Denmark: Litigation

The most common way to solve commercial disputes in Denmark is through the court system. However, this is not the general tendency in all legal fields in Denmark. Particularly within the field of construction arbitration is the primary dispute resolution mechanism. The majority of Danish construction contracts incorporate the General Conditions for the Provision of Work and Supplies within Building and Engineering (In Danish: Almindelige Betingelser 92 (AB 92)) which provides for arbitration.

AB 92 has been revised in June 2018 and is now referred to as AB 18. Arbitration has been maintained as the primary dispute resolution method in AB 18 but it also introduces new dispute resolution mechanisms such as mediation and conciliation as well as DAB/DRB.

The primary act governing litigation, including commercial litigation, in Denmark is the Danish Administration of Justice Act. The act which is very extensive thoroughly set out the steps throughout the litigation process and determines when and how the parties are to exchange various pleadings and the Act determines the legal effect if the parties do not adequately comply with the provisions. The act applies in both commercial and civil disputes as well as criminal cases.

In case the parties have chosen arbitration in Denmark as the dispute resolution mechanism the Danish Arbitration Act applies and determines the arbitration process. The Act was adopted in 2005 and is based on UNCITRAL Model Law on International Commercial Arbitration.

In Denmark there are three level of courts. The Supreme Court (In Danish: Højesteret) is the uppermost court in Denmark and it deals almost exclusively with cases where important legal principles are considered. Further there are two High Courts (In Danish: landsret) functioning as appeal courts. As first instance there are 24 District Courts (In Danish: byret) spread out over Denmark. Further there is a Maritime and Commercial Court (In Danish: Sø- og Handelsretten) only dealing with certain disputes, for instance maritime disputes, EU trade mark cases and design cases. Furthermore, the Maritime and Commercial Court often hear cases where detailed knowledge on international commercial relations is of major importance.

All 24 District Courts in Denmark deal with commercial claims.

When a district court has handed down its judgment either party can appeal the judgment to the High Courts. As a general rule, a judgment of a High Court cannot be appealed to the Supreme Court. Generally speaking a case will only be heard by two courts, District and High Court. However, if the case is a matter of principle the Appeals Permission Board (In Danish: Procesbevillingsnævnet) may grant a party leave to appeal the judgment of the High Court to the Supreme Court

Yet, some cases are tried before the Maritime and Commercial Court as first instance. A case can be brought directly before the Maritime and Commercial Court or before a District Court which ex officio determines if it has jurisdiction to deal with the matter. If the District Court determines that it does not have jurisdiction but the case has international jurisdiction in Denmark, i.e the Danish courts have jurisdiction, the case will be passed on to the Maritime and Commercial Court. The Maritime and Commercial Court is the only specialised Danish court with regard to commercial disputes. A judgment handed down by the Maritime and Commercial Court can be appealed to a High Court or the Supreme Court. However, an appeal to the Supreme Court is only possible if the case is a matter of principle. The Supreme Court ex officio decides whether the conditions are fulfilled or not. If the conditions are not fulfilled the Supreme Court will dismiss the case and the appeal will then be heard in the High Court. The decision of the High Court may subsequently be appealed to the Supreme Court, again provided that the Supreme Court accepts this.

There is no general rule for the duration of commercial litigation. Based on an average observation it takes one to two years from commencing proceedings to get to trial. It depends on the complexity of the case.

According to Section 65 of the Danish Constitution, publicity and orality in the administration of justice must be carried out to the greatest possible extent. Nevertheless, in civil cases preparatory hearings are not held in public unless evidence is being produced for the use of the final hearing. Preparatory hearings are often held as telephone conferences. The final hearing is held in public leading to the possibility for anyone to appear and observe the hearings. Furthermore viewers are allowed to report orally or in writing from the final hearings.

