This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Denmark.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration in your country? Are there any mandatory laws?
a. Act No. 553 of 24 June 2005 on Arbitration (the “Danish Arbitration Act 2005”) provides the legal framework for arbitration in Denmark. The Act applies equally to national and international arbitration. As only a few of the rules are mandatory, such as section 6, the parties retain autonomy over the dispute resolution process. The Arbitration Act is to a large extent based on the UNCITRAL Model Law.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
a. Denmark is a signatory to the New York Convention and ratified the Convention in 1972. There are no reservations to the general obligations of the Convention, and its provisions are incorporated in the Danish Arbitration Act 2005.
b. On 10 February 1976, Denmark declared that the Convention shall apply also to the Faeroe Islands and Greenland.
What other arbitration-related treaties and conventions is your country a party to?
a. Denmark is currently party to 51 bilateral investment treaties (BITs) and 68 treaties with investment provisions (TIPs). Denmark has signed the MIGA Convention, the ICSID Convention, the Energy Charter Treaty, and the International Energy Charter.
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
a. The Arbitration Act 2005 is based upon and closely follows the UNCITRAL Model Law. However, some small differences do exist. For example, the Danish Arbitration Act 2005 allows for a less formal arbitration agreement, such as oral agreements. In 2006 the UNCITRAL Model got new provisions regarding interim measures and preliminary orders which are not incorporated in The Danish Arbitration Act 2005.
Are there any impending plans to reform the arbitration laws in your country?
a. There is currently no impending plan to reform the Danish Arbitration Act, but The Danish Institute of Arbitration formed a committee in 2012 and published the committee’s recommendations in 2017. They recommended an implementation of Chapter IV A of the UNCITRAL Model Law on Arbitration on interim measures and preliminary orders and an exclusion and limitation of the access to appeal.
What arbitral institutions (if any) exist in your country? Have there been any amendments to their rules or are there any being considered?
a. The Danish Institute of Arbitration (DIA) has existed since 1894. DIA revised its rules effective 1 May 2013. The revision brought the rules into line with those of leading international arbitral institutions.
What are the validity requirements for an arbitration agreement under the laws of your country?
a. The validity requirements are limited. Basically, arbitration agreements can be entered within all legal matters subject to the freedom of contract. However, with regards to consumers, the arbitration agreement is only valid, if entered after the dispute has arisen.
Are arbitration clauses considered separable from the main contract?
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
a. The Rules of Arbitration Procedure (DIA-Rules) adopted by the DIA allows for multi-contract arbitration and for third-parties to join cases already pending (provided that an arbitration agreement covering the third party exists).
How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
a. According to the Danish Arbitration Act 2005, the arbitral tribunal shall decide the dispute in accordance with the rules of law chosen by the parties as applicable to the merits of the dispute.
The DIA Rules states if the parties have failed to choose the law, the tribunal shall apply the rules that it considers appropriate after having invited the parties file their observations on this matter.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
a. According to the Danish Arbitration Act 2005 all matters that falls within “freedom of contract” are arbitrable. Certain exceptions are made however, e.g. disputes arising from residential rental contracts must be settled by the courts. Furthermore, disputes regarding exercise of public authority is not regarded arbitrable. Finally, as regards consumer contracts, the arbitration agreement is only valid, if entered after the dispute has arisen.
In your country, are there any restrictions in the appointment of arbitrators?
a. According to the DIA-rules the president of the Arbitral Tribunal or the sole arbitrator shall hold a law degree.
Are there any default requirements as to the selection of a tribunal?
a. Unless agreed otherwise by the parties, the tribunal will consist of three arbitrators. The parties can also agree upon how the arbitrators are appointed. If no such agreement has been made, each party must appoint one arbitrator. These arbitrators shall then appoint a third arbitrator, who shall be president of the Arbitrator Tribunal.
Can the local courts intervene in the selection of arbitrators? If so, how?
a. If a party object against the appointment of an arbitrator, and the objection is overruled, the party objecting to the appointment may ask the local courts to decide on the matter. The request to the local courts must me made no later than 30 days after the party was notified of the decision.
The arbitration can continue while the local court decides on the request.
Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
a. A party can challenge an arbitrator only if it finds that there exist circumstances that may give rise to justifiable doubts as to the impartiality or independence of the arbitrator, or if the party finds that the arbitrator does not posses the qualifications agreed on by the parties.
A challenge must be submitted within 15 calendar days of the party having become aware of the appointment of the arbitrator and the circumstances on which the challenge is based.
No statistics have been published regarding the number of challenges.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
a. According to the Danish Arbitration Act 2005 a new arbitrator must be appointed in accordance with the rules governing the appointment of the arbitrator, who has vacated his/her office.
The DIA-rules states that, if an arbitrator is replaced, the Arbitral Tribunal decides whether procedural steps already taken in the case are to be repeated. If the arbitrator is replaced after the oral hearings has been conducted, the Chairman’s Committee of the DIA decides if the case is to be decided by the remaining arbitrators.
Are arbitrators immune from liability?
a. DIA-Rules states that the members of the Arbitral Tribunal shall not be liable for any act or omission in connection with the commencement of an arbitration, the processing of an arbitration or an award made by the Arbitral Tribunal except when such limitation of liability is prohibited by applicable law.
Is the principle of competence-competence recognised in your country?
a. According to the Danish Arbitration Act 2005 the Arbitral Tribunal decides on its own competence.
