A new Danish Arbitration Act came into force on 1 July It is largely based on the UNCITRAL model law.

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1 Denmark

2 europe Key points A new Danish Arbitration Act came into force on 1 July It is largely based on the UNCITRAL model law. The leading international commercial arbitration body in Denmark is the Danish Institute of Arbitration. It administers 20 to 25 international arbitration cases a year. If a witness refuses to give evidence or if it is necessary to have the witness give evidence under oath, the tribunal (or one of the parties with the approval of the tribunal) may ask the courts to take evidence (section 27 of the Arbitration Act). Denmark is a party to the New York Convention. Enforcement of foreign arbitral awards is swift and straightforward. If no objections are made, an award will generally be enforced within two months. Confidentiality Arbitration in Denmark is not confidential. The parties are free to agree otherwise in the arbitration agreement and can decide that the arbitration be confidential. 2 Denmark June 2007 Arbitration in Europe Norton Rose

3 denmark Model arbitration clauses Any dispute or claim arising out of or in connection with this contract or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Rules of Procedure of the Danish Institute of Arbitration (Danish Arbitration). The Arbitration Tribunal shall be composed of a sole arbitrator. arbitrators/ All members of the Arbitration Tribunal shall be appointed by the Institute. [or] Each party appoints an Arbitrator and the Institute appoints the Chairman of the Arbitration Tribunal. If a party has not appointed an Arbitrator within 30 days of having respectively requested or received notice of the arbitration such Arbitrator is appointed by the Institute. The place of arbitration shall be The language(s) of the arbitration shall be The contract shall be governed by the law of Danish Institute of Arbitration See Arbitration for best practice in drafting arbitration clauses. Norton Rose Arbitration in Europe June 2007 Denmark 3

4 europe Weblinks Danish Institute of Arbitration (in Danish) Dansk Forening for Voldgift International Chamber of Commerce ICC Danmark 4 Denmark June 2007 Arbitration in Europe Norton Rose

5 denmark 1 What arbitration bodies are there within the jurisdiction? The leading international commercial arbitration body in Denmark is the Danish Institute of Arbitration. It administers 75 to 80 arbitration cases each year, of which 20 to 25 are international. The International Chamber of Commerce (ICC) has a division in Denmark but does not serve as an arbitral institution; it is there as an aid to Danish members of the ICC. The Building and Construction Arbitration Board deals with domestic arbitration on matters relating to real estate and construction. 2 Is there an Arbitration Act governing arbitration proceedings and, if so, is it based on the UNCITRAL model law? The Danish Arbitration Act (Lov om voldgift, lov nr. L 127, 2005) (the Arbitration Act) entered into force on 1 July 2005 and governs both domestic and international arbitration proceedings. To a great extent, it is based on the UNCITRAL model law. 3 What are the available rules? The rules of the Danish Institute of Arbitration are available (in Danish, English, German and French) on its website. The parties are free to agree on the procedures to be adopted by the tribunal (section 19 of the Arbitration Act). The tribunal must give each party a full opportunity to present its case (section 18). If the parties have made no agreement about the procedural rules, the tribunal may apply the rules it finds appropriate for the arbitration. The Arbitration Act only specifies a few procedural rules for the parties to follow. Norton Rose Arbitration in Europe June 2007 Denmark 5

6 europe If no agreements have been made, and the tribunal adopts the procedures generally used, the following rules apply. Witness evidence will be provided orally and not in writing at the hearing. If it is not possible for a witness to appear before the tribunal, the courts may provide for examination of the witness. The parties must exchange any written contributions required by the tribunal (section 34 para 1 of the rules of the Danish Institute of Arbitration). This might include the written evidence of a witness. Cross-examination of witnesses is allowed and is quite common. If the parties or the tribunal deem expert evidence appropriate, the tribunal will appoint one or more expert witnesses to give evidence on factual or technical matters. If no agreement has been made, a party will not generally be allowed to produce its own expert evidence. If the parties adopt the rules of the Danish Institute of Arbitration, they may produce their own expert witnesses, regardless of whether the tribunal has appointed someone (section 35 of the rules). A party must disclose its own documents and any that the other party requests, as long as the request is a reasonable one. If a party chooses not to honour a request for disclosure, the tribunal may decide the case as if the documents in question were to the detriment of that party. 4 What supervision is there of arbitrators and their awards? The Danish courts will supervise the arbitrators and their awards as long as the arbitration is conducted in Denmark subject to the rules of the Arbitration Act. 6 Denmark June 2007 Arbitration in Europe Norton Rose

