Shipping 2021 Comparisons

Last Updated February 24, 2021

Contributed By Bech-Bruun

Law and Practice

Authors



Bech-Bruun is a market-oriented law firm offering a wide range of specialist advisory services to large sections of the Danish corporate and public sectors, as well as to global enterprises. Counting more than 500 experienced and highly specialised employees, of whom 69 are partners, and with offices in Denmark, Shanghai and New York, Bech-Bruun is one of Denmark’s leading full-service law firms. Bech-Bruun advises on all legal aspects of shipping, transport and logistics and co-operates with leading international transport lawyers and maintains an extensive international network to service its clients. Bech-Bruun is involved in more or less all major shipping deals in Denmark and is particularly known for maritime insolvency and issues related to the bunker industry.

The Danish Maritime Authority is a part of the Danish Ministry of Industry, Business and Financial Affairs, and is a government agency of Denmark that regulates maritime affairs.

Maritime and shipping-related disputes are heard by the Danish Maritime and Commercial Court. The authority of the Danish Maritime and Commercial Court is set out in the Danish Administration of Justice Act, which provides the Maritime and Commercial Court with authority over disputes concerning international trade relations as well as disputes concerning transport in a broad sense, including sea, land, air and rail.

The most common types of maritime and shipping-related claims brought before the Danish Maritime and Commercial Court are claims concerning carriage of goods, charterparties and bunker disputes. 

The Danish Maritime Authority is operating as the port state control agency under the Danish Ministry of Industry, Business and Financial Affairs. The Danish Maritime Authority is the inspecting body for all vessels flying the Danish flag.

The Danish Maritime Authority has authorised several classification societies (Recognised Organisations) to perform various approval and certification tasks on board Danish ships. All vessels must be designed, constructed and maintained as per the standards of these classification societies. 

There are no requirements for regular filings of any kind in Denmark. Ship-owners must ensure the validity of certificates and reapply for new certificates in the case of the expiry of such certificates.

Denmark strives to have regulation that ensures a competitive environment of a certain level for all ship-owners – both national and international – while ensuring that the shipping industry continues to become cleaner and safer. This is, inter alia, achieved through Denmark’s membership of the IMO.

The Danish Maritime Authority may detain a ship if the ship’s continued sailing constitutes a danger due to faults or deficiencies in the hull, machinery, safety equipment, location of ballast and cargo, manning or for other reasons associated with danger to the safety of occupants or danger of pollution. 

In the event of a grounding in Danish territorial waters or in a Danish exclusive economic zone, the Master of the vessel must report the grounding to the Danish Maritime Authority. The registered owner of a vessel flying the Danish flag has a duty to ensure that the wreck is removed.

With regard to pollution, the Danish Maritime Authority co-operates with the Danish Environmental Agency. Thus, the Danish Maritime Authority performs port state control of adherence to, inter alia, regulation concerning sulphur emission. The Danish Maritime Authority’s findings are reported to the Danish Environmental Agency for consideration. The Danish Environmental Agency will also decide whether to report a breach to the Danish police for further investigation and possibly criminal charges.

The Danish ship registers are handled by the Danish Maritime Authority and Chapter 2 and 2 (d) of the Danish Merchant Shipping Act contain the Danish rules on ship registration.

In Denmark, there are two different ship registries: a national registry for Danish-owned tonnage (DAS) and an international registry for ships engaged in foreign trade (DIS). Danish vessels with a gross tonnage of 20 GT or higher are obliged to register in the DAS or the DIS. Danish vessels with a tonnage of between 5 GT and 20 GT have a right to register in the DAS, but cannot be registered in the DIS. Furthermore, warships, fishing vessels, boulder fishing vessels and recreational craft, as well as ships carrying passengers engaged in regular services between Danish ports, cannot be admitted to the DIS. A vessel registered in the DAS or the DIS flies the Danish flag.

In order to be registered in DIS or DAS, it is a requirement that economic activity in Denmark be carried out in one of three ways;

  • the ship's technical or commercial operations are handled from Denmark;
  • the unit responsible for the operation of the ship meets the requirements to be covered by the tonnage tax regime; or
  • the shipping company, organisation or person who holds or has applied for the ship's compliance document in accordance with the Code of Compliance (Document of Compliance) is established in Denmark.

Furthermore, it is a requirement that the ship-owner appoint a Danish entity – either a natural or legal person – who can be contacted for inspection purposes and who can be sued on behalf of the ship-owner. For foreign ship-owners, the managing owner must also hold a Danish citizenship or be a Danish or European entity. Managing ship-owners from outside Europe are not eligible.

