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Arbitration

Overview
Including: Initiation of arbitration - institutional or ad hoc?; Submitting disputes to arbitration; Arbitration agreement; Ordinary courts; Composition of tribunal; Proceedings; Setting aside arbitral awards; Recognition and enforcement of arbitral awards; Foreign arbitral awards; Costs and security.

The council of the Institute of Arbitration recently adopted new rules for the hearing of arbitration cases. The new rules aim to make arbitration proceedings more effective, and thereby shorter, leading to a reduction in costs. Among other things, under the new rules it will no longer be possible for a claimant to bring an arbitration case solely by filing a request with the institute.

A recent arbitral award from the Danish Institute of Arbitration established that failure to pay the requested security for a counterclaim does not necessarily lead to termination of the arbitral proceedings as a whole. The award establishes the legal situation regarding the provision of security for counterclaims within the rules of the Institute of Arbitration.

The Building and Construction Arbitration Board has recently adopted new rules concerning the arbitration procedure for building and construction disputes. The purpose of the new rules is to make the arbitration proceedings more effective and thus quicker. The main change is that parties are now responsible for the proceedings early in the procedure. The new rules took effect early this year and apply to all arbitration proceedings brought before the board.

In a recent decision the Supreme Court established that an arbitrator was not independent because of his previous role as an adviser to one of the parties in regards to the contract on which the arbitration tribunal was to decide. However, the arbitration award was not found legally invalid, as the claimant had not stated its objection in time.

Cooperative housing associations and owners' associations are likely to be considered 'consumers' under Section 7(2) of the Arbitration Act. This means that they will not be bound by arbitration clauses in, for example, the General Conditions for Consultancy and Assistance or the General Conditions for Works and Supplies in the Construction Sector.

Is a bankruptcy estate obliged to accept an arbitration clause between the insolvent company and another company? Due to market conditions, this issue has significantly increased in importance and is worth examining more closely. The question should be taken into consideration before depending on an arbitration clause when entering into, for example, an international supplier agreement or a debt restructuring agreement.

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Banking

Overview
Including: The Banking Sector; The Banking Act; The Financial Business Act; Deposit and Investor Guarantee Fund.

The Financial Services Authority has finalized new guidelines concerning the organization of banks, their internal controls and the areas in which written procedures and policies are necessary. Among other things, the new guidelines implement the Committee of European Banking Supervisors' Guidelines on the Application of the Supervisory Review Process under Pillar II.

The Danish Financial Supervisory Authority has submitted for open consultation a proposal to allow commercial banks to issue covered bonds. The proposal exercises the option to issue covered bonds set out in the EU Capital Requirements Directive and implements the more stringent conditions of the directive.

The Danish Financial Supervisory Authority is to adopt the recommendations of a working group which was charged with reviewing the statutory obligations of financial undertakings to inform and advise their customers, and assessing whether the rules work against the objective of customers receiving relevant information in a timely fashion.

During 2005 and the first half of 2006 the International Monetary Fund (IMF) conducted a financial sector assessment programme in Denmark. The IMF has now published the programme's preliminary conclusions, including a finding that the sector has a high level of compliance with international financial supervisory standards.

The minister of economics and business affairs has put forward a proposal to Parliament which will adopt the presumed changes to the EU Credit Institution Directive (2000/12/EC) and the EU Capital Adequacy Directive (93/6/EC) - together known as the EU Capital Requirements Directive.

The Danish Financial Supervisory Authority (DFSA) has sent a letter to all Danish credit institutions regarding the developments in real estate prices in Denmark. In the letter the DFSA warned credit institutions that there might be a price bubble in the real estate market due to the significant rises in real estate prices in recent years.

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Capital Markets

From January 1 2011, issuers have a duty to publish internal knowledge as soon as possible if such knowledge can no longer be considered confidential, irrespective of whether the internal knowledge concerns matters that are uncertain (eg, information about ongoing negotiations which might not become a reality). The new rules aggravate the issuer's duty to disclose and place heavier demands on assessment of information.

The Copenhagen Stock Exchange Committee on Corporate Governance has published a report proposing a set of revised recommendations regarding the 'comply or explain' principle and the European Commission's recommendations regarding management independence and remuneration.

