DENMARK Trends and Developments Contributed by: Johannes Grove Nielsen, Jakob Lentz, Anne Buhl Bjelke and Daniel Myhre Engell, Bech-Bruun Law Firm P/S
The benefits of ICSID-based arbitration from a Danish perspective With intra-EU investor–state dispute settlement off the table, and with Denmark’s ECT exposure continuing only for legacy investments in accordance with the ETC’s “sunset-clause”, the forum choice in Denmark- related disputes often comes down to an ICSID versus non-ICSID route (eg, UNCITRAL/DAA with a Danish seat). In that landscape, ICSID’s mechanics remain uniquely advantageous for claimants, and materially relevant for investors seeking to challenge Denmark in poten- tial investor–state settlement disputes. Enforcement advantage Denmark has been an ICSID contracting state since 1968. Under Article 54 (1) of the ICSID Convention, any award imposing pecuniary obligations must be recognised and enforced in every contracting state “as if” it were a final domestic judgment – a unique, judgment-like pathway. In practice, this gives claimants a more predictable enforcement path following the final award than non- ICSID awards. Limits to remember for investors The ICSID regime guarantees the enforcement of monetary awards, but not of non-monetary relief. Orders requiring a state to change a law or regulation depend on voluntary compliance or domestic courts. Even with a monetary award, actual recovery hinges on the nature of the state’s assets in the enforcement jurisdiction, as national rules on sovereign immunity still apply in accordance with Article 55 of the ICSID Convention. In Denmark, as in most countries, sovereign assets such as embassies or central bank funds are immune from seizure, while commercial assets eg, those of state-owned enterprises) may be attachable. With that said, in practice most developed states like Denmark comply with awards voluntarily, meaning that seeking enforcement is rarely necessary and that the enforce- ment risk is more theoretical than real.
The practical takeaway for investors is to consider enforcement strategy early, but to recognise and be comforted by the fact that non-compliance is rather unlikely in jurisdictions like Denmark. Key takeaways For treaty-based claims against Denmark, ICSID generally offers an advantageous package deal: mechanistic recognition and enforcement of pecu- niary awards in all ICSID contracting states, a self- contained annulment process insulated from national courts, and modern safeguards on transparency and costs under the 2022 ICSID Arbitration Rules. Accordingly, where a treaty permits ICSID, it will often be the preferred forum by investors. Beyond the ECT: arbitration and other options For investor–state disputes, the default route, where Denmark has given arbitration consent in a treaty, is international arbitration under the mechanisms speci- fied in the given treaty: commonly ICSID arbitration under the ICSID Convention. Where no treaty consent is present, disputes can still be arbitrated if there is a contractual arbitration clause, as is in the pending Greenland Minerals (GMAS) v Greenland & Denmark case, which is being conduct- ed as an ad hoc arbitration seated in Denmark. This case illustrates how state-related disputes connected to Denmark can also be resolved by contract-based arbitration (rather than treaty-based investor–state dispute settlement), depending of course on the pre- existing contractual basis between an investor and Denmark. However, arbitration is not always an available path for investors. If no treaty consent nor arbitration clause makes arbitration available (or if domestic remedies are preferable), claims can be brought against Den- mark in the national courts as the GMAS v Greenland and Vermilion Energy cases have illustrated. In sum, investors in Denmark benefit from access to both international arbitration and a robust national judiciary process at the national court. The right forum depends on the legal basis of the dispute, the relief sought, timing and the enforcement strategy – but
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