DENMARK Law and Practice Contributed by: Johannes Grove Nielsen, Jakob Lentz, Anne Buhl Bjelke and Daniel Myhre Engell, Bech-Bruun Law Firm P/S
rule and depends on the tribunal’s jurisdiction and the character of the measure. 8.3 Recovering Interest and Legal Costs Denmark-Seated Arbitrations Danish law leaves costs and fee-shifting to the tribu- nal. The DAA empowers tribunals to: • determine their own fees and expenses; • allocate the costs of the arbitral tribunal between the parties and order one party to cover all or part of the other party’s costs; and • require security for the tribunal’s fees. Under the DIA Rules 2021, the award must state “the costs of the arbitration and the proportions in which they shall be borne”, which expressly includes arbi- trators’ fees/expenses, tribunal-appointed expert expenses, and DIA charges. ISDS Cases For ICSID cases, Article 61 (2) of the ICSID Conven- tion gives tribunals broad discretion to decide how and by whom parties’ expenses (including legal and expert fees) and arbitration costs are paid. The 2022 ICSID Arbitration Rule 52 further details the tribunal’s decision on costs (and permits interim cost decisions). Interest Many international investment agreements relevant to Denmark provide for interest. As an example, the Denmark–Mexico BIT requires that compensation shall “include interest at a commercial rate … from the date of expropriation until the date of … payment”. Tribunals then set rate, period (pre- and post-award) and compounding by reference to treaty text and evi- dence. Tribunals in ISDS commonly award pre-award and post-award interest. Recent practice emphasises the compensatory (not punitive) purpose of interest. General Practice on Awarding Interest and Shifting Costs Costs shifting in Denmark While discretion is broad, Danish practice follows a “costs follow the event” baseline, whereby the general rule is that the unsuccessful party bears the costs. The DIA Rules instruct tribunals to take account of the out-
come, each party’s incurred costs, any agreement on costs, the amount in dispute, and whether each party contributed to efficient, cost-conscious conduct. The prevailing outset is that the winning party is reim- bursed for all its actual costs, but with the tribunal having a discretionary option to reduce the cost award to a lesser amount than the actual cost based on the specific case. Interest practice In ISDS, tribunals typically award pre-award interest (from the valuation date to the award) and post-award interest (until payment), selecting rates consistent with the governing treaty/law and the evidence on com- mercial benchmarks. Tribunals seated in Denmark (and those hearing Dan- ish-related ISDS claims) may award interest, legal and expert fees, and institutional costs. The statutory basis is Sections 34–36 of the DAA for cost allocation, while Article 40 of the DIA Rules 2021 sets out cost categories and allocation principles. In ICSID cases, Article 61 (2) of the ICSID Convention and Rule 52 of the 2022 rules apply. Interest is award- ed based on treaty provisions (eg, Denmark–Mexico BIT) and arbitral discretion. Danish and ICSID practice generally apply the approach that “costs follow the event”, tempered by conduct and efficiency-based considerations. 8.4 Mitigation of Damages While the DAA does not itself codify a “duty to miti- gate”, a tribunal seated in Denmark decides the dis- pute under the applicable substantive law chosen by the parties (or determined by conflicts rules). In inves- tor–state arbitration cases, that law typically includes the relevant treaty under which tribunals consistently recognise a claimant’s duty to take reasonable steps to mitigate losses and reduce compensation.
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