Investor–State Arbitration 2025 Comparisons

Denmark has not expressed general reluctance towards investor–state arbitration or investor–state dispute settlement (ISDS), nor does Denmark oppose it in principle. Denmark continues to maintain a network of extra-EU bilateral investment treaties (BITs) with nations outside the EU that typically provide consent to arbitration.

However, in 2020 Denmark agreed – alongside 22 other EU member states – to terminate all intra-EU BITs with each other, as such treaties were deemed inconsistent with general EU law by the European Court of Justice. Foreign investments within the EU are, as a general rule, protected by EU law. Going forward, Denmark supports the EU’s general shift from traditional investor–state arbitration to a reformed Multilateral Investment Court System, in line with the regime set forth by UNCITRAL.

In April 2023, Denmark further announced its intention to withdraw from the Energy Charter Treaty (ECT), due to the treaty creating uncertainties for investments and for the green transition; the withdrawal took effect on 4 September 2025 under Article 47 of the ECT. Importantly, the so-called “sunset clause” under Article 47 of the ECT ensures continued investment protection for existing investments for 20 years after withdrawal (ie, potentially until 2045). This extended timeline post-withdrawal and the subsequent implications remain central to investment arbitration in Denmark.

Denmark is a party to a number of major arbitration conventions, the most notable of which include the ICSID Convention of 1965 and the Convention on the Recognition and Enforcement of Foreign Arbitral Award of 1958 (“the New York Convention”). The ICSID Convention entered into force for Denmark in May 1968, and the New York Convention first entered into force in March 1973.

In February 1976, the New York Convention’s application was extended to Greenland and the Fareo Islands as well (which are a part of the Kingdom of Denmark). However, Denmark has made use of both the reciprocity and commercial reservations in connection with the Convention.

Treaty-based investor–state arbitration is rather rare in Denmark. The public register of the UN’s Conference on Trade and Development shows only two known investor–state arbitration cases commenced against Denmark to date – one discontinued and one currently pending.

Denmark’s first known treaty-based investor–state arbitration case first started in 2020, underscoring historically low prevalence. The case – Aleksandravicius v Denmark (ICSID case no ARB/20/30) – was initiated in accordance with a Denmark–Lithuania BIT, but was discontinued in November 2021.

The second, now-pending investor–state arbitration case – Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark (ICSID case no ARB/23/48) – has been initiated under the ECT and is currently pending before ICSID.

Investors often tend to pursue contract-based arbitration or domestic litigation with the national courts instead of treaty-based investor–state arbitration. Danish law provides for judicial review of administrative actions through its Constitution, enabling court litigation as an alternative path in some cases.

An example of this is seen in Greenland Minerals (GMAS) v Greenland & Denmark, where an investor commenced contract-based ad hoc arbitration with the seat in Copenhagen and, parallel to this, initiated court cases in the Greenlandic and Danish national courts over the same measures, illustrating that investors do not rely on arbitration alone.

In addition, following a March 2018 ruling from the Court of Justice of the European Union and the agreement for the termination of intra-EU BITs (see 1.1 National Position), EU investors can no longer commence intra-EU BIT-based arbitration against Denmark. As such, EU investors must rely on national and/or EU law remedies (ie, litigation at the national court), further lowering the use of treaty-based investor–state arbitration in Denmark.

From an outbound perspective, Danish investors abroad have used treaty-based investor–state arbitration when available; the register of the UN’s Conference on Trade and Develop shows a total of nine cases initiated (solely or partially) by an investor from Denmark – eg, Mærsk v Algeria (ICSID case no ARB/09/14) commenced in accordance with the Denmark–Algeria BIT.

The higher frequency of investor–state arbitration commenced by Danish investors showcases such arbitration as a familiar tool, albeit not universal.

Investor–state arbitration activity in Denmark has been very limited and concentrated in two industry sectors, as seen in the cases mentioned in 1.3 Prevalence of Investor–State Arbitration.

In the energy sector, the pending ICSID case of Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark (ICSID case no ARB/23/48) challenges Denmark’s implementation of the EU “solidarity contribution” for fossil fuel companies. If the case commenced by Klesch Group et al proves successful, it is plausible that other investors in similar situations will embrace the opportunity to commence investor–state arbitration.

This is all the more apparent as Denmark’s withdrawal from the ECT (effective September 2025) still secures protection for investments existing prior to Denmark’s withdrawal, pursuant to the 20-year “sunset clause” in Article 47 of the ECT.

The other relevant industry that has experienced significant investor–state arbitration is the mining sector, with the Greenland Minerals v Greenland & Denmark arbitration (ad hoc, Copenhagen) arising from Greenland’s uranium ban (Act No 20/2021) and the refusal of an exploitation licence for the Kvanefjeld rare earths project as the prominent (and only) example.

As such, from a broader perspective, the energy sector seems to be the most prone to disputes and, by extension, investor–state arbitration due to the climate transition regulation and emergency measures, as shown by the ICSID cases referred to above.

The following three cases are the most legally significant investor–state arbitrations involving Denmark, although one of them is not formally an investor–state arbitration, but rather contract-based ad hoc arbitration brought by an investor against Denmark and Greenland.

Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark (ICSID Case No ARB/23/48) – Pending

The facts of the case

This case challenges Denmark’s implementation of the EU-wide “solidarity contribution” for certain fossil fuel sector profits adopted by Council Regulation (EU) 2022/1854 and implemented in Denmark by Act No 502 of 16 May 2023. The ICSID tribunal has recorded that the dispute “arose out of the ‘solidarity contribution’” under the EU Regulation and the Danish Act. Parallel cases by the same claimants were filed against Germany (ICSID case no ARB/23/49) and the EU (ICSID case no ARB(AF)/23/1).

Key legal issues in dispute

According to the publicly available Procedural Orders from the tribunal, the claimants allege breaches of Articles 10(1), 10(7), 10(3) and 13 of the ECT, including “fair and equitable treatment” (FET) and expropriation-related claims.

The respondents raised preliminary “intra-EU” objections (relying on previous case law from the Court of Justice of the European Union) to contend that Article 26 of the ECT is inapplicable intra-EU, and also advanced defences linked to “essential security interests”/necessity in light of the energy crisis.

The tribunal addressed these in a public consolidated Decision on Bifurcation governing the Denmark, Germany and EU cases.

Another key preliminary question in the case, according to the publicly available Procedural Decision on Bifurcation, is whether Article 24(3)(a)(ii) of the ECT (exemption due to essential security interests taken in time of war, armed conflict or other emergency in international relations) can be invoked by the respondents.

Outcome/status of the case

The tribunal issued a Decision on Bifurcation on 8 April 2025, deciding not to bifurcate any of the objections.

No award on the merits has been rendered as of 25 September 2025, and the case remains pending.

Greenland Minerals A/S v Government of Greenland and Government of the Kingdom of Denmark – Pending

The facts of the case

This ad hoc contract-based investor–state arbitration was commenced under the arbitration clause in the claimant’s Greenland exploration licence, with a seat in Copenhagen under the Danish Arbitration Act (DAA), which is based on the UNCITRAL model law.

The dispute concerns Greenland Parliament Act No 20 of 1 December 2021 banning uranium prospecting/exploitation and its effect on the claimant’s asserted entitlement to an exploitation licence for the Kvanefjeld rare earths project. In the Request for Arbitration of 22 March 2022, the claimant pleaded that Greenland’s measures amount to expropriation and join the Kingdom of Denmark as co-respondent based on its role in Greenland’s mineral governance during the relevant period. The claimant later confirmed the filing of its Statement of Claim on 19 July 2023, and the tribunal ordered bifurcation on 3 October 2024.

Key legal issues in dispute

The key issues in this case are the assessment of the contractual entitlement to an exploitation licence (legitimate expectations under the licence terms), the legal effect of Greenland Parliament Act No 20 of 1 December 2021 on existing rights, potential expropriation under the applicable law, and attribution/consent issues vis-à-vis Denmark.

Outcome/status of the case

Proceedings are ongoing; no final award has been published as of 25 September 2025.

Donatas Aleksandravicius v Kingdom of Denmark (ICSID Case No ARB/20/30) – Discontinued on 19 November 2021

The facts of the case

The Lithuanian investor brought claims under the 1992 Denmark–Lithuania BIT relating to alleged failure by Danish police to act against labour union protests targeting his construction company’s works and equipment. The tribunal was constituted under the ICSID Convention.

Key legal issues actually pleaded

Denmark invoked previous case law from the Court of Justice of the European Union on intra-EU treaty arbitration, stating: “The European Court of Justice decided in case C-284/16, Achmea, that article 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept. The above-mentioned agreement is therefore not in accordance with EU law and cannot be relied upon in this regard.”

Outcome/status of the case

The tribunal issued an order taking note of discontinuance on 19 November 2021 under ICSID Arbitration Rule 44; there has been no decision on liability.

There has been no final award in any investor–state arbitration case against Denmark to date. As such, there is no public record of Denmark resisting enforcement or seeking annulment as a respondent. The two known treaty-based investor–state arbitration cases are pending or discontinued, and the contract-based Greenland case is pending.

If an adverse award were rendered, Denmark’s obligations and procedures for recognition/enforcement are clearly laid out in the ICSID Convention (Article 54), the DAA and the New York Convention.

Denmark maintains a network of 39 BITs, primarily with extra-EU partners – ie, China, Sri Lanka, South Korea, Türkiye, Malaysia, Hong Kong (China), Ukraine, Vietnam, Ghana, Argentina, Peru, Chile, Albania, Mongolia, Russia, Venezuela, Pakistan, Tunisia, North Korea, the Philippines, Zimbabwe, Laos, Egypt, Mexico, Kuwait, Mozambique, Algeria, Belarus, Ethiopia, Nicaragua, Uganda, Tanzania, Bosnia and Herzegovina, Indonesia, Montenegro, Serbia, Bangladesh, Morocco and North Macedonia.

Intra-EU BITs have been terminated following the European Court of Justice Achmea case (C-284/16) and the 2020 agreement terminating intra-EU BITs within the EU.

