Bringing a claim - initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

A party should always consider its legal position and assess the possible (and likely) outcome of a litigation case before bringing a claim, simply because the legal costs of bringing a claim - especially if the court ultimately rules in favour of the defendant - can be significant, although it should be noted that legal costs in Denmark are considerably lower than in many other jurisdictions.

Establishing jurisdiction

How is jurisdiction established?

Jurisdiction in Denmark can be established on the basis of the Danish Administration of Justice Act, European regulations, or other international conventions or treaties.

Danish jurisdiction is generally established by the Administration of Justice Act, which decides on both the subject matter jurisdiction (ie, the competency of the court to hear and determine a particular category of cases) and the territorial jurisdiction.

If it is possible to choose between different territorial jurisdictions according to the Act, a claimant can decide which territorial jurisdiction shall be chosen.

When a dispute involves international parties, and the defendant is domiciled within the EU (ie, in an EU member state), the jurisdiction is decided by Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Regulation 1215/2012). According to Regulation 1215/2012, the main rule is that claims must be brought against a defendant in the EU member state where the defendant is domiciled. However, the main rule is deviated from in a number of situations, including but not limited to the following:

  • in matters relating to a contract, a claim can be brought against a defendant before the courts at the place of performance of the obligation in question;
  • in matters relating to tort, delict or quasi-delict, a claim can be brought before the courts at the place where the harmful event occurred or may occur; and
  • in matters relating to claims brought by a consumer against a party in another EU member state, the consumer can bring the claim before the courts where the consumer is domiciled.
Preclusion

Res judicata: is preclusion applicable, and if so how?

Res judicata is applicable in Denmark. Consequently, Danish courts will preclude a claim brought before the courts in cases (1) where a final judgment (not subject to appeal) has been rendered regarding the same claim, or (2) where a final judgment (not subject to appeal) has already been rendered between the same parties and the claim covered by the final judgment is partially the same as the new claim or is based on the same legal foundation as the new claim; and the new claim should and could have been brought by the claimant in connection with the claim covered by the final judgment.

If a claim brought before the Danish courts is precluded, this will lead to the dismissal of the claim (and the whole case if the claim in question is the only claim comprising the case).

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

In some cases, Danish courts must apply foreign law. This can be the case if the parties have agreed on the applicable law (without having agreed on jurisdiction in the same country) or if the character of the dispute leads to a governing law that is different from Danish law.

If the parties have not agreed on the law governing a specific dispute, the most important regulation when determining the governing law is Regulation (EC) No. 593/2008 on the law applicable to contractual obligations (Rome I Convention) and Regulation (EC) No. 864/2007 on the law applicable to non-contractual obligations (Rome II Convention).

When a Danish court decides on the applicable law governing a specific dispute - ie, when the parties are not in agreement - the court will interpret the parties’ contract documents and the nature of the dispute in light of the Rome I and Rome II Conventions to determine the applicable law. If the governing law is foreign, a Danish court will not interpret the foreign law but will consider the relevant foreign law as a production of evidence by the parties that the court will assess in accordance with the legal principle of free evaluation of evidence. Consequently, it is common that the parties in such cases will produce legal memoranda on the relevant and applicable (foreign) law.

Foreign law will only apply to the merits of the case while procedural questions will be governed by the Administration of Justice Act.

Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

In some situations, it is possible for a claimant to obtain an order freezing a defendant’s assets; see question 9.

In most cases, the claimant will assess the defendant’s financial situation prior to taking out a summons against the defendant to assess whether the claimant can reasonably expect to be able to enforce a judgment successfully. In respect of legal entities, such an assessment will often be made based on an entity’s public financial reports. For natural persons, it can be difficult to establish a foundation to make such an assessment.

In that context, natural persons can make themselves judgment proof - or perhaps more correctly, collection proof. If a natural person does not possess any assets or funds to satisfy a judgment (in full or in part, or by the payment of instalments), the person concerned can, before a Danish bailiff’s court in connection with the enforcement of a claim, declare to be insolvent, making him or her collection proof for a six-month period. If a legal entity declares itself to be insolvent, this will (almost) always lead to bankruptcy; the same is only rarely the case for natural persons.

Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

The pre-action remedy of freezing a defendant’s assets in Denmark can be carried out by obtaining a precautionary attachment ruling by a Danish bailiff’s court whereupon the judgment debtor is unauthorised to sell the asset or assets comprised by the precautionary attachment.

