Danish Supreme Court refuses enforcement of foreign arbitral award for lack of proper notice

On 20 March 2025, the Danish Supreme Court issued an important judgment concerning the enforcement of foreign arbitral awards in Denmark. In its decision, the Court emphasised the importance of proper notice in arbitration proceedings, ultimately refusing to enforce an award from the Shanghai Arbitration Commission (“SHAC”) due to inadequate notice to the respondent. The ruling is reflective of the emphasis all the Nordic jurisdictions, including Norway, place on fundamental due process in arbitration. It serves as a reminder to parties, practitioners, and tribunals not to take shortcuts when attempting to ensure adherence to procedural and substantive due process rights.

Background

The case involved a dispute between two parties, A and B, arising from an investment agreement dated 25 April 2017, concerning B’s investment in [Company 1] Co., Ltd. The agreement included an arbitration clause providing that any disputes should be resolved by arbitration administered by SHAC.

In June 2020, B initiated arbitration proceedings against A at SHAC, seeking annulment of the agreement and repayment of the investment. A did not participate in the arbitration proceedings. On 19 November 2020, the arbitral tribunal rendered an award in favour of B, ordering A to repay the investment.

B sought to enforce the arbitral award in Denmark. A objected, arguing that he had not received proper notice of the arbitration proceedings and, therefore, that the award should not be recognised or enforced under section 39(1)(1)(b) of the Danish Arbitration Act. He argued that the notices were sent to outdated addresses in China – one being his childhood home, which he left in 1997, and the other related to an inactive company unrelated to the dispute. A was residing in Denmark during 2020, a fact acknowledged in B’s notice of arbitration, which stated that A had been living in Denmark since 2017. A maintained that he was not given the opportunity to present his case, constituting a fundamental breach of his rights under section 39(1)(1)(b) of the Danish Arbitration Act.

In response, B argued that notice was properly served according to SHAC’s rules. She asserted that, by agreeing to the arbitration clause, A had accepted SHAC’s notification procedures, which included sending notices to the parties’ registered addresses. B further contended that it was not practical to locate A’s address outside China, especially since A had not updated his contact information in Chinese registers. She maintained that SHAC had fulfilled its obligations, and the lack of actual receipt by A did not invalidate the notice.

Legal Framework

According to section 38(1) of the Danish Arbitration Act, an arbitral award rendered abroad has binding effect in Denmark and may be enforced unless grounds for refusal exist under section 39. Section 39(1)(1)(b) allows a court to refuse recognition or enforcement if the party against whom the award is invoked proves that he did not receive proper notice of the arbitration proceedings or was otherwise unable to present his case. This provision mirrors Article V(1)(b) of the New York Convention and Article 36(1)(a)(ii) of the UNCITRAL Model Law. As noted in the preparatory works to the Danish Arbitration Act, the Danish act is intended be in line with the Norwegian and Swedish Arbitration Acts. Given the alignment between all three Scandinavian countries and the fact that all are signatories to the New York Convention, their respective laws’ provisions on recognition and enforcement, including refusal where proper notice has not been effected, are materially identical.

The Supreme Court’s Assessment

The Court held that proper notice is a fundamental principle in arbitration, ensuring that a party has the opportunity to present its case. The Court emphasised that if a party does not receive proper notice, there is no basis for recognising and enforcing an arbitral award.

A bore the burden of proof to demonstrate that he did not receive proper notice. The Court acknowledged the inherent difficulty in proving a negative but concluded that there was sufficient reason to doubt whether A had received the notice.

Given that A was residing in Denmark and B was aware of this, as reflected in her notice of arbitration, the Court found that sending notices to outdated addresses in China was insufficient. The Court noted that no attempts were made to notify A through other means, such as email, despite the parties’ history of digital communication. The Court also noted that B did contact A via email and letter at his Danish address after the arbitral award was issued on 19 November 2020 when it was in B’s interests to do so, although B should have done so in connection with the notice of arbitration.

The Court concluded that A did not receive proper notice and was, therefore, unable to present his case. Consequently, the Court refused to recognise and enforce the arbitral award under section 39(1)(1)(b). The Court held that it was irrelevant that the arbitral tribunal itself had deemed service proper.

Implications of the Ruling

This judgment underscores the Danish courts’ commitment to fundamental due process in the enforcement of foreign arbitral awards. It highlights the necessity for arbitral institutions and parties to ensure that proper notice is given, especially when the respondent’s whereabouts are known or can be reasonably ascertained.

The decision indicates that Danish courts will scrutinise the notification process, and mere compliance with the arbitration institution’s rules may not suffice if fundamental fairness is compromised. Parties seeking enforcement in Denmark must be diligent in ensuring that respondents are given actual notice of proceedings to avoid enforcement being refused.

The Danish judgment is reflective of Scandinavian jurisprudence in this area and is generally consistent with UNCITRAL Model Law approaches. Illustrative of this is the Danish Supreme Court reference to the Swedish Supreme Court’s judgment reported in NJA 2010.219, where the Swedish court observed that, for reasons of legal certainty, high demands must be placed on the notice regarding the basic fact that arbitration proceedings have been commenced. As noted above, the preparatory works to the Danish Arbitration Act (cited in the judgment) also explicitly note that the Danish act is intended to be in line with the Norwegian and Swedish Arbitration Acts. In addition, the Norwegian courts have placed great emphasis on the fundamental principle of the right of reply in arbitration (Nw.: kontradiksjon), and it is concomitant with adherence to that principle that Norwegian courts would place high demands on the notice of arbitration, including that it actually be served on the respondent, see e.g., Rt-2005-1893-A.

For practitioners, this case serves as a reminder of the importance of adhering not only to procedural rules but also to overarching principles of due process recognised under the national laws of many legal systems, not least those of the Scandinavian countries, as well as under international conventions.