REALWorld Law

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

In Denmark, the use of standard form building contracts goes back more than 100 years.

There are four standard form building contracts that are used in Denmark:

• AB 18 – General conditions for the provision of works and supplies within building and engineering.
• ABT 18 – General conditions for turnkey contracts.
• ABR 18 – General conditions for consulting services.
• Note: AB Consumer – 'General conditions for the provisions of works within building to consumers. (A standard form contract that takes into consideration that the employer is a non-professional party.)

These standard form building contracts are updated versions of the formerly used AB 92, ABT 93 and ABR 89 documents, which were drafted in accordance with the recommendations made by a Committee set up by the Danish Ministry of Housing with a cross section of representatives from the construction industry.

International forms of contract (such as FIDIC) are used in Denmark, however, primarily within the off-shore/energy sector and/or large-scale infrastructure projects.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

The main parties involved in a construction project are:

Employer/client

The party procuring the work. In building contracts this party is referred to as the 'employer'.

Contractor

Typically a main building contractor is employed to carry out and complete the work for the employer/client. Contractors may also take responsibility for the design of all parts of the works and often engage sub-contractors to carry out and complete separate parts of the work.

Where there are faults or defects in the construction the contractor can incur liability to remedy the defects after delivery. This follows from the AB 92 and from the basic principles of contract law to the effect that the employer has a right to have the contract performed.

Designers

Typically, a main building contractor is employed to carry out and complete the work for the employer/client. Contractors may also take responsibility for the design of all (turnkey contractor) or parts of the works and often engage sub-contractors to carry out and complete separate parts of the work.

Where there are faults or defects in the construction the contractor can incur liability to remedy the defects after delivery. This follows from ABT 18/AB 18 and from the basic principles of contract law to the effect that the employer has a right to have the contract performed.

Non-designers

Contract administrator, project manager, etc.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

The main building contractor is responsible for the construction.

Where a turnkey contractor is used that contractor is additionally responsible for the design of the works (all design services). The design consultant in this instance is appointed by the turnkey contractor.

The standard form building contracts AB 18 and ABT 18 do not use the wording ‘force majeure’, but both contracts contain a clause allowing the contractor additional time to complete the work if the cause of the delay cannot be attributed to the contractor and is beyond his control, eg where the delay is due to circumstances attributable to the employer, or in the cases of war, Acts of God, fire, strike, lock-out and vandalism.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

Public-private partnerships (PPPs) are not that common in Denmark currently, but they are encouraged by the government and they appear to be becoming more popular.

The use of PPP in Denmark can primarily be found in the following sectors: public administration (buildings), healthcare, defence, education and transportation.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

It is theoretically possible for the parties to enter a construction contract where the price is fixed, but the reality is that both the employer and the contractor want some flexibility in the contract.

The employer normally wants to have the right to instruct a contractor to carry out variations/alterations and the contractor normally wants to have the right to undertake variations/alterations that are requested for an additional payment.

Thus, it is very uncommon for the involved parties to enter a 'fixed price contract'.

Apart from this, it is standard that the contract price is stated as fixed in contrast to payment on a cost-reimbursement basis.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

Under the general conditions in the standard form construction contracts, AB 18 and ABT 18, the employer shall take out and pay for the usual fire and storm and tempest insurance from the commencement of the work until any defects identified at handing-over of the construction have been rectified. It is often agreed that such insurance is taken out as an all-risk construction insurance.

A public employer is not obligated to take out the abovementioned insurance as he can be considered as a self-insurer. 

The contractor and any sub-contractors must be covered by the usual liability insurance in relation to injury or damage for which they may incur liability under the general provisions of Danish legislation.

Note: In case of new building or material rebuilding of a residential property, the employer is obligated by law to take out and pay for the building construction insurance (Byggeskadeforsikring) that follows the building after completion.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

Under the general conditions in the standard form construction contracts, AB 18 and ABT 18, the contractor must within a period of eight working days of the conclusion of the contract provide security for the due performance of his obligations towards the employer. This security may be in the form of an adequate guarantee from a bank or a savings bank, an insurance guarantee or other adequate types of security.

The security will normally be reduced in stages and ceases five years after handing over the construction works to the employer. Usually, the security offered by the contractor shall correspond to 15% of the contract price until handover of the works, which is reduced to 10% from handover to the first-year inspection of the property from which point the security is reduced to 2% until the final release.

If the employer discovers defects in the construction before the first-year inspection of the property, the reduction in the contractor's security may be postponed until the defects has been relieved by the contractor.

After the fifth-year inspection the security is completely released unless the employer has presented claims against the contractor.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

According to the general conditions in the standard form construction contracts, AB 18 and ABT 18, the total contract sum can be paid under two different systems:

1. Upon written request to the employer, the contractor is entitled to receive payment twice a month for work performed.
2. Instead of payment from the employer twice a month, the parties can agree on payment being effected in accordance with a payment schedule which follows the time schedule and stipulates at which time the contract sum or parts thereof are to be paid.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

It is normal practice that construction contracts require works to be completed by a specified date. In the event of a delay the contractor will have the right to an extension if the delay is a result of:

• changes in the character or extent of the construction that is ordered by the employer;
• circumstances attributable to the employer or to other contractors;
• force majeure;
• rain, low temperature, strong winds or other extremes of weather if such extremes occur to a significantly greater extent than could have been foreseen taking the season and region into account; or
• public regulation or injunctions that are not attributable to the contractor.

