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National arbitration laws
What legislation applies to arbitration in your jurisdiction?
The Arbitration Act (Act 553/2005, as amended on February 26 2008) and Executive Order 117 of March 7 1973 on the recognition and enforcement of foreign arbitral awards.
Are there any mandatory laws?
The Arbitration Act is mandatory to a certain extent. The parties may agree which specific procedures must be followed by the arbitral tribunal, but may not deviate from fundamental principles stipulated in the act.
In accordance with Section 39 of the Arbitration Act, any foreign or domestic arbitral awards must be enforced in Denmark, unless they are contrary to public order or another ground listed in Article V of the New York Convention applies.
New York Convention
Is your country a signatory to the New York Convention? If so, what is the date of entry into force?
Yes, Denmark ratified the New York Convention in 1973. As of 1976, the convention also applies to the Faroe Islands and Greenland.
Are there any reservations to the general obligations of the convention?
Treaties and conventions
What other treaties and conventions in relation to arbitration is your jurisdiction party to?
The Geneva Convention of April 21 1961 and the European Convention of December 17 1962.
Has your jurisdiction adopted the UNCITRAL Model Law?
Yes. The Arbitration Act is based on the UNCITRAL Model Law 1985. However, the 2006 amendments to the UNCITRAL Model Law have not been adopted. Please see below.
Are there any impending plans to reform the arbitration laws in your jurisdiction?
In 2017 a committee appointed by the Danish Institute of Arbitration released a report, including a legislative proposal on the revision of the Arbitration Act. In its proposal, the committee recommended the adoption of the 2006 amendments to the UNCITRAL Model Law (ie, provisions on interim measures). Moreover, the committee recommended that access to court appeal in cases regarding the setting aside and enforcement of arbitration awards be limited, and that the Danish Maritime and Commercial Court should have exclusive jurisdiction in these cases. Following the report, the Ministry of Justice initiated a public hearing regarding the need for reform. The Ministry of Justice has not yet formally introduced a legislative proposal regarding the amendment of the act. Any possible amendment must be enacted by Parliament.
What are the validity requirements for an arbitration agreement?
Both written and oral arbitration agreements are valid under Danish law. The validity of an arbitration agreement depends on the authority of the parties entering into the agreement (eg, legal age and authority to bind a company). Consumer arbitration agreements entered into before a conflict arises are not binding on the consumer.
Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?
Arbitral agreements are generally respected by the Danish courts.
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?
It is possible if authorised by the arbitration agreement or by the rules of the applicable procedure (eg, institutionalised arbitration).
Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
If the parties have not agreed on a choice of law, the arbitral tribunal must determine the applicable law based on the circumstances. This implies a wide discretion on the part of the arbitral tribunal.
Are there any provisions on the separability of arbitration agreements?
Arbitration clauses in contracts are considered separate agreements (ie, independent of the validity of the agreement in which the clause is included).
Are multiparty agreements recognised?
Criteria for arbitrators
Are there any restrictions?
Anyone who is not impartial and independent cannot be appointed as an arbitrator (nor can his or her appointment be upheld).
What can be stipulated about the tribunal in the agreement?
The Arbitration Act contains no restrictions on the number of arbitrators required or who must appoint them. The default rule is that:
- ad hoc arbitral tribunals consist of three arbitrators;
- each party appoints one arbitrator; and
- the two party-appointed arbitrators appoint the chair.
Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?
The Arbitration Act contains no requirements on the qualifications of an arbitrator. In principle, any person who has legal autonomy may be appointed as an arbitrator.
Challenging the appointment of an arbitrator
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?
The appointment of an arbitrator may be challenged within 15 days of the challenging party obtaining knowledge of the appointment and the grounds giving rise to the challenge. If an appointment is challenged and the arbitrator does not step down voluntarily or by the tribunal’s majority decision, the matter can be brought before the ordinary courts within 30 days of the decision.
How should an objection to jurisdiction be raised?
If a case is brought before the ordinary courts and one of the parties believes that the matter should be settled by arbitration, it can make a claim to have the case dismissed from the ordinary courts.
If arbitration procedures are initiated and one of the parties believes that arbitration has not been agreed, it can apply to the arbitral tribunal for a decision on the issue. The arbitral tribunal will either find that:
- an arbitration agreement was not entered into, in which case the arbitration proceedings will be terminated and the case can be brought before the ordinary courts (if authorised by the Administration of Justice Act); or
- an arbitration agreement was entered into, in which case the opposing party must plead its case before the arbitral tribunal. If the tribunal renders a separate decision on the validity of the arbitration agreement, that decision may be challenged separately before the ordinary courts.
Replacement of an arbitrator
Why and how can an arbitrator be replaced?
