Collective Redress & Class Actions 2023 Comparisons

Denmark introduced legislation on the subject of collective redress in 2008. The purpose of the introduction of this legislation in Danish law was, among other things, to improve and expand the possibilities of enforcing existing substantive rules of law in the courts. This legislation has not been changed since it was introduced.

However, the existing rules on collective redress have been supplemented by new legislation. Following an EU Directive on collective redress (Directive (EU) 2020/1828) (the “EU Collective Redress Directive”), Denmark has implemented the EU rules in a new Danish implementation act, which came into force on 25 June 2023 (see 1.3 Implementation of the EU Collective Redress Regime and 2.1 Collective Redress and Class Action Legislation). The Act on Access to Class Actions for the Protection of the Collective Interests of Consumers (the “Danish Implementation Act”) applies to class actions brought as a result of trader breach of EU consumer protection rules. There is a wide variety of applications, including data protection rules, unfair consumer agreements and trade practices, and misleading advertising.

Although Danish legislators evaluated the experiences on collective redress suits in many other jurisdictions, they found that – owing to differences in legal systems – the regimes could not be copied. They found that, even though the USA had extensive collective redress suits, the differences between the American and Danish legal systems could not be reconciled. Some inspiration was drawn from Swedish regulation, especially the strict legislation concerning group representatives, which ensures that no unnecessary collective redress suits (so-called nuisance suits) are brought to the courts.

The EU Collective Redress Directive was implemented within Danish law by Parliament on 20 April 2023. As mentioned in 1.1 History and Policy Drivers of the Legislative Regime, the Danish Implementation Act came into force on 25 June 2023.

The Danish Implementation Act concerns access to class actions for the protection of consumers’ collective interests. The Danish Implementation Act expands the consumers’ ability to bring collective redress against traders, as it – among other things – is possible to conduct cross-border class actions. By way of example, Danish traders run the risk of being the subject of class actions in another EU member state and, in this regard, they will need to familiarise themselves with the changes in Danish law as well as changes in the rest of the EU. This is due to the fact that the EU Collective Redress Directive is a minimum Directive and Denmark has opted for an implementation similar to the EU Collective Redress Directive – in contrast with other member states that have, for example, extended access to opt-out collective redress.

Besides, the Danish Implementation Act introduces more flexible access in order to overcome several of the procedural challenges that have hitherto led to delays in the spread of class actions. An example of this is the appointment of a class action representative (see 4.3 Standing).

Apart from this extension, the Danish Implementation Act does not have significant impact on Danish legislation. Hence, Danish legislation already shares many similarities with the new EU system.

As an example, Denmark has already appointed an entity that can represent consumers in collective redress suits – namely, the Forbrugerombudsmand. Furthermore, the government can appoint other public entities to represent consumers, per Section 254 c, subsection 1(3) of the Danish Administration of Justice Act (the “Justice Act”). In addition, there are no obstacles preventing organisations from other EU countries representing consumers in Denmark, as long as the legal venue of the suit’s claim is Denmark. Thus, if an action is covered by both schemes, there is – in principle – freedom of choice as to how the action should be brought.

Collective redress suits in Denmark are regulated under Chapter 23 a of the Justice Act. The Justice Act contains almost all the legislation regulating court cases in Denmark. Chapter 23 a of the Justice Act comprises Sections 254 a–k.

In addition to the Justice Act, collective redress suits in Denmark have recently also been regulated under the Danish Implementation Act, which is based on the EU Collective Redress Directive (as mentioned in 1.3 Implementation of the EU Collective Redress Regime).

Apart from criminal cases, any type of civil cases can be brought as a collective action. However, for a collective redress suit to be allowed by the court, the following conditions (see Section 254 b, subsection 1 of the Justice Act) must be met:

• the claims must have a certain degree of similarity, although they do not need to be identical;
• the legal venue of all the claims must be Denmark; 
• the court must have jurisdiction over one of the claims;
• the court must have subject-matter jurisdiction with regard to one of the claims;
• the court must agree that class actions are the most suitable way to address the claims, in preference to any other form of court action;
• all the members of the class action must be identified so that they can be appropriately informed about the case; and
• a class action representative must be appointed to act as a party in the case.

