Arbitration - in the Netherlands
Arbitration - under Dutch arbitration law
Is dispute resolution through arbitration a common alternative in the Netherlands?
In the Netherlands, a settlement can be reached either in or out of court. Arbitration is a common alternative dispute resolution pursued in international commercial cases.
Arbitration has become a popular out-of-court method to resolve disputes in the Netherlands particularly for the maritime, securities and construction industries. Arbitration is supposed to be quicker, less formal, and has the option to select arbitrators. Due to the Netherlands being particularly arbitration-friendly, it is not uncommon for commercial disputes to be referred to arbitration.
What are the arbitration rules in the Netherlands?
As of the 1st of January 2015, the New Dutch Arbitration Act entered into force, replacing the Dutch Arbitration Act of 1986. The New 2015 Act is still contained in book 4 (arts 1020-1077) of the Dutch Code of Civil Procedure (DCCP - in Dutch: Wetboek van Burgelijke Rechtsvordering), however the provisions have been updated and modernized.
Overall, the Dutch Arbitration Act aims to facilitate efficiency and flexibility of the proceedings, while simultaneously offering a more cost-effective means for dealing with both domestic and international disputes. The Act intends to provide a neutral venue for international arbitration, making arbitration in the Netherlands more attractive for international cases.
The Act is inspired (although not based) on the UNCITRAL Model Law (2006), and is in line with the European Unfair Terms in Consumer Contracts Directive 93/13/EE.
What is a valid arbitration agreement under Dutch law?
In order for an arbitration agreement to be valid under Dutch law, the dispute that has to be settled must arise out of a contractual (or non-contractual) legal relationship (article 1020 DCCP). The arbitration agreement must be in writing. Inclusion of the arbitral agreement in general terms and conditions may not suffice.
Under certain circumstances an arbitration clause included in the general terms and conditions could be considered unreasonably onerous, and thus voidable, if there is no opportunity for a consumer to submit the arbitration to a state court (unless otherwise agreed by the consumer and company). This can be avoided by including the arbitration clause in a separate agreement that allows the consumer to opt for arbitration, or allowing the consumer a period of at least one month to choose for the civil court that would have jurisdiction.
The arbitral agreement cannot be used to determine the legal consequences over matters that are the exclusive province of national courts, or matters relating to public policy that legally effects not only the parties involved, but also third parties. Such matters include certain issues of corporate law, bankruptcy petitions, or the legal status of persons.
What is the place of arbitration under Dutch arbitration law?
The place of arbitration will be determined by agreement of the parties, or alternatively determined by the arbitral tribunal (article 1037 DCCP). If the place of arbitration is in the Netherlands, the Dutch Arbitration Act will be applicable, and Dutch rules governing enforcement and setting aside the award will also be applicable.
However, this does not preclude the arbitral tribunal meeting elsewhere within or outside the Netherlands, for example for holding hearings or examining witnesses or experts.
What is the jurisdiction under Dutch law of the Arbitral Tribunal?
According to article 1052 DCCP, the arbitral tribunal has the power to decide on its own jurisdiction. The jurisdiction of the tribunal may be contested on several grounds, including when there is no valid arbitration agreement, or if the constitution of the tribunal is in violation of the applicable rules (articles 1052 (2) and (3), respectively).
Such grounds for lack of jurisdiction must be raised before the party submits a defense on the merits, and failing to do so are barred from raising the lack of jurisdiction issue in arbitral proceedings or other proceedings before the court.
In the event that the arbitral tribunal itself declares a lack of jurisdiction, the court will have jurisdiction to hear the case unless otherwise agreed by the parties.
How do you appoint arbitrators in accordance with Dutch law?
Articles 1026-1029 DCCP relate to the appointment of arbitrators. In order for one to be appointed as an arbitrator, the person must be (1) impartial and (2) independent. There must be a minimum of one arbitrator, and in the event of more, there must be an uneven number of arbitrators.
The procedure to be followed in appointing arbitrators is any procedure agreed by the parties, with the possibility of the third party being entrusted with this. If no procedure is agreed upon, arbitrators are appointed by consensus between the parties.
The time limit to appoint arbitrators is three months after the commencement of the arbitration, unless the arbitrators have already been appointed. New is that only if no appointment is made within three months, the preliminary relief judge (voorzieningenrechter) will appoint the arbitrator.
How do you challenge arbitrators under Dutch Law?