As mentioned in 1.1 National Position, Denmark is/was party to several major multilateral instruments with investment provisions. Notably, Denmark withdrew from the ECT with effect from 4 September 2025, under Article 47. The ECT’s 20-year “sunset clause” continues to protect pre-withdrawal investments, shaping the post-ECT landscape for legacy energy investments.

Practical Angle Post-ECT

For EU-based investors, protection increasingly comes from EU law and national remedies, while extra-EU BITs remain the primary treaty vehicle. Structuring through jurisdictions with applicable extra-EU BIT coverage may therefore be considered for future investments.

As an EU member state, Denmark participates in the EU’s network of 44 preferential trade agreements with 76 partners worldwide. Recent “in-force” additions include EU–New Zealand (2024) and the EU–Chile Interim Trade Agreement (2025); the EU also lists agreements being adopted/ratified (eg, EU–Mercosur, modernised EU–Mexico) and under negotiation (eg, India, Indonesia, the Philippines, Thailand, Australia, the UAE).

The EU is likely to ratify additional treaties and trade agreements in the future. The Commission’s “Negotiations and agreements” dashboard shows multiple dossiers pending adoption/ratification (eg, Mercosur, Mexico) and active negotiations (India, Indonesia, the Philippines, Thailand, Australia, the UAE). Once concluded at EU level, Denmark is bound in accordance with EU competences and national ratification where required.

Most of Denmark’s “classic” BITs were negotiated from a Danish Model BIT (circa 2000). Since the Lisbon Treaty (2009), however, new investment-protection texts for Denmark are negotiated at EU level (eg, the Comprehensive Economic and Trade Agreement, or CETA; EU–Vietnam IPA), so current practice follows 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 “investor” definitions to include natural persons who are nationals or permanently resident. Covered assets include shares, claims to money, IP and concessions.
• Admission and full protection and security (FPS)/non-impairment: investments are admitted “in accordance with [host] legislation and administrative 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 jurisdiction. 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 coverage (ie, Indonesia–Denmark 1968 conditioned protection 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 mechanism, 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 confirmed that CETA’s investment tribunal system is compatible 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.

Denmark has been a member of the EU since 1 January 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 competence over foreign direct investment, meaning that investment protection and dispute settlement provisions in new agreements covering Denmark are negotiated 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 traditional 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 Komstroy 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 (leaving investors with national and EU-based remedies instead of investor–state arbitration).

Denmark does not publish a general, official “commentary” on investment treaties. Instead, interpretive guidance is provided through treaty-specific instruments such as Exchanges of Notes and Protocols attached to individual treaties and, in the case of more recent EU agreements covering Denmark, through the EU’s Joint Interpretative Instruments.

A number of Denmark’s extra-EU BITs include Exchanges of Notes or Protocols that are expressly “an integral part” of the treaty and serve as interpretive context under Article 31(2) of the Vienna Convention of Law of Treaties (VCLT). For instance, the Denmark–Lithuania BIT (1992) was concluded “with exchange of notes”, and the Denmark–Vietnam BIT of 1994 contains a Protocol providing for possible extension to the Faroe Islands and Greenland by Exchange of Notes. These texts are publicly available via UNCTAD/UNTS repositories.

As an EU member state, Denmark is bound by Joint Interpretative Instruments published in the Official Journal (which qualify as interpretive context under Article 31 of the VCLT). The CETA Joint Interpretative Instrument (2017) explicitly states that it provides a clear, agreed interpretation of debated provisions, “in the sense of Article 31 of the Vienna Convention”.

For access and publication, Denmark’s treaty texts and attached notes/protocols are publicly available via the UN Treaty Series and major official repositories; the Danish Ministry of Foreign Affairs also sets out national practice on treaty making and documentation.

Denmark has no single, standalone “national investment law” that grants general substantive protections and ISDS to national or foreign investors. Instead, investor protection stems from the Danish Constitution and incorporated human rights laws on an EU level, while screening/controls are governed by the Investment Screening Act.

Disputes with public authorities are often resolved at the ordinary Danish courts via litigation, as an alternative to investor–state arbitration under domestic law. Danish law provides a constitutional guaranteed right for judicial review of administrative decisions through the Danish courts.

Extra-EU investment protection and ISDS, if any, derive from treaties, not from Danish statutes.

In Denmark, direct arbitration clauses between investors and the state or state-owned/controlled entities are primarily used in sector-specific contexts. They are common in public construction and infrastructure contracts through the AB 18 standard terms, which refer disputes to the Danish Building and Construction Arbitration Board.

Outside those sectors, Danish law allows the state and state-owned entities to agree to arbitration, but there are no published statistics indicating how widespread this practice is across the market. Compared with investment treaties, these clauses provide protection only at the contractual level and do not offer the broader substantive and procedural guarantees found in treaty-based investor–state dispute settlement.

In Denmark, contract-based arbitration gives access to arbitration depending on the scope of the arbitral clause in question, with enforcement subject to the New York Convention. Treaty-based ISDS, by contrast, provides investors with substantive international protections and stronger enforcement, especially under the ICSID Convention.

Within the EU, however, treaty-based ISDS is no longer available (post-Achmea/Komstroy – see 2.3 Free Trade Agreements), leaving only contract arbitration and domestic courts as remedies unless the investment is covered by an extra-EU treaty.

