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Recorded seminar: Mastering contract negotiations and dispute differences in Denmark, Germany, Norway, and Lithuania

Four different countries geographically close but with different trends and preferences. What influences the choice between arbitration and litigation? That was the topic of last week's seminar.

Published 2024-03-01

21 February

Litigation or arbitration?

In Norway, most commercial disputes are resolved in court. As explained by Knud Jacob Knudsen, Partner at Simonsen Vogt Wiig, arbitration is less common than in Sweden and the other Scandinavian countries, though this varies depending on the business sector. For shipping and offshore disputes, for example, arbitration is customary. Norwegian courts are highly trusted by the public and deal with cases very quickly. For instance, Oslo District Court, which is the country’s largest court, on average resolves civil cases within five months. The courts of appeal have a similar processing time.

German courts are almost as efficient as their Norwegian counterparts: on average, it takes still a little less than one year to adjudicate a case in the first instance. Therefore, also in Germany, many commercial disputes are handled in court. However, post-M&A disagreements and disputes with an international element are often referred to arbitration. At the same time, settlements play an important role, with many commercial litigations and arbitrations being settled before a decision is issued. 

In Lithuania, litigation is also by tradition still the preferred dispute resolution method, though in the 90’s the market started opening up to arbitration. Arbitration is now benefiting from a newly gained trust in the Baltic countries.

On the contrary, in Denmark and in Sweden, arbitration is predominant for commercial disputes. There is “generally trust in the Danish courts and judges […] but the courts are experiencing a heavy caseload and the timeline in a complex commercial case in court can be very long”, said Henriette Gernaa, Partner at Gorrissen Federspiel.

Preferred arbitral institutes, governing law and seat

What are the prevailing preferences in terms of arbitral institutes, governing law, and seat, when the home seat and the domestic law cannot be chosen? In Sweden and Lithuania, the SCC is the champion and Stockholm is the most selected seat for arbitrations. There are a number of arbitral institutes in the Baltic countries, but none of them have the same trust and good reputation as the SCC Arbitration Institute and Sweden for Baltic companies. In Germany, by contrast, the DIS is often used (in particular for domestic disputes) and the ICC also has a considerable market share (in particular for international disputes), as pointed out by Sven Lange, Partner at Busse Disputes. The SCC has also a very good reputation. Denmark prefers by tradition the DIA for domestic as well as international disputes but many look to ICC or SCC for international disputes, although the former appears to be dominant. Danish parties prefer Scandinavian laws or English law as far as the choice of law is concerned. 

Due to the large shipping industry in Norway, Norwegians find London convenient for shipping disputes – but at the same time, with the establishment of NOMA (“Nordic Offshore & Maritime Arbitration Association”), they are trying to take some of these disputes back to Scandinavia. For commercial disputes, the SCC is also well-recognized.

What about mediation?

Dispute resolution geeks now might wonder where mediation went in these jurisdictions. The panelists certainly did not forget about it (hot topic now!). Apart from Norway, where it is an integral part of the court proceedings, in Lithuania, Germany, Denmark, and Sweden, mediation is not big for commercial disputes but seems to be growing – with slight differences among these four countries.

Decisive factors for choosing arbitration

A good part of the discussion was also dedicated to the analysis of the decisive factors when choosing dispute resolution methods. Ramunas Audzevicius,Partner at Motieka, brought to the table the Lithuanian perspective. He said that confidentiality, neutrality, and expertise are often the most important elements considered. In Germany, expertise is indeed a huge factor in favor of arbitration. Danish and Norwegians take speed as well into account. For all international business negotiations, irrespective of the parties’ origin, the enforceability of arbitral awards is an important factor when including an arbitration clause into the contract.

Final tips

Finally, the speakers shared a few additional tips for a well-drafted dispute resolution clause. All speakers agreed that the arbitration clauses provided by the top arbitration institutes, such as the SCC, should be used. Do not write your own! 

Would you like to know the other pointers? Please listen to their great advice in the recording.

By Lorenzo Nizzi, Visiting Professional at SCC Arbitration Institute. 

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