Which are the key ports in your jurisdiction and what sort of facilities do they comprise? What is the primary purpose of the ports?
The structure of ports in Denmark is characterised by many small ports (around 130 in total). As such, the listing of key ports depends greatly on which features the ports are assessed on. In general, the ports can be subdivided into the following three categories:
- large general cargo ports, including Copenhagen, Aarhus, Fredericia, Esbjerg (ro-ro and offshore) and Kalundborg;
- ferry ports, including Rødby, Gedser and Helsingør; and
- private speciality ports servicing a specific company or industry, including the Statoil Port (crude oil), Enstedvaerket (coal) and Aalborg Portland (cement).
Describe any port reform that has been undertaken over the past few decades and the principal port model or models in your jurisdiction.
In 2000, the Danish law on commercial harbours was replaced by the law on ports. The general purpose was to increase competition and debureaucratise the area, including by allowing ports to restructure themselves into private limited companies, and by increasing the operational freedoms of ports established as private limited companies.
In 2012, another major revision was completed, the purpose of which was to increase municipal ports’ and self-governed municipal ports’ access to the market by allowing participation in a wider range of business.
Ports may be organised as follows:
- state port;
- municipal port;
- self-governed municipal port;
- private limited company owned fully or partly by a municipality; or
- private limited company.
The five different organisational structures are subject to different requirements and varying degrees of operational freedom. All five organisational structures are allowed to operate a port, to hire out real estate in the port and to enter into cooperation with other ports on the operation and development of port infrastructure, buildings and facilities, as well as procurement of goods and services. In addition, the self-governed municipal ports are granted access to offer a wider range of services, including stevedoring or piloting. Private limited companies owned fully or partly by a municipality may offer the same services as a self-governed municipal port, as well as other activities promoting the use of the port and sea transport. For procurement limitations, see question 15.
As a downside, ports organised as private limited companies may not receive any form of municipal subsidies.
The contemplated new Danish law on ports may discontinue the right to organise ports as self-governed municipal ports.State development policy
Is there an overall state policy for the development of ports in your jurisdiction?
The Danish Ministry of Transport and Housing has established the following visions for the Danish port sector in 2025:
- the port sector contributes to solving society’s needs for the transportation of cargo;
- the port sector is able to compete internationally;
- Danish and international transport of cargo takes place through a well-developed system of effective centres of transport and well-developed inland infrastructure;
- the port sector offers attractive terms of employment with good opportunities for professional and personal development; and
- the port sector contributes to a better environment in the general transport sector.
The above visions have led to the following objectives:
- Danish ports must increase the amount of deep sea and short sea cargo handled;
- ports, port companies, shipping companies and other operators performing related services must establish and develop productive partnerships in ‘port clusters’;
- the port sector must develop simple administrative procedures and fee structures;
- the port sector must develop simple pricing mechanisms for its users;
- ports must develop cooperative relationships with other ports in the chain of transportation;
- the port sector must be able to recruit new and well-educated employees;
- ports must develop cooperative relationships with other operators in the chain of transportation, including by focusing on education and the general ability to attract labour;
- more ports must establish themselves as limited liability companies; and
- investments in ports and infrastructure must be focused on removing bottlenecks in the chain of transportation.
What ‘green port’ principles are proposed or required for ports and terminals in your jurisdiction?
Danish legislation regarding environmental requirements stipulates various different requirements on port operation, including requirements regarding noise, air pollution, sediment pollution, water quality and waste management as the main focus areas.
A central concern is sediment gathering in the approach to a port, which must periodically be dredged and deposited at sea or on land. The EU Commission has recently pronounced that the EU directive on landfill of waste applies to sediment being deposited on land, and the costs related to compliance with such requirements may mean an increase in the price of depositing sediment on land. A task force consisting of the Danish Society for Nature Conservation, Danish ports representing commercial ports in Denmark, Danish Shipping representing shipping companies and the Danish Coastal Authority has been established to analyse the current rules regarding depositing sediment on land.
Legislative framework and regulationDevelopment framework
Is there a legislative framework for port development or operations in your jurisdiction?
The Danish law on ports sets out the rules of port development and operations. This includes rules on privatisation and PPPs.
