Building law and regulation in Denmark during Covid-19

1. Is there construction-relevant COVID-19 regulation?

The construction industry has been affected by the general regulations and guidance’s in Denmark regarding Covid-19, but no excusive regulation regarding the construction industry has been passed by the government.

The general regulations include entry restrictions at the Danish border, which requires workers to have a worthy purpose for entry and prober documentation hereof. Employment contracts are considered prober documentation.

Furthermore, the approved Amendment Act to the Epidemic Act has provided the Minister of Health and the Elderly with new empowerment preventing the spread of Covid-19. Especially section 5 and 6 of the Act are relevant for the construction industry as they give the Minister the power to order persons to go into solitary confinement and to ban larger assemblies, which can have an impact on the contractor’s ability to provide manpower. However, so far construction sites have been exempted from any ban on larger assemblies, but there is a requirement that only one person can work indoor per four sqm.

2. Subsidies and other government support for employer, contractor and other involved parties? (generic, high level only).

The government has issued a variety of aid packages in order to secure the Companies day-to-day operations. The aid packages involve help in regards to overhead expenses, compensation for loss of sales and payment of wages. Furthermore, the deadline for payment of taxes have been postponed.

If an event is characterized as force majeure, the contractor, the consultant and the developer are entitled to an extension of time but neither of the parties will be entitled to pursue claims based on the concept of force majeure. 

However, the Covid-19 situation is not at this point characterized as a force majeure situation regarding lack of progress and delay of projects, which is due to lack of labor. The Government’s regulation does not directly limit the contractor’s ability to work at the construction site and therefore the legal principle of force majeure is not applicable in this context. In the event a construction site is closed due to a public order or ban it might entitle the contractor to indemnity. 

It is more applicable to use force majeure in relation to non-deliveries from, for example, China or Italy.

4. Does the Epidemic give rise to termination rights to either party?

No, the Epidemic itself and the Danish Government’s regulation do not give termination rights to either of the parties. However, specific circumstances can entitle the parties to terminate the contract if the performance becomes impossible or unreasonable costly.

5. Do the measures currently being taken in relation to the Epidemic amount to change in law? What are the price and time consequences?

The government has issued several acts; however, none of them has changed the standard agreements used in construction. The perception of force majeure connected with pandemics might change for the future since a situation must be unpredictable to constitute force majeure.

6. Are there any other issues relevant to COVID-19 the construction industry should be aware of?

In connection with a possible delay due to Covid-19 the construction industry should also be aware of two important contractual concepts: A) the duty of loyalty and B) the duty to mitigate losses. 

A) The duty of loyalty is stated in AB 18 § 39, (2) and (3) as follows: 

AB 18 § 39 (3): “If the contactor realizes that a delay will occur, the contractor shall as soon as possible give written notice to the developer.”

AB 18 § 39 (2): “The contractor shall seek the delay avoided or limited by such dispositions as with reasonableness can be required.”

B) The duty to mitigate losses is stated in AB 18 § 26 (2) but is also a law principle that applies in all contractual relations. The principle obligates the parties to take reasonable steps to limit a possible loss.

Portrait of
Ann Frølund Winther
Lundgrens Law Firm