicial documents, including court rulings) as well as the University of Oslo and others. Note that the texts referred to below may not be up to date and we strongly advise against relying solely on the translated versions.

The Competition Act is accessible via this link.

The Specialisation Block Exemption is not available in English.

The Research and Development Block Exemption is not available in English.

The Motor Vehicle Block Exemption is not available in English.

The Vertical Block Exemption is not available in English.

The Exemption for agriculture and fisheries is not available in English.

The Exemption for the sale of books is not available in English.

The EEA Competition Act is not available in English.

The Act relating to Conclusions of Agreements etc. is not available in English.

The Sale of Goods Act is accessible via this link.

The Commission Act is accessible via this link.

The Good Business Practice Act is not available in English.

Q2. Other than for agency agreements pursuant to Directive 86/653 (EEC) on the coordination of the laws of the Member States relating to self-employed commercial agents, are there specific rules depending on the distribution format (e.g. franchising, exclusive distribution)?

No. 

Q3. Other than general contract law and competition law, are there other rules which may generally restrict the parties when drafting and concluding distribution agreements (e.g., rules in relation to unfair contract terms in B2B contracts, specific requirements in the context of a prohibition of abuse of economic dependence)?

No. 

Part 2: Pre-contractual phase

Q4. Are there mandatory provisions in relation to the disclosure of pre-contractual information prior to concluding and/or executing distribution agreements?

Yes. 

If yes, which mandatory provisions apply (a) and which information must be disclosed (b)? Where available, please also include a link to the official publication of the applicable rules (c) and, if available, to the English translation of the regulatory framework (d).

a. Mandatory provisions:

Although there are no mandatory provisions as such regarding disclosure of pre-contractual information prior to concluding and/or executing distribution agreements under Norwegian law, the generally applicable principle of loyalty in Norwegian contract law will be relevant when concluding/executing distribution agreements.

b. Information to be disclosed:

There is no exact list of mandatory information during the pre-contractual phase, as this will depend on a concrete assessment in each individual case. In its decision HR-2010-2060-A, the Norwegian Supreme Court stated that even though the principle of loyalty may be relevant during the pre-contractual phase, this phase should be characterized by a large degree of freedom to negotiate and that the principle of loyalty should be considered a minimum standard in such circumstances. 

Note that with regard to distribution agreements in the grocery sector, there is an obligation on the parties to disclose certain information. During the negotiation and execution of agreements regarding the delivery of groceries, the parties shall disclose information which the parties have reason to believe may be of relevance to the other party. This does however not extend to information which the parties have a valid reason not to disclose.

c. Link(s) to official publication:

The Good Business Practice Act is accessible via this link.

d. Link(s) to English translation:

.The Good Business Practice Act is not available in English.

Q5. Is there a standstill obligation linked to the requirements imposed for the pre-contractual phase?

No.

Q6. Does the relevant regulatory framework impose sanctions if the pre-contractual obligations are not (fully) respected?

No. 

Q7. Can a party be held liable if it terminates the pre-contractual negotiations?

Yes. 

If yes, on what grounds (a); under what conditions (b); and what consequences are generally linked to such liability (c)?

a. Grounds for precontractual liability:

Any party is, theoretically, free to terminate pre-contractual negotiations at any time, but the principle of good faith applies. In very rare circumstances, terminating pre-contractual negotiations may give rise to a claim for damages. The rules of liability are non-statutory and apply if non-compliance with the principle of good faith constitutes negligence. Pursuant to case law, pre-contractual liability does not occur unless the negotiations are nearing the entering of an agreement. To date there have been no cases where the courts have awarded damages on the ground of pre-contractual liability in relation to distribution agreements.

b. Conditions for precontractual liability:

Pursuant to non-statutory law a contracting party may, in rare circumstances, be held liable for negligent behaviour during the pre-contractual phase, provided that the aggrieved party has suffered a financial loss and proximate cause is established. Due to the strong position of the principle of freedom of contract under Norwegian law, the main rule is that the contracting parties do not have a legal claim over each other before the agreement has entered into force.

c. Consequences of precontractual liability:

Norwegian tort law is based on a principle of (full) indemnification, i.e. that the aggrieved party shall be compensated as if the damage had not occurred. In other words, the compensation shall correspond to the actual financial loss incurred as a consequence of the other party’s negligent actions. It is generally assumed that the aggrieved party may be entitled to reliance damages.  

Q8. Are there other relevant rules and/or restrictions that apply during pre-contractual negotiations between supplier and distributor?  

No. 

Part 3: Contractual phase

A. Form of distribution agreements

Q9. Must a distribution agreement be executed in writing to be valid and enforceable?

Only in certain instances

If only in certain instances, please explain when a written agreement is required.

