Introduction

When doing business, there is always the risk that a dispute arises that cannot be settled amicably. It is worthwhile considering the best dispute resolution mechanism for the commercial relationship at hand. This blog will provide some guidance in respect of some of the options available for dispute resolution in the Netherlands.

Choose a forum

If parties have not agreed in advance which court or tribunal will have jurisdiction in case of a dispute, this will be determined by the applicable national conflict of forum rules. If the contracting parties reside in different jurisdictions, this could be a complex assessment. Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I recast) contains jurisdiction rules for the national courts of European member states. However, the outcome of the application of these rules to a specific matter may be that parties have to litigate before a different court than expected or before a court that is not familiar with the applicable law to the contract. Agreeing on a competent forum with the other party when a dispute already exists, is often not feasible. With that in mind, it is important to insert a clear agreement on the competent forum into the contract.

Options in the Netherlands

The most common forms of dispute resolution in the Netherlands are court proceedings and arbitration. A relatively new type of court proceedings are those before the Netherlands Commercial Court (the NCC). Below we explain the main advantages and disadvantages of court and arbitration proceedings in the Netherlands.

Dutch court proceedings

There are 11 district courts in the Netherlands, located in the 11 judicial regions (arrondissementen). These courts have competence if no choice of forum has been agreed upon, and the defendant resides in that judicial region. If parties agree upon court proceedings, they are at liberty to choose any of the 11 district courts as the competent court. The courts of Amsterdam, Rotterdam and The Hague are relatively popular, given their size and expertise in specific matters.

One of the advantages of Dutch court proceedings is that they are deemed to be among the best in the world. The World Justice Project ranked the Netherlands third worldwide in respect to civil justice¹. Dutch judges are highly qualified and independent. Furthermore, the costs of proceedings in the Netherlands are also relatively low, with court fees in first instance not exceeding € 4,200 and cost awards for lawyers’ fees set at statutory (very minimal) levels (with an exception to IP matters, where cost awards based on actual lawyers’ fees can be awarded).

The low court fees can also represent a disadvantage, as the threshold for initiating and continuing litigation is relatively low. Furthermore, court proceedings are public, and judgments can be published on the website of the Dutch courts or in legal journals. The proceedings will be in Dutch (although evidence in English is accepted and some judges will accept English during oral hearings), which necessitates the use of translators and interpreters.

NCC

The NCC is part of the Amsterdam district court (and court of appeal) and was founded on 1 January 2019, following Amsterdam’s growing role as a prime location for business and a gateway to Europe. The NCC handles international commercial litigation cases by expert judges. The judgments are enforceable in the same manner as other Dutch judgements. Proceedings before the NCC are in English and are tailored to handle complex cases in the most efficient way. The judges selected for the NCC are specialized in complex commercial cases. Court fees to the NCC are somewhat higher than regular Dutch courts (€ 15,000 in first instance), but the NCC probably still is a less costly alternative than arbitration.

Arbitration

Arbitration is an alternative to regular court proceedings and a popular choice of dispute resolution for contracts involving (highly) specialised markets (such as construction, international trade and maritime law). The Netherlands has several well-established arbitration institutes, such as the Dutch Arbitration Institute, for general commercial arbitration, and more market-specific institutes like UNUM (for trade and maritime disputes) and the Construction Arbitration Institute.

An advantage of arbitration is that parties can opt for confidential proceedings. In addition, parties select the arbitrators, who are generally experts on the subject of the dispute. Arbitration proceedings further allow for more flexibility on the course of the proceedings and alternative arrangements on methods of communication. Under the New York Arbitration Convention², arbitral awards are automatically recognised and enforceable in a large number of countries.

A disadvantage to arbitration is that it is more costly than court proceedings, as arbitration costs usually include both the administrative costs of the relevant institute as well as the fees of the arbitrators. Furthermore, adverse cost awards include actual lawyers’ fees.

Conclusion

The forum before which a dispute is resolved can have a material impact on the manner in which proceedings are conducted, the costs involved and, to an extent, on the outcome of the dispute. Considering the options and making a conscious decision for a specific forum provides predictability. The Netherlands offers parties one of the best and most efficient legal systems in the world. A relatively new, additional option is the NCC which also offers expert judges and proceedings in English. Outside of court litigation, several Dutch arbitration institutes provide contracting parties with high-quality arbitration proceedings as an alternative.

Please feel free to reach out to us to discuss which option is best suited for your specific situation. Our IT, contracting and litigation teams have negotiated and litigated hundreds of contracts, and can help you reach a well-considered decision.

1. The ranking is based on the measurement whether ordinary people can resolve their grievances peacefully and effectively through the civil justice system. It measures whether civil justice systems are accessible and affordable as well as free of discrimination, corruption, and improper influence by public officials. It examines whether court proceedings are conducted without unreasonable delays and whether decisions are enforced effectively. See the report for 2020 here ↩

2. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The New York Arbitration website provides a list of states that are a party to the convention and where arbitral awards from other countries are in principle enforceable. ↩