As the primary rule according to Section 41 of the Danish Administration of Justice Act everyone has also the right to access documents from court proceedings, hereunder judgments and court orders. However, according to Section 41 b of the Danish Administration of Justice Act there are various exceptions to the primary rule. For instance if the judgment or court order contains information about a person’s private life or about business secrets the right to access documents will be restricted. However, it is a condition that publication of the judgment or the court order will severely damage the business for the right to be restricted. Furthermore the court has also to consider if the principle of an expanded right to access documents (In Danish: meroffentlighed) applies. This principle requires that even though the conditions for access are not necessarily fulfilled, the court is still obliged to consider whether a right to access documents can be granted. The expanded access even applies if a right to access documents is already provided, but perhaps with some restrictions. Here the court must consider if an even greater right to access can be granted. It is important to add that the principle of expanded right to access documents only apples if it will not be contrary to other legislation, especially GDPR.

In addition, it must be mentioned that most cases in Denmark are published in summary in various law reports, but often without revealing the identity of the parties. The most important law report is the Danish Weekly Law Reports (In Danish: Ugeskrift for Retsvæsen). If a case is not published herein, access must be sought through the court directly and an administrative fee is required.

It has for many years been debated whether there should be a database or report where all Danish judgments are made public to which everyone should be granted access free of charge. This debate has recently resurfaced, but funding is difficult.

According to the Danish Limitation Act there are primarily two limitation periods, including two different time limits to statute-barre a claim.

The main rule is that a claim is statute-barred after 3 years. The limitation period is calculated from the earliest time that the creditor could demand for the claim to be fulfillled. The 3 year limit can be put on hold if the creditor did not have knowledge of the claim or the debtor ( may be relevant in tort cases ).

The Limitation Act also contains a provision that states that in any case a claim is statute-barred 10 years after the time that the creditor could demand to have the claim fulfilled even if the creditor was not aware of the claim or knew the identity of the debtor.

The limitation period can be suspended in various ways. One way is if the debtor acknowledges the debt to the creditor. A more common way to suspend the limitation period is to bring a legal action against the debtor. If the limitation period is suspended a new limitation period then commences.

As a main rule there are no pre-action conduct requirements under Danish law.
However, according to the Danish Debt Collection Act it is a requirement prior to a creditor taking legal actions against a debtor that the debtor has received a letter of demand (In Danish:inkassoskrivelse). The letter of demand shall state all information that is necessary for the debtor to assess the claim. Furthermore, the letter of demand has to provide a time period of minimum 10 days where the debtor can redeem the claim without further measures are taken that can cause the debtor extra costs.

Commercial legal proceedings are commenced by filing a writ of summons to the court. The writ of summons must include the name and address of the defendant. Furthermore, the writ must contain a claim (request for payment) and a presentation of the questions of fact and law. If the court assesses that the writ of summons is not sufficient detailed, which is very rare if the plaintiff is represented by a lawyer, the plaintiff receives a notice and is being asked to remedy the defects identified. Once the writ of summons is sufficiently detailed the writ is served on the defendant. The court has the exclusive right to serve the writ of summons. However, under certain circumstances service is valid even though the regular process has not been followed as long as the defendant has gained knowledge of the writ of summons. Today, a writ of summons can be served digitally.

After the writ of summons has been delivered to the defendant, the defendant has at least two weeks to file a statement of defence to the court containing any preliminary objections.

“Jurisdiction” has two sides to it under the Danish Administration of Justice Act: Subject-matter jurisdiction and territorial jurisdiction.

Subject-matter jurisdiction regards the type of court that should hear the case. That could be whether or not the case should be heard by a District Court or if the case instead should be referred to the Maritime and Commercial Court if the dispute is about EU trade mark or EU design over which the Maritime and Commercial Court has exclusive jurisdiction. The court ex officio determines whether it has subject-matter jurisdiction and can consider this issue throughout the entire case as the scope of the case may of course change during the preparations.

Territorial jurisdiction regards if a case can be heard by a Danish court and if so to which court the writ of summons should be filed. According to the Danish Administration of Justice Act paragraph 248 the court should ex officio determine its competence. This rule applies in situations where the case is governed by the exclusive jurisdiction of the courts of another EU-/EFTA country. In practice the main rule is different from the Danish Administration of Justice Act. In the majority of cases, the court does not ex officio determine if the court is competent if the defendant participates actively in the process and does not object to the jurisdiction. Therefore, the defendant must object if the defendant believes that the case should be heard by a different court. Otherwise the court considers itself competent to hear the case.

In Danish private international law there is a distinction between claims in contract, claims under Sale of Goods Act, claims in tort and claims dealing with right to property. Thus different rules apply.