Denmark’s pattern mirrors global ISDS practice when it comes to the complaints most frequently cited by investors. The leading claims relate to FET, FPS and (indirect) expropriation. NT and/or MFN tend to be pled as auxiliary theories.

In Aleksandravicius v Denmark (ICSID ARB/20/30), the investor alleged FET (including the denial of justice) and FPS under the Denmark–Lithuania BIT, before the case was discontinued.

Energy/ECT matters sharpen the mix. In Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark (ICSID ARB/23/48), the tribunal’s public procedural record reflects claims under Articles 10 (treatment obligations including FET and non-discrimination) and 13 (expropriation) of the ECT, with the expropriation claim noted as being capable of surviving even if certain objections were to succeed.

FET/FPS remain the default backbone of treaty claims, often paired with NT/MFN as supportive arguments. This is consistent with Denmark’s very small set of respondent cases and general ISDS practice.

Expropriation is frequently advanced alongside FET in ECT-related disputes and, in the pending ECT case, is positioned to survive certain preliminary objections, hence its practical importance.

Finally, intra-EU objections (post-Achmea/Komstroy) are routinely raised by Denmark in treaty cases and shape pleadings strategy, particularly under the ECT – see Aleksandravicius v Denmark (ICSID ARB/20/30).

Contract-based disputes seated in Denmark (separate from treaty-based ISDS) largely centre on breach of contract and declarations of rights, sometimes framed alongside expropriation arguments under domestic law.

In the Greenland Minerals (Energy Transition Minerals) v Greenland & Denmark arbitration (ad hoc, seat Copenhagen), the claimant seeks confirmation of a contractual right to an exploitation licence and argues that governmental measures would amount to an expropriation of protected property rights according to the investor’s published Statement of Claim.

The parties’ autonomy to select arbitrators is broad in Denmark, but the source of the limits depends on whether the case is conducted under the ICSID Convention or as a non-ICSID arbitration with the seat in Denmark.

ICSID Convention Cases

Party autonomy is broad but constrained by the ICSID framework, not Danish law. Under Article 39 of the ICSID Convention, the majority of arbitrators must be nationals of states other than the respondent state and the investor’s home state. Arbitrators must be independent and impartial, and have a continuing disclosure duty (ICSID Arbitration Rules 2022). Challenges are decided under the ICSID Convention, with a high “manifest lack” standard (Article 57), and default appointments are made within the ICSID system. There is no national “seat” and no lex arbitri like the DAA.

Non-ICSID Arbitrations With Danish Choice of Law

If chosen as the law of the arbitration, Danish law imposes mandatory requirements of independence/impartiality and a disclosure duty, and provides challenge and court appointment mechanisms.

Key provisions from the DAA expressing the parties’ autonomy to select arbitrators include that:

• parties may set the number of arbitrators – the default is three if not agreed;
• parties may agree the appointment procedure – failing agreement, in a three-member tribunal each party appoints one arbitrator within 30 days, and the co-arbitrators shall appoint the president within 30 days; and
• arbitrators must be impartial and independent, and must disclose circumstances giving rise to justifiable doubts as to their impartiality and independence.

Under the DAA, default rules apply if the parties’ agreed method fails.

In a three-member tribunal, each party must appoint one arbitrator within 30 days of a request from the other party, and the two co-arbitrators must appoint the presiding arbitrator within 30 days of their appointment.

If a party fails to appoint, or if the co-arbitrators fail to agree, the Danish courts will appoint the missing arbitrator(s), taking into account any agreed qualifications and ensuring independence and impartiality. If not otherwise agreed, the default number of arbitrators is three. The Act contains no special multi-party appointment rule; the same default provisions and the court appointment backstop apply.

Courts may intervene only as provided by the DAA, which explicitly states that the court may not intervene in the arbitration process on a general level.

The court may intervene in some specific instances, such as:

• to appoint arbitrator(s) where constitution fails (Section11(3)) – such appointment is not appealable (Section 5(4));
• to decide challenges if a party-agreed or default challenge fails before the tribunal (Section 13(3)); and
• terminate a mandate where an arbitrator is unable to act or unduly delays (Section 14(1)).

As a general rule of thumb, most court orders – also in relation to those delivered in accordance with the DAA – are appealable as per the Danish Administration of Justice Act (except an order under Section 11(3), as mentioned above).

There are particular provisions governing the challenge or removal of arbitrators if there are justifiable doubts as to their impartiality/independence, or if there is a lack of agreed qualifications (Section 12(2) of the Danish Arbitration Act). The arbitrators’ duty to disclose circumstances that may give rise to justified doubts as to the impartiality or independence of the person concerned is continuous (Section 12(1)).

The procedures for such challenges or removal of arbitrators vary. The parties may agree a challenge process; in the absence of an agreement, a party must challenge within 15 days of becoming aware of the tribunal’s constitution and the relevant facts.

If the tribunal rejects the challenge, the party may request a court decision within 30 days. The tribunal may proceed while the court application is pending. Termination for inability/undue delay may be ordered by the court. The appointment of a replacement arbitrator follows the original appointment rules.