Both conditions must be fulfilled for the ship to remain registered in Denmark. The Danish Maritime Authority carries out random checks on whether ships are registered with a non-Danish owner and whether the ship and owner meet the registration conditions on an ongoing basis.

Pursuant to the Danish Maritime Act, a special section of the ship register has been established under the DAS register. This is called the ship-building register. Ships that are under construction in Denmark can be registered in the register. The precondition is that the ship can be reliably identified and that its tonnage is estimated to be at least 5 GT. There is no obligation to register and no requirements are made regarding the nationality of the owner. Request for registration is made by the owner and the notification information must be confirmed by the ship-builder. The detailed rules on registration in the ship-building register, registration of rights and deletion of the register are essentially the same as for the actual ship register.

Foreign-registered vessels can also be bareboat-registered in the DIS and Danish vessels can be bareboat-registered under certain foreign flags.

The Maritime Act provides for the possibility of foreign ships being registered temporarily in the Danish ship registers under certain circumstances, and that Danish ships are correspondingly registered in foreign registers. The basic condition is that the ship is bareboat-chartered, and it is thus the charterer who requests the flag change. The purpose of these rules is to enable the parties to the charterparty to have the nationality of the ship changed temporarily, should there be any benefits associated with it.

The registration can take place in both the DIS and the DAS, and the ship can be admitted for a period of up to five years. However, this period may be extended by up to one year at a time at the written request of the charterer.

The Danish Maritime Authority is the authority responsible for the registration of mortgages.

Ship mortgages must be registered in the DAS or the DIS. The owner of the vessel must send the mortgage deed to the DIS or the DAS in original. The deed must be consecutive-page numbered and signed by the issuer of the mortgage. Passport or similar proof of identity is often required. The ship-owner can submit documents in both Danish and English.

The Danish Maritime Authority offers public access to preliminary information about vessels, such as ownership and mortgages, registered in the DIS or the DAS. The information is not an official copy of the registers but a special database that the public has access to, and the information may therefore differ from the official registers. The database is updated approximately once a day.

Denmark is a party to the following international conventions on pollution:

  • the 1992 International Convention on Civil Liability for Oil Pollution Damage;
  • the 1992 International Convention on the Establishment of an International Fund for Compensation of Oil Pollution Damage;
  • the 2003 Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (the Supplementary Fund);
  • the 2003 International Convention on Civil Liability for Bunker Oil Pollution Damage;
  • the 1973 International Convention on Prevention of Pollution of Ships
  • the 1978 Protocol relating to the International Convention on Prevention of Pollution of Ships
  • the 1997 Protocol to amend the International Convention on Prevention of Pollution of Ships;
  • the 1996 International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea;
  • the 2010 Protocol to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea;

Denmark is a party to the following international conventions on wreck removal:

  • the 2007 Nairobi International Convention on Removal of Wrecks.

Denmark is a party to the 2010 International Convention for Unification of Certain Rules of Law with respect to Collision between Vessels. This convention is implemented in Chapter 8 in the Danish Merchant Shipping Act.

As for salvage, Denmark is a party to the 1989 International Convention on Salvage. Denmark has incorporated the 1974 York-Antwerp Rules in Chapter 17 in the Danish Merchant Shipping Act.

Denmark is a party to the 1976 Convention on Limitation of Liability for Maritime Claims and its Protocol from 1996. The convention has been implemented in the Danish Merchant Shipping Act. 

The Danish Merchant Shipping Act sections 177 to 180 and Chapter 12 set out the procedural rules for establishing a limitation fund.

According to these rules, a limitation fund may be constituted with the Danish Maritime and Commercial Court if arrest is applied for, an action is brought, or other legal proceedings are instituted in Denmark with respect to claims which according to their nature may be limited.

The fund is set up by paying the limitation amount to the court, or by providing security for the amount at the same time as an order is issued. The court will set a notification deadline once the fund has been established. Claims that have not been notified in time are disregarded.

The fund shall be deemed as constituted for all the persons who may invoke limitation of liability and to cover all the claims for which the limitation of liability applies. The fund shall only be available for payment of claims in respect of which limitation of liability may be invoked, including interest.

The court shall, by court order, stipulate the size of the fund amount as well as whether any security offered can be approved. The court order may stipulate that security shall also be provided for an additional amount to cover the costs of administering the fund, including costs awarded by the courts, as well as to cover any interest claims.

The limitation fund is calculated with reference to the size of the vessel and the nature of the claims.