In contracts the Rome Convention determines the law applicable. The Rome I Regulation is to replace the Rome Convention. However the Regulation does not apply for Denmark due to the opt-out on EU justice and home affairs. Therefore only the Rome Convention should be applied in Denmark.

According to both the Regulation and the Convention the parties have “freedom of choice” and can agree upon which law to govern the contract. Under the Rome Convention the law of the country which the contract has a closer connection to should govern the contract if no agreement has been made. It is presumed that the contract is most closely connected to the country where the party who is to effect the “characteristic performance” has his habitual residence at the time of the conclusion of the contract. The Rome Convention applies in every case, also in cases were one of the parties is a non-EU member state. According to the Rome I Regulation the contract shall be governed by the country where the service provider, seller or the party who is to effect the characteristic performance e.g. have their habitual residence. In consumer lawsuits both the Rome Convention and the Rome I Regulation states that the law of the country of the consumer is to govern the case. However the parties can agree upon the law applicable but the consumer cannot be deprived the protection afforded by the mandatory rules of the country in which he has his habitual residence.

In sale of goods cases the Hague Convention applies. For Consumers the Rome Convention and Rome I Regulation applies as stated above since the Hague Convention does not apply in consumer cases. The Rome Convention and Rome I Regulation shall not prejudice the application of international conventions to which a Contracting State is a party. According to the Hague Convention the parties have freedom of choice. In the absence of an agreement the law applicable will be the law of the place where the seller has his habitual residence, unless the seller has received the order in the country of the buyer. Then the buyer’s habitual residence will determine the law applicable.

Often CISG will govern the order, even if there is a reference to Danish law.

In tort cases the law of the place where the harmful action has taken place will apply as a main rule, “lex loci delicti”. However the courts does not apply the rule mechanically, and it is questionable whether the place of action or the place of consequence determines the law. Further, other connecting factors may be taken into account. The Rome II Regulation does not apply in Denmark.

In property/things cases neither the Rome Convention nor Hague Convention applies. The general principle is based on connection, “lex rei sitae”. The law applicable is determined by the place the property/thing is situated.

If the plaintiff does not appear in court or does not submit pleadings when requested to by the court the case will be dismissed, meaning that there will be no judicial judgment. The plaintiff may resubmit the claim. If the defendant does not appear or does not submit pleadings when requested by the court a judgement by default will be entered. The judgment by default can be requested continued within a short time limit (two weeks) after the judgement was handed down.

As a main rule commencement of a trial will not have suspensory effect but it is possible for the court to order interim measures. Necessary preliminary steps can further be ordered by a court of arbitration.

Immediate execution (In Danish: umiddelbar fogedforretning) concerns the possibility to become in possession of a movable asset, or on the contrary to expose another of the possession.

Injunction concerns the duty not to act, undertake acts and withstand certain actions. The plaintiff must show that the injunction is necessary, and that the purpose will be made impossible if the result of a normal trial must be awaited.

Arrest concerns protection of a demand and must be followed by a justification case before the ordinary courts as well as a main case regarding the substance of the actual claim. The measures ensure that there is something left to get enforcement against when the plaintiff has obtained the judgement.

Taking of evidence ensures the parties’ ability to provide information needed for an approaching trial, where preservation of evidence (In Danish: bevissikring) concerns the possibility to ensure evidence of infringement of an intellectual property right, involving an inspection with the aim of ensuring information.

The trial begins with a writ of summons, which is followed by a statement of defense. These documents are the basis for the further progress of the case. Furthermore different types of submissions can be demanded by the court in the case schedule, hereunder reply and rejoinder or documents related to specific questions. The court can order the parties to hand in a comprehensive case summary or a summary of claims prior to the actual hearing. In this document the important elements and arguments of the case is set out in summary form. The court will determine certain deadlines for the submissions of the documents. It is very common to demand reply and rejoinder and consequently plaintiff and defendant will normally submit three pleadings each.

A case can normally be finished within a year or two, but there is no official maximum.

The rules for disclosure documents are stated in the Danish Administration of Justice Act Section 298-300. The rules vary according to whether a party or a third party is required to submit documents.