Arbitrators can be challenged under Dutch law, pursuant to articles 1033-1035 DCCP. Arbitrators can be succesfully challenged if their impartiality or independence can be questioned. New is that article 1034(3) provides that arbitrators can be challenged throughout the proceeding, rather than only when appointed. Furthermore, the addition of article 1075 (7) provides for the possibility of an institutional challenge; a third party, and not only the preliminary relief judge, can challenge the arbitrator.
How do you commence arbitration proceedings under Dutch law?
According to article 1025 DCCP, arbitration proceedings generally commence upon receipt of a written notice whereby one party notifies the other party that arbitration is commencing, as well as noting the disputes to be submitted to arbitration.
How do you conduct proceedings under Dutch arbitration law?
The proceedings itself should be conducted in a manner agreed between the parties, and in the absence of such an agreement, this manner is to be agreed by the arbitral tribunal. The general rule regarding proceedings is found in article 1036 DCCP, stating that each party is to be treated with equality and given the opportunity to explain its case and respond to arguments. Furthermore, it provides that the arbitral tribunal shall ensure no unreasonable delays, and that parties also have an obligation toward one another to prevent unreasonable delays as well.
Newly introduced are articles 1038a and 1038d. This regards the written phase of the proceedings under Dutch arbitration law, allowing parties to submit a statement of claim and statement of defense, the amendment of a claim or the increase a counterclaim during the arbitration proceedings.
What are the rules of evidence in arbitration proceedings under Dutch law?
Articles 1039-1043 DCCP relate to evidence. These articles of Dutch law hold that it is up to the arbitral tribunal to determine the rules of evidence, including its production, admissibility, and weight.
Additionally, article 1046 of the new Dutch Act also provides that parties can ask third parties (an arbitral institute) to order a joinder of arbitral proceedings (also known as a consolidation of arbitrations). This provides the possibility of proceedings pending outside the Netherlands to be joined with the proceedings in the Netherlands.
Article 1048a of the new Act provides for a general rule for the broader forfeiture of rights by the parties. The article states that any party must, as soon as it becomes aware and without delay, file its objection of any act or omission in violation of the arbitration rules. If this is not done in a timely manner, the party forfeits its rights to invoke this violation in order to set aside arbitration proceedings or enforcement proceedings. The aim of this provision is to strengthen the enforcement of Dutch awards in third countries.
The new Act provides for an e-arbitration framework, whereby electronic documents and electronic signatures, and electronic correspondence facilitate quicker and more efficient communication during arbitral proceedings, as well as minimizing the administration burden. In addition to this, there is no requirement for the arbitral award to be filed with the district court, unless this is expressly agreed by parties.
Confidentiality of arbitral proceedings in the Netherlands
Confidentiality of arbitral proceedings under Netherlands law is not regulated in the new Act, despite being included in the initial draft of the new Act. While arbitration is generally considered to be confidential, parties should explicitly agree on this in their arbitration agreements to ensure confidentiality.
Preliminary relief in arbitration proceedings
The new Act introduces the possibility for provisional relief in arbitration proceedings under Dutch law, in the form of interim measures to be granted during proceedings, or allows for the possibility for provisional relief to be granted in separate summary or arbitral proceedings. This is found in articles 1043b (1) and 1043b (2), respectively.
However it is not possible under Dutch arbitration law for the arbitral tribunal to grant conservatory measures such as prejudgment attachments.
The decision to order a provisional relief is to be considered an enforceable award, unless determined otherwise by the arbitral tribunal.
How are the costs of arbitration allocated under Dutch law?
As in the former Act, Dutch arbitration law does not deal with the recovery of legal fees or costs. Alternatively, it is possible for an arbitration agreement may state the allocation of costs. In the absence of such agreement the arbitrators can decide this allocation.
However it is normal practice for the arbitrators to decide the losing party bears the costs of arbitration, including the legal fees of the other party. In reality there is a reasonable limit placed on the amount payable by the losing party, resulting in the possibility that the winning party cannot recover all costs incurred.
Can parties waive the substantiation and reasoning of the award?
Article 1057 (5) DCCP allows for parties to agree in writing that the award does not require substantiation or reasoning (waiver), after the commencement of the arbitral proceedings under Dutch law. This provision effectively increases the party’s autonomy in the overall proceedings, and is favored as it promotes time and cost effectiveness.