In accordance with Section 12 of the Danish Implementation Act, collective redress suits can be filed when:

• the requirements are uniform;
• class actions are deemed to be the best way to address the claims; and
• the affected consumers can be identified and notified in an appropriate manner.

The court will determine whether these conditions have been met. If the class action group cannot comply with these criteria, the court will not allow the collective redress suit to proceed and the participants must bring their claims individually.

According to Danish law, collective redress suits are a separate form of legal procedure and, as such, a collective redress suit is a lawsuit that can be processed using the rules set forth in Chapter 23 a of the Justice Act as well as the Danish Implementation Act. In other words, a collective redress suit is a lawsuit that meets the criteria set out in 3.1 Scope of Areas of Law to Which the Legislation Applies.

The mechanisms for bringing a collective redress suit to court are almost identical to any other court case. The difference is that the plaintiff, in their Statement of Claim, must request that the court processes the claim in accordance with the rules of a collective redress.

A collective redress suit can be brought in a city court. Certain collective redress suits can be brought in the Maritime and Commercial Court – namely, cases concerning transportation, marketing, IP and competition law.

A collective redress suit begins like any other court case, with the handing in of a Statement of Claim (see Section 348, cf. Section 254 d, subsection 1 of the Justice Act). This must contain the request for the case to become a collective redress suit and can be handed in by anyone with the standing to be group representative. Besides the request, the Statement of Claim must – according to Section 254 d, subsection 1 of the Justice Act – contain the following:

• a description of the group;
• information about how the members of the group can be identified and informed about the suit; and
• a suggestion as to who can and wants to be class action representative.

In addition to Section 348 of the Justice Act, the Statement of Claim must – according to the Danish Implementation Act – contain:

• a statement that the case is brought according to the rules of the Danish Implementation Act; and
• information about the consumers who are affected by the collective redress suit.

When the group is identified, a collective redress suit proceeds in the same way as any “normal” civil case. Procedurally, once the group has been identified, there is no difference between bringing forth a normal court case and bringing forth a collective redress suit. Thus, the Statement of Claim will be served on the group’s counterparty and – if the other party objects to the case proceeding as a class action – the court will need to decide whether the case can be brought as a class action before the case can continue.

However, if the Statement of Claim does not meet the conditions, the claim is defective and the case must be dismissed as a result. Nevertheless, the court may grant the plaintiff a deadline to remedy the deficiencies (see Section 348, subsection 2 of the Justice Act).

The class action representative is the one with the standing to bring forth the claim and act as a party in the suit. Section 254 c, subsection 1 of the Justice Act sets forth that a class action representative can be:

• a regular member of the group;
• a private organisation, where the purpose of the suit falls within the purpose of the organisation; or 
• a public organisation authorised by law.

Thus, there are three different parties who can be appointed as group representatives. As regards a public organisation authorised by law to act as the group representative, it should be noted that the Forbrugerombudsmand was the only public institution authorised to do so until the introduction of the new legislation, which implements the EU Collective Redress Directive. The new legislation strengthens consumer protection by introducing the possibility that several approved authorities and organisations representing the interests of consumers can be approved for bringing new types of class actions against traders for injunctions or prohibitions respectively and for recovery (eg, compensation, proportionate refusal or refund).

In contrast to the general rules in the Justice Act, and in accordance with the Danish Implementation Act, the class action representative is not required to be appointed by the court. Also, authorities do not need to be empowered by law to act as class action representatives. Instead, authorities and organisations can request approval from the Minister of Trade and Industry (see Section 3, subsection 1 of the Danish Implementation Act). Subsequently, the Competition and Consumer Agency notifies the EC of a list of approved representatives, which will be published by the EC (see Section 4, subsection 1 of the Danish Implementation Act).

However, in accordance with Section 3, subsection 2 and 3 of the Danish Implementation Act, several conditions must be met before approval can take place. By way of example, organisations must be able to demonstrate 12 months of activity within the protection of consumers’ interests. Further, the organisation cannot work with profit in mind and must be independent.

