Judgment against the principal debtor also had effect for the guarantor

The case concerns the final settlement in a construction contract. A subsidiary of NorgesGruppen ASA entered into a contract with AF Gruppen Norge AS for the construction of a coffee processing facility in Vestby. The contract was based on NS 8407. NorgesGruppen provided a surety bond for the subsidiary’s obligations. A dispute arose regarding the final settlement, and AF brought an action against both the developer company and NorgesGruppen to recover its claim.

The District Court ruled in favour of the developer company because AF had not complied with the time limit for bringing an action under NS 8407. That part of the District Court’s judgment became final, while the part concerning the claim against NorgesGruppen was appealed to the Court of Appeal.

The Court of Appeal held that the decision on AF’s claim against the developer company – the principal debtor – was not binding in the case against NorgesGruppen – the guarantor. The Court of Appeal therefore conducted an independent assessment of whether the time limit for bringing an action had been met, and, contrary to the District Court, concluded that the deadline had not been exceeded.

The Supreme Court found that the Court of Appeal had misinterpreted the rule in section 19-15 subsection 1 second sentence of the Dispute Act regarding derivative subjective legal enforceability – res judicata. The Court of Appeal’s judgment was therefore set aside.

Under section 19-15 subsection 1 second sentence of the Dispute Act, a ruling is binding – has res judicata effect – for parties other than those directly involved if, due to their relationship with a party, they would be bound by a corresponding agreement concerning the same legal relationship. When the principal claim is dismissed or reduced for a reason may be invoked also by the guarantor, the creditor would be bound by a corresponding agreement with the principal debtor. Limitation is an example of such a reason. Therefore, derivative subjective res judicata applies in this case, and the Court of Appeal should have accepted the District Court’s conclusion that the time limit for bringing an action had been exceeded without re-examination.

Under section 25 (2) of the Limitation Act, the creditor may in certain cases still retain the claim against the guarantor even if the principal claim is time-barred. However, this is a substantive issue that must be decided in the case against the guarantor.

The judgment is significant for the interpretation of the rules on derivative subjective res judicata in surety relationships.

Read the judgment from the Supreme Court (Norwegian only) (PDF)

Areas of law: Surety law and civil procedure, section 19-15 of the Dispute Act

Key paragraphs: 62–66, 70.

Justices: Østensen Berglund, Thyness, Hellerslia, Lund, Poulsen