Can you lodge an arbitral appeal in the Netherlands?
The new Act provides for a separate article for arbitral appeals (article s1061a-1061l DCCP). Appeal is allowed in the case that parties have agreed to this in their arbitration agreements. If agreed, parties may lodge an appeal within three months after the date of sending the award, and appeals can only be made against final awards or a last partial final award, unless otherwise agreed.
What should an arbitral award include to enforce it in the Netherlands?
An arbitral award for the purpose of enforcement should include a final award, or a partial award, or an interim award, for example an award on costs.
Procedure under Dutch law for enforcement of an arbitral award
The general rule contained in article 1062 states that leave (“exequatur”) must be granted by the preliminary relief judge of the competent District Court before the arbitral award can be enforced. This is generally an ex parte procedure, where the parties are not required to appear before the preliminary relief judge.
The applicant has to submit a petition (verzoekschrift) requesting leave and must provide the preliminary relief judge with the original and certified copies of the award, any translations, and a copy of the arbitral agreement.
Direct enforceability of an arbitral award under Dutch law
Both arbitral awards issued in summary proceedings and those granted in first instance are immediately enforceable.
Refusal to enforce a Dutch arbitral award in the Netherlands
Article 1062(1) of the new Act widens the grounds for the preliminary relief judge to refuse enforcement of the arbitral award. Refusal may exist if, following a summary investigation, the preliminary relief judge concludes that the award will most likely be reversed on either:
- One of the grounds for setting aside (articles 1065(1)(a-e); or
- One of the grounds of revocation (article 1068(1)), or
- If a penalty for non-compliance is set contrary to the provisions of the Act
Enforcement of foreign arbitral awards in the Netherlands
Foreign arbitral awards are enforced on the basis of article 1075 DCCP and 1076, providing for enforcement by treaty or without treaty respectively.
Article 1075 – enforcement of foreign arbitral awards under treaties
The most important enforcement treaty in regard to the recognition of foreign arbitral awards in the Netherlands is the New York Convention. The Netherlands is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This was signed and ratified by the Netherlands in 1964. Consequently, foreign arbitral awards are to be enforced and only in certain situations (for example if the decision of the arbitral award falls outside the scope of the arbitral agreement) does the award not have to be enforced. However due to a reservation made by the Netherlands to the New York Convention this is only in regards to awards from other contracting states (the ‘reciprocity’ reservation).
What are the requirements for enforcement of a foreign arbitral award?
Both the Act and the New York convention contain provisions relating to enforcement procedures, however the provisions of the New York Convention always prevail over the Dutch Act.
Article 1075 DCCP provides that in order to enforce a foreign award, leave must be obtained from the competent Court of Appeal. Like in the case for enforcement for domestic awards, the applicant must submit a petititon (verzoekschrift) requesting leave. Furthermore, article IV of the New York Convention states that the applicant has to provide the original arbitral awards, the original arbitral agreement, and translations if necessary.
Refusal to enforce a foreign arbitral award under the treaties
Article V of the New York Convention provides for a number of grounds in which a foreign arbitral award can be refused to be enforced:
- Incapacity of the parties or lack of a valid arbitration agreement;
- Violation of due process;
- Excess of the arbitral tribunal’s authority;
- Irregularity in the composition of the arbitral tribunal or arbitral procedure;
- The award has not yet become binding, has been set aside, or has been suspended;
- The subject matter of an award is not attributable; and
- The award contradicts public policy.
Procedural requirements for enforcement of foreign arbitral awards without treaties
If there is no applicable treaty to the recognition and enforcement of an arbitral award, in accordance with article 1067 DCCP the award made in a foreign state may be recognized and enforced in the Netherlands once the original copy of the arbitration agreement and the arbitral award has been submitted.
Grounds for refusal of enforcement of foreign arbitral awards without treaties
The grounds or refusal of enforcement of foreign arbitral awards without treaties are also contained in article 1076 DCCP, and include:
- The lack of a valid arbitration agreement
- The tribunal has not been appointed in accordance with the rules
- Excess of the arbitral tribunal’s authority
- The award is still open to appeal to a second tribunal, or to a court in the country in which the award was made
- The award has been set aside by a competent authority of the country where it was made, and
- The award contradicts public policy.
