- Courts and Legal Proceedings in Denmark, including Greenland and the Faroe Islands:
The Danish legal system is based on a civil law system. A civil law system means that the legal system is predominantly based on laws passed by Parliament, as opposed to a common law system, which is based on previous court judgments and case law developed over several centuries.
The Danish legal system consists of 26 district courts, including one in Greenland and one in the Faroe Islands, two appellate courts, and a Supreme Court.
Generally, all legal proceedings begin in one of the district courts. The district courts handle civil cases, criminal cases, enforcement cases, collection cases, probate, and bankruptcy cases. The district courts also perform notarial work.
In addition to the regular courts, the Danish legal system also includes special courts, each of which handles cases of a particular nature. The most important of these is the Maritime and Commercial Court, which deals with international maritime, commercial, and business law cases.
Judgments rendered by a district court can be appealed to the appellate court within a period of 2-4 weeks from the pronouncement of the judgment. Generally, a judgment can only be appealed once. If a judgment concern matters of fundamental importance, the Appeals Permission Board (Procesbevillingsnævnet) may grant permission to appeal to the Supreme Court[1].
Conflict and Court Mediation:
Mediation is actually conflict resolution outside the regular courts. Court mediation is a voluntary offering where a mediator helps the parties resolve their dispute. In court mediation, no judgment is rendered, so neither party wins or loses, but their conflict is resolved.
The courts may suggest court mediation after the case has been brought to court.
The parties can also request court mediation on their own initiative. The court appoints a mediator. The mediator can either be a judge or a lawyer with a special education/training as a mediator[2].
Arbitration:
Arbitration can be used for resolving disputes outside the regular courts. The dispute is resolved through a decision issued by one or more independent and impartial arbitrators. Arbitration is often considered more efficient in terms of time and cost compared to regular courts, as arbitration decisions cannot be appealed, among other reasons.
Arbitration allows the parties to raise various claims against each other.
One advantage of arbitration is that the parties can choose an arbitrator with the necessary expertise in the specific field, as long as there is no conflict of interest.
The arbitration process is tailored to the parties’ needs and agreement.
The parties are jointly liable for the costs of the case, unlike court cases where typically the losing party bears the litigation costs[3].
Time and costs of legal proceedings:
The duration of a lawsuit will always depend on the specific case and the evidence presented. In many cases, there may be a need for additional evidence or expert opinions, which takes time.
The scheduling time can vary greatly depending on the type of case. Scheduling time refers to the time expected from when the court receives the case until the hearing is held. For civil cases, it can take between four weeks to 18 months for the main hearing to be scheduled. The average processing time for ordinary civil cases in the first half of 2023 is 13 months[4].
An appeal can, in some cases, take longer than 6-9 months.
The cost associated with conducting a lawsuit in Denmark include court fees, expenses related to the case, such as expert opinions, witness expenses, translations, and attorney fees.
As part of the judgment, the court usually decides on costs to the prevailing party. In principle, the losing party must reimburse the other party for the costs incurred in connection with the lawsuit.
- Contract Law
The main principle in Danish contract law is the principle of freedom of contract. Agreements and contracts are binding for the parties entering them. This means that the parties are obliged to adhere to the agreements entered, provided they are not in conflict with laws and legal principles.
As a rule, the parties to a contract can freely enter into agreements that reflect their specific needs and preferences, with some exceptions. In addition to the principle of freedom of contract, Danish law also recognizes the principle of freedom of form.
Both oral and written agreements can be validly entered into and are therefore binding. However, it may be difficult to prove an oral agreement, therefore written agreements are recommended legally.
- Intellectual Property Law
Denmark has signed the Berne Convention for the Protection of Literary and Artistic Works and most recently ratified the amendments to this convention in Paris in 1971. The Berne Convention protects the copyright of artists for at least 50 years after the year in which the longest living creator of the work has passed away.
In the EU, Directive 2011/77/EU has extended the protection of copyright so that works are protected 70 years after the death of the author/creator.
A work of art is automatically protected by copyright from the moment it’s created, but it can be beneficial to clarify the copyright with the text “all rights reserved” or © followed by a year.
Additionally, it can be advantageous to register the copyright, for example in VISDA (images), Copydan (texts), or KODA (music).
Danish trademark law protects trademark infringements. Registration of Danish trademarks and EU trademarks must be renewed every 10 years[5].
Any invention of a technical nature can be granted a patent if the invention meets the three conditions of novelty, inventive step, and industrial applicability.
A patent right is protected up to 20 years, with an annual fee payment. Applications for patents, design registrations, or trademarks are submitted in Denmark to the Danish Patent and Trademark Office[6]. A patent valid in Denmark does not automatically cover Greenland and the Faroe Islands. If a patent is desired abroad, an application must be made within 12 months from the first filing date. Organizations such as EUIPO (European Union Intellectual Property Office) and EPO (European Patent Office) can be used to facilitate the process when seeking patent protection in multiple countries[7].
The Faroe Islands have their own copyright law, which can be read here: https://logir.fo/Logtingslog/30-fra-30-04-2015-um-upphavsraett.
Greenland has adopted the Danish Copyright Law through Order No. 561 of June 7, 2006.
