DENMARK: An Introduction to Shipping
The following Overview featured in Chambers Europe 2023 and is awaiting update from the firm.
Danish Shipping Market
Denmark enjoys a centuries long tradition as a maritime nation operating one of the World’s largest commercial fleets. Denmark consistently ranks among top ten countries by operated tonnage.
The Danish shipping industry covers all the major segments with dry bulk, tanker and container business counting for the largest shares. Some of the World’s largest shipping companies operate out of Denmark, and Maersk, Torm and Norden are headquartered in Copenhagen. The oil and gas sector and, more recently, offshore windfarms and other energy projects have attracted a sizeable offshore industry to Denmark. Likewise, the multi-purpose segment, which has always been strong in Denmark, has grown from the increase in offshore energy and infrastructure projects globally. Being surrounded by sea, Denmark further has several ferry companies and a large fishing industry.
Danish shipyards have changed focus from full scale newbuilding to repair and maintenance in recent years, however, specialised naval architecture, engineering, robotics and information technology businesses serving the shipping industry have a strong base in Denmark. The same applies to the bunker supply and trading industry, which has grown to be perhaps the largest in the world.
The finance, insurance and legal industries in Denmark have developed the expertise to accommodate the demands of a large shipping industry, although volatility of asset prices combined with stricter financial regulation have driven finance from debt-based to equity capital.
The maritime legal industry is concentrated into less than a handful of law firms specialising to serve the shipping industry. Hafnia Law Firm is Denmark’s largest specialised maritime law firm, covering all legal areas of the shipping industry.
Danish Shipping Community
Being Denmark’s single largest export industry, counting for approximately 20% of all Danish export, the business sector and its supplying industries employ about 5% of the Danish commercial work force. The Danish Shipowners Association together with the Danish engineering and maritime schools and universities have consistent focus on educating high skilled workers and employees to satisfy industry demand.
Denmark is home to the Baltic and International Maritime Council (BIMCO), one of the largest of the international shipping associations representing shipowners.
Business Regulation
Denmark is ranked top in Europe in terms of ease of doing business and fourth in the world (in a 2020 survey by the World Bank Group).
Effective public institutions, liberal business regulation and independent and effective courts are generally highlighted as key to foreign businesses and capital entering Denmark.
The Danish Maritime Authority operates efficiently and rules based, and ship registration in the Danish International Ship Register is standardised and inexpensive. Shipping companies further enjoy a favourable tonnage tax scheme, and seafarers are generally exempt from paying income tax. A special tax rebate is further available to high-salaried employees moving to Denmark to work on-shore.
Merchant Shipping Act and Maritime Contracts
Merchant shipping is regulated predominantly by the Danish Merchant Shipping Act, which in the civil law tradition includes regulation of vessels and their registration, mortgages and liens, arrest, owners and masters, collision, wreck removal and pollution liability, charterparties and contracts of carriage of goods and passengers, casualties, salvage and general average.
Denmark is an active advocate of international cooperation and participates as a member state in many of the international shipping conventions, which in most cases are implemented by introducing provisions within the framework of the Merchant Shipping Act which correspond to the conventions.
Shipbuilding, conversion and repair contracts are not per se regulated by the Merchant Shipping Act and are subject to freedom of contract. Traditionally, Danish owners use standards developed by organisations such as BIMCO when entering into contracts of this nature.
Charterparties are equally subject to freedom of contract, but the Danish Merchant Shipping Act include default provisions to the extent none or certain issues have not been agreed by owners and charterers.
Contract of carriage of goods are subject to mandatory provisions protecting cargo owners, which reflect the Hague Visby Rules ratified by Denmark as well as elements of the Hamburg Rules.