An arbitrator can be replaced only if he or she does not fulfil the impartiality and independence requirements or decides that he or she will no longer partake in the arbitration, in which case a new arbitrator must be appointed.
Powers and obligations
What powers and obligations do arbitrators have?
Arbitral tribunals issue final and binding decisions on arbitration. They must offer equal treatment to the parties and maintain their impartiality throughout the case. Tribunals also have powers to pass orders on interim measures and the deposit of collateral.
Liability of arbitrators
Are arbitrators immune from liability?
Not unless it has been specifically agreed. According to the Arbitration Act, there are no liability restrictions.
Communicating with the tribunal
How do the parties communicate with the tribunal?
This depends on what has been agreed between the parties and arbitral tribunal. Usually, communication rules are agreed beforehand or as a first step when the arbitral tribunal is established.
Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?
A unanimous decision need not be reached. In case of a disagreement, the majority's decision applies. A dissenting arbitrator has the right to state his or her separate opinion in the final award so that the parties are aware of his or her opinion and reasons for dissent.
Are there any disputes incapable of being referred to arbitration?
Yes – matters of public law (eg, in whose custody a child should be placed).
Generally, disputes that are contrary to Danish public order are non-arbitrable (eg, an agreement to commit fraud or bribery or avoid payment of taxes owed according to applicable Danish tax law).
Can the arbitrability of a dispute be challenged?
Yes – either as a substantive argument (in which case the arbitral tribunal must decide whether to dismiss the case) or subsequently in a case concerning the setting aside of the arbitral award.
Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
The principle of competence-competence is recognised in Denmark. Arbitral tribunals decide whether they are authorised to adjudicate a case based on an arbitration agreement. However, tribunal decisions regarding whether an arbitration agreement is binding may be tried by the ordinary courts as a separate matter (if the tribunal has issued a separate decision on its competence to adjudicate the matter) or as part of invalidation proceedings against the tribunal's final award.
Starting an arbitration proceeding
What is needed to commence arbitration?
A written request for arbitration. The parties may agree on other formal requirements in the arbitration agreement.
Are there any limitation periods for the commencement of arbitration?
No – the alleged claim may be time barred, but that does not imply that it cannot be subject to arbitration.
Are there any procedural rules that arbitrators must follow?
The Arbitration Act includes procedural principles, including fundamental principles of due process, impartiality and equal treatment of the parties. If arbitration is conducted by an arbitration institution, the institution’s rules of procedure typically contain more detailed rules than those set out in the Arbitration Act.
Are dissenting opinions permitted under the law of your jurisdiction?
Can local courts intervene in proceedings?
Not on an ex officio basis, but the arbitral tribunal can ask the ordinary courts to assist in obtaining evidence.
The parties can, without reference to the arbitral tribunal, ask domestic courts to initiate interim measures.
Can the local courts assist in choosing arbitrators?
If the parties cannot agree on formation of the arbitral tribunal according to the Arbitration Act, each party may ask the ordinary courts to appoint arbitrators.
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?
If a respondent fails to participate, it runs the risk of the arbitral tribunal making its decision based on the other party's allegations and evidence. Tribunals have no power to issue subpoenas to third parties, but may ask the ordinary courts to assist in obtaining evidence through the court.
In what instances can third parties be bound by an arbitration agreement or award?
Only the parties agreeing to arbitration are bound by the arbitral award. While other parties may be affected, a claim against a party can be subject to arbitration only if that party has agreed to arbitration.
Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?
This will be decided by the arbitral tribunal.
How is evidence obtained by the tribunal?
Evidence is provided by the parties. Arbitral tribunals decide what evidence is admissible and how particular evidence should be evaluated (eg, which is the strongest evidence). Tribunals can appoint an independent expert to provide a statement and give evidence on relevant matters. Moreover, tribunals may request that the ordinary courts assist in obtaining evidence. Tribunals also have authority to ask the ordinary courts to pose preliminary questions to the European Court of Justice. Arbitral tribunals rarely take steps to obtain evidence ex officio.
What kinds of evidence are acceptable?
Both written evidence (documents) and witness statements are admissible. Written witness statements may be admissible at the arbitral tribunal's discretion. There are no formal requirements for obtaining witness statements. Thus, witness statements may be given via any means (eg, teleconference) accepted by the tribunal.
Is confidentiality ensured?
The arbitrators are bound by confidentiality but the parties are not, unless confidentiality among the parties is specifically agreed in the arbitration agreement. Meetings between the arbitral tribunal and the parties are not publicly accessible, unless otherwise agreed by the parties.
Can information in arbitral proceedings be disclosed in subsequent proceedings?
Yes, unless the parties agree otherwise. That said, such agreements are difficult to uphold under Danish law if, for example, the arbitral award is subjected to invalidation proceedings.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
Members of the Danish Bar must abide by the ethical codes, regardless of whether a case is conducted before the ordinary courts or an arbitral tribunal. Moreover, if the seat of the arbitration is in Denmark, attorneys are regulated by the Administration of Justice Act.