7 denmark 5 How quickly can a tribunal be set up? The parties are free to choose how the tribunal is set up (sections 10 and 11 of the Arbitration Act). The speed at which this happens depends on the parties. If they have not agreed on a specific procedure, each party has to appoint an arbitrator within 30 days after a request to do so by the other party (section 11 (2) of the Arbitration Act). The two arbitrators subsequently appoint the president of the tribunal within another 30 days. 6 What happens if one party refuses to participate in the process? If one party refuses to appoint an arbitrator, the other party may ask the courts to appoint any arbitrator not yet appointed (section 11 (3) of the Arbitration Act). The provision is mandatory. 7 What interim measures are available? The following measures depending on the circumstances of the case may be available either from the tribunal or from the courts: injunctive relief security for costs specific disclosure preservation of evidence compelling witnesses. The arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the tribunal considers necessary. The tribunal may require any party to provide appropriate security Norton Rose Arbitration in Europe June 2007 Denmark 7

8 europe (section 17 of the Arbitration Act). The parties are, however, free to agree otherwise. Any interim measures taken by the tribunal cannot be enforced through the judicial system. Through the arbitration agreement, however, the parties are free to choose the consequences of non-compliance themselves. These could include damages, adverse inferences drawn by the tribunal and a stay of the proceedings until the party complies with the order. Notwithstanding the arbitration agreement, the parties are also free to apply to the courts for interim measures (section 9 of the Arbitration Act). Section 27 provides that the parties, subject to approval by the tribunal, can apply to the courts for assistance in the securing of evidence both from the other party and from a third party not involved in the proceedings. In the same manner, the tribunal can make an application to the courts. Injunctive relief A tribunal may order injunctive relief but cannot enforce the order; it will often be more effective to seek such relief from the courts (section 9 of the Arbitration Act). Security for costs The tribunal can stay the proceedings or even end the arbitration if the parties do not post security as specified by the tribunal (section 36 of the Arbitration Act). If one party does not post security, the other party can post full security for the costs, in order for the arbitration to proceed. It is not yet settled whether section 17 provides the tribunal with the power to order one party to post security for the other party s legal costs. The explanatory notes to the Act indicate this possibility, as it allows all 8 Denmark June 2007 Arbitration in Europe Norton Rose

9 denmark interim measures, as long as these measures are interim both formally and in reality. Security for the amount in dispute The Arbitration Act does not grant the tribunal the power to order one party to post security for the amount in dispute. The parties are, however, free to agree otherwise. Pre-arbitration disclosure of documents A party cannot be forced to produce evidence before the arbitration has commenced. A party may, subject to the approval of the tribunal, apply to the courts for help in forcing the opposite party to produce evidence after the tribunal has been constituted. The party wishing to secure evidence or have documents disclosed may also request voluntary early disclosure. If the other party does not disclose the documents, the tribunal could draw adverse inferences or order the party to bear additional costs. Preservation of evidence The tribunal can take measures to preserve evidence; these interim measures cannot be enforced against the other party. However, in certain circumstances it is possible for the tribunal to apply to the court to seek an order for preservation of assets within the jurisdiction. Taking evidence of a witness The tribunal does not have the power to secure the attendance of a witness at the hearing nor does it possess any means of compelling a witness to be truthful. Norton Rose Arbitration in Europe June 2007 Denmark 9