If a party wants to refer to documents in the possession of another party to the court, the first party can make a request to the court stating 1) the facts to be proven by the documents and 2) the reasons on which he supports the assumption that the other party has the documents in its possession, cf. section 300 of the Danish Administration of Justice Act. Upon such request the court may order the other party to submit the requested documents available to the party if the requesting party intends to invoke these during the case, unless submission of such documents would disclose circumstances about which the party would be excluded or exempted from giving testimony. Thus, the court may decide that documents or parts of documents without relevance to the court and which the other party does not want to submit shall not be submitted or shall only be submitted in part. The courts do not look favorably on “fishing expeditions”.

For a third party the duty to disclosure documents will lapse in the same situations as regards for witnesses (see below, question 15). This includes professional secrecy and other duties of silence and if it might damage the third party or his/hers next of kin.

The Danish “style” differs from the “discovery-style” used in for instance the US. The Danish style is muchless extensive than discovery, although it is possible to request the court to order the opponent to submit specific documents and thereby expand the duty to disclose documents.

In Denmark witnesses give oral statements. In arbitration the statements may be in writing.
It is a general rule that everyone has an obligation to make a statement before the court. This includes a duty to refresh the particular knowledge of the case. The party who has requested the witness may begin the questioning, and hereafter the opponent may question (cross). The cross examination is not limited to the issues or questions raised/asked in the examination in chief. Subsequently further questions can be asked if the need arises.

Professional secrecy and other duties of silence can exclude the use of specific witnesses. Further a witness can be exempted if a statement might damage the witness or his/hers next of kin.

Expert evidence (expert appraisal (In Danish: syn og skøn) is widely used, in particular in disputes about construction, real estate, patents or technical issues. The expert is appointed by the court, and has the duty to investigate carefully, a duty owed to the court. The parties may suggest one or more experts but the court is not bound by the suggestions. Expert appraisals involves an expert’s inspection and evaluation, and it is possible for the parties to comment on the evaluation. The expert will only investigate the facts and not make any legal evaluation. The expert may however express a view as to what customary practise is or for instance whether the goods are of reasonable quality or similar statements.

Further expert opinions, expert witnesses and appointment of technical judges is a possibility:

• Expert opinions are written and the court decides the decisive importance.
• The expert witnesses will comment on the facts of the case.
• The technical judges will use their own experience when deciding the case together with the legal judges

It is possible to appeal a case. In Danish law there is a distinction between appeal (In Danish: anke) and interlocutory appeal (In Danish: kære).

Appeal: A judgment can be appealed from the District Court to the High Court within four weeks, and from a High Court to the Supreme Court within four weeks as well. The High Court may reject the case if there is no prospect that the case will have a different outcome and if the case is not of principle character. Further a case needs permission to be appealed to the High Court if the claim is less than 20,000 DKK (Approximately Euro 3,000.-).

Interlocutory appeal: Decisions and court orders can be appealed within two weeks. In principle it is not possible to appeal rulings if it is made during the preparation of the case or during the main hearing and the ruling does not close the case. However it is possible to apply for a permission to appeal the ruling. Only special circumstances will grant permission. Besides, permission is needed in certain other cases.

Interim orders cannot always be appealed in transit but only when the final decision has been made. This depends on the nature of the decision and if it actually ends the case, for instance a rejection.

In Denmark it is a general principle that a judgment has both legal force (res judicata) and can be enforced. For foreign judgments there are different rules governing the enforcement although enforcement of foreign judgments in general is determined by multi-lateral agreements. If a judgment is from a court in a country outside the EU or the “Lugano” area it is the main principle that it is only enforced if there is a treaty obligation. There is only one such further convention, namely the Nordic Judgment Convention, but that has in reality lost its relevance due to the overlapping Bruxelles/Lugano Regulation. In reality therefore judgments from courts outside the EU/Lugano area will not be enforced in Denmark.

Jurisdiction agreements are generally accepted by Danish courts and a case instigated before a Danish court in violation of a jurisdiction agreement pointing to a foreign court will be dismissed.

The Bruxelles I Regulation applies in cases where the plaintiff lives within an EU member state, and the Lugano Convention applies when the plaintiff lives in a Lugano Country. The legislation entails that every foreign judgment (from such country) will be enforced.