Norwegian contract law is based on a principle of freedom of form. This means that the legality of an agreement is not dependent on whether the agreement is formalised in writing. Hence, as a general rule, a distribution agreement does not need to be executed in writing to be valid and enforceable. According to case law there is a presumption of formalisation, and this presumption is even stronger where the contract is complex and of high value, and involving professional parties. A lack of formalisation will therefore indicate that an agreement has not yet entered into effect, which will allow a contracting party to argue that it is not bound by the contractual obligations.

Sector specific regulations (grocery sector): Pursuant to Art. 6 of the Act relating to Fair Commercial Practice in the Grocery Sector (LOV-2020-04-17-29), the agreement must be executed in writing to be valid and enforceable. See our answer to Q23 for more information concerning this specific sector. 

Q10. Are there any (other) requirements as to the form of the distribution agreement for it to be valid and enforceable?

No.

B. Content of distribution agreements

Q.11 Other than restrictions imposed by EU competition law (including Regulation (EU) 330/2010), do specific rules and/or restrictions apply in distribution agreements with respect to

  • the territory in which or the customers to whom the goods/services will be sold;
  • an exclusivity granted to the distributor;
  • (exclusive) sourcing/purchasing obligations;
  • resale prices;
  • non-compete clauses

No specific rules apply. 

Q12. Do specific rules and/or restrictions apply in distribution agreements with respect to

  • obligations of the supplier vis-à-vis the distributor, including in relation to the remuneration of the distributor;
  • obligations of the distributor vis-à-vis the supplier or vice versa;
  • a non-solicitation clause during and/or after the term of the distribution agreement;
  • minimum sales quota imposed on the distributor;
  • specific sector rules?

Specific sector rules

If yes, what do these specific rules and/or restrictions entail?

The Act relating to Fair Commercial Practice in the Grocery Sector (entered into force 01.01.2021) contains sector specific legislation relating to trade between importers/suppliers and retailers/resellers active in the grocery sector.

Examples of rules/restrictions include (non-exhaustive):

  • A duty to disclose information during the negotiation and execution phase (see answer to Q7 a);
  • There exists a particular duty of loyalty between the parties, for the protection of investments made in good faith in relation to the other party;
  • A duty to execute the distribution agreement in writing;
  • A duty to include deadlines for de-listing and termination of the distribution agreement. Note that de-listing is only permitted where objectively justifiable.

C. Term and termination

Q13. Are there particular rules and/or restrictions in relation to the term (incl. renewal) of distribution agreements?

No. 

Q14. Are there any specific rules and/or restrictions with respect to the termination of distribution agreements (e.g. minimum notice period, statutory right to compensation (goodwill or other))?

No. For the sake of completeness, please note:

According to Norwegian case law, where the parties have not agreed on a notice period for termination and the agreement is later terminated, the other party must be given ‘reasonable notice’ before termination can take effect.

Based on Norwegian case law, Art. 28 Norwegian Agency Act may in exceptional circumstances be applicable by way of analogy, subject to a concrete assessment of whether a lack of compensation upon termination would be “highly unreasonable”. For the avoidance of doubt: the threshold for applying the Agency Act Art. 28 by way of analogy on agreements other than agency agreements, including distribution agreements, is high.

Q15. Is it possible to terminate the distribution agreement based on certain grounds for termination (breach or other) included in the distribution agreement?

Yes. 

If yes, is prior judicial intervention required in order for the termination of the agreement to take effect?

No. 

Part 4: Post-contractual phase

Q16. Is the supplier required to repurchase the stock that is still at the distributor’s disposal when the distribution agreement ends?

No. 

Q17. Are there other post-contractual obligations that generally apply to either of the parties in the context of the termination of the distribution agreement?

No. 

Part 5: Dispute resolution

Q18. Do specific rules and/or restrictions apply as regards the choice of forum and/or jurisdiction?

No. 

Q19. Can the parties opt for arbitration?

Yes. 

If yes, are there any rules and/or restrictions as regards the enforceability of arbitration clauses in distribution agreements?

Yes.

If yes, what do these specific rules and/or restrictions entail?

The Norwegian Arbitration Act (LOV-2004-05-14-25) specifies that arbitration clauses are, as a general rule, enforceable (as well as rules relating to the enforceability of an arbitration award etc.). Furthermore, the Act contains several mandatory provisions which the parties cannot depart from - the extent of which depends on the parties as well as the place of arbitration (in Norway or abroad).

Q20. What is the statute of limitations applicable to claims regarding the performance of a distribution agreement?

The Norwegian Limitation Act (LOV-1979-05-18-18) contains generally applicable regulations on the statute of limitations. The ordinary statute of limitations is 3 years following the day on which the breach of contract occurred (cf. Art. 2). The statute of limitations may, depending on the circumstances, be extended pursuant to the rules of the Limitation Act up to 10 years, following the initial 3-year period (i.e. for a maximum period of 13 years).  

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