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HR-2019-1929-A
Side 1 
The Supreme Court of Norway - Judgment - HR-2019-1929-A
Authority The Supreme Court of Norway – Judgment
Date 2019-10-18
Published HR-2019-1929-A
Keywords International private law. Choice of law. Real estate in Spain. The Lugano 
Convention. Rome I.
Summary A Norwegian private individual residing in Spain had entered into an agreement 
with a Spanish company with Norwegian owners regarding the purchase of a flat 
in Spain. When the buyer later wanted to terminate the agreement, a termination 
agreement was entered into under which the buyer was to pay damages. The 
settlement of claim was brought before Norwegian courts, which had decided with 
a legally binding effect that it had jurisdiction to hear the case, see Article 15 (1) 
(c) of the Lugano Convention. In the choice of law issue, the Supreme Court found 
that the dispute was to be resolved under Norwegian and not Spanish law. There 
was no basis for letting the purchase agreement determine the choice of law. 
Separate assessments of the two agreements were not in conflict with Article 12 in 
Regulation (EC) No 593/2008 of the European Parliament and of the Council – 
Rome I. Since the termination agreement was a consumer agreement, the 
Regulation's Article 6 (1) indicated review under Norwegian law. The 
consideration of international uniformity of the law strongly suggested compliance 
with the choice of law rule under EU law. It was also emphasised that the case was 
closely connected to Norway, because, among other things, the seller directed its 
business towards the Norwegian market. The ownership interests in the Spanish 
company were also mainly Norwegian, and most loss items related to the 
Norwegian owners' costs.
Proceedings The Supreme Court HR-2019-1929-A, (case no. 19-29021SIV-HRET), civil case, 
appeal against judgment.
Parties Propiedades Rott SL (Counsel Leif Inge Håland)
v.
Trond Lie Nilsen (Counsel Finn Eide).
Author Justices Wenche Elizabeth Arntzen, Wilhelm Matheson, Ragnhild Noer, Kine 
Steinsvik and Magnus Matningsdal
Last update 2020-01-08

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HR-2019-1929-A
Side 2Translation provided by the Supreme Court of Norway.
Anonymization may differ from the Norwegian version.
(1) Justice Arntzen: The case concerns financial settlement after the cancellation of an agreement for 
purchase of a flat in Spain.
(2) In the spring 2014, Trond Lie Nilsen entered into an agreement with Propiedades Rott SL 
(hereafter referred to as Propiedades) for purchase of a flat in a planned building project in 
Villajoyosa, Spain. Propiedades is a company registered in Spain engaging in property 
development directed to the Norwegian market, among others. Ninety percent of the shares in the 
company are owned by Valor AS, which in turn is owned by the Norwegian Terje Rott and his 
family who have residence in Norway. Nilsen is a Norwegian citizen with residence in Norway. 
He bought the flat for private use.
(3) On 7 March 2014, the parties signed a «binding purchase confirmation». The purchase 
confirmation was written in Norwegian and signed in Norway. The purchase price was EUR 660 
000 with the addition of 10 percent Spanish VAT (IVA). Upon signing, Nilsen transferred a 
«deposit» of EUR 11 000 to the seller's Spanish bank account.
(4) The agreement was revised twice in 2015, latest by a «binding purchase agreement» signed 25 
September 2015 in Spain. The seller's deadline for having the flat ready for takeover was set to 1 
June 2016. Before the takeover, a final purchase agreement would be entered into at the Notary 
Public of Villajoyosa. Under the headline «Terms of payment», Nilsen undertook to pay in the 
remaining purchase price in different rates until delivery of the flat. In line with the agreement, 
Nilsen transferred on the same day EUR 250 000 to an account in the Spanish bank Bankinter. 
The account was established in his name and would be locked «as a guarantee» until the flat was 
delivered. The interest accrued would be credited to Nilsen. In connection with the transfer of the 
guarantee amount, he also signed a notarial deed for «creation of a pledge» written in Spanish.
