Denmark offers a robust and internationally aligned framework for arbitration, making it a preferred choice for resolving cross-border disputes. Governed by the Danish Arbitration Act 2005 (the “DAA”), based on the UNCITRAL Model Law, Denmark ensures adherence to global standards of fairness, flexibility, and efficiency. Its legal framework supports both domestic and international arbitration, guaranteeing party autonomy, equal treatment, and enforceable awards. The Danish Institute of Arbitration (the “DIA”) in Copenhagen further enhances this system, providing professional administration and specialised rules for streamlined arbitration proceedings in Denmark. Denmark provides a stable legal environment and a reputation for neutrality. Thus, it is an excellent hub for international arbitration.
Legal Framework
The DAA regulates arbitration in Denmark. It replaced the Danish Arbitration Act of 1972 and is based on the 1985 UNCITRAL Model Law on International Commercial Arbitration.[1] The DAA applies equally to international and domestic arbitration seated in Denmark.[2]
The main arbitral institution in Denmark is the DIA. Founded in 1981, the DIA offers rules for arbitration, simplified arbitration, express arbitration, and mediation.
Arbitration Agreement in Denmark
Pursuant to Section 7(1) of the DAA, an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate contract.[3]
Further, Section 7(2) of the DAA limits the effectiveness of arbitration agreements in consumer disputes to those concluded after the dispute arose:
In case of a consumer contract, an arbitration agreement concluded before the dispute arose shall not be binding on the consumer.[4]
Under the DIA arbitration rules, where the parties agreed to submit the dispute to arbitration under the DIA arbitration rules, they should be deemed to have submitted to the rules in effect on the date of commencement of arbitration.[5]
Arbitral Jurisdiction
The DAA also regulates the jurisdiction of arbitral tribunals. Section 16(1) stipulates that an “arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement”[6] (the Kompetenz-Kompetenz principle). The DAA further stipulates that challenges to the tribunal’s jurisdiction must be raised before the submission of the statement of defence, and a claim that the tribunal is acting beyond its jurisdiction must be raised during the arbitral proceedings. The arbitral tribunal can admit a challenge at any time if it considers the delay justified.[7]
Arbitral tribunals may rule on such pleas in a preliminary award or an award on merits.[8] Further, a party cannot argue that a tribunal lacked jurisdiction during setting-aside or enforcement proceedings unless the dispute’s subject matter is incapable of being resolved through arbitration.[9]
International Arbitration Principles in Denmark
Pursuant to the DAA, the parties should be treated equally, and each party should be given a full opportunity to present its case.[10] The Act also guarantees parties’ rights to agree on the procedure to be followed by the arbitral tribunal (the parties can choose institutional rules or arbitrate ad hoc),[11] and stipulates that if the parties fail to reach such an agreement, the tribunal can conduct the arbitration in the manner it considers appropriate:
Failing such agreement, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.[12]
The DAA also guarantees the parties’ right to agree on the place of arbitration[13] and the language used in arbitration.[14] Without an agreement on these issues, the tribunal shall determine the language and place of arbitration.[15]
Procedural Requirements
Further, the DAA requires the parties to exchange at least one set of briefs with supporting evidence.[16] The claimant’s failure to submit a statement of claim permits the tribunal to terminate the proceedings. The respondent’s failure to submit a statement of defence permits the tribunal to consider this as an admission of the claimant’s claims, and the failure to appear at the hearing permits the arbitral tribunal to make the award on the evidence before it.[17]
Hearings
The DAA permits the tribunal to conduct the arbitration without a hearing, on the basis of documents presented, if a party does not request a hearing.[18] The DAA requires the tribunal to decide the dispute in accordance with rules and laws chosen by the parties. The tribunal is permitted to decide ex aequo et bono or as an amiable compositeur only when expressly authorised by the parties.[19]
DIA Arbitration Procedure
The DIA arbitration rules mirror a majority of the provisions of the DAA, adding provisions requiring the Claimant to pay a financial deposit for the commencement of arbitration.[20] The DIA Rules further state that absent the parties’ agreement on the place of arbitration, the default place of arbitration shall be Copenhagen.[21]