The Danish Parliament has adopted new regulations on market abuse and prospectuses. The regulations implement, among other EU legislation, the EU Market Abuse Directive by amending the Danish Securities Act.

A court ruling has substantial ramifications for the financial industry and the possibility of developing new financial instruments linked to or derived from other financial instruments, since such instruments may now only be issued with the acceptance of the linked or derived financial instrument.

Commercial Property

Overview
Including: Legal Systems; Tenure Groups; Pertinent Laws; Agreement to Buy; Registration; Taxation.

The Supreme Court recently ruled that connection charges cannot be collected following the subdivision of property into housing parcels when a previous connection charge has already been paid under the rules of commercial property. According to the court, the responsibility for sewerage for newly subdivided housing parcels lies with the wastewater utility company, despite it being unable to collect contribution charges.

The Building Act requires local municipalities to review applications for building permits and investigate whether proposed construction works would be contrary to other legislation. A recent Supreme Court judgment suggests that a building permit does not necessarily grant permission to build.

In two recent decisions the Supreme Court ruled that the owners of polluted sites should compensate municipalities for expenses incurred in remedying the pollution.

Company & Commercial

The Maritime and Commercial Court recently found that a former managing director had violated his duty of loyalty when he stated that he had continued his sold company under a new name. The case centred on the question of whether the former company owner and managing director was entitled to a bonus pursuant to a purchase agreement entered into with the purchaser of his company.

Competition

The Competition Appeals Tribunal has overruled a decision of the Competition Council which found that the Danish Pharmaceutical Association had violated Section 6 of the Competition Act and Article 81 of the EC Treaty. The tribunal held that as the pharmaceutical market is highly regulated, it was not possible for the wholesalers to compete on price, quality or product diversity, but instead only on services and cost-based discounts.

The Competition Authority recently published the Danish Competition Report for 2007. The report highlights that mergers that could have possible detrimental effects on competition are exempt from the Danish merger control rules due to the high threshold values, which are among the highest in the European Union.

Following dawn raids on a number of Danish banks, the Competition Council has issued a ruling concluding that seven Danish banks had violated the Competition Act by participating in a cartel for a period of several years. The council found that the banks had participated in a market-sharing agreement by dividing customers geographically.

The Competition Appeal Board has repealed a ruling of the Competition Council that Viasat's business terms did not violate Sections 6 and 11 of the Competition Act, which deal with anti-competitive behaviour and correspond to Articles 81 and 82 of the EC Treaty. The case turned on the definition of the relevant market reached following the council's examination of the facts.

In order to boost competition and enhance transparency, the minister for economic and business affairs has proposed a bill containing several amendments to the Competition Act. The amendments can be categorized into two groups: preventive measures and investigative measures.

In a recent decision the Competition Council stated that a merger that involved the transformation of a business from a voluntary chain to a centralized capital chain of retail shops impeded competition in a way that created a dominant position in the market, even when almost all the participating retail shops in the voluntary chain followed the same pricing policy.

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Corporate Finance/M&A

Overview
Including: Private Acquisitions; Public Takeovers; Corporate Reorganizations

It is becoming increasingly common in Denmark for the parties to an M&A transaction to take out insurance in order to cover potentially deal-breaking issues, and to provide certainty and finality. Generally, however, it is not an option for deals with a premium of below €150,000.

It is unclear whether Danish limited liability companies can give representations and warranties to share subscribers in private placements. Generally, the view is that representations and warranties from the issuing company in private placements fall within the scope of legal obligations to which a Danish company can validly commit, since they are required by the international investor community.

The Danish Data Supervisory Agency has stated that the release of non-sensitive personal data to a potential purchaser and its advisers is compatible with the Danish Act on the Processing of Data, provided that those with access to the data have executed appropriate confidentiality agreements.

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Corporate Tax

The Danish Parliament, the Folketinget, has adopted Act 357/2004 to amend the Tax Administration Act, ensuring that major shareholders and companies will receive a binding reply to questions about the tax effects of their transactions. The act took effect on July 1 2004.

In a recent decision the National Tax Tribunal established that a taxpayer who had been fired by his Danish employer and who subsequently moved abroad was liable to pay a limited amount of tax in Denmark on the salary received during his notice period.