According to the new rules, each EU member state must respect the approvals of authorities and organisations made by other member states. This means that an approved organisation or authority in another EU country can bring proceedings against a trader in Denmark.

Danish legislation allows both opt-in and opt-out collective redress suits. However, the starting point in Danish law is that class actions are opt-in collective redress suits, which means that group members must actively register for the action before they are part of it. However, there is a narrow exception, as it is possible to file an opt-out collective redress suit if there are a lot of small claims that cannot be expected to be pursued by individual lawsuits.

If the suit is an opt-in suit, the court will determine a deadline for group members to opt in to the suit (see Section 254 e, subsection 6 of the Justice Act as well as Section 16, subsection 2 of the Danish Implementation Act) – although, under special circumstances, the court can allow a group member to opt in after the deadline. Opting in to a collective redress suit is binding for the group members, which is why any potential group member must be informed of the legal effects of opting in. This implies that the group members cannot file individual lawsuits regarding their claims covered by the class action.

According to the Danish Implementation Act, consumers can also opt in to class actions brought in other EU member states if they are affected by the action.

The court can decide that opt-in is not the optimal mechanism for a specific collective redress suit. In such cases, the court can decide that the suit should be formed as opt-out and will set a deadline for when potential group members must opt out of the group (see Section 254 e, subsection 8 of the Justice Act). However, under certain circumstances, the court can allow a group member to opt out even after the deadline has expired. In addition, in opt-out collective redress suits, the class action representative must be a public authority.

For details of the procedure for joining further parties to collective redress/class actions in Denmark, please refer to 4.4 Class Members, Size and Mechanism (Opt In/Out).

The court decides whether the suit is appropriate as a collective redress suit and whether it should be an opt-in or opt-out suit. Furthermore, the court manages deadlines for opting in class actions (cf. Section 16, subsection 2 of the Danish Implementation Act). The court can exceptionally allow opting in to take place after the expiry of the deadline, if special reasons justify it.

In opt-in collective redress suits, the court can decide that opting in is conditional on the group member providing security – in an amount decided by the court – for the legal costs of the case should the court grant a judgment in favour of the defendant (see Section 254 e, subsection 7 of the Justice Act). However, individual group members can be exempted from providing security for legal costs if the group members have a legal insurance or other insurance that covers the costs of the case or if the class action meets the conditions for obtaining free legal aid. It should be noted that the group members themselves cannot apply for free legal aid. The class action representative can apply for free legal aid on behalf of the group.

In opt-out suits, the court cannot demand security for the legal costs of the case from the group member.

The length of the proceedings will depend on several factors – for example, how many group members there are and how complicated the case is. However, it is not unusual for the proceedings to take more than one year.

In accordance with Section 14, subsection 1 of the Danish Implementation Act, class actions for injunctions or prohibitions must be processed expeditiously.

Such rules do not apply in the Danish legislation.

Funding

There are several methods of funding a collective redress suit. A number of these are open to individuals.

Legal expenses insurance

An individual can be covered by a legal expenses insurance (see 4.6 Case Management Powers of Courts).

Legal aid

In certain cases, the government provides free legal aid covering a person’s costs in connection with the case, provided that a person or the case subject qualifies. A person qualifies for legal aid provided that their income is below the set minimum, which can be found in Sections 325 and 326 of the Justice Act. Such a person may not be covered by legal expenses insurance and the case needs to either fall with the types of cases listed in Section 327 of the Justice Act or be of such a nature that it is essential for the applicant to take it to the court (see Section 328 of the Justice Act). Free legal aid can also be provided if the case is of benefit to society or will have such an impact on the applicant that it is necessary to provide legal aid (see Section 329 of the Justice Act) or if legal action is taken by a consumer who has been successful in an action before the Consumers Complaints Board or in certain taxation cases.

Third-party funding

With regard to third-party funding, the Supreme Court permitted this in 2017, when OW Bunker’s bankrupt estate entered into an agreement with a third-party funder. The Supreme Court found that third-party funding is not in conflict with Danish legal procedure. Since then, third-party funding has been used in bankruptcy cases and in large damages suits. It has especially been used by shareholders and other investors to bring security claim suits against large companies and executive boards that have experienced a sudden drop in the value of their shares – for example, OW Bunker, the Danske Bank, the pharmaceutical company Novo Nordisk, and the wind-turbine producer Vestas.