No specific act regulates arbitrators, apart from the general regulations set out in the Arbitration Act, according to which any arbitrator must be impartial and independent.
Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?
The arbitral tribunal decides on its own costs and those awarded to the participating parties. These costs will normally depend on the outcome (the ‘loser pays principle’ applies under Danish law and practice). The arbitral tribunal may request that the parties guarantee payment of the arbitral tribunal's costs and may terminate the arbitral proceedings if this guarantee is not furnished. Normally, the arbitral tribunal will ask the parties to deposit a certain amount with a Danish bank.
Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?
What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?
An arbitral award in writing rendered and signed by an arbitral tribunal will be recognised by the Danish courts. An award need not be reviewed by any other body according to Danish law. Further, according to the the Danish Arbitration Act any arbitral award rendered by an arbitral tribunal must be reasoned, unless otherwise agreed by the parties.
Timeframe for delivery
Are there any time limits on delivery of the award?
No. Arbitral tribunals will generally seek to move the case forward. An arbitral tribunal can terminate arbitration proceedings if it considers continuation to be unnecessary or impossible.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
Danish law does not restrict private parties from agreeing on certain remedies.
Generally, there are no limits to the agreed remedies that an arbitral tribunal will accept; however, the parties must bear in mind that the tribunal's competence encompasses only the matter covered by the arbitration agreement. This implies that the tribunal cannot impose injunctions on third parties.
As for damages and compensation claims, the tribunal's remedies must be authorised by the applicable law. Some remedies authorised by foreign law may be considered contrary to Danish public policy.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
It follows from the Arbitration Act that the ordinary courts may commence interim measures even though the parties have agreed to arbitration. This could be a preliminary injunction prohibiting one of the parties to the arbitration agreement from performing certain actions.
Can interest be awarded?
At what rate?
At the applicable rate according to the Danish law on interest (currently around 8% per year).
Is the award final and binding?
What if there are any mistakes?
The Arbitration Act authorises the setting aside of arbitral awards for reasons aligned with Article 34 of the UNCITRAL Model Law and the reasons for refusing to enforce an award pursuant to Article V of the New York Convention. The Supreme Court has recently confirmed the position on the setting aside of arbitral awards in the “Taewoong” case, where the Supreme Court confirmed that arbitral awards can only be set aside under extraordinary circumstances in obvious violation of ordre public and that those circumstances are exhaustively listed in the Arbitration Act. Notably, this is the first Supreme Court Judgment on the setting aside of an arbitral award since 2009.
Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
Arbitral awards are final and cannot be appealed. The ordinary courts’ authority to set aside arbitral awards according to Section 37 of the Arbitration Act cannot be waived.
On what grounds can parties appeal an award?
What is the procedure for challenging awards?
A suit to set aside a final award must be filed within three months of issuance of the award.
What steps can be taken to enforce the award if there is a failure to comply?
The ordinary courts will assist as if the arbitral award were a judgment.
Can awards be enforced in local courts?
How enforceable is the award internationally?
This depends on the law of the state in which the party seeks to enforce the Danish award. An arbitral award rendered by an arbitral tribunal seated in Denmark will generally be considered enforceable in all states which have adopted the New York Convention.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
Under Danish law, states and state entities may enter into arbitration agreements; as such, according to the Arbitration Act, they are bound by any final arbitral award. However, the legal authority to enter into an arbitration agreement may be regulated by the law of another state (eg, the law of the domicile of the party in question) instead of Danish law.
Are there any other bases on which an award may be challenged, and if so, by what?
See Section 37 of the Arbitration Act which implements Article 34 of the UNCITRAL Model Law.
How enforceable are foreign arbitral awards in your jurisdiction?
Arbitral awards are generally upheld by Danish courts. There are few cases in which a party has successfully challenged an arbitral award.
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
Rules and restrictions
Are there rules or restrictions on third-party funders?
Class-action or group arbitration
Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?
The Administration of Justice Act includes provisions on class-action suits. According to Section 254C, the court will appoint a representative for the plaintiffs. Class-action suits are not arbitrable in the sense that one party may conduct one case on behalf of a group of plaintiffs pursuant to the Administration of Justice Act. Thus, arbitral awards are binding only on the parties that have entered into the arbitration agreement.
Are there any hot topics or trends emerging in arbitration in your jurisdiction?
The need for dissenting opinions has been debated alongside the authority to set aside arbitral awards under Section 37 of the Arbitration Act. The general opinion is that dissenting opinions should be reserved for special cases, where they may be of specific legal importance (eg, because they point out mistakes by the majority that may give rise to invalidation proceedings).