The minister of taxation has issued an order on the Value Added Tax (VAT) Act concerning changes to VAT invoice requirements. The changes are a result of the harmonization of invoice requirements between EU member states. The Parliament has also adopted amendments to the Tax Control Act which abolish the duty of sole traders and principal shareholders to submit annual capital statements.

In a recent decision the National Tax Tribunal established that a company registered by the Danish Commerce and Companies Agency was considered fully liable to pay tax to Denmark, irrespective of the fact that its management (which consisted of two individuals), was based in the United States.

The Central Customs and Tax Administration has issued guidelines regarding taxation in connection with working abroad. They cover issues such as cross-border workers, tax calculation, tax deduction at source and foreign salaries.

According to a recent decision of the Western High Court, there was no grounds for allowing a limited partner to deduct a loss caused by joint and severable liability with an insolvent co-limited partner, irrespective of the fact that a significant part of the loss related to operating costs within the scope of the registered liability of the limited partner.

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Employment & Labour

The EU advocate general recently found that an age-graduated pension scheme was in compliance with EU law. In his decision, he held that any such age-graduated pension scheme was an act of age discrimination. The main question was therefore whether such discrimination fell within the derogation of Section 6a of the Danish Anti-discrimination Act, or whether it could be deemed unlawful.

The Eastern High Court recently found that an agreement that an employee would waive all claims against his employer should not include claims that could not have been predicted at the time at which the agreement was concluded. The judgment shows that, irrespective of whether a severance agreement has been concluded in connection with dismissal, an employee may be able to raise additional claims against the employer.

The Eastern High Court recently established that an employer's failure to acknowledge the prognosis of an employee's impending return to work counted as grounds for unfair dismissal. Despite indications to the contrary in the Danish press, the judgment does not change existing case law under which a company or authority may fairly dismiss an employee following absence as a result of illness.

A recent amendment to the Act on Equal Treatment of Men and Women as Regards Access to Employment gives parents the right to ask for flexible working arrangements when resuming work after maternity or paternity or parental leave. As the interpretative notes do not indicate that the amendment is intended to change legal practice, it should be regarded as a mere codification of the state of law already in force.

Companies preparing to carry out an election of employee representatives to serve on the board of directors are advised to pay attention to new rules regarding the election procedure. The provisions set forth in the Companies Act have recently been supplemented by a new executive order, which contains a number of new procedural rules and allows for derogation from the rules to a much greater extent than before.

The Board of Equal Treatment recently found that employers are not permitted to use wording in job advertisements that implies that they are targeted at young applicants. Attaching importance to seemingly neutral criteria can create an assumption that the employer is seeking young employees, which is contrary to the Act on Prohibition against Discrimination in Respect of Employment.

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Energy & Natural Resources

The Danish Energy Authority recently granted a permit to Nord Stream AG to construct the Danish section of its planned Nord Stream pipeline. The pipeline has been subject to intensive political protests in Eastern European countries, particularly regarding national security and potential environmental hazards from the pipeline. However, such political protests have been mainly absent in Denmark.

Environment

The Agriculture and Food Council filed an administrative complaint with the Nature and Environment Complaints Board in relation to both water plans and buffer strips adopted in Denmark. The board recently decided on the complaint and rescinded all 23 water plans, declaring them invalid due to procedural deficiencies in connection with the adoption of the plans.

According to recent Danish legislation - more specifically, the recently enacted water plans - emissions of nitrogen and phosphorus into watercourses and the sea must be reduced radically and the upkeep of specific watercourses must be reduced or discontinued. Some Danish farmers fear that such restrictions will further compound the financial crises to which they are already subject.

Residents often protest against the construction of onshore wind turbines close to their properties due to considerable noise problems, particularly relating to low frequency noise. The Environment Protection Agency recently revised the statutory order on noise from wind turbines to include mandatory limit values for low frequency noise. Denmark is the first country to introduce such mandatory limit values.

For the past two years so-called 'monster rain' has hit Copenhagen in summer. The rain has flooded large areas in the capital and neighbouring towns, causing substantial property damage and closing major radial routes. The authorities have announced a number of ways in which they intend to prevent damage caused by monster rain in future.

In a number of recent decisions on the erection of large demonstration wind turbines, the Appraisal Authority has awarded modest damages to adjoining properties. However, in general the awarded damages have been relatively far from the individual neighbours' experience of the effects. As a result, local authorities may hesitate before granting permission for the establishment of new wind turbine parks.