Under the Danish Institute of Arbitration (DIA) Rules 2021, challenges must be filed within 15 calendar days and are decided by the Chair’s Committee in accordance with Article 21. Any replacement appointments are handled in accordance with the procedure stipulated in Article 22.

Under Danish law, arbitrator independence and impartiality are treated as mandatory safeguards. The DAA provides that anyone approached to serve as arbitrator must be impartial and independent, and is under a continuing duty to disclose any circumstances that could give rise to justifiable doubts about their independence or impartiality. These requirements are mandatory, meaning the parties cannot contract out of them.

An arbitrator may be challenged if such doubts exist or if the arbitrator does not meet agreed qualifications, and the Act sets out a structured procedure for challenges, including time limits and the possibility of court review if the tribunal rejects a challenge.

The same principles are reinforced under the DIA Rules of Arbitration 2021, which are the most frequently used institutional rules in Denmark. Article 20 requires that any arbitrator must be available, impartial and independent. Before confirmation, an arbitrator must sign a Declaration of Acceptance, Impartiality and Independence, and provide written disclosure of any circumstances that are likely to raise justifiable doubts; the obligation to disclose continues throughout the proceedings.

The DIA Chair’s Committee has the power to confirm or refuse the confirmation of arbitrators, thereby acting as an additional safeguard.

Challenges must be made in writing within 15 calendar days of learning of the relevant circumstances, and the Chair’s Committee decides on such challenges. The Rules also extend disclosure obligations to the parties, requiring them to identify any third-party funder with an economic interest in the outcome of the proceedings.

In short, Danish arbitration law and the DIA Rules both impose stringent requirements of independence, impartiality and disclosure, combining statutory safeguards with institutional oversight to ensure the integrity of arbitral tribunals.

Arbitral Tribunals Seated in Denmark

The DAA permits a tribunal, on a party’s request, to order “such interim measure of protection as the arbitral tribunal may consider necessary …” and to require “appropriate security” in connection with such measures (Section 17).

These directions are contractually binding between the parties, but the Act contains no mechanism for court recognition/enforcement of tribunal-ordered interim measures. In practice, parties must seek enforceable relief from the ordinary courts instead (please see 5.2 Role of Domestic Courts).

Scope/Examples

Although it is accepted under Danish law that tribunals may order status quo or action/refrain orders, asset preservation and evidence preservation directions, there is debate in the relevant legal literature about interpreting domestic injunction/attachment concepts into Section 17; either way, tribunal measures are not directly enforceable by Danish courts.

DIA Rules

Under the DIA Rules, a constituted tribunal may grant interim measures (Article 36) and may require security. Before constitution, the Rules provide an interim arbitrator (Appendix 3) and an emergency arbitrator (Appendix 4). Emergency/interim decisions are binding inter partes and must be complied with “without delay”, but they are not court-enforceable awards under Sections 38–29 of the DAA.

Investor–State (ICSID) Arbitrations

ICSID tribunals may “recommend” provisional measures to preserve parties’ rights (Article 47 of the ICSID Convention; Rule 47 of the 2022 ICSID Arbitration Rules). While Article 47 uses the term “recommend” ICSID practice treats compliance as mandatory in order to protect the exclusivity of ICSID proceedings under Article 26. Security for costs is now governed by a standalone provision (ICSID Arbitration Rule 53, 2022).

For perspective on the topic of provisional measures, Klesch Group Holdings Limited and Raffinerie Heide GmbH v Federal Republic of Germany (ICSID case no ARB/23/49 – see 1.5 Major Arbitrations) has showcased, among many other things, that ICSID arbitration can be used by investors to challenge national provisional measures. In this case, the tribunal ordered Germany, by way of provisional measures, to refrain from collecting the solidarity contribution in order to preserve the status quo and protect ICSID exclusivity. By contrast, in Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark (ICSID case no ARB/23/48), Denmark has, pursuant to its own laws, already put the collection of the solidarity contribution on hold, which may reduce the immediate need for provisional measures.

Such provisional measures are binding inter partes but they are not enforceable (see above and 5.2 Role of Domestic Courts).

An amendment of the DAA is expected to be implemented within the coming years, and an expert committee has recommended that Denmark implements the UNCITRAL Model Law Amendments from 2006 on interim measures.

UNCITRAL-Based Investor–State Cases

Where UNCITRAL Rules are used, tribunals may grant interim measures of the kinds listed in Article 26 (status quo, prevent harm, asset and evidence preservation). In Denmark, such measures are not directly enforceable under the DAA; parties obtain enforceable relief from the courts (again, please see 5.2 Role of Domestic Courts).

Court Powers Notwithstanding Arbitration

Section 9 of the DAA provides that the courts may grant interim measures (and enforcement measures) even if there is an arbitration agreement. This applies irrespective of whether arbitration has begun or where the seat is located. It is, however, conditional on the Danish courts having jurisdiction, and the availability of such measures is further limited by the general principles of state immunity, which typically shield sovereign and public assets from attachment or injunction.

Therefore, enforceable attachments (in Danish: “arrest”), injunctions and similar relief are sought from the ordinary courts under the Danish Administration of Justice Act.