The right to global limitation of liability exists, regardless of the basis of liability in respect of claims arising from;

  • personal injury or damage to property occurring on board or in direct connection with the operation of the ship or with salvage operations;
  • loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
  • loss resulting from infringement of rights other than contractual rights occurring in direct connection with the operation of the ship or salvage operations;
  • raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board that ship;
  • the removal, destruction or the rendering harmless of the cargo of the ship; and
  • measures taken to avert or mitigate loss which is or would be subject to limitation of liability as well as loss caused by such measures.

The right to global limitation of liability does not apply to, inter alia:

  • claims for reward for salvage or contribution in general average;
  • claims subject to any international convention or national legislation governing or prohibiting limitation of liability for nuclear damage; and
  • claims arising from nuclear damage caused by a nuclear-powered ship.

For claims resulting from the ship's own passengers dying or being injured, the liability limit is 400,000 SDR (Special Drawing Rights), multiplied by the number of passengers the ship is permitted to carry under its certificate.

For other claims in the event of death or personal injury, the liability limit is 3.02 million SDR for ships with a tonnage of 2,000 tons or less. For a ship with a larger tonnage, the liability limit is increased as follows:

  • for each ton from 2,001 to 30,000 tons, an increase of 1,208 SDR;
  • for each ton from 30,001 to 70,000 tons, an increase of 906 SDR; and
  • for each ton over 70,000 tons, an increase of 604 SDR.

The limit of liability for claims relating to the location, marking and removal of a wreck is 2 million SDR for non-passenger ships operating exclusively on regular scheduled services. For such vessels with a tonnage of more than 1,000, the liability limit is increased as follows:

  • for each ton from 1,001 to 2,000 with 2,000 SDR;
  • for each ton from 2,001 to 10,000 with 5,000 SDR; and
  • for every ton over 10,001 with 1,000 SDR.

The liability limit for all other claims, as well as any uncovered portion of claims relating the ship’s own passengers’ death or personal injury, is 1.51 million SDR for ships with a tonnage of 2,000 tons or less. For a ship with a larger tonnage, the liability limit is increased as follows:

  • for each ton from 2,001 to 30,000 tons with 604 SDR;
  • for each ton from 30,001 to 70,000 tons with 453 SDR; and
  • for each ton over 70,000 tons with 302 SDR.

Denmark is a party to the 1968 Hague-Visby Rules and has incorporated the rules into the Danish Merchant Shipping Act.

In addition to incorporating the Hague-Visby Rules, Denmark has adopted the Rotterdam Rules and parts of the 1978 Hamburg Rules, even though Denmark is not a party to the Hamburg Rules.

Under Danish law, the rightful holder of a bill of lading has title to sue on the bill of lading. Rights under a bill of lading, including title to sue, are transferred when the bill of lading is validly transferred. To what extent a bill of lading can be transferred depends on the wording of the bill of lading. It can be issued to a specific person, to order or to a bearer. If it is issued to a specific person, it cannot be transferred and only that person has the right to sue. If it is issued to order, any person who by a consecutive series of transfers can prove that they are the rightful owner has title to sue on the bill of lading. If it is issued to the bearer, any person who has the bill of lading in their possession has the rights.

However, it must be noted that the carrier is responsible for the goods while the goods are in the custody of the carrier and anyone able to prove a legal interest related to the goods is under Danish law permitted to sue the carrier, irrespective of whether the plaintiff is the holder of a bill of lading.

The bill of lading is decisive for the legal relationship between the issuer of the bill of lading and the person who, with the bill of lading in hand, demands delivery of the cargo. Moreover, under Danish law a cargo interest may sue a carrier for damage due to loss or damage of cargo under the general rules on non-contractual liability.

A carrier (whether the performing carrier or contractual carrier) is responsible for the goods, while the goods are in the custody of the carrier in the port of loading, during transport and in the port of discharge.

The carrier is liable for losses arising out of damage to or loss of goods as well as delay, while those goods are in the custody of the carrier, unless the carrier substantiates that the fault or neglect by the carrier or someone for whom the carrier is liable did not cause the loss.

The carrier is not liable for loss or damages caused by fault or neglect in navigation or the management of the ship. Similarly, the carrier is not liable for loss or damages caused by fire unless caused by the actual fault or privity of the carrier. Notwithstanding this, the carrier is liable for loss caused by unseaworthiness caused by want of due diligence on the part of the carrier to make the ship seaworthy.