(5) During the autumn 2015, Nilsen's economy suffered a downfall, and he decided to withdraw from 
the agreement. On 8 December 2015, the parties entered into a new agreement on «Termination of 
purchase agreement» (hereafter the termination agreement), under which Nilsen was to cover 
Propiedade's costs and potential loss from the resale of the flat.
(6) In February 2017, Propiedades submitted a claim for damages in excess of NOK 1 500 000. In the 
loss statement, more than half of the amount was entered as costs incurred by the Norwegian 
parent company Valor AS and Terje Rott. As we have been informed, the claim related mainly to 
costs of financing of the company's building loan.
(7) The parties failed to agree on the settlement, and in March 2017, Nilsen brought an action to 
Stavanger District Court claiming to be released from the guarantee amount after deduction of 
damages as stipulated by the court. In its response, Propiedades claimed principally that the case 
be disallowed as it should have been brought before a Spanish court. Alternatively, the company 
claimed judgment in its favour.
(8) By an order issued 29 June 2017, Stavanger District Court agreed to hear the case. The District 
Court found that Nilsen had to be considered a consumer. Thus, it follows from Article 15 (1), cf. 
Article 16 (1) of the Lugano Convention that legal action may be brought in the courts for the 
place where the consumer is domiciled, i.e. Stavanger District Court.
(9) The order was not appealed, but Propiedades asserted in a pleading 12 December 2017 that the 
issue of damages should be settled under Spanish law. Stavanger District Court decided to hear the 
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Side 3choice of law dispute together with the other issues in dispute. As set out in the District Court's 
judgment 28 February 2018, the dispute was subject to Norwegian law, and Propiedades was 
instructed to release the guaranteed amount with the addition of interest after deduction of 
damages of EUR 26 050.
(10) Propiedades appealed the judgment to Gulating Court of Appeal, claiming that the case should 
have been governed by Spanish law. During the preparatory phase, the Court of Appeal 
determined the choice of law issue separately, see section 16-1 subsection 2 third sentence (b), and 
gave judgment on 2 January 2019 – incorrectly named an «order» – with the following 
conclusion:
«The dispute in case no. 18-072859ASD-GULA/AVD2 is governed by Norwegian law.
Propriedades Rott SL will pay costs in the Court of Appeal of NOK 5 000 – fivethousand 
– (inclusive of VAT) to Trond Lie Nilsen within 2 – two – weeks of the services of this 
order.»
(11) In other words, the Court of Appeal agreed with the District Court, and found that the termination 
agreement of 8 December 2015 «stood on its own». Thus, there was no basis for applying Article 
4 (1) (c) of Regulation (EC) No. 593/2008 («Rome I»), which states that a contract relating to a 
right in rem in immovable property shall be governed by the law of the country where the property 
is situated.
(12) Propiedades has appealed the Court of Appeal's ruling to the Supreme Court on the point of the 
application of the law.
(13) It is set out in section 19-1 (1) (b) of the Dispute Act that rulings under section 16-1 subsection 2 
third sentence shall be made by way of judgment. Thus, the appeal must be heard in accordance 
with the provisions on appeals against judgment, see section 19-1 subsection 4 second sentence.
(14) The appellant – Propiedades Rott SL – contends:
(15) The choice of law provisions in Rome I must be considered fixed rules under Norwegian 
international private law. The purchase agreement concerns rights in rem to real property, and is 
according to Article 4 (1) (c) governed by the law of the country where the property is situated. 
The provision on consumer jurisdiction is thus not applicable, see the exception for such 
agreements in Article 6 (4) (c). Nor does Rome I contain other exceptions implying that the 
agreement is governed by Norwegian law.
(16) There is no basis for assessing the termination agreement apart from the contractual relationship as 
such, see Article 12 stating that all effects of an agreement are regulated by the law of the same 
country.
(17) Although the applicable law is determined according to the Irma Mignon formula, the dispute 
must, after an overall assessment, be considered to be most closely connected with Spain since the 
real debtor resides there. This applies irrespective of whether the contractual relationship is 
assessed as one.
