The capitalisation rate in expropriation to remain at 4 percent (Steinkjer municipality)

A farmer in Trøndelag was required to surrender around 3 percent of his cultivated land for road construction. The issue before the Supreme Court was which interest to apply when future loss of income is discounted to a lump sum – the capitalisation rate. The District Court and the Court of Appeal had applied a rate of 4 percent, while the landowner claimed that it ought to be 2.5 percent. The difference is substantial: a capitalisation rate of 2.5 percent yields compensation 60 percent higher than a rate of 4 percent.

The case was heard by the Supreme Court sitting as a grand chamber with 11 justices, together with a case from Telemark concerning the same issue (HR‑2025‑2364‑S).

The Supreme Court held that the capitalisation rate in expropriation proceedings should continue to be standardised at 4 percent, as it has been since the rate was fixed by the Supreme Court in 2014 – also as a grand chamber. The Court emphasised that it requires compelling grounds to depart from established case law. Neither the 2022 Regulation, which prescribes a capitalisation rate of 2.5 percent in personal injury cases, nor any other circumstances provide sufficient basis for altering the standard rate in expropriation. Expected future income growth beyond inflation – real income growth – is treated as an element in the calculation of the income loss, and therefore does not affect the standard rate.

Since the Court of Appeal had applied the correct rate and provided adequate reasoning for its conclusion, the farmer’s appeal was dismissed.

A detailed reasoning for the Supreme Court’s conclusion is set out in the Telemark judgment, which was handed down first.

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

Areas of law: Expropriation compensation law. Capitalisation rate.

Key paragraphs: 42–45.  

Justices: Øie, Webster, Falkanger, Bull, Bergsjø, Bergh, Sæther, Stenvik, Sivertsen, Poulsen, Steen