Cadwalader Successfully Represents Defendant as Part of £1.5 Billion Danish Tax Claim

April 27, 2021

Justice Baker, sitting in the High Court in London, has today dismissed all of the Danish Customs and Tax Administration's (Skatteforvaltningen or "Skat") claims against 107 Defendants in 5 consolidated proceedings. The £1.5 billion tax claim, expected to be the longest and most expensive in British legal history, had been penned in as one of the UK's top 5 cases to watch in 2021.

Cadwalader represents the 5th Defendant to Skat's 1st claim with a team led by partner Kevin Roberts and including staff attorney Gareth Rund.

Today's preliminary issue judgment, which followed a short 4-day hearing in March, concerns the application of Dicey Rule 3, the principle that English courts have no jurisdiction to entertain an action for the enforcement of a penal, revenue or other public law of a foreign State, either directly or indirectly. In his judgment, Justice Baker concluded that the Revenue Rule was an overriding rule of English law that looked beyond the form of the dispute to examine the substance of the matter – the central interest in bringing the claim. He furthermore concluded that Danish tax law was at the heart of Skat's case, and that without reliance on it none of Skat's claims could exist. In Justice Baker's words, "the central interest [in Skat's case] is the Kingdom of Denmark's sovereign right to tax Danish Company Dividends."

The judgment means a second preliminary issue trial, to decide whether thousands of claims for withholding tax refunds were valid claims under Danish tax law (listed for 6 weeks in October this year), and a mammoth 16 month final hearing in 2023-2024 will be vacated.

Already contending with setbacks elsewhere, the judgment is the latest block on the Danes' multi-jurisdictional efforts to claw back billions of krone paid out in withholding tax refunds. The judgment follows Justice Baker’s June 2020 comments that "Skat’s pleading is badly structured and unhelpful, confusing, and in places inconsistent. I have described it as unfit for purpose."

Cadwalader’s Roberts said: "Although significant, we recognize that this claim is but one thread of the Danish legal strategy to recoup its losses. Wiser heads should prevail to bring about a sensible conclusion to these matters. There is still a window for Skat to resolve its claims swiftly, without further recourse to the courts."