Skagerak Salmon must pay compensation to NRS after breach of contract

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The amount of compensation is increased after an appeal in the Frostating Court of Appeal.

Norway Royal Salmon (NRS) and Danish importer Skagerak Salmon, had an agreement for the delivery of 837 tonnes of salmon spread over 45 weeks in 2020. The agreed price was 6.45 euros per kilo, corresponding to a total of EUR 5.4 million, writes Finansavisen.

But when the pandemic broke out in March, Skagerak Salmon canceled the delivery for nine weeks, citing the market situation. Skagerak Salmon referred to the contract’s points on force majeure and regulatory matters, and explained that the business had been affected by the closure in several EU countries.

Force majeure is a common clause in contracts that basically releases one or both parties from liability for default when an extraordinary event or circumstances beyond the parties’ control – such as floods, war, rebellion and natural disasters – prevent one or both parties from carrying out obligations prescribed in the contract.

However, NRS did not accept force majeure in this case, and believed Skagerak Salmon broke the contract and demanded full compensation.

The loss items consisted of cover sales at a lower price than what followed from the contract and currency losses.

In a lawsuit in Trøndelag District Court last year, NRS was awarded NOK 2.9 million (EUR 0.29 million) in compensation.

The case was appealed, and the ruling in the Frostating Court of Appeal increases the amount of compensation to NOK 3.1 million (EUR 0.31 million) plus default interest. In addition, Skagerak Salmon has to pay approximately one million kroner (EUR 100,000) in legal costs to the other party.

The court notes that the threshold for invoking force majeure must be high, and says that Skagerak Salmon could have frozen the fish to sell it at a later date, possibly resell to the owner Sekkingstad or other customers in the spot market.

The court further emphasizes that the threshold for invoking force majeure must be high.