Minister for the Environment Karen Ellemann has announced that she wishes to introduce a Danish ban on the use of four dangerous phthalates. In order to implement such ban, a draft regulation was recently submitted for public hearing. Ellemann also says that she will also work for a European ban on these four phthalates.

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Franchising

In a recent case Danish company Bestseller attempted to obtain the competition authorities' approval of its franchise agreements. The eventual High Court judgment has led to uncertainty as to how and to what extent it is possible to establish adequate, up-to-date and necessary reporting and monitoring systems within franchising systems without legal repercussions.

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Healthcare & Life Sciences

In line with the general trend in Europe, the Danish government has recently taken initiatives to increase control in the medical device industry. Changes to the Medical Devices Act will impose new obligations on importers and distributors in order to increase supervision of the market and allow the Danish authorities to identify all types of medical device imported into and distributed within Denmark.

The Danish administrative regions, which are responsible for public hospitals and healthcare, have joined forces in an attempt to decrease the use of new medicinal products that they deem too expensive. The regions will establish a pool of Dkr80 million to finance industry-independent research projects. The focus is expected to be on cancer medication and pharmaceuticals for major chronic diseases.

The government's growth team for healthcare and welfare solutions recently published its recommendations on creating growth opportunities, strengthening export possibilities and increasing international market potential. The report selects specific areas of focus, including better framework conditions for research and development and increased efforts for capital and growth companies.

Insurance & Reinsurance

Overview
Including: Social Security System; Mandatory Insurance; Private Insurance and Pensions; Taking Out Insurance; Property and Liability Insurance; Personal Insurance

No guarantee fund exists to protect policyholders in the event that an insurance company goes bankrupt. A new bill establishes a private, independent fund to deal with insurance claims that are not covered in the event of the bankruptcy of a non-life insurance company. All non-life insurance companies set up in Denmark must be a member of, and contribute to, the fund.

A parliamentary committee has issued a White Paper concerning the Danish Insurance Contracts Act. Although the committee has recommended adjustments or specifications to protect the interests of policyholders, rather than the drafting of an entirely new act, it remains to be seen whether a majority of Parliament will adopt the recommendations.

Suggested amendments to the Liability for Damages Act should be considered in light of the Industrial Injuries Insurance Act and contemplated proposals for separate amendments.

A recent case before the Maritime and Commercial Court concerned a carriage of insulin which was exposed to frost. The importer claimed full damages against the carrier on the grounds of its carrier liability insurance (open policy).

A government commission has recommended radical amendments to the 1984 Act on Liability for Damages. Major changes would be made in areas such as temporary loss of earnings, permanent injury and permanent loss of earnings capacity.

According to a ruling by the Danish Competition Authority, legal aid insurance will no longer form an automatic part of domestic consumer insurance products. The ruling follows an unsuccessful action brought by the Association of Danish Insurers concerning group exemption from the ban on non-competitive agreements.

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Intellectual Property

Overview
Including: Trademarks; Copyright; Patents.

The Maritime and Commercial Court recently considered an alleged violation of design rights for two competing herb and spice grinders. Grace Manufacturing Inc argued that Herstal's herb and spice grinder with cutting blades violated Grace's design registration for a similar product. The case centred on whether the cutting blades could be considered visible, and thus eligible for protection.

The Maritime and Commercial Court recently considered whether use of the designation 'Opus-Dei: Existence After Religion' by a games company implied a violation of the Prelatura Del Opus Dei Region de España's right to use the designation OPUS DEI. The court also examined whether the prelature's Community trademark registration was invalid or should be invalidated due to non-use.

Following its hearing in Blomqvist v Rolex, the Supreme Court decided to refer preliminary questions to the European Court of Justice. The Supreme Court recently issued a document detailing these questions for reference. The court has also issued a number of remarks to the decision made in the appealed judgment. This matter has attracted worldwide attention.

In 2010 the Maritime and Commercial Court ordered two fashion houses to pay compensation to an importer that they had accused of marketing counterfeit goods and trademark infringement. Although the court found for the plaintiffs on two counts, it rejected most of the infringements which Gucci alleged, instead finding for the importer. The Supreme Court recently made a number of alterations to these decisions.