No Enforcement of Tribunal-Ordered Interim Measures

Danish courts do not recognise or enforce interim measures ordered by arbitral tribunals (including DIA emergency/interim arbitrators). A party must apply anew to the courts; any prior tribunal decision has persuasive value at most.

ICSID Specificity

In ICSID cases, Article 26 of the ICSID Convention gives arbitration an exclusive character (“to the exclusion of any other remedy” unless the parties agree otherwise).

ICSID tribunals have protected that exclusivity – for example, by ordering parties to withdraw or refrain from parallel court measures. Accordingly, interim relief in ICSID disputes is addressed to the ICSID tribunal; national court intervention is generally incompatible with Article 26 without party agreement. An example from ICSID case law showcasing this is Klesch Group Holdings Limited and Raffinerie Heide GmbH v Federal Republic of Germany (ICSID case no ARB/23/49 – see 1.5 Major Arbitrations).

The DAA does not expressly empower tribunals to order security for (adverse) party costs. However, it does expressly cover interim measures generally and the ability to require “appropriate security” in connection with such measures (Section 17) and security for the tribunal’s own fees/expenses and deposits (Section 36).

In litigation cases, Danish courts may order a claimant to put up security for adverse costs where the claimant is domiciled outside the European Economic Area. Danish case law also addresses attempts to circumvent the cost rules – eg, by assigning a claim to a newly formed, thinly capitalised company – and has accepted a defendant’s claims for security for costs in such scenarios.

The same anti-abuse considerations might inspire tribunals’ decisions when seated in Denmark, outside the specific cases where parties have empowered the tribunal to order security for costs through the DIA Rules, inter alia.

Under the DIA Rules, the tribunal has several options.

• Article 12(3) expressly allows the tribunal, at a party’s request, to order another party to provide security for any costs the tribunal may impose in its final award, including ordering security for adverse costs, such as expected lawyer and expert fees.
• Article 36 empowers the tribunal to order interim measures it considers necessary and to require appropriate security in connection with those measures. This covers security tied to the effectiveness of the interim measure itself (ie, preservation of assets or evidence), not security for the opposing party’s legal costs.

Permissibility of Funding of Investor–State Claims

Danish law does not prohibit third-party funding (TPF) of arbitration, and the DAA contains no restriction on funding arrangements.

Under Article 20(4) of the DIA Rules 2021, a party must “immediately inform” the tribunal, the other parties and the DIA of the identity of any third party that has entered into a funding arrangement or otherwise has an economic interest in the outcome.

In investor–state cases under the ICSID system, TPF is likewise permitted and expressly regulated by ICSID Arbitration Rule 14 (2022), which requires disclosure of the funder’s name and address (this is relevant as Denmark is an ICSID Contracting State).

Prevalence of Funding

Funding is available in Denmark-seated arbitrations (and in ICSID cases), but there is no evidence that TPF is prevalent in Danish investor–state disputes, largely because Denmark’s treaty-ISDS docket is very small (one known case discontinued and one pending – see 1.3 Prevalence of Investor–State Arbitration). For example, the pending Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark (ICSID ARB/23/48) has public procedural orders but no public record confirming the presence of TPF; the tribunal instead adopted a transparency schedule without disclosing any funder.

As mentioned in 6.1 Prevalence of Third-Party Funding, TPF is lawful and unregulated in Denmark; it has become established in practice and is used occasionally in both litigation and (non-public) arbitration.

Of publicly known cases, albeit non-arbitration, in a Supreme Court ruling of 23 March 2017 (U 2017.1815 H), the Supreme Court upheld an arrangement following which a creditor financed an insolvency estate’s avoidance claim in return for 50% of any recovery, essentially accepting an external funding-type agreement in civil litigation. This ruling is frequently cited as prominent evidence that TPF-style arrangements are not, per se, inconsistent with Danish law, neither in litigation nor in arbitration (although the case was litigation).

In Danish case law related to management liability, practice shows frequent use of TPF in substantial cases, including the infamous OW Bunker case, in which the potential management liability claims of the estate of OW Bunker could not be financed due to assets being pledged. TPF was used as a measure to ensure that the case could proceed at all. The arrangement is often cited as the first of its kind in Denmark, illustrating TPF’s “access to justice” role in insolvency-driven claims and why more liability cases are arising following the acceptance of such funding.

The Danske Bank shareholder action bringing claims related to the alleged disclosure failures around the Estonian branch is reportedly backed by litigation funding institutions to a large degree. This shows that global funders actively operate in the Danish market and use TPF structures to mobilise large, co-ordinated investor claims.

Because arbitral proceedings (including those seated in Denmark) are typically confidential, reported arbitration case law related to TPF is sparse, but it can be concluded that TPF is commonly used in arbitration in Denmark as well.

Danish Arbitration Act

The DAA does not contain any provisions on TPF, nor does it impose any duty of disclosure. It also provides no specific guidance on how tribunals should treat funding in relation to applications for security for costs.

DIA Rules Require Disclosure

Under the DIA Rules 2021, a party must immediately inform the tribunal, the other parties and the DIA of the identity of any third party that has entered into a funding arrangement in relation to the case or that has an economic interest in its outcome (Article 20(4)).

