Legal remedies under Dutch law

Specific performance of a contract under Dutch law

Under Dutch law, one party has the right to claim specific performance of an obligation (contractual or non-contractual) against another party as long as performance is possible. Unlike other jurisdictions, in the Netherlands specific performance is the primary remedy for breach of contract and the creditor is not obliged to be satisfied with damages.

The party to whom the specific performance is ordered against (debtor) must comply with the court order. The enforceable right of the creditor to demand specific performance is called an ‘obligatory claim’. The law of obligations indicates what the creditor can expect, and what actions can be taken when specific performance does not take place. The debt that the debtor owes to the creditor stands until the performance is carried out.

Types of specific performance under Dutch civil law

Under Dutch civil law there are three main types of performance:

1. Delivery of an object (to give), e.g. transferring a good or paying;
2. Performance of a work (to do), e.g. an employee who has a duty to carry out some kind of labor on behalf of his employer; and
3. Refrain from doing something (to not do), e.g. not starting up a company in a certain place for a specific time as stated in a non-competition clause.

Restrictions on Specific Performance

There are however cases where specific performance can be refused by the court. These restrictions under Dutch civil law include:

1. If statutory law allows for the refusal of specific performance:
   • Illegality: This may be the case if a juridical act (e.g. a contract) is considered to be null and void, or if the contract is contrary to ordre public due to its contents or intentions. In this case, specific performance cannot be upheld. Similarly, no specific performance will be granted if the obligation itself is prohibited by law.
   • Absolute impossibility: When the claim for performance is absolutely (theoretically and logically) impossible to perform (e.g. a unique painting destroyed by fire).
   • Relative impossibility: Where the law or a decree prohibits the performance (therefore the performance would be illegal), or where the performance would threaten a higher interest (e.g. life, liberty, health or honor).
   • Unreasonable effort or expense: If the performance requires the debtor to undertake unreasonable effort or expense in order to perform the obligation, specific performance may not be possible.
   • Temporary impossibility: This is when performance is temporarily impossible, but may be possible at a later stage. This means that when the impossibility is no longer an issue (e.g. export or import prohibition), specific performance is required.
   • Restriction by juridical act (contract): The parties themselves are free to deny the creditor the right to request specific performance.
2. If the nature of the obligation prevents specific performance, for instance:
   • obligations of an artistic or personal nature (e.g. painting a picture);
   • employment contract: an order for an employee to perform an obligation in an employment contract is allowed, however a claim that may be considered a form of slavery or personal servitude is prohibited.
3. If specific performance has been disallowed by the contract:
   • Abuse of right and the principle of proportionality: parties in a legal relationship are bound to act in accordance with the requirements of reasonableness and equity. This means that parties cannot act solely in their own interests but also have to consider the interests of the other party. A claim to specific performance is considered to be an abuse of right if one party’s interests in exercising the right (creditor’s interest) unreasonably imbalances the interest harmed as a consequence of the performance (debtors performance). In this case, the creditor cannot demand specific performance if performance a) would unreasonably burden the debtor, and b) is not more beneficial to the creditor than another type of remedy.

Other available remedies under Dutch law

While specific performance is the primary remedy under Dutch law, there are other remedies available in the forms of: damages, recission, annulment, a declaratory judgment, and an injunction.

Damages under Dutch law

Compensatory damages under Dutch law can include all material loss, and possibly other harm (such as emotional damage). Damage is usually paid in monetary form. The general rule followed by the courts when awarding damages is that the aggravated party is places in the situation it would have been in if the event that caused the damage did not take place.

Recission of a contract under Dutch law

Recission of the contract occurs when the contract is cancelled and both parties are released from further performance. When performance has already taken place, there is an obligation on the parties to undo the performance already carried out. If the performance cannot be undone, the total cost of the performance can be compensated for. This hold true to the extent that the breach is so small that it does not justify the recission.

Annulment of a contract under Dutch law

A contract (or other legal act) may in certain situations be annulled by a court. This can occur in the case of duress, fraud, undue influence, or misrepresentation or error. While similar to a recission claim, the difference is that a recinded contract is acknowledged and executed, but for some reason was terminated. The annulled contract is to behave as though it never existed in the first place.

Declaratory judgment in the Netherlands

A declaratory judgment confirms or determines the rights of the parties without actually ordering anything to be done or awarding damages. For example, a party may seek whether alleged behavior constitutes a tort. It may be possible to later claim damages in follow-up proceedings.

Injunctions in the Netherlands

Injunctions in the Netherlands can be mandatory or prohibitory and order the defendant to immediately perform or refrain from doing something in urgent situations. An injunction under Dutch law can be temporary, preliminary or permanent, and can for example be obtained in reference to an intellectual property right.

All injunctions are normally immediately enforceable notwithstanding appeal. Preliminary injunctions must be accompanied with follow-up proceedings o the merits, whereas final injunctions require no further proceedings. In the final judgment, the court can also render a declaratory judgment and issue the payment of damages.