The Danish law on ports is supplemented by legislation both generally and specifically applicable to ports, including:
- the Danish Competition Act;
- EU competition law;
- the EU regulation on provision of port services and common rules on the financial transparency of ports;
- the General Block Exemption Regulation;
- environmental legislation;
- tax legislation;
- the Danish law on municipal management;
- the Danish Public Administration Act;
- security regulations;
- ice-breaking regulations;
- piloting regulations; and
- infrastructure regulations for ports in passage waters.
Is there a regulatory authority for each port or for all ports in your jurisdiction?
The Danish Ministry of Transport and Housing is the regulatory authority for all Danish ports. Given that most ports are owned by municipalities, such municipalities are of course also important public players.
What are the key competences and powers of the port regulatory authority in your jurisdiction?
The Danish Ministry of Transport and Housing sets out the legislative framework for Danish port operations, including by implementing EU rules regarding, among other things, decisions regarding protection of the natural environment in port areas, and procedures for the completion of assessments of the environmental impact of public and private port projects. The ministry also set out rules regarding enforcement notices, prohibition notices and duties of disclosure relating to the areas governed by the Danish law on ports.Harbourmasters
How is a harbourmaster for a port in your jurisdiction appointed?
There are no firm requirements regarding, for example, the educational background of harbourmasters. The appointment of a harbourmaster follows a normal hiring process which, insofar as positions in state and municipality ports are concerned, is supplemented by the Danish Public Administration Act setting our various rules and principles in connection with the selection of applicants and the decision regarding employment.Competition
Are ports in your jurisdiction subject to specific national competition rules?
The Danish Competition Act and European competition law apply to ports in the same way that they apply to other private and public companies. This means that the rules on market dominance, cartels and collusion, merger control and state aid also apply to ports.Tariffs
Are there regulations in relation to the tariffs that are imposed on ports and terminals users in your jurisdictions and how are tariffs collected?
The way tariffs are determined depends on the organisational structure of the port:
- for state ports, it is the Minister of Transport that determines the applicable tariffs;
- for municipal ports, it is the municipal council that determines the applicable tariffs;
- for self-governed municipal ports, the municipal council determines the economic framework of the port and the board of directors of the port disposes independently within such framework, including by determining the applicable tariffs; and
- for private limited companies, regardless of whether there is a municipal ownership interest, it is the board of directors and management that determine the applicable tariffs.
Generally, tariffs are imposed through publicly available general terms and conditions; however, framework agreements with certain important customers may be entered into on a case-by-case basis.
Are there restrictions relating to the currency applied to the tariffs or to any fees that are payable by a port operator to the government or port authority? Are any specific currency conditions imposed on port operators more generally?
Foreign currencies are not legal tender in Denmark unless specifically agreed between the parties. There is generally freedom of contract for the parties to agree on whichever currency and exchange rate they so choose.Public service obligations
Does the state have any public service obligations in relation to port access or services? Can it satisfy these obligations through a contract with a private party?
As a rule, all Danish ports have an obligation to accept all vessels insofar as the port has adequate space to accommodate such vessels and assuming it is acceptable from a security perspective. The exception to this general rule is ports that, in accordance with the granted permissions of the port, are only allowed to be used for limited purposes. For example, the ferry ports of Odden and Ebeltoft are only allowed to be used by Mols-Linien for ferry services on the route between Sjaellands Odde and the Ebeltoft peninsula. Another example is ports established for the purpose of servicing power plants and refineries.
Danpilot (the pilot service of the Danish state) has a duty to offer pilotage to any vessels requesting pilotage in any Danish port upon a 24-hour notice. Danpilot is allowed to enter into contracts with private operators to fulfil this obligation.Joint ventures
Can a state entity enter into a joint venture with a port operator for the development or operation of a port in your jurisdiction? Is the state’s stake in the venture subject to any percentage threshold?
As described in question 2, ports may be organised as private limited companies owned fully or partly by a municipality. There are no requirements regarding the size of the municipality’s ownership interest.Foreign participation
Are there restrictions on foreign participation in port projects?
There are no restrictions. Foreign participation in port projects is allowed assuming the port is organised as a private limited company.
Danish ports organised as private limited companies owned fully or partly by a municipality may invest in foreign ports with up to 15 per cent of the company’s equity.
Public procurement and PPPLegislation
Is the legislation governing procurement and PPP general or specific?
The legislation regarding procurement is both general and specific and applicable to state ports, municipal ports, self-governed municipal ports and private limited company ports owned fully or partly by a municipality.