It is standard practice for construction contracts to contain provisions which require the contractor to pay liquidated damages in the event of delays for which the contractor is responsible.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

Under the general conditions in the standard construction contracts, AB 18 and ABT 18, the employer has the right to request variations to the works. The building contractor is entitled to undertake such alterations, unless the employer included special conditions, which justify that the performance of the work be undertaken by others. If the contractor is entitled to undertake alterations the contractor will also be entitled to additional payments and time.

If variations are made because of the contractor's error, delay or default, the contractor will not be entitled to additional time or payment.

Even when AB 18 and ABT 18 are not agreed between the parties, the provisions above are commonly found in most construction contracts.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

According to Danish construction law the works are completed when they comply with the contract and are ready for all practical purposes, such as occupation.

Where the works do not comply with the contract, a distinction between significant and insignificant faults and defects must be made. In the case of insignificant faults and defects the works may be considered to be 'completed', despite the non-compliance with the contract. In the case of significant faults and defects, the building works cannot be considered to have been 'completed' and therefore cannot be certified. Certification is effected by the parties.

Under Danish contract law there is a principle of freedom to enter into a contract, so the parties are free to agree on the criteria the works must fulfil to be considered 'completed'.

Before moving into the building, it is necessary to obtain an occupation permit from the municipality, which is not granted until the building works are practically completed.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

According to the general conditions in the standard form construction contracts, AB 18 and ABT 18, the employer´s claim against the contractor for defects shall be made within five years of handing-over (completion) of the work. After this time the employer is not entitled to make a claim against the contractor.

Besides the limitation periods in AB 18 and ABT 18, limitation periods are imposed by the Limitation Act dated 9 November 2015. The Limitation Act provides for different limitation periods for various types of actions but does not apply where AB 18 and ABT 18 are used.

Under the Limitation Act the limitation periods in AB 18 and ABT 18 are not applicable between a commercial contractor and a non-commercial employer. The Limitation Act provides for three different limitation periods: A three-year limitation (called the "relative" deadline for complaints) and a 10-year or 30-year limitation (called the "absolute" or "ultimate" deadline for complaints) depending on the type of the claim – respectively property damage, personal injury or environmental damage.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

A second buyer of the property, meaning someone who bought the property from a buyer who bought it from the developer, can raise a claim against the developer in some circumstances and depending on the character of the claim. Recourse to a prior party or making a direct claim against an original developer is generally quite a complex matter; however, it has been known in relation to real estate.

If the developer constructs a building with the intention of selling it the limitation periods in the Limitation Act apply between the end user/buyer and the developer/seller.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

Under Danish law, pure economic loss is not recoverable where there is no contract between the parties, which is the case here. There is no contractual relationship between these parties and the end user of a completed development.

It may be possible for the end user to put forward a claim against the building contractor, architect etc for injury or damage for which they may incur liability under the general provisions of Danish legislation.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

The purchasers, tenants and lending banks can only be protected in individual contracts with the developer. They are not protected by the construction contract.

If possible purchasers, tenants and lending banks will record their contractual rights at the Land Registry and thus be protected from third-party rights.

If the employer to the construction has appointed a designer, eg an architect, a third-party purchaser (the seller's buyer) can in certain circumstances have remedies, ie compensation as well as damages from respectively the employer and the designer.

If the employer is 'professional' later purchasers have wide-ranging claims for damages directly against the employer.

Furthermore, a later purchaser who is a consumer can claim damages towards a professional construction inspector for defects in the construction that should have been uncovered by the inspector.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

The Building and Construction Arbitration Court in Copenhagen decides disputes between the parties.

The Building and Construction Arbitration Courts decisions are final and conclusive.

Unless the parties have agreed to apply AB 18, ABT 18 or ABR 18 including the arbitration clause their dispute will be referred to the public courts.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

It is common for construction disputes to be settled by The Building and Construction Arbitration Court as the standard documents AB 18, ABT 18 or ABR 18 are often adopted.

Arbitration is more informal than traditional litigation. The Building and Construction Arbitration Court has a better understanding and competence when it comes to construction disputes as opposed to the national courts.

Unlike litigation, which can take years, arbitration can usually be completed within a set time frame.

Last modified 13 Mar 2025

In this country, what are the main rules relating to health and safety on construction sites? Do these rules in any way relate to the use of the development after construction is completed?

It has not been common for construction disputes to be referred to ADR. Mediation is not mandatory by law, but under the Danish dispute resolution procedure it is possible to settle the case through mediation.

The updated AB 18, ABT 18 and ABR 18 documents however have introduced a “dispute resolution ladder”. Consequently, the parties are bound to try to resolve and settle a dispute on the lowest step of the “conflict ladder”. That is, the parties shall try to resolve and settle the dispute through negotiation before other steps can be initiated (mediation, speedy resolution or arbitration).

Last modified 13 Mar 2025