What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
a. According to the Danish Arbitration Act 2005, the local courts may only reject litigation in breach of an arbitration agreement, if the defendant requests the court to do so.
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
a. The parties are free to agree upon the procedural rules of the arbitration. If no such agreement has been made, the Arbitral Tribunal decides on the procedural rules to apply in the matter at issue.
Neither the Danish Arbitration Act 2005 or the DIA-Rules contains general rules on limitation periods or time bars. Such rules are subject to agreement by the parties or – in the absence of such an agreement – the decision of the Arbitral Tribunal.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate?
a. If the respondent does not participate, the Arbitral Tribunal can continue the proceedings and decide the case on its merits. Offering a “default award” is not a possibility.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
a. If a state or state entity has entered an arbitration agreement, the state or state entity is considered to have revoked any possible claims of immunity.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award? Can local courts order third parties to participate in arbitration proceedings in your country?
a. In general, the arbitration agreement and the award are only binding between the parties. However, rules of succession or power-of-attorney can make the agreement or award binding for third parties as well.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
a. According to section 17 of the Danish Arbitration Act 2005, the arbitral tribunal can impose such interim measures on a party, as the arbitral tribunal finds necessary given the nature of the dispute. The nature of the interim measures is not mentioned.
Moreover, the courts may impose certain interim measures as well, such as the interim seizure of assets and order of prohibition, see section 9 of the Danish Arbitration Act 2005. Such interim measures are available even during arbitral proceedings.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
a. Prior to the confirmation of the Arbitrators an interim arbitrator may be appointed to obtain evidence or decide on interim measures when this cannot await the confirmation of the arbitrators.
The Arbitral Tribunal may request the local courts to assist in the obtaining of evidence when necessary.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
a. Arbitrators must be impartial and independent, and the arbitrator must inform the parties of such circumstances that may raise doubt of his or her impartiality or independence.
Counsels and arbitrators who are members of the Danish Bar and Law Society must act in accordance with “Code of Conduct of the Danish Bar and Law Society”.
How are the costs of arbitration proceedings estimated and allocated?
a. The arbitral tribunal decides the costs of the arbitration and how they are allocated between the parties. The parties shall be jointly and severally liable for the total costs of the arbitration regardless of how the costs have been allocated in the award and whether or not the amount exceeds the financial deposit lodged.
The award shall state whether or not a party shall compensate the other party for reasonable costs, including legal costs, incurred by that other party in relation to the arbitration.
In its decision on the costs, the Arbitral Tribunal shall take into account the outcome of the case and other relevant circumstances, including any agreement between the parties and the extent to which each party has contributed to the arbitration in an efficient and cost-conscious manner.
Can pre- and post-award interest be included on the principal claim and costs incurred?
a. Interests on the claim can be awarded from the day that the arbitral tribunal received the statement of claim.
With regards to interest on costs Danish arbitral tribunals often refer to section 8a of the Danish Interest act, according to which interests on costs are incurred 14 days after the decision on costs has been made.
What legal requirements are there in your country for the recognition of an award?
a. Awards are recognized in Denmark regardless of where the award has been given. Recognition and enforcement can be denied on the same grounds as mentioned in art. V of the New York convention.
What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
a. Recognition is not required in Denmark. Hence the enforcement court may enforce an arbitration award directly. The timeframe for the enforcement differs between a few days in urgent matters to several months.
Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
a. To enforce an arbitration award a certified transcript of the award and the arbitration agreement must be provided to the enforcement court. If necessary, a certified translation of the documents to Danish must be provided as well.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
a. The remedies available to the arbitral tribunal in general are those that falls within the scope of freedom of contract. In general, those remedies are also generally enforceable by the local courts.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
a. The proceedings can be challenged in the local courts on grounds like art. V of the New York Convention.
The challenge must be filed no later than three months after the award has been delivered.
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
a. This issue is not governed by the Arbitration act, but it is generally assumed that the right to challenge the award cannot be waived.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
a. No Danish case law seems to exist regarding this issue. In legal theory it appears that the concept of relative immunity is applicable at the enforcement stage.
To what extent might a third party challenge the recognition of an award?
a. A third party, who is not bound by the award, cannot challenge it.
Have there been any significant developments with regard to third party funding in your jurisdiction recently?
Is emergency arbitrator relief available in your country? Is this frequently used?
a. The DIA-rules makes an emergency arbitrator available. The emergency arbitrator can decide on interim measures. The DIA has not published any numbers of how frequent requests for an emergency arbitrator has been made.
Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
a. The DIA has adopted rules for simplified procedures by a sole arbitrator. The case is decided on solely on the written submissions and evidence, and a draft award must be rendered no less than 30 days after the case was referred to the arbitrator.
The simplified rules were used in 2016 for 12 new cases. In 2017 the number had decreased to 3 (3 % of the total number of new cases at the DIA).
Have there been any mass (arbitration) claims in your jurisdiction?
a. Not to our knowledge.
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
a. No. Arbitrators are chosen on their qualifications and professional background.
Have there been any developments regarding mediation in your jurisdiction?
a. In 2015 the DIA adopted a new set of rules on mediation. Sometimes the DIA suggests that the parties seek the dispute resolved through mediation.
Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
a. No such decisions have been published in the official law journals, and we are not aware of any other decisions on the subject.
Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?
a. In general corruption is not considered an issue in civil or commercial disputes. Thus, no specific standard for proving corruption has been developed. In general, Danish courts are very reluctant to decide on the subject matter in civil or commercial cases where corruption is involved, and such cases will often be rejected from the ordinary courts.