In a recent case before the Maritime and Commercial Court, Kraft attempted to substantiate claims that its mark was well established in Denmark and a rival mark should be invalidated. However, the court argued that despite being visually similar, the marks were pronounced differently - in Danish and English, respectively - and there was no risk of confusion. Kraft was ordered to pay Dkr30,000 as costs.

The Supreme Court recently reversed a Maritime and Commercial Court ruling in relation to a three-dimensional trademark for a bottled gas container. The first instance court had found that the trademark had been infringed when the bottle was reused; the Supreme Court disagreed. Before making its decision, the Supreme Court submitted a number of questions to the European Court of Justice.

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Litigation

Overview
Including: Background; Jurisdiction; Procedure; Evidence; Judgment and remedies; Recognition and enforcement of foreign judgments.

The Eastern High Court recently found that an agreement that an employee would waive all claims against his employer should not include claims that could not have been predicted at the time at which the agreement was concluded. The judgment shows that - irrespective of whether a severance agreement has been concluded in connection with dismissal - an employee may be able to raise additional claims against the employer.

According to a recent Supreme Court judgment, two members of a houseowners' association committee did not become personally liable in damages for appealing a judgment, even though they knew that the association would be unable to pay the legal costs if the High Court judgment were upheld and the case thereby lost. The case was tried at all three instances.

A new bill, which is intended to modernise and improve the rules on injunctions and to create a process which reflects the increasing complexity of injunction cases, has been introduced to Parliament. The bill would make it possible to request mandatory injunctions and allow injunction cases to be heard by the ordinary courts.

Lawyers are often required to consider private international law rules of a country other than their own, in order to determine whether it is possible and favourable for the client to instigate proceedings in a different country. Such questions are covered by both EU conventions and regulations. However, Denmark has expressed its reservations over such legislation and has opted out of cooperation with the rest of the European Union.

Legal action can generally be brought against a party in the party's home jurisdiction. However, an alternative jurisdiction may apply in certain circumstances. The notion of delictum enables a legal action to be brought "where the legal wrong occurred". Danish case law was previously unclear regarding the interpretation of this rule, but a recent Maritime and Commercial Court judgment has provided clarification.

When an EU member state has levied a tax in breach of EU law, the consequences of the tax's incompatibility with EU law must be offset by reimbursement. The Court of Justice of the European Union recently considered a case arising from the Danish state's levying of an excise duty on lubricant and hydraulic oils that was later found to be unlawful.

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Media & Entertainment

The handing over of paintings for scrapping is not an assignment of ownership or copyright in the works. A new Supreme Court judgment establishes that such abandonment does not imply a right to sell the paintings. This judgment strengthens the protection of artists' works and illustrates a central element of copyright - namely, the scope of the protection of such works.

The dispute between film company Zentropa and writer Peter Øvig Knudsen has received wide media coverage and raises the question of whether making a close screen adaptation of a historically based book without obtaining permission from the author constitutes copyright infringement.

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Shipping & Transport

Overview
Including: Damaged Cargo; Merchant Shipping Act; Choice of Law and Paramount Clauses; Freight Forwarders; Transport Conventions

A recent ruling highlights the fact that carriers must be informed when goods are of particular value and special security measures must be taken. The Supreme Court held that the theft of designer goods from an area that was checked by security guards only three times a night was not attributable to the carriers' gross negligence.

The Maritime and Commercial Court has ruled in favour of railway carriers in a delivery dispute, notwithstanding a leakage of wine from a tank container in transit.

The Western Division of the Danish High Court found in favour of plaintiffs who had experienced airline delays. The court was not satisfied that the airline had taken all necessary measures to avoid the loss incurred by the travellers due to the delay.

Following damage to meat products in transit, the goods' insurers paid compensation and instituted legal proceedings claiming indemnification against the transportation firm for the full amount. The Maritime and Commercial Court ordered the transportation firm to pay.

The Maritime and Commercial Court has ruled on the issue of whether a ship broker and shipping firm were liable for costs incurred in connection with the retention of goods in Pakistan.

A recent case before the Maritime and Commercial Court concerned a carriage of insulin which was exposed to frost. The importer claimed full damages against the carrier on the grounds of its carrier liability insurance (open policy).

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