Date of the last update: 27th May 2024
A collective redress mechanism was adopted into the Danish legal system on 1st January 2008, in connection with the amendment of the Act on Administration in Justice (Retsplejeloven, Chapter 23a) which lays down the rules concerning proceedings before the Danish courts.
Solutions adopted in Denmark confirm that it is possible to incorporate an opt-out model into domestic legal order also in the continental legal system (apart from a simultaneously functioning opt-out model).
All claims based on substantive civil law may be pursued in group proceedings, save for family law cases (concerning marriage, parent-child relationship, custody, guardianship or paternity) and other cases concerning inalienable rights.
Moreover, beyond the Act on Administration in Justice, a number of legal instruments contain specific regulations in this regard, e.g. the Danish Competition Act (Konkurrenceloven) which regulates the collective redress in the event of claims for compensation for damages caused by an infringement of Article 101 and 102 of the Treaty on the Functioning of the European Union. The Act on Market Practices (Markedsføringsloven – cf. Article 28.2) provides for a representative action in cases concerning misleading advertising. The characteristic feature of both these procedures is that representation of the claimant by the Consumer Ombudsman is required.
As a general rule, the proceedings in Denmark operate on the basis of the opt-in model. However, the opt-out procedure can be applied if the size of the claims is comparatively low and the opt-in model class action would not be an effective way to pursue the claims.
The principle of representation applies to both models of the proceedings, whereas in the opt-out procedure, only an authorised public authority body, the Consumer Ombudsman may exclusively be a group representative. In the opt-in model not only a public authority body but also a member of a group or private association or institution (subject to the fulfilment of further requirements, when the proceedings concern the scope of its activity) may act as a group representative.
Members of the group are not a party in the proceedings. Formally, the representative is the only entity appearing as the complainant.
The examination of the case as a group action is admissible only if the following conditions are fulfilled (cf. Art. 254b.1 of the Act on Administration in Justice):
When the preconditions listed above are met, the court should consider the examination of the case as a class action, however, no formal decision is issued in this regard. At this stage the court decides which model needs to be applied (opt-in or opt-out). The admissibility of taking advantage of the opt-out model depends on fulfilling following additional conditions:
Provisions applicable in Denmark to class actions do not lay down a requirement of a minimum number of pursued claims or members of the group. Although, the number of group members is important – this has an impact on the assessment as to whether a class action is the most appropriate way to hear the case which is one of the preconditions for this procedure’s admissibility.
Although members of the group in Denmark are not a party in the proceedings, the statute provides that if the representative of the group does not appeal against the final judgment in the case, each entity capable of being a representative is entitled to appeal and each member of the group may appeal in relation to their own claim (in such a case the appeal is processed in individual proceedings).
All remedies generally available in civil cases, including: compensation, injunctive relief, declaration of the existence or non-existence of the right or legal relationship, may be obtained in group proceedings.
As a rule, the losing party bears the costs of the proceedings. The court may also order a group representative to secure the costs of the proceedings.
In Denmark, contingency fee agreements with an attorney are not allowed, nevertheless, the degree of taking the claim into account may have an impact on the fee amount.
Under the Danish law, third-party financing of the proceedings is admissible, although this solution in not usually used in practice.
So far, cases heard as class actions concerned mainly financial services and the protection of minority shareholders. In the public debate regarding collective redress, the need to introduce more detailed provisions and to improve the activity of the Consumer Ombudsman in this area is emphasised. In 2004 the Ministry of Justice evaluated the efficiency of the current regulations and concluded that there is no need for any amendment.
Group proceedings are not popular in Denmark mainly due to the difficulty of meeting the formal requirements. Among other things, there is the obstacle of requiring to qualify a case for hearing in a group proceeding due to the criterion of “the most appropriate measure for pursuing the claim”. This criterion is evaluative and qualification is made in each case by the court.
Nevertheless, class action lawsuits are emerging and in recent times have been gaining popularity in a growing wider spectrum of cases. An example would be a class action by owners of Tesla cars, brought against Tesla Inc. in spring 2021. The claim was based on allegations that the battery charging system malfunctioned, making the cars less functional than the manufacturer’s assurances.
Danish legislation did not differ significantly from the provisions of European Parliament Directive (EU) 2020/1828 of the European Parliament and of the Council of 25th November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC. Most of the provisions of this Directive were very similar to the regulations in force in Denmark.
The Directive was implemented by the Lov om adgang til anlæggelse af gruppesøgsmål til beskyttelse af forbrugernes kollektive interesser (Act on Access to class actions to protect the collective interests of consumers) of 20th April 2023, which entered into force on the 25th June 2023. The law supplemented existing provisions (of the Danish Code of Civil Procedure) regarding class actions, while also making the procedure more flexible (e.g.with regard to the appointment of a group representative).
Even before implementation, the Danish government had taken a position on some of the provisions of the Directive. It publicly expressed satisfaction with the regulations on criteria and the selection of the group representative and also noted the wide margin that member states were given in terms of its interpretation. On the other hand, it spoke negatively among other things about the provisions regarding availability of group redress mechanisms and financing of actions by third parties. Concerns have arisen that the Directive will lead to deterioration of the situation of companies due to potential number of unnecessary proceedings. This standpoint seemed to be shared primarily by the Danish Confederation of Industry and the Danish Chamber of Commerce.