Greenland

Greenland’s legal system is primarily based on Danish civil law and is supported by Danish legislation, precedents, and legal practices. Although Greenland’s courts are part of the Danish system, Greenland has its own judicial authorities, whose decisions can be appealed to the courts in Copenhagen.

Following an amendment to the Danish constitution in 1953, Greenland became an integrated part of the Kingdom of Denmark. Self-government was established in 2009 with the creation of the Inatsisartut (parliament) and Naalakkersuisut (government), which have legislative and executive powers over devolved areas. However, some areas such as defense, foreign policy, and monetary policy have remained under Danish control.

While Denmark manages overall international relations for the Kingdom, Greenland can independently negotiate and enter into international agreements solely related to Greenland within the devolved competency areas:

• EU relations: Greenland is not an EU member but is associated as an overseas country and territory, providing access to the EU’s internal market and programs without customs duties.
• NATO: Greenland is part of NATO through Denmark but does not have independent membership.
• Bilateral investment treaties: Current Danish investment protection agreements do not cover Greenland, but certain agreements allow for territorial expansion, enabling Greenland to join.
• Double taxation: Greenland has entered into several double taxation agreements, some with broad coverage and others more specific, including aviation, shipping, and the raw materials sector, with countries such as Canada, USA, Norway, and the Cayman Islands.
• Foreign direct investment: The EU’s framework for screening foreign direct investments does not apply in Greenland, but investments may require permission for significant foreign influence.
• New York Convention and The International Labour Organization (ILO): The New York Convention on arbitration applies in Greenland, and ILO rules apply indirectly through Denmark’s membership.

The operation of businesses in Greenland is regulated by legislation similar to Denmark's, including the Danish Companies Act and specific competition rules. Financing in Greenland involves both local and Danish initiatives.

In 2016, the Greenlandic parliament adopted the implementation of the Danish Companies Act, which came into effect on July 1, 2018. This harmonized the conditions for Greenlandic and Danish companies under the Companies Act of 2010, although some elements were not (and are not) implemented in Greenland.

The Competition Act requires notification of mergers exceeding certain thresholds to the Greenlandic competition authorities, with rules similar to Denmark's with minor adjustments.

Regarding financing, local financial institutions and Denmark's Export and Investment Fund (EIFO) offer loans and guarantees. Additional sources of financing include the Vestnordenfonden and the Nordic Council of Ministers, supporting sustainable growth. The Danish government also participates in financing major projects, such as the expansion of Greenlandic airports and hydroelectric power plants.

Additionally, Greenland has a mortgage credit system for financing, similar to Denmark's, generally available in larger cities like Nuuk, Sisimiut, Ilulissat, and Qaqortoq. The country has its own land registry, handling public registration of property rights related to real estate.

The mining and mineral industry is expected to play a central and vital role in Greenland's economy in the future. Despite recent political focus on uranium, there is still political support for expanding the mining industry.

With the implementation of the Self-Government Act in 2009, Greenland took over the area for mineral resources through the Mineral Resources Act, which grants the Self-Government ownership and the right to dispose of and exploit the underground mineral resources. The Greenlandic government thus has the right to administer mineral resources, including issuing and managing licenses.

To conduct mining activities in Greenland, necessary licenses are required, varying between exploration, prospecting, and exploitation:

• Exploration License: These are non-exclusive and issued for up to five years. They do not grant rights to exclusive exploration or preferential rights to exploration licenses and do not entail obligations to conduct exploration.

• Prospecting License: Exclusive licenses granting sole rights to the area. The license is issued for five years with the possibility of extension and requires a fixed minimum expenditure on prospecting annually, along with a license fee from the sixth year.

• Exploitation License: Allows the exploitation of discovered minerals, provided compliance with the terms of the exploration license and approval after environmental and socio-economic sustainability assessments. The license is valid for 30 years with the possibility of extension up to 50 years. Exploitation licenses may impose requirements for payment of area fees, production fees, and dividend fees.

Additionally, license holders are required to use Greenlandic labor and Greenlandic companies for contracts, deliveries, and services, although foreign labor and companies can also be used under certain conditions. Moreover, an export permit is required to export stones or minerals out of Greenland.

Currently, advice is provided on the Mineral Activities Act of June 13, 2023

Greenland's construction and infrastructure sector is experiencing growth, driven by increased accessibility to the outside world, resulting in a rising demand for hotels, housing, and other relevant infrastructure projects. There is a growing urbanization trend as people move from small settlements to larger cities.

Investors should be mindful of various practical and legal issues when investing in and engaging with the construction and infrastructure sector. The natural conditions in Greenland can complicate construction projects, with delays often occurring due to material deliveries challenged by the weather and environment.

AP95, based on the Danish standard AB92, forms the basis for the general terms for construction and civil engineering activities in Greenland. For turnkey contracts and professional service agreements, the Danish codes ABT93 and ABR89 are typically used, anchored in the arbitration tribunal in Copenhagen.

Infrastructure plays a central role in Greenland and is undergoing major development projects to expand and streamline infrastructure:

• Land infrastructure primarily relies on road networks, which are not highly developed, and interconnecting roads between cities are limited. Projects to expand the road network are underway to facilitate transportation between cities.

• Shipping is vital for Greenland, as almost all exports and imports occur via the sea. Cruise tourism is also a central part of the tourism industry. Danish maritime law applies in Greenland, with requirements for pilotage for larger vessels. Additionally, the International Maritime Organization has introduced a mandatory Polar Code, which sets requirements for ship design, equipment, route planning, and crew training.

• Aviation is the primary mode of transport to and from Greenland, with expectations of more connections in the future. In 2015, the Greenlandic parliament decided to build a new airport in Qaqortoq and expand two existing airports in Nuuk and Ilulissat.

The improved infrastructure is expected to create opportunities in tourism, exports, and general economic growth in Greenland, likely increasing the need for investments in tourism-supporting facilities such as hotels, restaurants, and daily essentials for employees, including housing and institutions.

In 2021, the Greenlandic government decided to join the 2015 Paris Agreement, highlighting an ambition to be known for efforts in renewable energy and the desire to become an exporter of such.

Hydropower is the primary source of renewable energy in Greenland and plays a significant role in energy supply. There are plans for hydropower to play an even larger role in Greenland's energy supply and production in the future.

Oil continues to play a crucial role in Greenland's energy supply. However, in 2021, the Greenlandic government decided to suspend oil and gas exploration and extraction due to environmental impacts. This shift supports Greenland's commitment to global climate goals and reflects an increased awareness of the importance of the environment and the need to protect the Arctic environment.