(18) Propiedades Rott SL has submitted this prayer for relief:
«1.The dispute in case 18-072859ASD-GULA/AVD2 is to be governed by Spanish law.
2.Propiedades Rott SL is to be awarded costs in the District Court, the Court of Appeal and 
in the Supreme Court.»
(19) The respondent – Trond Lie Nilsen – contends:
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Side 4(20) According to Norwegian international private law, the choice of law must be based on the Irma 
Mignon formula unless there are other more strict choice of law rules. Rome I is not part of 
Norwegian law, and these choice of law rules are merely included as factors in the overall 
assessment of the country with which the dispute is most closely connected. The case does not 
concern an agreement on rights in rem to real property, but the financial settlement stipulated in 
the termination agreement. Therefore, Article 4 (1) (c) of Rome I does not give any guidance for 
the choice of law issue and does not imply an exception from the consumer provision in Article 6. 
The dispute is most closely connected to Norway. Propiedades is Norwegian owned by 90 percent, 
and the termination agreement is drafted by a Norwegian lawyer and entered into in the 
Norwegian language in Norway.
(21) Trond Lie Nilsen has submitted this prayer for relief:
«1.The appeal is to be dismissed.
2.Trond Lie Nilsen is to be awarded full costs in the Supreme Court.»
(22) My view on the case
(23) It has been decided with a legally binding effect that the case is to be heard by Norwegian courts, 
see the consumer rule in Article 15 (1) (c), cf. Article 16 (1) of the Lugano Convention. The 
question of the choice of law – i.e. under which country's law the court is to give judgment – must 
thus be governed by Norwegian choice of law rules.
(24) The choice of law is traditionally based on the so-called Irma Mignon judgment included in Rt-
1923-II-58, where the following is stated on page 60:
«When deciding which country's rules to apply, one is ... mainly obliged to base the 
decision on general principles of law and the nature of the circumstances in question... For 
my part, however, I believe it is natural to start with the consideration that a circumstance 
should be judged on the basis of the law in the country with which it is most closely 
connected, or where it most naturally belong.»
(25) In other words, the connection issue must be considered based on the closeness to «the 
circumstance» dealt with in the case.
(26) This approximate choice of law rule has been maintained in subsequent case law, although the 
development suggests that the choice of law issue should be decided under firmer rules. In the 
Supreme Court judgment in HR-2016-1251-A paragraph 27, it is formulated as follows:
«The starting point for the choice of law is – where the issue is not regulated by any law, 
custom or other firmer rules – to find the state with which the case, after an overall 
assessment, is most strongly connected (the Irma Mignon formula). If the choice of law 
issue is not governed by Norwegian law, there may be reason also to apply EU choice of 
law rules laid down in Rome I and II. I refer to Rt-2009-1537 paragraphs 32 and 34 and 
Rt-2011-531 paragraphs 29 and 46 on the Irma Mignon formula and the application of 
Rome I and II in Norwegian law. The question is whether there is a statutory choice of 
law rule that is applicable to the facts of our case.»
(27) The facts of the case at hand concern the damages settlement under the termination agreement. 
There is no law regulating the choice of law. EU's choice of law rules for obligations arising from 
a contract as laid down in Rome I of 17 June 2008, are thus essential. Rome I is not part of 
Norwegian law, and, for that reason, it is not necessarily decisive.
(28) A key issue is whether the entire contractual relationship – that is, the purchase agreement and the 
termination agreement – are to be judged as a whole.
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Side 5(29) The overall starting point must be that the applicable law would be determined based on the facts 
of the case. This implies that the termination agreement must be assessed separately. The question 
is however whether the choice of law provisions in Rome I suggest otherwise.
(30) For my further discussion, I consider it appropriate to quote the relevant part of the termination 
agreement:
«The parties agree that the purchase agreement is terminated with effect from the date of 
signing this agreement. Trond Lie Nilsen accepts that Propiedades Rott SL is entitled to 
compensation for all costs incurred in connection with termination. This includes the 
following costs:
•Costs of marketing, travels to Spain etc.