The contracting carrier as well as the performing carrier and anyone for whom the carrier is liable may limit liability arising out of the carriage of goods by sea. Thus, the liability shall not exceed 667 SDR for each package or other shipping unit or 2 SDR per kilogram of gross weight of the goods lost, damaged or delayed, whichever is the higher.

A carrier may not limit liability arising out of the carriage of goods by sea, if it is proved that the loss resulted from an act or omission of the person done with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

Dangerous goods shall, according to the Danish Merchant Shipping Act, be marked or labelled as dangerous in a suitable manner. The shipper shall inform the carrier and the sub-carrier to whom the goods are delivered in good time of the dangerous character of the goods and, if necessary, state the precautions to be taken.

In the event that the shipper otherwise is aware that the goods are of such a character that their carriage could cause danger or serious nuisance to persons, vessel or cargo, the shipper shall also provide information about this. If the goods are to be treated with special care, the shipper shall inform the carrier accordingly in good time and state the measures which may be necessary.

Where the shipper hands over dangerous goods to the carrier or a sub-carrier without informing him or her of the dangerous character of the goods and, if necessary, of the precautions to be taken and if the recipient of the goods does not otherwise have knowledge of the dangerous character, the shipper is liable towards the carrier and any sub-carrier for costs and any other loss resulting from the carriage of such goods. The carrier or sub-carrier may unload, render innocuous or destroy the goods, as the circumstances may require, without obligation to pay compensation.

In a Supreme Court case from 1999, the Danish Supreme Court found that batteries as well as battery waste should be regarded as dangerous goods. Prior to loading, the carrier noticed a liquid running out of the cargo of waste batteries. The shipper informed the carrier that the liquid could be neutralised. In reliance on this information the carrier loaded and transported the dangerous cargo of battery waste. During transport, the liquid from the battery waste caused significant damages to the ship. The Supreme Court held that the shipper was liable for the damages caused to the ship by the batteries.

Moreover, in a decision from the Danish Maritime and Commercial Court of 7 April 2012, it was established that the carrier must establish the cause of the damage. In that case, the shipper and recipient of scrap metal which contained flammable liquids were not considered liable to the ship-owner. During loading, a cargo of scrap metal caught fire on board the ship and caused significant damage. The cause of the fire could not, however, be determined with certainty and on this basis the Maritime and Commercial Court did not hold the shipper liable for damages.

The time bar for filing a claim for damaged or lost cargo is one year, as per the Danish Merchant Shipping Act section 501.

For recourse claims related to damages or lost cargo, the time bar is one year from the time where the claim was paid or legal proceedings concerning the claim commenced.

The time bar is suspended by the initiation of legal proceedings.

The time limit can be extended after the damage or loss occurred by agreement between the parties. Any agreement between the parties extending a time bar prior to the occurrence of a loss or damage is invalid.

Denmark is a party to the 1952 Arrest Convention, which has been implemented in Chapter 4 of the Danish Merchant Shipping Act. In addition, the Danish Administration of Justice Act which contains general rules on arrest applies, alongside the Danish Merchant Shipping Act.

According to the Danish Merchant Shipping Act, the maritime liens recognised in Denmark are:

  • wages and other sums due to the Master and other members of the ship's complement in respect of their employment on board;
  • public and private legal port dues, canal and other waterway dues, as well as pilotage dues;
  • compensation for personal injury occurring in direct connection with the operation of the ship;
  • compensation for damage to property in direct connection with the operation of the ship if the claim cannot be based on contract;
  • rewards for salvage, removal of wrecks and contribution in general average.

In Denmark, a distinction is made between maritime liens and maritime claims. According to Danish law, arrest may only be carried out for security for a maritime claim. A claim secured by a maritime lien falls within the category for maritime claims, see further below. Maritime claims also include claims that are not secured by maritime liens.

According to the Danish Merchant Shipping Act, a maritime claim may arise out of one or more of the following:

  • damage to property caused by a ship through collision or in some other way;
  • personal injury caused by a ship or arising in connection with operation of a ship;
  • salvage;
  • agreements contained in a chartering agreement or otherwise for the use or hire of a ship;
  • agreements contained in a chartering agreement or otherwise for the carriage of goods on board a ship;
  • loss of or damage to goods, including luggage, which are carried on board a ship;
  • general average;
  • bottomry;
  • towage;
  • port, canal and other waterway dues and charges as well as pilotage;
  • delivery of goods or materials to a ship, irrespective of the delivery location, for use in its operation or maintenance;
  • construction and repair or delivery of equipment for a ship as well as costs and docking fees;
  • wages for Masters and other members of the ship's complement;
  • Masters' disbursements, including disbursements paid by shippers, charterers or agents on behalf of the ship or its owner.