Arbitral Tribunal
Under Chapter 3 of the DAA, the parties are free to determine the number of arbitrators. Failing an agreement of the Parties on the appointment of the arbitral tribunal, the number of arbitrators shall be three, with each party appointing one arbitrator, and with the two party-appointed arbitrators appointing the chair of the arbitral tribunal.[22] Further, the DAA also regulates the grounds for the challenge of an arbitrator and the arbitrator’s withdrawal and incapacity to act.[23]
Under the DIA arbitration rules, the arbitral tribunal shall consist of one or three arbitrators, and the sole arbitrator or president of the tribunal shall hold a law degree.[24] The arbitrators must be available, impartial and independent.[25]
The Parties may jointly appoint the sole arbitrator.[26] In the case of a three-member tribunal, each party should appoint an arbitrator in their first submission, who should appoint the president of the tribunal.[27] In cases where both parties are not of the same nationality, the sole arbitrator or the president of the tribunal shall be of a different nationality and shall be domiciled in a different country.[28]
Before being confirmed as an arbitrator, the arbitrator must sign a declaration of acceptance, impartiality and independence disclosing all the relevant facts.[29]
The DIA Rules provide that a party may challenge an arbitrator only if justifiable doubts as to the impartiality, independence or qualification of the arbitrator arise. Unless the parties agree on the challenge, or the arbitrator steps down voluntarily, the challenge shall be decided by the DIA.[30]
Expert Witnesses
The DAA regulates the role of expert witnesses in international arbitrations seated in Denmark. It gives arbitral tribunals the power to appoint expert witnesses and to require a party to give the expert all the relevant information and documents.[31]
Similarly, the DIA arbitration rules permit the arbitral tribunal to, following consultation with the parties, appoint experts to report on specific issues to be determined by the arbitrator. The expert can also be appointed jointly by the parties. The expert is required to be available, impartial and independent.[32]
Arbitration Awards in Denmark
Under the DAA, the arbitral tribunal shall terminate the proceedings if the parties settle the dispute. At the parties’ request and with the arbitral tribunal’s consent, the arbitral tribunal can record the settlement in the form of an arbitral award on agreed terms, giving it the same status and effect as any other award on the merits of the case.[33] The DAA requires an award to state the reasons on which it is based and the date and place of arbitration. The award should be in writing and signed by the arbitral tribunal.[34] A party can request the arbitral tribunal to correct any computational, clerical and typographical errors in an award within thirty days from the receipt of the award.[35]
The DIA arbitration rules require the arbitrator to submit a draft version of the award to the Secretariat as soon as possible upon conclusion of the oral hearing, and no later than six months after the case is referred to the arbitrator; otherwise, the arbitrator shall notify the parties and the Secretariat of the time when the draft award may be expected.[36] The award should state its date and the place of arbitration, a presentation of the facts of the case and, to the extent necessary, a rendition of any statements made by the parties or witnesses and the legal arguments of the parties. Further, the award should be in writing and signed by the arbitrator and should also contain the reasons upon which it is based.[37]
The DIA Secretariat shall scrutinise draft awards, propose modifications to their form, and draw the arbitrator’s attention to any issues that affect the validity of the award, its recognition, and enforcement.[38] The DIA arbitration rules also permit the arbitrator to issue a consent award in the event of settlement.[39]
Recourse Against International Arbitration Awards in Denmark
The DAA specifies that an award may be set aside only if the party making the application furnishes proof that:
- the arbitration agreement was not valid;
- the party making the application was not given proper notice of the proceedings or of the appointment of the arbitrators;
- the award contains decisions beyond the scope of the submission to arbitration; or
- the composition of the tribunal or the procedure was not in accordance with the procedural law or the agreement of the parties.