International soft law is commonly relied on in Denmark; the IBA Guidelines on Conflicts of Interest treat third-party funders and insurers as potentially bearing the identity of a party for conflict-checking and disclosure purposes (General Standard 6(b); 2014 text and 2024 revisions). These Guidelines are widely used by tribunals seated in Denmark.

Tribunals will generally likely place emphasis on TPF when assessing a claim for security for costs, depending on the specific circumstances of the case.

ICSID Cases Seated Outside Denmark (Guidance on Security for Costs)

Tribunals have held that the mere existence of TPF is not, by itself, enough to justify security for costs (eg, EuroGas v Slovakia, ICSID ARB/14/14).

Conversely, in exceptional circumstances (notably a track record of non-payment), security has been ordered and TPF was treated as a relevant factor (eg, RSM v Saint Lucia, ICSID ARB/12/10).

Under the ICSID 2022 Rules, Rule 14 requires the disclosure of funders (including ownership/control of a corporate funder), and Rule 53 expressly empowers tribunals to order security for costs, directing them to consider “all relevant circumstances”, including the existence of TPF – but TPF remains only a factor, not a presumption.

No Danish Statutory Pre-Conditions for Treaty Claims

Danish law does not prescribe pre-arbitration “notice” or “cooling-off” steps for investor–state claims. Those requirements flow from the applicable investment instrument and arbitral rules, not from the DAA.

Substantive protections and access to ISDS vis-à-vis Denmark come from treaties (and, in contract cases, from the contract), not from Danish statutes.

Typical Treaty-Based Cooling-Off Periods Used With Denmark

Under the ECT, parties should first seek an amicable settlement. A three-month consultation period must elapse before arbitration may be commenced. After that period, the investor elects a forum (domestic courts/administration; a pre-agreed procedure; or international arbitration under ICSID/UNCITRAL/SCC). The election of a forum after the cooling-off period is a material procedural step.

Many Danish BITs provide for written notice plus three to six months of consultations before arbitration – eg, the Denmark–Mexico BIT requires amicable settlement efforts for six months from written notification before submission to arbitration.

ICSID Convention and Exhaustion of Local Remedies

Where the forum is ICSID, the Convention itself does not require the exhaustion of local remedies unless the state conditions its consent on that requirement. Consent to ICSID arbitration is deemed exclusive of other remedies, unless otherwise stated. Tribunals consistently read Article 26 as waiving any default exhaustion rule absent an express condition in the instrument of consent.

Lex Arbitri and Institutional Rules at a Danish Seat

The DAA does not contain a general duty of confidentiality; confidentiality must be achieved by agreement or institutional rules. Under the DIA Rules 2021, hearings are held in private unless the parties agree otherwise, and there is an express confidentiality obligation on the tribunal and the institution. Notably, this provision binds the tribunal/DIA; any party-side confidentiality should be expressly agreed or ordered.

Transparency Defaults in Treaty-Based ISDS Forums

The 2022 amendments to the ICSID rules strengthened transparency. Awards are now published by default unless a party objects within 60 days, important orders/decisions may be published, hearings are open to the public unless a party objects, and tribunals must protect “confidential or protected information”.

In Denmark’s pending Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark case, the tribunal has already issued a procedural order on transparency, underlining that transparency is actively managed from the outset where public interests (energy markets, fiscal measures) are engaged.

UNCITRAL Transparency Rules

For UNCITRAL arbitrations under treaties concluded on or after 1 April 2014, the Rules on Transparency apply by default (publication of key documents, open hearings, third-party submissions), subject to the protection of confidential information.

For pre-2014 treaties, the Rules apply only if the treaty or disputing parties so provide, or via the Mauritius Convention on Transparency. On 22 May 2025, the EU concluded the Mauritius Convention, committing to apply the Transparency Rules to covered pre-2014 treaties within EU competence (notably relevant for the ECT when UNCITRAL rules are used).

Intra-EU Overlay

Within the EU, intra-EU ISDS under BITs/ECT is inapplicable following the Achmea/Komstroy cases and the 2020 agreement mentioned in 1.1 National Position; Denmark’s modern transparency posture in UNCITRAL treaty cases is therefore most relevant for extra-EU matters and for the ECT while it still applies.

National arbitration law does not enumerate or cap remedies.

The DAA contains no list of permissible remedies. It provides for the recognition/enforcement of arbitral awards subject only to standard New York Convention-type defences, such as public order.

While investment tribunals can order non-pecuniary remedies (eg, specific performance/injunctions) – and some have (ie, Goetz v Burundi) – Article 54 of the ICSID Convention obliges contracting states to enforce only the pecuniary obligations of ICSID awards. Non-pecuniary orders in ICSID awards may thus face enforcement constraints; by contrast, non-ICSID awards seated outside ICSID are enforceable under the New York Convention without that “pecuniary-only” limitation.

Lastly, punitive damages are not recognised under Danish arbitration law. An award granting such punitive damages risks being set aside or not enforced under the DAA – eg, on grounds of public order.

There are no Denmark-specific statutory methodologies for assessing damages in investor–state disputes or in general liability cases.

Tribunals seated in Denmark or court cases with claims against Denmark typically apply international law and the treaty/contract standard. They often apply FMV at the valuation date for expropriation, and then select a suitable method based on the evidence.

