Alex Borch as legal counsel in pivotal banking case.
The case in brief
Two companies domiciled in the Marshall Islands, have sued a bank seeking damages after the bank refused to offer VPS services. The basis for the rejection was that the bank was unable to carry out the necessary control measures under the Money Laundering Act within the available timeframe. The bank was acquitted in the district court as the refusal was deemed to be factually justified. The verdict was then appealed to the Borgarting Court of Appeals. In this case it was important to ensure that the bank was able to recover legal costs that the bank could be awarded from the counterparties in the Court of Appeal.
Our assistance
Alex Borch, along with one of the bank's in-house counsel, assisted a bank in legal proceedings involving two companies domiciled in the Marshall Islands.
As a general rule, Section 20-11 of the Disputes Act allows plaintiffs who are not domiciled in an EU/EEA country to be required to provide security for legal costs that they may be ordered to reimburse the defendant. The background for the provision is that it may be difficult to recover awarded legal costs when the party ordered to pay legal costs is domiciled outside the EU/EEA. However, a claim for security must be made at the earliest opportunity. In appeals cases, this will be when an appeal response is filed.
The Borgarting Court of Appeals ruled 4 April 2022 that the two plaintiffs (now appellants) had to provide security within four weeks for possible legal costs liability of NOK 1,200,000. This increased the chances that our client would be reimbursed for any awarded legal costs significantly. In the Court of Appeals' judgement 27 January 2023 the bank was again acquitted. But as legal costs were not awarded, the provided security did not become important in this case.
Originally published by 19 April, 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.