In Denmark, arrest of a ship in accordance with the Danish Merchant Shipping Act can only be carried out as security for the above-mentioned maritime claims.

Arrest of a vessel where the owner is not the debtor can only be made if the claim is also secured by a maritime lien.

In addition to arrest in accordance with the Danish Merchant Shipping Act, arrest can be carried out as a security for non-maritime monetary claims in accordance with the Danish Administration of Justice Act if execution is not possible, if the possibility of payment will otherwise be significantly reduced and if the claimant does not wish to detain the vessel.

Denmark has implemented the 1952 Arrest Convention with a reservation, according to which making an arrest in Denmark presupposes that the claim can be levied against the ship-owner.

The general rule is that only the particular ship in respect of which the maritime claim arose may be arrested. However, sister ships owned by the ship-owner of the ship in respect of which the maritime claim arose may also be arrested, provided that the claim is not a dispute on property rights to a ship, dispute between co-owners of a ship on property rights, possession, use or revenues of the ship or mortgages on the original ship.

Arrest in associated ships is not possible.

According to Danish law, arrest can thus only take place without the owner being personally liable for the claim, if the claim is also secured by a maritime lien. This applies regardless of the creditor being domiciled in a country which has implemented the convention without a corresponding reservation.

According to the Danish Merchant Shipping Act, an arrest requires that the owner of the ship can be held personally liable, unless the claim is secured by a maritime lien. Consequently, if bunkers were supplied to a chartered vessel and if the bunkers were ordered by the charterer and not by the owner, the claim cannot form the basis of an arrest, as the ship’s owner is not liable and as bunker suppliers are not afforded a maritime lien under Danish law. If, however, the owner is liable towards the bunker supplier, the bunker supplier may apply for an arrest of the vessel.

A supplier may, irrespective of the above, apply for an arrest pursuant to the Danish Administration of Justice Act as previously mentioned. 

An application for arrest must be submitted in writing to the bailiff's court. The application must contain an indication of the specific circumstances which, in the creditor's opinion, may prevent him or her from obtaining coverage of his or her claim. The documents that the creditor wishes to rely upon must also be attached. Copies are sufficient. If these requirements are not met, the bailiff's court may dismiss the case.

A power of attorney is not required to be submitted with the request for arrest. The arrest application must be drafted in Danish. Any supporting documentation is usually accepted in English but the opponent or the court may occasionally require a translation to Danish.

The arresting party will usually have to provide security for the damages and inconvenience that the arrest may cause the arrestee. The enforcement court specifies a sufficient amount which will normally not exceed an amount corresponding to five days’ loss of hire.

Both parties may appeal the enforcement court’s decision regarding the amount of security to the Danish High Court, which will review the decision. The Danish High Court’s decision is final and cannot be appealed.

There are no rules regarding the form in which the arresting party has to provide security. Often, enforcement courts demand a bank guarantee but there is no statutory authority to such a demand. The court will usually also accept a letter of guarantee from a P&I (protection and indemnity) club.

Bunkers and freight may be subject to arrest in accordance with the Danish Administration of Justice Act.

In reality, there are several challenges concerning bunker arrest. For an example, it is – as previously mentioned – a requirement that the execution of the claim can be levied against the owner. This means that arrest can only be carried out with regard to a debtor’s own assets and not assets owned by anyone else and, as bunker tanks are normally not emptied completely, it may be a challenge to determine which part of the bunker is owned by a specific debtor.

For certain maritime claims, it is possible to make an arrest of a sister ship. This requires that the sister ship is owned by the same legal entity which owns or owned the vessel with which the maritime claim is concerned at the time when the maritime claim arose.

According to the Danish Merchant Shipping Act, apart from ship arrest, a ship-builder or a ship-repairer can exercise his or her right of retention over a ship to secure a claim in respect of the ship-building or repair.

Further, and as previously mentioned, arrest can be carried out as a security for non-maritime monetary claims in accordance with the Danish Administration of Justice Act if execution is not possible, if the possibility of payment will otherwise be significantly reduced and if the claimant does not wish to detain the vessel.

Moreover, the Danish Administration of Justice Act allows for obtaining attachments (levy execution) once a judgment or award has been obtained, a settlement entered into or a mortgage signed. Once execution is levied it gives the execution creditor a right to apply for a forced sale. To levy execution on a vessel, an enforceable judgment or court order, a settlement that expressly states that it is enforceable, an instrument of debt expressly stating enforceability or a mortgage is required.