- Property Law
Danish property law encompasses the obligations and rights that arise from the right to dispose of one’s own property. A distinction can be made between property rights and contractual rights. The rules regarding property rights are usually more regulated by law, while the contractual rights often derive from principles as well as the parties’ mutual agreement.
In the Faroe Islands, property law is an adopted area of jurisdiction following the supplement to the Home Rule Act through the Takeover Act, which came into force on July 29, 2005.
With the accession of the Self-Government Act on June 21, 2009, property law became an adopted area of jurisdiction in Greenland.
- Company Law
Danish company law is characterized by flexibility.
A foreign company considering doing business in Denmark can do so with or without a permanent establishment.
The most common form of company is the limited liability company.
The most common types of companies are private limited companies (ApS) or public limited companies (A/S).
Greenlandic companies have the same conditions as Danish companies, as the new company law was implemented in Greenland in 2018[8], which was an adoption of the already existing Danish company law. This means that Greenlandic companies have the same conditions as Danish companies under the Danish company law from 2010. However, the Danish company law was amended in 2019, and this amendment has not come into force in Greenland.
The Faroe Islands have their own company law, which has many similarities to the Danish law[9].
Private Limited Company (ApS)
To establish a private limited company, the founder must have a minimum capital of DKK 40,000.
Private limited companies are often practical due to the flexibility regarding management structure and decision-making processes. A private limited company can be managed by one or more directors and can have a board of directors or, in some cases, a supervisory board.
Shareholders are not personally liable for the company’s obligations, but only for their contributions, which is considered advantageous.
There are no nationality requirements. Members of the registered management, board members, supervisory board, and managers can be citizens of any country and reside wherever they wish. However, the company must have a Danish address.
The same company form and its effects apply in Greenland and the Faroe Islands, although the initial capital requirement is DKK 50,000 for Greenland.
Public Limited Liability Company (A/S)
The mandatory initial capital required to establish a public limited liability company is higher, amounting to DKK 400,000. Public limited liability companies must have a board of directors. Like private limited companies, shareholders of public limited liability companies are not personally liable for the company’s obligations. Liability is limited to the contributed share capital.
There are no nationality or residency requirements for members of the registered management/board of directors/executive board.
The same company form and its effects apply in Greenland and the Faroe Islands.
Other Company Forms:
Partnership (I/S)
There is no requirement for minimum capital.
All participants are personally, jointly, and directly liable with all of their personal assets for the partnership’s obligations. This means that all of the business’s obligations are also the owners’ obligations. Liability is joint and several, which means that if the partnership cannot pay its debts, creditors can choose which partners to recover the debt from.
Partnerships are not subject to the company law but are covered by the Act on Certain Commercial Undertakings, which includes a definition of a partnership and rules on naming.
The same company form and its effects apply in Greenland and the Faroe Islands.
Limited Partnership (K/S)
There is no requirement for minimum capital.
Limited partnerships consist of two types of partners – limited partners and general partners. Limited partners have limited liability based on their contributions, while general partners have unlimited personal liability. The status of the general partner determines whether the business needs to be publicly accessible and must also prepare and submit annual reports in accordance with the Annual Accounts Act.
Limited partnerships are regulated by the Act on Certain Commercial Undertakings.
The same company form and its effects apply in Greenland and the Faroe Islands.
There are also other forms of companies such as companies with limited liability (A.m.b.A) as well as commercial foundations like the Business Foundation.
In general
All new companies in Denmark must be registered directly in the Danish Business Authority’s IT system. It is possible to establish and register companies in a single day.
- Taxation
Taxation in Denmark is generally based on direct taxation of business and individuals.
Businesses are subject to a flat tax rate, while individuals are subject to a progressive tax rate.
In addition to the above tax rates, there are also a number of indirect taxes, such as the general 25% value-added tax (VAT) and various other indirect taxes on various goods. However, certain goods and services are completely exempt from VAT. Costs related to social benefits are typically covered by the state through paid taxes.
- Employment Law
Danish employment and labour laws are based on Danish legislation, collective agreements between employer organizations and trade unions, and individual agreements between employers and employees.
The rules that apply depend on whether the employee in question is a salaried employee (“funktionær”) or covered by a collective agreement.
As a general rule, salaried employees are subject to the Salaried Employees Act and the employee’s individual employment contract.
Other employees will often be covered by their relevant collective agreements. The collective agreements establish the basic rights and obligations of employees and impose obligations on employers regarding minimum wages, pension schemes, working hours, notice periods, public holidays, overtime, etc.
In addition to collective agreements, local agreements are often entered into between employers and local branches of trade unions. Such local agreements often contain specific and local rights and obligations that are the responsibility of the employer and the employee.
The Salaried Employees Act contains minimum obligations for the employer, including notice periods for dismissal, severance pay, compensation for non-objective dismissals by the employer, absence due to illness, and requirements regarding non-competition and non-solicitation clauses.
Last updated on September 25, 2023
Majken Johansen
Attorney at law (H)
[1] https://domstol.dk/om-os/organisation/
[2] Danmarks Domstole – Retsmægling
[3]https://voldgiftsinstituttet.dk/wp-content/uploads/2021/06/4304611-regler-for-voldgift_04-2021_dk_web.pdf
[4] Overblik over gennemsnitlig sagsbehandlingstid for 1. halvår 2023
[5] Varighed og fornyelse af varemærkeregistrering