Denmark

In Denmark, legislation about TPLF is limited to representative actions filed on behalf of
consumers collective interest within the remit of EC Directive on Representative Actions for the
Protection of the Collective Interests of the Consumers (EU) 2020/1828.
TPLF is used both in litigation and arbitration, including liability claims, commercial disputes,
insolvency and market abuse, but TPLF is (still) not ‘regularly used’ in either litigation or in
arbitration.
There is no general regulation on the legal admissibility and conditions of using TPLF in civil
litigation, but the Danish Supreme Court has accepted a funding model like TPLF. It is is the
general perception that TPLF is legal in Denmark.
A representative action brought on behalf of the general interest of consumers under the
Representative Actions Act, which implements the Representative Actions Directive
(2020/1828), is subject to several limitations regarding who can fund which cases and the
funder’s ability to influence the proceeding.
A representative action brought under chapter 23 a in the Danish Administration of Justice Act,
which is the general regulation for representative actions in Denmark, does not include specific
limitations regarding the use of TPLF. However, the court may order a group representative to
provide security for legal costs to the adverse party. It is the group representative who decides
under which regulation a representative action should be brought, if both regulations apply.
So far, TPLF has not been used to fund a representative action in Denmark either under the
Representative Act, or under the Administration of Justice Act, chapter 23 a.
There is no specific regulation of third-party funders or the funding industry of TPLF in
Denmark, but a funder may – depending how the funder is organized – be subject to financial
regulation, including the Alternative Investment Fund Managers Act, which implements the
Alternative Investment Fund Managers Directive (2011/61/UE).
If a funder – as part of the funding process of consumer claims – gives advice of a predominantly
legal nature, then the funder will (also) be subject to the Danish Legal Advice Act, which includes
limitations regarding the use of TPLF.
there are no specific procedural safeguards regarding potential conflicts of interest,
transparency, disclosure, and costs when it comes to TPLF in litigation. A party is not obligated
to disclose a funding agreement or inform whether the proceeding is funded by a third-party
funder.
In arbitration, the parties have a duty to disclose any third-party funding to minimise the risk of
justifiable doubts regarding the arbitrator’s impartiality and independence.
Since September 2022, the former ban against pactum de quota litis in the Danish Bar
Associations Code of Codex has been revoked. Today, lawyers in Denmark are, therefore, able
to enter into a share-based fee agreement and offer a funding model like TPLF. However, a
lawyer can only enter into such a fee-agreement if the lawyer is able to maintain independence
and integrity under the Code of Conduct