The general rules follow the EU public procurement rules as implemented in Danish law.
Although not actual public procurement governance, the Danish law on ports contains stipulations limiting ports’ possibilities of procuring services freely. These specific rules on procurement contain certain limitations on the activities that a port (depending on the organisational structure; see question 2) may conduct, as these activities (for example, stevedoring or pilotage) must be advertised to private parties who may be interested in offering such activity on market terms by themselves. The duty to advertise activities applies only if the expected turnover related to such activity exceeds 500,000 kroner per year. If the port is subject to a duty to advertise, such advertising must contain a description of the activity, contact information and relevant notice periods of no less than eight weeks. If no private parties can be found, the activity must be re-advertised every five years thereafter.
The rules on PPPs are of a general nature.Proposal consideration
May the government or relevant port authority consider proposals for port privatisation/PPP other than as part of a formal tender?
As PPPs normally extend beyond 10 years and involve both construction work and subsequent operation, PPPs will normally be a part of a formal tender process.
Regarding privatisation, there is a specific requirement set out in the Danish law on ports relating to privatisation stating that, if in connection with a privatisation, in-kind contributions of structures, etc., have been made to the newly established private limited company, dividends to the shareholders may only be paid once provisions for maintenance and planned acquisitions have been made. This must be described in the articles of association of the private limited company.Joint venture and concession criteria
What criteria are considered when awarding port concessions and port joint venture agreements?
Port concessions are typically not used in Denmark. If a party (public or private) wants to establish a port, they will have to apply for permission from the Minister of Transport. As such, this usually does not follow a typical procurement process.Model agreement
Is there a model PPP agreement that is used for port projects? To what extent can the public body deviate from its terms?
PPPs have not yet been used in relation to Danish ports.
There are no model agreements being used for port projects. Necessary agreements are drafted on a case-by-case basis. There are model agreements within real estate PPP projects.Approval
What government approvals are required for the implementation of a port PPP agreement in your jurisdiction? Must any specific law be passed in your jurisdiction for this?
There are no specific laws required to be passed. In practice, a binding ruling from the Danish tax authorities would always be obtained if private financing is involved.Projects
On what basis are port projects in your jurisdiction typically implemented?
There are very few major port projects in Denmark. As such, there is no typical approach to implementation.
If a port project were to be implemented as a PPP, it could follow any of the following three structures:
- private financing and public ownership at the end of the concession;
- private financing and private ownership at the end of the concession; or
- public financing and public ownership throughout the concession.
Is there a minimum or maximum term for port PPPs in your jurisdiction? What is the average term?
There is no minimum or maximum term. Usually PPPs have an average term of around 10-30 years.
On what basis can the term be extended?
In principle, there are no legal issues preventing extensions, but they must be agreed on a case-by-case basis.Fee structure
What fee structures are used in your jurisdiction? Are they subject to indexation?
There are no standard fee structures. If a company or municipality buys a piece of land and obtains permission to establish a port, then no specific fees will be payable in relation to such port apart from the applicable taxes as relevant.
A specific issue is payment regarding hire of sea territory, which is always owned by the state. Assuming a piece of sea territory must be hired from the state for the installation of various pieces of equipment, such may be subject to a payment of hire to the state determined on a case-by-case basis.Exclusivity
Does the government provide guarantees in relation to port PPPs or grant the port operator exclusivity?
Guarantees and exclusivities are not necessarily relevant or important given the Danish structure of granting evergreen permissions rather than temporary concessions.Other incentives
Does the government or the port authority provide any other incentives to investors in ports?
Port development and constructionApproval
What government approvals are required for a port operator to commence construction at the relevant port? How long does it typically take to obtain approvals?
The Danish law on ports states that the establishment of a new port requires approval from the Minister of Transport. It is common practice for the ministry to ensure that public considerations and interests are not disregarded. This is achieved by the application to establish a new port being considered in a hearing by the authorities involved, including, for example, authorities governing transportation, fishing, environmental matters and district planning. Based on the responses from the involved authorities, the ministry assesses the application. As a rule, permission is granted, possibly with certain conditions attached, unless relevant objections are made, for example, of an environmental nature or regarding maritime security.
There are no set time limits attached to the ministry’s assessment of an application. It will depend on the specific situation and complexity of the matter.
Aside from the above there may be specific district plans that need to be changed, and an environmental impact assessment will likely need to be made.Port construction
Does the government or relevant port authority typically undertake any part of the port construction?
