Courts and litigation in Denmark, including Greenland and the Faroe Islands:
Denmark has 26 County Courts (byret), two High Courts (Landsret) and one Supreme Court (Højesteret). As a general rule, all court cases begin in one of the County Courts. County Courts hear civil, criminal, enforcement, insolvency, probate and bankruptcy cases. County Courts also perform notarial acts.
In addition to the ordinary courts, the judicial system in Denmark also consists of some special courts, each handling cases defined by the nature of the dispute. Most importantly, the Maritime and Commercial Court handles cases within the field of international maritime, commercial and business law.
The decision of a County Court can be appealed to the High Court within a period of four weeks from delivery of the judgment. As a general rule, a judgment may only be appealed once. If a judgment concerns questions of general public importance, the Danish Appeals Permission Board may grant a second appeal to the Supreme Court.
Time and costs for litigation:
The duration of a trial depends on the case and the time to get evidence. An appeal may take up to six or nine months.
The costs in connection with a lawsuit in Denmark are court fees, costs connected with the litigation, e.g. expert opinions, witness fees, translation and legal fees. In general, the unsuccessful party must reimburse the other party for costs connected with the lawsuit.
Mediation is an alternative to judgment by Court. Mediation is a voluntary offer of assistance from a third-party mediator to assist in settling issues between the parties of a case. In this way, no judgment is delivered and neither party loses or wins the case.
The court can suggest mediation even after the case is brought to court. The parties can also request mediation on their own initiative. The court will then appoint a mediator.
Arbitration can be used to solve commercial disputes outside the ordinary courts. The dispute is decided in the form of a final award which is issued by one or more independent and impartial arbitrators.
Arbitration is often considered to be faster and more cost-effective than the ordinary courts, since the arbitral award is not subject to appeal. Another advantage is the possibility for the parties to select their own arbitrators with subject expertise provided that they are safe from conflicts of interest. In addition, the arbitration procedure can be tailor-made in accordance with the parties’ agreement.
One principle of Danish contract law is the principle of freedom of contract, which means that, as a general rule – although with minor, important exceptions – the parties are free to make an agreement that reflects their particular needs and preferences. In addition to the principle of freedom of contract, the law also holds a principle of freedom of form, meaning that both oral and written agreements are considered valid.
Intellectual property law:
Intellectual property law is a joint denominator for rules intended to protect the right to different intellectual creations. Traditionally, intellectual property law is divided into five main topics: copyright law, trademark law, design law, patent law and utility model law. The Danish law provides the right to apply for registration.
Copyright is regulated by the Danish Act on Copyright. When the copyright is registered, it is protected, although the protection only applies to the work in its actual presentation – not the underlying idea. The copyright last for 70 years after the year of the applicants death.
The Danish Trade Marks Act contains provisions regarding the protection and infringement of trade marks. Registration of Danish trademarks and EU trademarks must be renewed every 10 years.
The Danish Design Act contains the condition that the design has to be new and have an individual character.
Danish corporate law has a variety of forms of companies.
A foreign company may do business in Denmark with or without a permanent establishment in Denmark. If the foreign company wishes to have a permanent establishment, there are several options for establishing a company, the most common of which is to establish a limited liability subsidiary. In this situation, the limited liability subsidiary may be a private limited liability company (ApS) or a public limited liability company (A/S).
Private limited liability company (ApS)
To establish a private limited liability company, the founder must have a capital of at least DKK 50.000. The private limited liability company offers the most flexibility in terms of management structure and decision making process; it can be led by one or more managers and may or may not have a board of directors or a supervisory board.
There are no nationality requirements. The members of the registered management, and accordingly, all the members of the board of directors, the supervisory board and the manager may be nationals of any country and may reside anywhere in the world. However, the company must have a Danish address.
Public limited liability company (A/S)
The public limited liability company functions much like the private limited liability company. The raise starting capital required for incorporation is DKK 500.000. The public limited liability company must also have a board of directors or supervisory board consisting of at least three members in addition to the management. As with the private limited liability company, no nationality or residential requirements apply.
Other company categories:
There is no minimum capital, and all partners are personally liable for the obligations of the I/S.
Limited partnership (K/S)
There is no minimum capital, and the general partner(s) have full personal liability. Any limited partner(s) are only liable by their original capital contribution to the K/S.
Partnership limited by Shares (P/S)
There is no minimum capital. The public limited company is acting as limited partner, and is liable by its entire share capital or a certain amount divided into shares.
Entrepreneurial limited company (IVS)
Entrepreneurial limited companies are a cheaper way for entrepreneurs to create a limited company and thereby protect their own fortune from creditors. The entrepreneurial limited company is almost similar to an private limited liability company, except that the minimum capital is DKK 1. Over time, the company develops into a private limited liability company with a capital of DKK 50.000.
The share capital is built up by saving 25% of the annual profit of the company until the total equity amounts to DKK 50.000.
Denmark also has co-operative societies (A.m.b.A) and commercial foundations (erhvervsdrivende fonde)
Any new company i Denmark can be registered directly into the IT-system of the Danish Business Authority, making it possible to establish and register a company within a day.
The taxation in Denmark is generally based on a direct taxation of companies and individuals. Companies are subject to a flat tax rate, while individuals are subject to a progressive tax rate. In addition to the above, a number of indirect taxes exist, such as a general 25% VAT and various other indirect taxes on different goods. Certain goods and services are entirely exempt from VAT. Costs for social security etc. are usually covered by the state on the basis of the taxes paid.
Danish employment and labour law is based on Danish legislation, collective bargaining agreements between the employers’ organizations and the employees’ unions and the individual agreements between employers and employees.
The rules that apply will depend on whether the involved employees are salaried employees or blue-collar workers. As a main rule, salaried employees are subject to the individual employment agreement and the Danish Salaried Employees Act (funktionærloven) while blue-collar workers are usually covered by their relevant collective bargaining agreements. Collective bargaining agreements basically stipulate all rights and obligations of the employers and the workers regarding e.g. minimum wages, pension scheme contributions, working hours, termination notices, holidays and overtime payment.
In addition to the collective bargaining agreements, local agreements are often entered into between the employers and the local departments of the workers’ unions. These local agreements contain specific and local rights and obligations which are the responsibility of the employer and of the workers.
The Danish Act on Salaried Employees stipulates a substantial number of principal terms of employment applicable to salaried employees. While collective bargaining agreements are sometimes entered into in relation to salaried employees, the Act on Salaried Employees normally renders the collective bargaining agreements less important in relation to salaried employees. The Act on Salaried Employees sets out the minimum obligations resting on the employers in respect of the salaried employees, such as notice of termination; severance payments; compensation for the employer’s non-objective termination of the employment contract; absence due to illness and requirements to the contents of competition and customer clauses.
Copenhagen, November 16 th 2016
Supreme Court Lawyer, Majken Johansen