However, it is only possible to obtain such a precautionary attachment if:

  • the claimant has a monetary claim (not necessarily in Danish kroner);
  • the claimant cannot obtain a levy of execution (eg, because the claimant does not have a basis of enforcement or because the bailiff’s court suspends the proceedings);
  • the claimant can prove on a balance of probabilities that his or her claim exists; and
  • the claimant can prove on a balance of probabilities that his or her possibility of receiving effective payment for the claim at a later point in time will be significantly reduced if a precautionary attachment is not delivered.

The bailiff’s court can decide that the claimant must provide adequate security for the loss and disadvantage that the defendant (the judgment debtor) will suffer as a consequence of the precautionary attachment if the claimant’s claim did not exist.

If the claimant obtains a precautionary attachment, he or she must file an action on the merits of the claim before the civil courts within a week after the precautionary attachment is delivered.

A claimant should consider pursuing a precautionary attachment in situations where his or her claim (in practical terms) is indisputable and where it seems likely that defendant will dispose of his or her assets before the claimant has obtained a levy of execution for the claim.

The practical implication of said rules in Denmark is, however, limited.

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

There are no formal steps that need to be taken prior to commencing proceedings before the Danish civil courts. However, Danish lawyers are subject to a set of rules of conduct that in certain situations may require a lawyer to notify the opposing party before filing a writ of summons with the courts.

Other interim relief

What other forms of interim relief can be sought?

In Denmark, other interim relief to consider are:

  • obtaining an injunction stating that a party temporarily must perform, refrain from or tolerate certain specific actions;
  • taking of evidence out of court both by way of expert evaluation and by disclosure and discovery of documents; and
  • preserving of evidence subject to intellectual property rights or infringement of the rules set forth in the Danish Marketing Practices Act.
Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

There are no requirements in Denmark for parties to engage in ADR before commencing legal proceedings. However, it is common that Danish courts at a later state in a case propose that the parties participate in a mediation process where the court will provide a mediator (ie, a conciliation process whereby a neutral third party provided by the court will function as a mediator seeking to promote communication between the parties to resolve the dispute extrajudicially).

At any point in time, all parties to a dispute are entitled to refuse engagement in mediation without such refusal having any impact on the court’s hearing of the case, unless the parties have specifically agreed otherwise.

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

Formally, there are no differences between bringing claims against natural persons and corporations. However, from a practical and non-procedural law perspective, a claimant should consider the opposing party’s ability to perform his or her obligations if the claimant is successful in the case. In addition, when bringing an action against a corporation, and especially when the claim is against (one of the companies in) a group of companies, the claimant should be thorough when assessing who to bring the claim against.

Class actions

Are any of the considerations different for class actions, multi-party or group litigations?

Multi-party litigation is common in Denmark and can be established by initial joinder of parties or, subsequently, by third-party proceedings (also known as ‘Part 20 claims’ brought by or against any legal or natural person who is not already a party to the proceedings).

Class actions can also be brought before the Danish civil courts. However, the provisions on class actions are based on the fundamental principle establishing that class actions can only be brought before the Danish civil courts provided that the rules on class actions are more suitable than the other provisions on multi-party litigation.

In a class action group, the litigation process is controlled by a group representative, and the economic risk for each member of the group is limited to the provision of security demanded initially by the court (possibly with the addition of damages awarded in the case). Consequently, the economic risk is often much lower for a member of a class action group compared with a party to a case governed by the ordinary multi-party litigation provisions.

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

There are no restrictions on third parties funding the costs of litigation or agreeing to pay adverse costs. While third-party funding of litigation in Denmark is rare, there are tendencies pointing towards a bigger market for such cases in Denmark in future years.

However, according to the ethical standards for lawyers in Denmark there are restrictions on Danish lawyers’ possibilities to conclude contingency fee agreements whereby a lawyer obtains a right (directly or implicitly) to a percentage of the recovered claim if the party is successful with the claim; see question 16.

Contingency fee arrangements

Can lawyers act on a contingency fee basis? What options are available? What issues should be considered before entering into an arrangement of this nature?

In Denmark, lawyers cannot act on a contingency fee basis according to which they will receive a percentage of the amount recovered. However, a lawyer can act on a ‘no cure no pay’ basis if the lawyer’s fee payable in the case of success is not calculated as a percentage of the amount recovered for the client.

As such, it can be agreed that a lawyer will not receive any fee payment if a certain criterion is not met (eg, the case is lost), and that the lawyer will only receive a fee payment if that criterion is met (eg, the case is won) on condition that the lawyer’s fee is determined according to ordinary criteria (time spent, case value, etc), or the fee is a pre-fixed amount. In contrast, the fee cannot be influenced by the extent to which the criterion is met (ie, to what extent the litigation case is won, what amount was awarded or recovered).

Such (or similar) fee arrangements are only rarely seen in litigation cases.