Aside from hinterland access, the government does not undertake any part of the port construction unless it is a state port.
Does the port operator have to adhere to any specific construction standards, and may it engage any contractor it wishes?
There are no specific requirements regarding construction standards, but general legislation on building, safety and labour will apply.
What remedies are available for delays and defects in the construction of the port?
Remedies will be subject to specific agreement between the parties.
What government approvals are required in your jurisdiction for a port operator to commence operations following construction? How long does it typically take to obtain approvals?
A port operator will require various approvals, including general business licences depending on the nature of the business, which should be fairly quick and easy to obtain.Typical services
What services does a port operator and what services does the port authority typically provide in your jurisdiction? Do the port authorities typically charge the port operator for any services?
The distinction between a port operator and port authority is not necessarily very clear in Denmark as it is very often the same party; however, it follows from the five different organisational structures being subject to different requirements and varying degrees of operational freedom (see question 2) that, depending on the chosen structure, some activities and services must be outsourced to independent operators.
A port organised as a private limited company is a commercial business, which is not limited in the way it operates its business. As such, there is no difference in what the port itself and a private company operating on the port may do.
In regard to a port organised as a municipal port or a primate limited company wholly or partly owned by a municipality (these being the two main organisation forms being used by publicly owned commercial ports); the port provides the infrastructure while other private operators handle commercial activities at the port. Only where the private operators are not interested in providing a certain service may the public port operator provide such service themselves after observation of the duty to advertise (see question 15). The contemplated new Danish law on ports will likely further support this division in order to prevent what is being referred to as ‘public theft of services’.
On the charging of fees; if specific operators rent buildings or land in the port they will pay the port authority accordingly, but otherwise they will not normally pay the port authority for any services.Access to hinterland
Does the government or relevant port authority typically give any commitments in relation to access to the hinterland? To what extent does it require the operator to finance development of access routes or interconnections?
Hinterland access is a public service obligation, so is not normally something that is financed by the operator. The extent of such access will likely be an element of discussion in connection with the application to establish a new port.Suspension
How do port authorities in your jurisdiction oversee terminal operations and in what circumstances may a port authority require the operator to suspend them?
This depends on the specific agreement between the port and the terminal operator. Unless it is specifically described in the agreement, there is no general right for the port to demand suspension. The government may shut down operations due to general safety concerns.Port access and control
In what circumstances may the port authorities in your jurisdiction access the port area or take over port operations?
Various governmental authorities may demand access to perform inspections. There is no specific legislation regarding the taking over of port operations.Failure to operate and maintain
What remedies are available to the port authority or government against a port operator that fails to operate and maintain the port as agreed?
As Danish ports are not normally operated under concessions, the government is limited in the options it can take against ports not being operated to a sufficient standard. Normal Danish civil law rules will apply to any contracts entered into between the parties.
The licence to operate the port may contain certain conditions and it may be possible to revoke such licence if the conditions are not met, but it will completely depend on the terms of such specific licence.Transferrable assets
What assets must port operators transfer to the relevant port authority on termination of a concession? Must port authorities pay any compensation for transferred assets?
Ports are usually not operated under concessions.
MiscellaneousSpecial purpose vehicles
Is a port operator that is to construct or operate a port in your jurisdiction permitted (or required) to do so via a special purpose vehicle (SPV)? Must it be incorporated in your jurisdiction?
All ports, regardless of their organisational structure, are allowed to operate a port, hire out real estate in the port and enter into cooperation with other ports on the operation and development of the port infrastructure, buildings and facilities, as well as the procurement of goods and services.
If the real estate of the port is limited, ports may purchase areas within a fairly limited distance of the port. For competition purposes, such activities must be separated into a separate limited liability company.
A port’s access to activities aside from those already mentioned is subject to various limitations and requirements, as discussed in further detail in question 2. One additional requirement not previously discussed is that there may be requirements of performing such activities only through limited liability companies organised in accordance with the Danish Companies Act.
For example, self-governed municipal ports or private limited companies fully or partly owned by a municipality may only (as discussed in question 15) offer pilotage if no private parties can be identified to perform such services independently. In such a situation, pilotage may only be performed through a private limited company organised in accordance with the Danish Companies Act.