Setting aside, revocation and remission of arbitral awards in the Netherlands
The setting aside of arbitral awards in the Netherlands relates to the recourse given for the mistakes or errors that arbitrators made during the course of proceedings, and is regulated by article 1064 and 1065. These articles state that applications for setting aside awards must be brought before the Court of Appeals of the relevant District Court, and must be made within 3 months from the day that the arbitral award was sent.
Article 1064a(5) provides the possibility to opt-out of appeal for both national and international arbitrations, however this is not possible where one party is a consumer.
An exhaustive list of grounds that allow for an award to be set aside is found in article 1065. These include:
- The absence of a valid arbitration agreement
- The composition of the arbitral tribunal was not in accordance with the rules
- The arbitral tribunal did not comply with the scope of the submission to arbitration
- The award had not been signed in accordance with the provisions of article 1057, or does not contain reasons, and
- The award, or the manner in which it was made, is in conflict with public policy.
Pursuant to article 1067 in the new Act, as soon as the judgment to set aside the arbitral award has become final the arbitration agreement remains in force, unless if the reason for setting aside was based on a lack of a valid arbitration agreement.
Revocation under Dutch law of arbitral awards
Revocation is an extraordinary legal remedy relating to misrepresentations of the parties, rather than mistakes or errors of the arbitrators. Article 1068 DCCP provides for limited grounds in which an arbitral award can be revoked:
- Fraud
- Forgery of documents, and
- Withholding documents.
The time limit to bring an application for revocation is within three months after the fraud or forgery of documents has become known or the party has obtained the new records.
Remission under Dutch law of arbitral awards
Remission is the event where the case is referred back to the arbitral tribunal, and is regulated by article 1065a DCCP. This is newly introduced in the Act, and ensures that setting aside proceedings is the last remedial measure.
In this procedure, the Court of Appeal may suspend the setting aside of proceedings in order for the arbitral tribunal to nullify the grounds for setting aside the award, by re-opening the arbitral proceedings or by taking another appropriate measure. After having heard both parties, the arbitral tribunal can render a new award, and in doing so, replacing the former award. It is then up to the Court of Appeal to make its judgment, keeping in mind the amended award.
E-arbitration in the Netherlands
The new Dutch Arbitration Act provides for an e-arbitration framework, whereby electronic documents and electronic signatures, and electronic correspondence facilitate quicker and more efficient communication during arbitral proceedings, as well as minimizing the administration burden. In addition to this, there is no requirement for the arbitral award to be filed with the district court, unless this is expressly agreed by parties.
Party autonomy and consumer protection in Dutch arbitration
The Dutch Arbitration Act also grants more autonomy for parties in conducting arbitration proceedings, making the procedures much more flexible, where many of the provisions are of a regulatory rather than mandatory nature. Non-mandatory conditions contain the wording “unless otherwise agreed by the parties”, or something similar, whereas mandatory provisions cannot be deviated from.
Furthermore, consumer protection is enhanced with the inclusion of a black-list; an arbitration clause included in the general terms and conditions is considered unreasonably onerous, and thus voidable, if there is no opportunity for the consumer to submit the arbitration to state court (unless otherwise agreed by the consumer and company). This can be avoided by including the arbitration clause in a separate agreement that allows the consumer to opt for arbitration, or allowing the consumer a period of at least one month to choose for the civil court that has jurisdiction.
International enforceability of Dutch arbitral awards: the New York Convention
The Netherlands is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This was signed and ratified by the Netherlands in 1964. Consequently, foreign arbitral awards are to be enforced and only in certain situations (for example if the decision of the arbitral award falls outside the scope of the arbitral agreement) does the award not have to be enforced. However due to a reservation made by the Netherlands to the New York Convention this is only in regards to awards from other contracting states (the ‘reciprocity’ reservation).
What are the arbitration institutes in the Netherlands?
The main arbitration institute is the "Netherlands Arbitration Institute" (NAI). Other arbitration institutes in the Netherlands are the Arbitral Tribunal for the Graphic Industry Foundation, the Council for Arbitration in the Construction Industry (Raad van Arbitrage voor de Bouw), the Dispute Resolution Foundation for Automation Disputes (Stichting Geschillen Oplossing Automatisering), and the International Chamber of Commerce.
Institutional arbitrations are popular in the Netherlands and are governed by their own set of rules. These include for example the Arbitral Tribunal for the Graphic Industry Foundation, the Counsel of Arbitration for the Metal Industry and Metal Trade Foundation, and the Counsel for Arbitration in the Construction Industry.
