DENMARK Law and Practice Contributed by: Johannes Grove Nielsen, Jakob Lentz, Anne Buhl Bjelke and Daniel Myhre Engell, Bech-Bruun Law Firm P/S
lows the EU’s Investment Court System (ICS) template rather than a Danish national model. As a general outline, the key provisions in the Danish Model BIT (2000) include the following. • Broad asset-based “investment” and wide “inves- tor” definitions to include natural persons who are nationals or permanently resident. Covered assets include shares, claims to money, IP and conces- sions. • Admission and full protection and security (FPS)/ non-impairment: investments are admitted “in accordance with [host] legislation and administra- tive practice”. Investments enjoy FPS and freedom from unreasonable or discriminatory impairment. • Umbrella clause: each state “shall observe any obligation it may have entered into with regard to investments” of investors of the other party. • Expropriation compensation at fair market value (FMV) as of the valuation date, with interest until payment, and the right to prompt review by an independent authority. • Free transfers of capital/returns “without delay” in a freely convertible currency and at market rates. • Consent to investor–state dispute settlement at multiple fora. After a six-month amicable period, advance consent to arbitration at ICSID, ICSID Additional Facility, UNCITRAL (ad hoc) or the ICC. Locally incorporated but foreign-controlled entities may be treated as foreign investors for ICSID juris- diction. Awards are final, binding and enforceable. • State–state arbitration for treaty interpretation/ application. • Territorial extension clause (option to extend to Faroe Islands and Greenland by the exchange of notes). Some older Danish BITs also used approval-type cov- erage (ie, Indonesia–Denmark 1968 conditioned pro- tection on an express declaration by the Ministry of Foreign Affairs), illustrating an earlier template lineage. For any new agreements covering Denmark, the EU’s ICS model applies (standing tribunal, appellate mech- anism, code of conduct, enhanced transparency), as reflected in CETA Chapter 8 and the EU–Vietnam IPA. The Court of Justice of the European Union has con-
firmed that CETA’s investment tribunal system is com- patible with EU law. The bottom line is that Denmark’s legacy BITs largely reflect a Danish model with broad protections – FET, most-favoured nation (MFN)/national treatment (NT), “whichever more favourable”, umbrella clause, multi- forum ISDS. Going forward, EU ICS texts rather than a Danish national model will shape any new treaty- based investment protection covering Denmark. 2.3 Free Trade Agreements Denmark has been a member of the EU since 1 Janu- ary 1973, and participates in the EU’s network of free trade agreements (FTAs) through the EU’s common commercial policy. Since the Lisbon Treaty, the EU has exclusive com- petence over foreign direct investment, meaning that investment protection and dispute settlement provi- sions in new agreements covering Denmark are nego- tiated at an EU level, not by Denmark bilaterally. This is significant for investor protection and dispute settlement in a number of different situations. • The EU’s post-2015 practice is to replace tradi- tional investor–state arbitration with a standing ICS (first instance plus appeal), as in CETA and the EU–Vietnam/EU–Singapore Investment Protection Agreements. • Some EU FTAs now exclude ISDS altogether; for example, the EU–New Zealand FTA does not include ISDS. Rather, investor protection relies on domestic remedies and state-to-state enforcement. • Intra-EU ISDS is not available. After the Achmea case and the agreement terminating intra-EU BITs (in force since 29 August 2020), EU investors cannot use intra-EU BIT arbitration. In the Kom- stroy case (C-741/19). the Court of Justice of the European Union held that Article 26 of the ECT was inapplicable intra-EU. This frames Denmark’s dispute settlement landscape inside the EU (leav- ing investors with national and EU-based remedies instead of investor–state arbitration).
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