10 europe However, the tribunal (or one of the parties with the approval of the tribunal) may ask the courts to take evidence (section 27 of the Arbitration Act) if the witness refuses to give evidence or if it is necessary to have the witness give evidence under oath. Appointment of a receiver The tribunal does not have the power to appoint a receiver. Either party can apply for interim measures to the local court before the proceedings have begun (section 9 of the Arbitration Act). 8 What right is there to challenge the appointment of an arbitrator? The parties may choose how they wish to challenge the appointment of an arbitrator. If they have not specified a particular procedure, the challenge must go to the tribunal within 15 days after the party has learnt of the appointment of the arbitrator (section 13 of the Arbitration Act). There have to be circumstances which give rise to reasonable doubt as to the impartiality of arbitrators or their lack of qualifications. If a party wishes to challenge the appointment of an arbitrator that they have appointed, the challenge must be based on reasons unknown to the party at the time of appointment (section 12 of the Arbitration Act). Unless the other party chooses another arbitrator (or the arbitrator chooses to resign), the tribunal must decide whether the challenge is just. If the challenge is turned down, the party presenting the challenge has 30 days to go to the courts. The arbitration proceedings will, however, continue in a normal manner in this period of time. 10 Denmark June 2007 Arbitration in Europe Norton Rose

11 denmark If it becomes impossible for arbitrators to complete their tasks, or if arbitrators do not pursue their duties in a timely manner, arbitrators can step down or the parties can agree to remove them. If this does not happen, the party wishing to remove an arbitrator can ask the courts to step in. A challenge to the appointment of an arbitrator cannot at a later point in time serve as the basis of nullification of the proceedings or of a refusal to enforce the arbitral award. 9 Can a party appeal the arbitrator s decision and, if so, are there any time limits to be aware of or unusual provisions? One or more of the parties may, within 30 days after receipt of the award, ask the tribunal to correct any obvious errors. Within the same time limit, one or more of the parties may ask the tribunal to render an award on an issue which was submitted to the tribunal but not included in the final award (section 33 of the Arbitration Act). The courts can set the award aside if they decide that the matter cannot be settled by arbitration or that the recognition or enforcement of the award would be contrary to Danish public policy. The courts can also set the award aside on the basis of article 5 excluding article 5(e) of the New York Convention (section 37 of the Arbitration Act). See Arbitration for more detail on enforcement and Reference for the text of the New York Convention. Norton Rose Arbitration in Europe June 2007 Denmark 11

12 europe 10 Is Denmark a party to the New York Convention? Yes. 11 Will an arbitration award be enforceable in Denmark and, if so, what is the procedure? A foreign arbitral award is likely to be enforced in Denmark. Denmark has exercised two reservations in relation to the New York Convention. It will apply the New York Convention only to awards made in other contracting states which are deemed under Danish law to be commercial. Enforcement would be refused only if the award were seen to contravene article 5 of the New York Convention (see Reference ) or if the award had not yet become binding on the parties or had been set aside by the courts in the country of origin of the award. The party seeking to enforce an award must give a signed copy to the enforcement court, along with a copy of the arbitration agreement (if it is in writing). The enforcement court may ask for both the award and the agreement to be translated into Danish. Enforcement through the courts is quite swift. Practice varies, but as long as no objections are made, most courts will enforce the award within 60 days. The cost of enforcement depends on whether translation is necessary. The court fees depend on the size of the claim but are generally low. 12 Denmark June 2007 Arbitration in Europe Norton Rose

13 denmark 12 What are the likely costs of arbitration? At the Danish Institute of Arbitration the administrative charges and the arbitrators fees are based on the size of the claim, the complexity of the case and the experience of the arbitrator. The arbitrators fees have a set minimum and maximum. Charts setting out the range of fees and the administrative charges are available on the Danish Institute of Arbitrator s website (see Weblinks ) under Background and facts (fakta og baggrund). An arbitration not conducted through the Danish Institute of Arbitration is likely to follow the same fee pattern. Awarding costs The parties are free to make any arrangements as to the costs of the arbitration, including legal costs. If they do not enter into any arrangements, the tribunal will order the losing party to cover part of the actual costs of the winning party (section 35 of the Arbitration Act). This includes the administrative costs charged by the arbitral institution, the arbitrators fees and the legal costs. If some costs are unreasonable (because of outrageous claims or very high legal costs, for example) the tribunal can decide that such costs are not to be recovered. In practice, the winning party will recover only a small part of its lawyer s fees. Interest The parties are free to agree on the powers of the tribunal to award interest. If they have not made an agreement, the tribunal will award interest on any pecuniary claim but not on costs. Norton Rose Arbitration in Europe June 2007 Denmark 13

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