Thus, this form of attachment can be used to secure payment of a right already established through a judgment, settlement agreement, debt instrument or mortgage.

The Brussels Regulation (recast) No 1215/2012 on Jurisdiction and Recognition and Enforcement of Judgements in Civil and Commercial Matters is in force in Denmark through Denmark’s bilateral agreement with the EU. In accordance with the Regulation, judgments from within the EU are recognised and enforceable without any special proceedings. As Denmark is bound by the Lugano Convention, judgments rendered by a court within the European Free Trade Association (EFTA) are similarly recognised and enforceable in Denmark.

The Brussels Regulation also allows for provisional measures, including arrest. This means that a Danish court should allow arrest of a vessel situated outside Danish waters in accordance with the Danish Administration of Justice Act.

An arrest shall be lifted if security is provided which is deemed by the enforcement court as sufficient to cover the claimant's claim, including interest due and estimated future interest, as well as likely costs of the arrest procedure, the arrest action, and the action regarding the claim. Usually, an amount corresponding to the total claim plus 30% to 40% is regarded as sufficient.

A club LOI (letter of indemnity) is usually accepted and, similarly, a bank guarantee issued by an EU bank should be acceptable in Danish courts.

There is no formalised procedure and a petition to release the ship can simply be submitted to the court by email.

Judicial sales of arrested vessels are regulated by the general rules on judicial sales of goods which are laid down in the Danish Administration of Justice Act, chapters 49-50.

Arrest is only an interim remedy designed to secure the payment of debt where execution is not immediately available. A judicial sale of a vessel requires that execution is first levied on the vessel. Execution cannot be levied on the basis of a statutory maritime lien, but requires, eg, a judgment, an enforceable settlement or a mortgage.

Once execution is levied on the arrested vessel, usually on the basis of the judgment regarding the merits of the claim, the person with the claim can apply for judicial sale with the enforcement court.

The enforcement court will closely monitor a forced sale of vessels. The judicial sale of a vessel will be announced in the Official Danish Gazette as well as in local newspapers. The announcement must be made at least six weeks before the sale and at least twice. If the vessel is registered in the DAS or the DIS, the judicial sale will be registered therein.

Usually, the owner of the vessel will not be deprived of the right of disposal entirely and the owner will therefore still be responsible for the maintenance of the vessel. In addition, the owner is not allowed to dispose of the vessel in a way that can impair the arrestor's right.

Maritime liens on a ship take priority over other maritime claims and shall be paid in the order in which they are listed, and those mentioned under the same number shall rank equally.

However, rewards for salvage, removal of wrecks and contribution in general average, shall rank above other maritime liens which arose earlier and with regard to the relationship between the rights mentioned in 4.2 Maritime Liens, the youngest rights shall rank before the oldest.

Maritime liens on a ship continue in the event that the property rights to the ship are transferred to another party or if the registration of the ship is changed.

Claims secured by registered mortgages and all other claims have priority after maritime liens in the order in which they have been established.

A vessel may be subject to several mortgages and there is no general rule requiring the consent from higher-recorded mortgagees. It is not uncommon to agree to and register negative-pledge agreements. 

Rules on reorganisation analogous to Chapter 11 of the United States Bankruptcy Code are set out in Chapter 1 (a) of the Danish Bankruptcy Act. According to this act, arrest cannot be made during reorganisation proceedings. The rules imply that the debtor's creditors are barred from seeking satisfaction in the debtor's assets through individual prosecution when a reconstruction treatment has been initiated.

Under Danish law, a person who has obtained an arrest on the basis of a claim which turns out not to exist must pay the debtor compensation for loss and tort. The same applies when the arrest lapses or is revoked due to subsequent circumstances, if it must be assumed that the claim did not exist.

The liability is strict, if the claim for which an arrest has been made turns out not to exist. If the arrest is otherwise found wrongful, the creditor is liable for loss and tort on a fault-based basis.

The regulations on the carriers' liability for passengers and insurance obligation as well as the passengers' possibilities of being compensated and passenger rights are stipulated in four sets of regulations:

  • the Athens Convention of 1974 on the carriage of passengers and their luggage by sea, as amended by the Protocol of 2002;
  • the European Union Regulation No 392/2009;
  • order No 9 of 10 January 2013 on certificates for confirming insurance or other guarantee for covering the liability to pay compensation in connection with accidents during the carriage of passengers by sea, as amended by order No 47 of 21 January 2014;
  • chapter 15 of the Danish Merchant Shipping Act on the carriage of passengers and their luggage.

