DENMARK Trends and Developments Contributed by: Thomas Weitemeyer and Jonas Høst, Moalem Weitemeyer
• There may be a tactical advantage in pursuing claims against management and/or board mem - bers because such claims fall outside the SPA’s negotiated limitations (eg, contractual caps, bas - kets, time limits, exclusions and exclusive rem - edy provisions), depending on how the causes of action are framed and how the SPA is structured. Why this matters in Danish M&A practice Arbitration has traditionally been the preferred dispute resolution mechanism in Danish M&A, valued for its confidentiality, procedural flexibility and finality. Dan - ish courts generally respect arbitration agreements and arbitral awards, including at the enforcement stage, provided that due process requirements have been observed. This underlines both the strength of arbitration in Denmark and the importance of careful procedural design. Side litigation challenges that logic in three ways: • Arbitration under the SPA may run in parallel with court litigation against individuals, increasing cost and creating a risk of inconsistent factual findings or conflicting procedural timetables. • Even where the SPA and arbitration proceedings are confidential, court proceedings are generally public in Denmark. This can bring key aspects of the dispute into the public domain and create repu - tational and stakeholder pressure that the parties sought to avoid when selecting arbitration. • When individual managers or board members are named as defendants, settlements can from time to time become more difficult, as additional par - ties and insurers are involved and the personal interests of individuals may differ from those of the seller and/or the target. Drafting and structuring responses This development is prompting deal teams to think more holistically about dispute risk and to design a more integrated “dispute architecture” across the SPA and related documentation. In practice, this increas - ingly includes: • Clarifying whether the buyer’s recourse under the SPA is limited to the seller and/or the W&I insurer, and excluding claims against individuals except for
narrow carve-outs (for example, fraud and wilful misconduct). • Ensuring that key individuals are parties to a contract containing arbitration and confidential - ity undertakings, or are otherwise contractually aligned with the governing law and dispute resolu - tion provisions of the SPA. • Aligning the SPA’s non-recourse provisions with the W&I policy’s subrogation and recovery mechan - ics, to avoid unintentionally incentivising the buyer to pursue claims against individuals in court as an alternative route to recovery. Recent Danish judgment confirms the applicability of arbitration clauses in agreements with board members A recent decision from the Eastern High Court sup - ports the applicability of arbitration clauses in agree - ments with board members. In this case, the court accepted that a management liability claim against former board members (brought under the Danish Companies Act) fell within the scope of a standard- form arbitration clause in the board member agree - ments, with the consequence that the case was to be heard in arbitration rather than before the general courts. In an M&A context, where parties often prioritise con - fidentiality and seek to avoid “side litigation” in the courts, this provides additional support for aligning dispute resolution across the SPA and related docu - mentation (including board member agreements), so that disputes involving key individuals are more likely to be channelled into the chosen arbitration forum rather than creating parallel court proceedings and public exposure. Practical takeaway In Danish M&A transactions where arbitration and confidentiality are core commercial objectives, side litigation against management or board members is increasingly treated as a foreseeable risk rather than an exceptional scenario. Buyers may deliberately test routes outside the SPA dispute resolution framework in order to gain procedural leverage, increase pressure or bypass contractual limitations.
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