Other typical methods for valuation of damages include:

• discounted cash flow for going concerns with reliable projections;
• market-based approaches (comparable transactions/companies); and
• cost-based approaches (book value/replacement cost) where appropriate.

These are the approaches mapped in UNCTAD’s analyses of ISDS damages and valuation practice.

Many Danish BITs and the ECT (when applicable) specify FMV plus interest for lawful expropriation.

In practice, however, energy disputes like the pending Klesch Group Holdings Ltd, Klesch Refining Denmark A/S and Kalundborg Refinery A/S v Kingdom of Denmark arbitration illustrate a different posture, whereby the investor seeks repayment of a solidarity contribution levy rather than valuation of the refinery business itself.

In such scenarios, the remedy often takes the form of refund plus interest, although this is not a uniform rule and depends on the tribunal’s jurisdiction and the character of the measure.

Denmark-Seated Arbitrations

Danish law leaves costs and fee-shifting to the tribunal. 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 arbitrators’ fees/expenses, tribunal-appointed expert expenses, and DIA charges.

ISDS Cases

For ICSID cases, Article 61(2) of the ICSID Convention 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 evidence. 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 outcome, 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 reimbursed 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 commercial benchmarks.

Tribunals seated in Denmark (and those hearing Danish-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 awarded 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.

While the DAA does not itself codify a “duty to mitigate”, a tribunal seated in Denmark decides the dispute under the applicable substantive law chosen by the parties (or determined by conflicts rules). In investor–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.

Enforcement Procedure and Standards

Denmark’s Arbitration Act, which is UNCITRAL-based, provides that arbitral awards are binding and enforceable “irrespective of the country in which [they were] made”, subject to limited refusal grounds in Sections 38–39 of the DAA, which that mirrors Article V of the New York Convention.

The bailiff’s court carries out enforcement in accordance with the provisions of the Danish Administration of Justice Act.

Awards Set Aside at the Seat

Under Section 39(1)(1)(e) of the DAA, Danish courts may refuse recognition/enforcement if the award “has been set aside or suspended by a court of the country in which, or under the law of which, the award was made”.

If annulment/suspension proceedings are pending at the seat, Section 39(3) of the DAA authorises Danish courts to adjourn the enforcement decision and, upon the enforcing party’s request, to order the debtor to provide security.

In March 2025, the Danish Supreme Court refused enforcement of a Shanghai Arbitration Commission award for lack of proper notice (even though the service attempts were sufficient under local rules), confirming Denmark’s pro-enforcement stance with narrow, due process-focused exceptions.

ICSID Awards

For ICSID cases, Article 54(1) of the ICSID Convention obliges Denmark as a contracting state to recognise and enforce the pecuniary obligations of the award as if it were a final domestic judgment.

General Approach

Danish courts are pro-enforcement, narrowly applying the defences in Sections 38–39 of the DAA and Article V of the New York Convention.

Public policy as stipulated in Section 39(2)(b) of the DAA is reserved for cases manifestly contrary to public order.

In the recent Supreme Court ruling, however, the decisive point was due process notice under Section 39(1)(1)(b) of the DAA/Article V(1)(b) of the New York Convention. The courts will independently verify that a party actually received notice, and reasonable doubt will normally bar enforcement even if local rules were observed where the seat of the arbitration was based.

Set-Aside and Stays

If an award is annulled at the seat, Danish courts typically do not enforce the award. If annulment is pending, courts may adjourn and require security.

Sovereign Immunity and Recovery

For ICSID awards, Danish courts are obliged under Article 54 of the ICSID Convention to recognise the award as binding, as if it was a final judgment. However, when it comes to actually enforcing the award against state property, Article 55 makes it clear that ordinary rules on sovereign immunity still apply.

For non-ICSID awards, recognition and enforcement in Denmark follow the normal New York Convention and DAA regime. Again, even if recognition is granted, enforcement is limited by immunity, as follows:

• property used for sovereign/public purposes (eg, embassies, central bank funds, military assets) is immune from execution; and
• property used for commercial purposes (eg, state-owned companies engaging in business) may be subject to enforcement, but only after a case-by-case assessment.

Targeting State Assets

In Denmark, there is no special enforcement code for states; general enforcement rules apply subject to immunity. Materials on Danish practice indicate that:

• public-purpose assets are subject to enforcement immunity;
• commercial use assets are potentially executable; and
• state-owned entities’ assets are executable only if the entity is the debtor (or in exceptional cases where separate personality can be disregarded).

Piercing the Corporate/Sovereign Veil

The Danish courts have not reported any investor–state precedent in which the separate legal personality of a state-owned enterprise (SOE) has been disregarded for purposes of enforcing an award.

SOEs are treated as distinct legal persons, and recovery normally requires either that the SOE itself is the award debtor or that there is compelling evidence of an alter ego or abuse of form theory under general principles – an approach applied only rarely.

SOE assets may be reachable where the claim is directed against the entity itself.

These observations derive primarily from Danish enforcement practice in relation to foreign judgments and arbitral awards; there is no specific ISDS precedent regarding relaxing the corporate veil.