Sentence passed in the case of the state of Norway versus Samherji hf.
Samherji has decided to appeal against this sentence. The case may be expected to appear before the court of Gulaþing in Bergen during the early part of next year. In Norway there are three judiciary levels.
Samherji hf. feels that the following points should be made clear in this context:
In 1995, the management of Samherji began preparing for the design and building of a multi-purpose fishing vessel. The outcome of these preparations was a decision to enter into a contract with a Norwegian shipyard Th. Hellesöy Skipsbyggeri, through mediation by the sales department of the association of Norwegian shipyards.
The Norwegian shipbuilding industry had been subsidised by the government for many years and it was known that changes were to be expected in the form of these subsidies at the turn of the year 1997/98. Thus it was clear that shipyards in Norway would not have the same opportunities for official support in 1998 as previously had been the case.
Consequently Norwegian shipyards and their association made a concentrated effort during the latter half of 1997 to negotiate work contracts all over the world and to sign such contracts before the end of the year. This is clearly indicated by the fact that official Norwegian documents show that contracts for new projects in the shipbuilding industry were to the amount of ISK 145 billion in 1997, whereas the corresponding amount for 1998 was only ISK 45 billion, after the subsidies had been modified.
The precise reason why Samherji had the multi-purpose fishing vessel Vilhelm Þorsteinsson EA- 11 built in Norway, and not elsewhere, was that because of state subsidies to the shipbuilding industry, the above-mentioned shipyard was able to offer a competitive price compared to tenders made by various rival companies in other countries. Without these subsidies, there would never have been a question of building the ship in Norway.
Samherji’s agreements with the Norwegian companies were made in the trusting belief that the negotiating partners could be relied upon to conduct their affairs appropriately with regard to the Norwegian authorities – Samherji was not, in any case, involved in those transactions. It came as a complete surprise, therefore, to the management of Samherji that the company should be sued in connection with a process where it was in no way involved.
The Norwegian authorities began the court proceedings and demanded compensation to the amount of just over NOK 14 million on the premise that the contract for the building of the ship, did not become valid until three months after it was completed, due to a reservation clause in an appendix.
In connection with this court decision, Samherji wishes to make the following clarifying statements:
1. Samherji hf. was not in any way involved in matters relating to the state subsidy for the building of the vessel. Those communications were entirely conducted by the shipyard and the association of Norwegian shipyards on the one hand and the state organisation Exportfinans, which was in charge of the matter on behalf of the Norwegian authorities, on the other.
2. Samherji’s only contact with the Norwegian authorities in connection with the building of the vessel was a signed declaration to the effect that the ship would not be used to fish from stocks whose utilisation had not been agreed upon and that a contract for the building of the ship had become valid upon signature.
3. Samherji confirmed the contract by paying the shipyard over NOK 8 million in December 1997.
4. The Norwegian shipbuilding industry was keenly seeking contracts of this kind all over the world and in Norwegian law official support for the industry was stipulated in order to equalise its competitive position with regard to foreign rivals.
5. The Norwegian state subsidy was not received by Samherji in any way whatsoever. This is confirmed in the decision issued by the district court today. Samherji, however, negotiated on the basis of the price offered by the shipyard which made the tender on the assumption it would receive a government subsidy for the project. The subsidy, therefore involved no financial gain for Samherji. The subsidy was received by Norwegian industry.
6. The legal counsel of the Norwegian authorities made a claim on Samherji hf. since the Norwegian shipyard had gone into liquidation. In court, he based his case on the fact that Samherji and the Norwegian shipyard had added an appendix to the original contract as it was being formulated. As a consequence, the original contract had in fact not been binding with regard to the subsidy regulations valid at the time, although it had achieved full validity at a later date. This view is to some extent echoed in the arguments (premises NB) set forth by the court today. Samherji’s counsel and the representatives of the shipyard dismissed this premise before the court and Samherji wishes to emphasise its view that the original contract was fully valid and binding and that the company itself had endorsed this by a confirmation payment of more than NOK 8 million at the end of the year 1997 and by building the vessel in Norway. There had been, however, a well-known reservation clause in the appendix to the effect that technical specifications had not been completed: the original design had in fact turned out to be unsatisfactory with regard to stability and the ship had had to be widened to solve the problem.
7. After the shipyard went into liquidation, the possibility arose that Samherji would have the building of the vessel completed in Poland, where the hull was built in accordance with the Th. Hellesöy contract. The association of Norwegian shipyards, however, applied strong pressure on Samherji to transfer the contract to another shipyard in Norway and negotiated with the Norwegian authorities that the shipyard completing the work should take over the subsidy. Loans were also offered on advantageous terms, in part guaranteed by the Norwegian state, in order to facilitate the completion of the project in Norway. The vessel was completed in Norway at the Kleven shipyard which received subsidies of just under NOK 15 million in connection with the operation.
News release from Samherji hf., Tuesday June 25th 2002.