Before the EU Collective Redress Directive was implemented in Danish law, third-party funding was not regulated by law. Thus, in principle, there was complete freedom of contract regarding third-party funding – as long as the governing contract for the third-party funding lives up to the general requirements for contracts in Danish law.

When the EU Collective Redress Directive was implemented in Danish law, it was regulated by law that collective redress suits for recovery by approved organisations can be financed by a third party. This opens up the option of litigation funding (see Section 17, subsection 1 of the Danish Implementation Act). With the expansion of the basis for representative actions for restitution, in particular, as well as the possibility of litigation funding, an increase in the number of class actions and their size must be expected. This does not only apply for Denmark, but for the entire EU.

Costs

As regards who should pay the legal costs of the case, this is decided by the presiding court in accordance with the usual legislation concerning legal costs (cf. Sections 311–322 of the Justice Act). If the court finds in favour of the defendant, the class action representative and the members of the group are jointly and severally liable.

As mentioned in 4.6 Case Management Powers of Courts, the court can decide that opting in is conditional on the group members providing security for the legal costs of the case in the event that the court rules in favour of the defendant (cf. Section 254 e, subsection 7 of the Justice Act). If the group loses the case, the liability of the group members is limited to this amount, plus any amounts that the group members have benefited from the court proceedings (see Section 254 f, subsection 3 of the Justice Act).

In opt-out collective redress suits, where security cannot be required, the cost amount is thus maximised to the credit amount that benefits the group members through the court proceedings.

Furthermore, the starting point for registered consumers in a class action for recovery is that they cannot be ordered to pay court costs (see Section 18, subsection 1 of the Danish Implementation Act). However, an authorised organisation can charge a fee upon registration, which can be used by the organisation to pay legal costs, but the consumer cannot in addition be charged costs for the conduct of the case.

In exceptional circumstances, the court may order registered consumers in a class action to pay legal costs incurred as a result of an individual registered consumer’s intentional or negligent behaviour (see Section 18, subsection 2 of the Danish Implementation Act).

The same rules of disclosure apply in collective redress suits as in any other court case. These can be found in Sections 298–301 of the Justice Act (cf. Section 254 f, subsection 5).

As in any other court case, remedies can be the payment of damages, restitution or declaratory remedies.

There are a number of out-of-court resolution methods available in Denmark.

There are a great number of ADR mechanisms available before litigation. These mechanisms seek to settle a high number of small individual claims before they progress to the courts. If the defendant does not comply with these ADR rulings, the Forbrugerombudsmand – or another approved authority or organisation – may bring the question to court on behalf of the consumer or a group of consumers. These court proceedings may be brought on the same issues during the ADR process.

The ADR proceeding would normally be stayed during litigation. There are no collective ADR mechanisms available. The ADR mechanisms available have worked very well in the past and no changes are planned.

The parties can always choose to settle the claim between them before the court reaches a decision (see, for instance, Section 19 of the Danish Implementation Act). This is done as in any “normal” court case.

A judgment in a collective redress suit is binding for the members of the group (see Section 254 f, subsection 2 of the Justice Act).

Usually, the parties comply with the judgment and there is no need for the courts to enforce it. If the losing party does not comply with the ruling, the Enforcement Court can enforce any ruling that prescribes the payment of money. If the ruling is declaratory in nature, another suit must be brought before the court to determine if this declaration should lead to damages.

No current policy developments have been proposed.

See 1.3. Scope of Areas of Law to Which the Legislation Applies.

Brexit has had no impact on collective redress suits in Denmark.

Expanded access to class actions has been achieved through the implementation of the EU Collective Redress Directive in Danish law. This has significant importance for traders, who risk becoming the subject of a class action involving consumers throughout the EU. This can increase the incentive for companies to maintain high standards in addition to promoting increased transparency, accountability and improved ESG practices to mitigate potential risks and negative impacts.

Going forward, more EU cross-border class actions are likely to lead to more EU legal co-ordination and harmonisation of case law on ESG-related issues.