According to the Danish Merchant Shipping Act section 501, the period of limitation regarding delay of carriage of passengers or passengers’ goods is two years after the day the passenger or the baggage was discharged.

The limitations on liabilities are as follows:

  • loss caused by delay can be limited to SDR 4,150;
  • loss caused by delay of luggage:
    1. SDR 1,800 for hand luggage;
    2. SDR 10,000 per vehicle;
    3. SDR 2,700 for other luggage.

Liabilities cannot be limited if the loss is caused with intent or gross negligence.

Generally, Danish courts recognise and enforce law and jurisdiction clauses stated in bills of lading.

Any prior agreement which restricts the plaintiff's right to have disputes regarding carriage of goods decided by civil legal proceedings shall be void to the extent that it restricts the plaintiff's right, at his or her option, to institute an action with a court at one of the following places:

  • the principal place of business, or in the absence thereof, the habitual residence of the defendant; or
  • the place where the contract was made, provided that the defendant has there a place of business, branch or agency through which the contract was made; or
  • the port of loading agreed in the contract of carriage; or
  • the agreed or actual port of discharge pursuant to the contract of carriage.

However, this does not prevent a party from instituting an action with a court at the place stated in the contract of carriage or prevent the parties from agreeing on how a dispute is to be settled once it has arisen.

If a bill of lading has been completed pursuant to a chartering agreement, and that chartering agreement contains an arbitration clause, unless the bill of lading expressly states that such a clause is binding on the holder of the bill of lading, the carrier may not invoke the provisions against a holder of the bill of lading who has acquired it in good faith. Thus, an arbitration clause mentioned in the charterparty is only binding to the holder of a bill of lading if the bill of lading expressly refers to the clause.

Denmark is a party to the New York Convention of 10 June 1958 on the recognition and enforcement of arbitral awards.

The Danish Arbitration Act is based on the 1985 UNCITRAL Model Law and the 1958 New York Convention.

Under Danish law, arrest can be obtained if the requirements set out previously concerning arrest are met. The jurisdiction and applicable law of the underlying material claim is irrelevant and a Danish court will thus order an arrest of a vessel even if the relevant claim is subject to foreign arbitration or jurisdiction, due to an arbitration or law and jurisdiction clause in the relevant contract.

Denmark has a domestic arbitral institution, the Danish Institute of Arbitration. It does not specialise in maritime arbitration, but maritime disputes are occasionally arbitrated with the Danish Institute of Arbitration. In addition, maritime disputes can be arbitrated with the Nordic Offshore & Maritime Arbitration Association, facilitating international maritime and offshore arbitration in the Nordic Countries.

Denmark also has a well-established Mediation Institute, and maritime disputes can be mediated with the assistance of the Danish Mediation Institute, if the parties so agree prior to or once a dispute arises. During court cases, the courts also normally offer court mediation.

The procedure applicable to maritime arbitration and mediation depends on the parties’ agreement and whether the rules of an arbitration or mediation institute have been specified by the parties.

In addition to these procedures, the Danish Maritime and Commercial Court uses lay judges with maritime expertise.

The ordinary courts may refer a case to arbitration if, on the basis of a request from one of the parties, the court finds that the case has been commenced incorrectly and is in breach of an arbitration clause. However, this presupposes that the court does not declare the clause invalid or assesses that the subject matter cannot be admitted to arbitration.

In the event that arbitration proceedings have already been instituted, the courts may alone decide whether the subject is suitable for arbitration.

In that case, the pending arbitration proceedings may proceed irrespective of whether the proceedings are pending before the ordinary courts. If it turns out that the case is not suitable for arbitration, the arbitral tribunal will dismiss the case.

According to the Danish Arbitration Act section 16, a party’s objection to the validity of an arbitration clause must be submitted no later than the submission of the defence. 

If proceedings are commenced in breach of a foreign jurisdiction clause, the remedy depends on the nationality of the jurisdiction clause in question. If the jurisdiction clause breached specifies jurisdiction within the EU and if the Brussels I Regulation is applicable, a Danish court must decline jurisdiction if the court designated in the jurisdiction clause has already declared that it has jurisdiction; otherwise a Danish court must stay proceedings until the designated court declares whether it has jurisdiction.

If proceedings are commenced in breach of a foreign jurisdiction clause designating a court outside an EU Member State, a Danish court may choose to hear the matter if jurisdiction can also be established in Denmark.