•Costs of use of a notary in Spain.
•Costs of legal advice in Norway and Spain.
•Costs incurred by Terje Rott to be able to maintain Propiedades Rott SL's obligations 
towards financing bank in Spain, estimated to EUR 35 000.
•Potential loss in connection with resale of the flat. Trond Lie Nilsen accepts that the 
flat is put out for sale on the open market. In that respect, it must be expected that the 
flat be sold at a discount. Trond Lie Nilsen accepts that the discount given is part of 
the costs incurred by Propiedades Rott SL as a result of the agreement being 
terminated.
The above list is NOT complete with regard to the costs, and it is currently not possible to 
state an exact amount.
It is estimated that Trond Lie Nilsen may receive EUR 100 000 in payment once 
registration in Spain is completed – in the autumn of 2016.»
(31) The agreement is mutually burdening, as Propiedades accepts that the purchase agreement is 
cancelled in return for Nilsen's payment of damages. The agreement on the purchase of real 
property has thus lapsed and been replaced by a new agreement regulating the financial settlement. 
The agreement also contains provisions on the settlement procedure, which entails that that the 
damages can be set off against «the interim payment» on Nilsen's locked account, and that the 
remainder is then released.
(32) Propiedades asserts that a separate assessment of the termination agreement is incompatible with 
Article 12 of Rome I on the reach of the choice of law. I disagree.
(33) Article 12 reads:
«Scope of the law applicable
1.The law applicable to a contract by virtue of this Regulation shall govern in particular:
a)interpretation
b)performance
c)within the limits of the powers conferred on the court by its procedural law, the 
consequences of a total or partial breach of obligations, including the assessment 
of damages in so far as it is governed by rules of law;
d)the various ways of extinguishing obligations, and prescription and limitation of 
actions;
e)the consequences of nullity of the contract.
2.In relation to the manner of performance and the steps to be taken in the event of 
defective performance, regard shall be had to the law of the country in which 
performance takes place.»
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Side 6(34) Item 1 of the provision implies in short that an agreement must be governed by the same law from 
«the cradle to the grave». Item 2 concerns the manner of performance, where regard must be had 
to the law of the country in which performance takes place.
(35) It is clear that the termination agreement is a separate agreement within the meaning of this 
provision. The fact that the agreement is brought about by a former purchase agreement, does not 
change this. The dispute concerns the agreed termination settlement, which is to be assessed as 
one under Article 12 (1). The dispute does not concern the manner of performance under item (2), 
thus it is of lesser importance that the stipulated damages are to be set off against an amount on a 
Spanish bank account.
(36) Propiedades further contends that the damages clause in the termination agreement could have 
been included in the purchase agreement, and that the agreements, for that reason as well, must be 
seen as one. I do not agree to that either.
(37) Item 21 of the Preamble of Rome I, contains the following guideline on the country with which an 
agreement is to be considered «most closely connected»:
«In the absence of choice, where the applicable law cannot be determined either on the 
basis of the fact that the contract can be categorised as one of the specified types or as 
being the law of the country of habitual residence of the party required to effect the 
characteristic performance of the contract, the contract should be governed by the law of 
the country with which it is most closely connected. In order to determine that country, 
account should be taken, inter alia, of whether the contract in question has a very close 
relationship with another contract or contracts.»
(38) It is presumed in the last sentence that one may enter into separate closely related agreements 
without these being judged as a whole.
(39) Magnus & Mankowski, European Commentaries on Private International Law, Rome I 
Regulation, 2017, page 279, states the following on such agreements:
«It is not infrequent that two or more separate contracts are closely connected – for 
instance a main contract and an accompanying guaranty or insurance, a distribution 
contract and the single deliveries under it etc. In principle, the law for each of these 
contracts has to be determined separately. Yet, the main contract can 'infect' the connected 
other contract so that the law of the main contract applies to the other contract as well.»
(40) In other words, the starting point is that even closely related agreements must be assessed 
separately, unless there is a basis for letting the main agreement override the associated 
agreement.