The court can set aside the award if it is satisfied that the dispute subject matter was not capable of settlement by arbitration or that the award is manifestly contrary to Danish public policy.[40] Consequently, upon a successful setting aside of an award, the arbitration agreement becomes effective again.[41]
Enforcement of International Arbitration Awards in Denmark
Pursuant to Section 38 of the DAA, the courts should recognise and enforce all valid awards, irrespective of the country in which it was made:
an arbitral award, irrespective of the country in which it was made, shall be recognized as binding and shall be enforced in accordance with the provisions of the Administration of Justice Act on the enforcement of judgments.[42]
The DAA further specifies that recognition and enforcement of an award may be refused only for the same reasons as for setting aside an award.[43]
Denmark is a signatory state to the New York Convention on the Recognition and Enforcement of International Arbitral Awards. Thus, arbitral awards issued in Denmark are, in principle, enforceable in 172 contracting states.[44]
Express Arbitration
Besides its standard arbitration rules, the DIA also has rules for express arbitration (the “express rules”). They are applicable to disputes where the parties have agreed on their application.[45] The goal of these rules is to provide a quicker and more cost-effective means of dispute resolution.[46] The express rules shorten the time limits. For example, the respondent has only ten days from the receipt of a statement of claim to provide its statement of defence.[47] The arbitral tribunal also has only ten days from the last submission to render its award, and a request for correction should be made within five days from the receipt of the award.[48]
Conclusion
The framework for arbitration in Denmark ensures alignment with international standards. The DAA governs both domestic and international arbitration, providing a modern and effective legal framework. It reflects best practices in international arbitration. Awards rendered in Denmark are enforceable in the majority of jurisdictions. The DIA offers arbitration rules that provide for efficient dispute resolution. Parties are treated equally, and procedural fairness is sought. Denmark’s framework demonstrates its commitment to effective and globally competitive arbitration practices.
[1] Danish Institute of Arbitration (voldgiftsinstituttet.dk), Arbitration Act
[2] Danish Arbitration Act 2005, s. 1(1).
[3] Danish Arbitration Act 2005, s. 7(1).
[4] Danish Arbitration Act 2005, s. 7(2).
[5] DIA Arbitration Rules, Article 2.
[6] Danish Arbitration Act 2005, s. 16(1).
[7] Danish Arbitration Act 2005, s. 16(2).
[8] Danish Arbitration Act 2005, s. 16(3).
[9] Danish Arbitration Act 2005, s. 16(4).
[10] Danish Arbitration Act 2005, s. 18.
[11] Danish Arbitration Act 2005, s. 19(1).
[12] Danish Arbitration Act 2005, s. 19(2).
[13] Danish Arbitration Act 2005, s. 20(1).
[14] Danish Arbitration Act 2005, s. 22(1).
[15] Danish Arbitration Act 2005, s. 20(2), 22(2).
[16] Danish Arbitration Act 2005, s. 23.
[17] Danish Arbitration Act 2005, s. 25.
[18] Danish Arbitration Act 2005, s. 24(1).
[19] Danish Arbitration Act 2005, s. 28(3).
[20] DIA Arbitration Rules, Articles 5-14, 25-28.
[21] DIA Arbitration Rules, Article 27.
[22] Danish Arbitration Act 2005, s. 10-11
[23] Danish Arbitration Act 2005, s. 13-15.
[24] DIA Arbitration Rules, Article 18.
[25] DIA Arbitration Rules, Article 20(1).
[26] DIA Arbitration Rules, Article 19(2).
[27] DIA Arbitration Rules, Article 19(3).
[28] DIA Arbitration Rules, Article 19(7).
[29] DIA Arbitration Rules, Article 20(2).
[30] DIA Arbitration Rules, Article 21.
[31] Danish Arbitration Act 2005, s. 26(1).
[32] DIA Arbitration Rules, Article 35.
[33] Danish Arbitration Act 2005, s. 30.
[34] Danish Arbitration Act 2005, s. 31.
[35] Danish Arbitration Act 2005, s. 32.
[36] DIA Arbitration Rules, Article 39(1).
[37] DIA Arbitration Rules, Article 39.
[38] DIA Arbitration Rules, Article 43.
[39] DIA Arbitration Rules, Article 44.
[40] Danish Arbitration Act 2005, s. 37(2).
[41] Danish Arbitration Act 2005, s. 37(6).
[42] Danish Arbitration Act 2005, s. 38.
[43] Danish Arbitration Act 2005, s. 39.
[44] newyorkconvention.org, Contracting States.
[45] DIA Express Arbitration Rules, Article 1(1).
[46] DIA Express Arbitration Rules, Preamble.
[47] DIA Express Arbitration Rules, Article 6.
[48] DIA Express Arbitration Rules, Articles 19, 26.