The recent ruling from Hålogaland Court of Appeal on 5 April 2024 involved a dispute concerning communication by email between the parties under a Norwegian standard building and civil engineering contract (NS 8405). This standard contract includes provisions addressing several duties with respect to timely formal communication in order to safeguard contractual rights.

The contract for the construction of two hydro-electric power stations and cables connecting the power station to the power grid included contract provisions requiring that all formal correspondence being made in writing, unless electronically communication is agreed upon, and submitted to a digital platform (called Interaxo) established by the project for the exchange of information, documentation and all formal correspondence.

In connection with the final settlement, the client submitted its reservations to the contractor’s final invoice by email. The contractor unsuccessfully argued that the correspondence did not fulfil the requirement of communication “in writing” and further did not fulfil the requirement to submit “formal communication” into Interaxo

Interpretation of commercial contracts under Norwegian law is characterised by the following main approach:

1. The contract shall be interpreted objectively, by an objective understanding of the contract provisions.
2. Strong reasons must be demonstrated to reach an interpretation in conflict with an objective understand of the contract.
3. The burden of proof is on the party arguing that factors not covered by an objective understanding of the contract shall lead to a result not in line with the contract wording.

The Court of Appeal placed great emphasis on the parties’ conduct prior to the dispute arising and, based on a concrete assessment of the evidence, found that the parties had agreed to electronic communication via email. With regard to the requirement to include formal correspondence in Interaxo, the court also placed great emphasis on the parties’ actual conduct before the dispute arose, where extensive and important project correspondence, including such as establishment of side-agreements regarding variations and accelerations measures, took place outside of Interaxo.

Key takeaways

1. Experience shows us that important communication in large construction projects often takes place alongside an agreed-upon communication method/platform. This can put the proper safeguarding of contractual rights at risk.
2. The Court of Appeal ruling cannot be construed to mean that the use of email, in general, is accepted as a written form of communication under Norwegian law of contracts. The Court of Appeal made a concrete assessment of the factual circumstances and placed great emphasis on the parties’ conduct subsequent to contract signing, but prior to the dispute, to rule in favour of the party using email outside the established communication platform.
3.  As a general approach, it is crucial to establish good agreement clauses for project communication and to adhere to them, as written.

The ruling from Hålogaland Court of Appeal on 5 April 2024 is available here.

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