Private limited companies fully or partly owned by a municipality may invest up to 15 per cent of the company’s equity in non-Danish ports. Such investments must be separated into a separate private limited company operated on market terms in accordance with the Danish Companies Act.Transferring ownership interests
Are ownership interests in the port operator freely transferable?
Can the port operator grant security over its rights under the PPP agreement to its project financing banks? Does a port authority in your jurisdiction typically agree to enter into direct agreements with the project financing banks and, if so, what are the key terms?
This depends on the specific agreement. Port operators are as a general rule private companies that will be able to offer their rights in connection with port projects as security for financing. There are few port projects in Denmark and, as such, no typical financing terms.Agreement variation and termination
In what circumstances may agreements to construct or operate a port facility be varied or terminated?
This depends on the specific agreement.Contractual breach
What remedies are available to a government or port authority for contractual breach by a port operator?
This depends on the specific agreement.Governing law
Must all port PPP agreements be governed by the laws of your jurisdiction?
As described in question 37, under some circumstances the port is obligated to perform specific services through limited liability companies. Such companies must be incorporated in Denmark in accordance with the Danish Companies Act.Disputes
How are disputes between the government or port authority and the port operator customarily settled?
Disputes are handled by the courts, as any other civil dispute would be.
Complaints in relation to the EU regulation on provision of port services and common rules on the financial transparency of ports are handled by the Danish Transport, Construction and Housing Authority.
The contemplated new Danish law on ports will most likely establish an independent complaint resolution body with authority to sanction breaches.
Updates and trendsKey developments of the past year
Are there any other current developments or emerging trends that should be noted?Key developments of the past year44 Are there any other current developments or emerging trends that should be noted?
In May 2017, the Minister of Transport, Building and Housing set up an expert committee to assess whether the current Danish law on ports regulates the structure and organisational form of publicly owned ports in a way that ensures clarity in relation to administrative procedures and ensures that competition between public and private companies is on fair and equal terms.
The Committee was also asked to investigate whether the current rules for the ports’ financial affiliation with the municipalities are in accordance with general municipal, competition and EU rules.
In this context, the committee was asked to consider the relationship between the ports’ organisational form, ownership, loan terms and scope of investment.
In May 2018, the Ministry published the committee’s recommendations for a new Danish law on ports.
There are three key objectives behind the committee’s recommendations:
- to ensure that Danish port legislation complies with EU state aid rules;
- to ensure fair and equal competition partly between ports; and partly between ports and private operators at the ports; and
- to ensure better conditions for small ports.
The three key objectives are intended to be reached by:
- A proposal that the organisational form ‘self-governed municipal port’ is abolished and that publicly owned commercial ports are organised as limited liability companies, where economic activities within the traditional public service tasks are placed in one private limited company (infrastructure), and the port’s other commercial activities are placed in another private limited company (suprastructure). Collaboration between the two port companies must take place on an arm’s length basis.
- A proposal that a publicly owned commercial port, regardless of organisational form, should be able to obtain a municipal guarantee and, on this basis, take out loans from KommuneKredit (the credit association for municipal and regional authorities in Denmark) or from private lenders for construction projects or financing costs comparable to a municipal construction project (ie, the activities proposed to be located in the infrastructure private limited company), while borrowing by a publicly owned commercial port for other commercial activities (ie, the economic activities proposed to be located in the suprastructure private limited company) must be provided by private lenders on market terms.
- A proposal to maintain a system similar to the one already in force (see question 15), whereby the suprastructure private limited company may only take on new port services if the port market does not function effectively in itself. Private persons and corporations must be granted the opportunity to freely provide port services and other activities carried out by the suprastructure private limited company (challenge right).
- A proposal to improve the position for smaller ports, including that publicly owned commercial ports below a certain turnover limit, may opt out of the divided private limited companies structure and instead be organised as undivided municipal ports, but with an upper limit for future indebtedness in relation to the turnover of the port. Under certain conditions, such municipal ports may also be allowed to provide port services.
- A proposal to establish a complaint resolution body with effective sanctioning powers to strengthen the legal position of private business users.
The major point of contention is the question of whether there is a need to split the port operations into two companies (a suprastructure company and an infrastructure company). Local Government Denmark and Danish Ports take the view that a split will be unnecessarily bureaucratic and meaningless, especially in relation to smaller ports. They are instead of the opinion that EU law can be complied with simply by separating the two categories in the companies’ accounts rather than a corporate separation.