(41) In my view, there is no basis for determining the applicable law in the issue of damages based on 
the previous purchase agreement. The purchase agreement and the termination agreement are 
historically connected, but, legally, the termination agreement «stands on its own», as formulated 
by the Court of Appeal.
(42) My conclusion thus far is that Rome I does not contain rules suggesting that the applicable law 
must be determined based on a joint assessment of the purchase agreement and the termination 
agreement. Hence, it is not necessary for me to address the choice of law with regard to the 
purchase agreement itself.
(43) Essential for the choice of law, however, is Article 6 of Rome I on consumer agreements. The 
main rule under item (1) of the provision is that the law of the country where the consumer 
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Side 7resides. The provision reads:
«1.Without prejudice to Articles 5 and 7, a contract concluded by a natural person for a 
purpose which can be regarded as being outside his trade or profession (the consumer) 
with another person acting in the exercise of his trade or profession (the professional) 
shall be governed by the law of the country where the consumer has his habitual 
residence, provided that the professional:
(a)pursues his commercial or professional activities in the country where the consumer 
has his habitual residence, or
(b)by any means, directs such activities to that country or to several countries including 
that country,
and the contract falls within the scope of such activities.»
(44) As it appears from the provision, the agreement must have a purpose outside the person's trade or 
profession in order to be comprised by the consumer rule. As opposed to Article 5 in the previous 
consumer rule in the Rome Convention of 1980, the predecessor of Rome I, it is in other words 
not a condition that the agreement governs purchase of goods or services. On this point, the choice 
of law provision in Article 6 has the same application as the jurisdiction provision in Article 15 (1) 
(c) of the Lugano Convention and Article 15 of the Council Regulation (EU) No. 44/2001 
(Brussels I), later replaced by Article 17 of Council Regulation (EU) 1215/2012.
(45) The termination agreement is entered into for purposes outside Nilsen's trade. It is thus clear that it 
meets the criteria for being regarded as a consumer agreement, see also Article 6 (1) (b) about the 
professional activities being directed to the country where the consumer resides. I cannot see that 
any of the exceptions in item (4) of the provision are applicable. Nilsen resides in Norway, and 
Rome I thus instructs that the dispute be governed by Norwegian law.
(46) The consideration of international uniformity of the law strongly suggests that the choice of law 
rule under EU law should be applied, in particular in a case like the one at hand, where the 
application of the consumer rule in Article 6 is rather clear. The fact that the choice of law follows 
the jurisdiction also entails advantages with regard to litigation costs. In consumer relationships, 
the same considerations come to bear in both contexts. The jurisdiction provision makes court 
proceedings more accessible, while the choice of law provision, both at a contractual and a court 
level, makes background law more easily accessible.
(47) Moreover, the dispute is closely connected to Norway. The company directs its activities to the 
Norwegian market, among other things through a Norwegian website. The ownership interests in 
Propiedades are mostly Norwegian, and Nilsen has his residence in Norway. The termination 
agreement was drafted by the seller's Norwegian lawyer, and more than half of the disputed claim 
concerns costs incurred by the Norwegian owners.
(48) My conclusion is consequently that the case is governed by Norwegian law. The appeal should 
thus be dismissed.
(49) The respondent has claimed compensation for costs in the Supreme Court. I have no objections to 
the size of the claim.
[Paragraphs 50, 51 and 52 have not been translated as they concern procedural matters of lesser 
interest for foreign readers.]
(53) I vote for this
JUDGMENT:
1.The appeal is dimissed.
2.The decision regarding costs is postponed to the ruling that finalises the case.
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Side 8(54) Justice Matheson: I agree with Justice Arntzen in all material respects and with her conclusion.
(55) Justice Noer: Likewise.
(56) Justice Steinsvik: Likewise.
(57) Justice Matningsdal: Likewise.
(58) Following the voting, the Supreme Court gave this
JUDGMENT:
1.The appeal is dismissed.
2.The decision regarding costs is postponed to the ruling that finalises the case.