DENMARK: An Introduction to Dispute Resolution

The Kingdom of Denmark comprises Denmark, Greenland and the Faroe Islands, which generally share similar legal systems and cultures.

Institutional and ad hoc arbitration are the predominant dispute resolution forums for resolving larger commercial disputes in Denmark. Arbitral proceedings are governed by the Danish Arbitration Act, which is based on the UNCITRAL Model Law of 1985. Denmark is also a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The two major domestic arbitration institutions are the Danish Institute of Arbitration and the Danish Building and Construction Arbitration Board.

2024 in Review

For the ninth consecutive year, Denmark was ranked first on the World Justice Project’s Rule of Law Index in 2024. However, the court system has faced challenges in recent years due to increased case processing time. Consequently, funding of the court system will be significantly increased between 2024 and 2027, and several reforms of the procedural rules governing civil and criminal cases have been enacted.

Below, we have highlighted three landmark case complexes from 2024.

OW Bunker settlement

In July 2024, almost ten years after the bankruptcy of OW Bunker, Denmark’s third-largest company measured on revenue and the world’s largest bunker supplier at the time, a DKK645 million settlement of four actions for damages was reached. OW Bunker is one of the most spectacular busts in Danish corporate history. The company went bankrupt in November 2014, seven months after its IPO and following significant losses on derivatives and one single customer in Singapore. The bankruptcy led to substantial losses for the company’s creditors and shareholders that invested in the company in connection with the IPO and afterwards. The settlement covers actions for damages initiated by Danish and foreign institutional investors against OW Bunker, its former management, board of directors, the private equity fund Altor and the investment banks Carnegie and Morgan Stanley. A civil action between OW Bunker’s bankruptcy estate and the former management, board of directors, accountant (Deloitte) and Altor was not part of the settlement, and the oral hearing of the case is scheduled for February 2025.

Cum-Ex scandal

Following the Cum-Ex scandal, the Danish Tax Agency has pursued several criminal and civil actions in Denmark and globally.

In November 2023, the Supreme Court ruled a Danish law firm liable for the Tax Agency’s loss of DKK400 million, as the law firm – through a legal opinion issued to a German bank – had contributed to the bank’s fraud against the Tax Agency.

In another case, the Tax Agency has filed a tax claim and a claim for damages of approximately DKK900 million against the Canadian pension fund Healthcare of Ontario Pension Plan for unwarranted refunds of dividend tax. In 2024, the Supreme Court decided that several international banks could be joined in the proceedings based on alleged negligent contribution to the unjustified refunds of dividend tax. The oral hearing of the case is scheduled for 2027.

On 12 December 2024, the British citizen Sanjay Shah was found guilty by a district court for orchestrating a dividend tax fraud against the Tax Agency of approximately DKK9 billion and sentenced to 12 years in prison, which is the highest sentence ever imposed for financial crime in Denmark. The judgment has been appealed.

Bankruptcy of insurance companies

Following the bankruptcy of the insurance company Gefion, the bankruptcy estate has in June 2024 filed a claim for damages of approximately DKK565 million against the former liquidator. The claim is based on the assertion that the company continued its operations beyond the point of hopelessness, causing significant losses to the creditors. The legal action marks a rare instance of a bankruptcy estate claiming damages against a former liquidator. The case weaves into a larger complex following the bankruptcies in several newly established insurance companies (Alpha, Qudos and Gefion), primarily focused on selling insurances in other countries through intermediaries. Claims against the accountants are a main topic in the complexes, and in 2024 PwC was found liable for more than DKK100 million in the Qudos case.

Outlook for 2025 and Beyond

Looking into 2025, certain trends seem to be emerging throughout the legal landscape.

Climate change cases

The focus in recent years on climate change and sustainability has led to a global increase in so-called “climate change cases”, which involve a wide range of subject-matters.

In a Danish context, the Western High Court rendered a decision in the first-ever climate lawsuit in Denmark regarding a large pork producer’s marketing of pork as “more climate-friendly than you think” and “climate-controlled pork”. The court found that the latter statement was misleading and constituted so-called greenwashing.

Also, environmental responsibility in the so-called Nordic Waste case was given significant attention in 2024. Nordic Waste was a company specialised in handling contaminated soil from industrial activities. In December 2023, a landslide at the company's site set approximately six million tons of contaminated soil in motion towards nearby rivers that flow into the sea. The company was subsequently declared bankrupt, and the municipality was left to bear most of the related cleanup costs of approximately DKK 2 billion. The company and its shareholders received massive criticism in the media, and the government called for an investigation to determine accountability, including in particular in relation to the shareholders. The bankruptcy trustees are also currently examining accountability, and a legal investigation regarding the municipality’s liability has also been initiated.

Corporate exposure

Another trend, demonstrated by bankrupt insurance companies and the Nordic Waste case above, is the focus on tightening corporate and management liability.

Another aspect of corporate exposure was illustrated by the judgment from the Swedish High Court in the criminal case against the former CEO of Swedbank, Birgitte Bonnesen. In its September 2024 judgment, the court sentenced Birgitte Bonnesen to 15 months in prison based on her statements in two interviews given in connection to the bank’s quarterly report in October 2018, where Birgitte Bonnesen fraudulently declined the bank’s involvement in suspicious money-laundering activities in Estonia, despite information within the bank showing the contrary. Birgitte Bonnesen has subsequently applied for permission to appeal the case to the Swedish Supreme Court.

AML Sanctions

Following changes in legislation in 2019 and 2020 regarding calculation principles for fines and administrative powers to settle fines, one major challenge has been how the Financial Services Authority (FSA) and the Special Crime Unit (SCU) seek to impose significantly increased fines for AML violations. Very few and very small fines have been issued under the administrative fine regime with no clear guidance on fine calculation available. Some cases are referred to the SCU, which made one settlement with Jyske Bank in 2024 covering historical shortcomings in compliance with AML regulations.

In July 2024, Nordea was charged by the SCU for violating AML regulation in 2012–2015 regarding handling of certain foreign clients, money service businesses and correspondent banking relationships. The case relates to historical events and is the most extensive and high-profile prosecution ever in the Danish banking sector. The oral hearing is scheduled for 60 court days in 2025 and 2026. The case involves a number of core legal principles, including the principles for and calculation of a fine.