Danish ship-owners are able to choose to be subject to the Danish tonnage tax scheme as an alternative to payment of regular, corporate tax. Under the Danish tonnage tax scheme, ship-owners’ income is fixed on the basis of the net tonnage at their disposal. Ship-owners pay tonnage tax irrespective of actual income, profit and loss.

The participation of ship-owners in the tonnage tax scheme is voluntary, but the choice of opting in or out is binding for a period of ten years.

An amendment to the Danish tonnage tax scheme was agreed in the Danish parliament in 2015. The amendment means that special vessels such as supply, construction, offshore and ice-breaking vessels will be eligible for the tonnage tax scheme. The amendment was accepted by the EU Commission in 2018, but the amendment has not yet entered into force.

Merchant vessels or shipping companies that are permanently located in a Danish port or which sail a regular scheduled service between Danish ports can usually enter into payment agreements with the Danish ports and thereby obtain a discount on the fee.

Persons residing in high-risk countries and who travel into Denmark with a recognisable purpose must be able to present a certificate of a negative COVID-19 test. The test must be taken a maximum of 72 hours before entry.

Seafarers from high-risk countries who enter Denmark with the recognisable purpose of crew changing are not obliged to show a negative COVID-19 test. The seafarer is in transit in Denmark to make the crew change and is therefore exempt from the rule of having to present a negative test.

The list of high-risk countries in the EU, Schengen and the United Kingdom is updated weekly by the Danish State Serum Institute.

In general, the Danish courts are very reluctant to rule on liability with reference to a force majeure consideration.

In order for force majeure to be invoked as a ground of discharge, there must be a qualified extraordinary circumstance such as war, import bans and natural disasters, ie, a circumstance of a completely unusual nature. It is unknown whether the coronavirus pandemic may constitute a ground for discharge. However, the Danish courts have not yet considered a pandemic case - such as the coronavirus pandemic - to be a force majeure event.

The Brussels I Regulation which regulates jurisdiction is supplemented by the Danish Merchant Shipping Act, containing jurisdictional rules applicable to carriage of goods by sea. These rules take precedence over the general rules provided in the Brussels I Regulation.

The Danish Merchant Shipping Act provides that a jurisdiction clause cannot limit a plaintiff’s right to commence proceedings:

  • at the place where the defendant is domiciled;
  • at the place where the agreement was entered into, if the defendant has a branch, or place of business or the like, there;
  • at the place where the goods were loaded;
  • at the place where the goods were or should have been discharged.

This means that the plaintiff can always commence proceedings in those jurisdictions even if an exclusive jurisdiction clause states differently.

As these places of jurisdiction are not identical to the places of jurisdiction laid out in the Brussels I Regulation, the Danish Merchant Shipping Act provides that the Brussels I Regulation takes precedence. As a result, the place of jurisdiction provided in s. 310(1) will no longer apply. 

Subsequent to Brexit, the jurisdiction of a dispute concerning carriage of goods by sea between a party domiciled in Denmark and one domiciled in the UK will be regulated solely by the Danish Merchant Shipping Act if proceedings are initiated in Denmark.

The effects are inter alia that, due to Brexit, a plaintiff may choose to initiate proceedings in one of the jurisdictions provided by the Danish Merchant Shipping Act, irrespective of an exclusive jurisdiction clause.

This means that within the field of maritime litigation and especially with regard to disputes arising out of the carriage of goods by sea to or from Denmark, Brexit has increased the number of places in which proceedings may be initiated, irrespective of an exclusive jurisdiction clause agreed upon between the parties. When taking into consideration that one of the world’s largest carriers is in fact Danish, this may actually entail changes in the current statistics and the UK’s dominating market position concerning the provision of maritime services globally.

Bech-Bruun

Langelinie Alle 35
2100 Copenhagen
Denmark

+45 7227 3377

jgn@bechbruun.com www.bechbruun.com
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Law and Practice in Denmark

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Bech-Bruun is a market-oriented law firm offering a wide range of specialist advisory services to large sections of the Danish corporate and public sectors, as well as to global enterprises. Counting more than 500 experienced and highly specialised employees, of whom 69 are partners, and with offices in Denmark, Shanghai and New York, Bech-Bruun is one of Denmark’s leading full-service law firms. Bech-Bruun advises on all legal aspects of shipping, transport and logistics and co-operates with leading international transport lawyers and maintains an extensive international network to service its clients. Bech-Bruun is involved in more or less all major shipping deals in Denmark and is particularly known for maritime insolvency and issues related to the bunker industry.