Judgments from other countries, also if decided in accordance with a jurisdiction agreement is not enforceable in Denmark and a new case will have to be started. The foreign judgment will be granted value as evidence, but it will not be binding for the Danish court. The evidentiary value will depend upon the circumstances, in particular whether the Danish party was duly served, actually appeared in the foreign court and lodged a defense.

Foreign arbitral awards are enforced in Danish law due to the ratification of the New York Convention, and the Danish Arbitration Act does not contain any distinction between Danish and foreign awards.

When the proceedings has come to an end and as part of the judgment the court will (ex officio) decide which party is to bear the costs, which will of course normally be the losing party. If both parties can be said to have won or lost partly, each party will often have to bear own costs. The costs awarded are in reality only able to cover part of the expenses and the costs actually used by the party will not be taken into consideration by the court. The costs are fixed on the basis of a schedule, but they no longer reflect the actual legal costs. Therefore the parties will bear a lot of their own expenses to legal aid e.g. Further, the parties must bear the costs associated with procedural steps but fees paid to the court and costs paid to experts appointed by the court will as a main rule be fully recovered.

Also attorneys and legal representatives, can be ordered to pay costs caused by unlawful conduct if the counterparty claims it. It is extremely rare, but possible in principle and there are very few cases where it has been considered.

Two types of collective redress exist in Danish law: “opt in” and “opt out”. Opt in means that affected consumers must actively opt in for the redress action, where opt out results in automatic inclusion with the possibility of opting out. The different mechanisms existing in Denmark are general group actions, the Consumer Ombudsman’s representative action and competition group action. Only the Consumer Ombudsman can bring actions according to the opt out model.¨

There are no special rules under Danish law regulating ongoing individual claims relating to the same dispute. Therefore there are no rules stating that a case should be stayed until the collective proceedings are brought to an end. It is possible for the Courts to stay the proceedings when necessary – both when awaiting judicial and administrative decisions possibly influencing the outcome of the case. If a consumer is already party to an individual claim he/she cannot take part in a group claim concerning the same dispute. If the consumer wants to be party to a group claim he/she must discontinue the individual action. If the consumer is not party to the group filing the group claim, the decision regarding this will not be formally binding on the consumer. Nonetheless, the decision may establish a precedent. So far class actions are rare in Denmark, but there is an increasing tendency.

It is possible for each of the parties to bring claims against third parties during the proceedings. It is a requirement that the court has jurisdiction for all the claims in Denmark and that the same procedural rules applies.

Additionally, third parties can intervene. This is possible if the third party files a writ of summons, the third party’s plea must have such a connection with the case that it should be dealt with in the case and if there is the necessary jurisdiction. The court can reject the third party’s claim, if the parties request it and the court finds that the requirements are not met

Third party funding is permitted but may have tax implications or be questionable if made with an illegal purpose. It is a possibility for both the plaintiff and the defendant. Lately foreign equity funds and insurance companies have been showing interest in funding litigation in Denmark – against a share of the possible outcome of the case. This is a rare phenomenon in Denmark, nevertheless not prevented by law. Consequently, there is no minimum or maximum amount as to how much a third party will fund.

We find it unlikely that third party funders would be held liable for the costs of the other party, but there are no legislation and no precedence.

In Denmark it is common to have an insurance covering legal expenses as part of a customary domestic insurance. Usually the insurance company requires that there is a reasonable cause and that an attorney will undertake the proceedings. The insurance will usually cover the expenses of the other party if the policyholder is ordered to bear these by the court. Often an insurance will have a limited sum covered but this is not governed by law.

In certain cases (not commercial litigations) if the person is meeting the economic conditions, he/she can be granted “free legal aid” meaning that the state covers the expenses.

The main advantage will be costs as compared to US/UK jurisdiction. The courts are independent and well functioning and the Maritime and Commercial Court offers a very professional team of judges who has intimate knowledge of the different industries. The disadvantage is that the courts often take a long time in very complicated matters.

Competition claims due to cartel or other price manipulation and GDPR.

The litigation in Danish courts has been digitalized a short while ago, which also provides the clients with more insight into the procedure. This will change the lawyer/client relation.