Netherlands: The European, Middle Eastern And African Arbitration Review 2016 - Netherlands

In the Netherlands, arbitration has traditionally been the most important form of dispute resolution along with court litigation, particularly for the resolution of construction or trade disputes. Such disputes are usually brought before the Netherlands Arbitration Institute (NAI) or the Arbitration Board for the Building Industry. The Netherlands is also renowned for the arbitration of international disputes. There are many reasons why the Netherlands is an attractive seat for international arbitrations: as the host state of many international courts and tribunals – including the International Court of Justice, the Permanent Court of Arbitration and the International Criminal Court, and many specialised arbitration institutions – the Netherlands offers a favourable legal and logistical environment for accommodating, administering and conducting international arbitral proceedings. The city of The Hague is to have new hearing centre, which will be located right across the Peace Palace.¹ A much-welcomed added benefit of seating arbitral proceedings in the Netherlands is that it has cost advantages over more expensive venues such as Paris and London.

Another important factor is that the Dutch legislature and the judiciary have a favourable attitude towards arbitration. Dutch arbitration law affords the parties considerable freedom to determine the rules of procedure, and the state courts take a liberal approach to arbitration. The state courts do act as a safety net if issues arise that parties or arbitrators are unable to resolve, yet without interfering excessively in the arbitral process. They will decline jurisdiction if a party invokes an arbitration agreement before putting forward other defences, and if the arbitration agreement is valid and applicable to the subject matter in dispute.

On 1 January 2015, a revised Arbitration Act entered into force in the Netherlands² aimed at further enhancing the efficiency and flexibility of the arbitral process by avoiding delays through state court proceedings, reducing the administrative burden and maximising party autonomy. The main features of the legal framework for arbitration in the Netherlands under the revised Dutch Arbitration Act will be discussed below. Subsequently, other recent arbitration developments in the Netherlands will be addressed.

Legal framework for arbitration in the Netherlands

Each arbitration taking place in the Netherlands, regardless of the nationality of the parties or the subject matter of the arbitration, is subject to book 4 of the Dutch Code of Civil Procedure (DCCP), also referred to as the Dutch Arbitration Act.³ Most provisions are of a regulatory, not mandatory nature. The Dutch Arbitration Act contains fairly standard provisions on the arbitration agreement, the appointment of arbitrators, the disclosure and challenge of arbitrators, procedure, witness and expert hearings, joinder and consolidation, competence-competence, the content of the award, correction and addition of the award, and recognition and enforcement.

No restrictive requirements for the arbitration agreement

All subject matters may be referred to arbitration, unless this would lead to legal consequences of which the parties cannot freely dispose.⁴ Strictly speaking, the Dutch Arbitration Act does not impose special requirements on arbitration agreements beyond the rules applicable to the formation of contracts in general. However, if the arbitration agreement is contested, its existence must be proven by an instrument in writing (or by electronic data fulfilling certain requirements). For this purpose, an instrument in writing that provides for arbitration or that refers to standard conditions providing for arbitration is sufficient, provided that this instrument is expressly or impliedly accepted by or on behalf of the other party.⁵

An arbitration agreement is considered and decided upon as a separate agreement. The arbitral tribunal has the power to decide on the existence and validity of the contract of which the arbitration agreement forms part or to which the arbitration agreement is related.⁶

Remedies

The Dutch Arbitration Act distinguishes between three legal remedies that may be available against an arbitral award: arbitral appeal, setting aside and revocation.

Appeal from the arbitral award to a second arbitral tribunal is possible only if the parties have agreed thereto. Parties, and the rules of recognised arbitration institutes, do not usually provide for the remedy of an arbitral appeal.

Recourse to a court against a final or partial final arbitral award which is not open to appeal in arbitration, or a final or partial final award rendered on arbitral appeal, may be made only by an application for setting aside or revocation.⁷

The setting aside of arbitral awards is an extraordinary and restricted legal remedy. The available grounds for setting aside closely resemble those laid down in the New York Convention. The court may set aside the award only if:

• a valid arbitration agreement is lacking;
• the arbitral tribunal was constituted in violation of the applicable rules;
• the arbitral tribunal has manifestly not complied with its mandate;
• the award is not signed or does not contain any reasons whatsoever; or
• the award, or the manner in which it was made, violates public policy.

The setting aside of arbitral awards is limited to a maximum of two instances. The application for setting aside must be addressed to the Court of Appeal of the district of the seat of arbitration. After the Court of Appeal has rendered a decision on the application for setting aside, the parties can appeal in cassation to the Supreme Court. The parties may, however, agree to exclude the possibility of cassation, and by doing so, limit the state court's review to one instance.

Revocation is exceptional in practice. This remedy can be sought in case of fraud, forgery or withheld documents.

Partial setting aside

Under the Dutch Arbitration Act, it is possible to have an arbitral award set aside only in part, provided that the remainder of the award is not inextricably linked to the part of the award that is to be set aside. In the event that the arbitral tribunal has awarded in excess of, or differently from, what was claimed, the arbitral award shall be partially set aside to the extent that the part of the award which is in excess of, or different from, the claim can be separated from the remainder of the award.⁸ The Supreme Court has ruled that an application for the setting aside of an arbitral award implicitly entails an alternative application for a partial setting aside.⁹ This means that, in practice, an award may be set aside in part even where the applicant has not explicitly requested the court to partially set aside the award.

Remission

As soon as a decision which has reversed the award has become final, the state courts' jurisdiction revives only if the arbitral award is set aside due to the absence of a valid arbitration agreement.¹⁰ In the event the award is set aside for another reason, the court will refer the case back to the arbitral tribunal.

The revised Dutch Arbitration Act also provides for the possibility for the Court of Appeal to suspend the setting aside proceedings to allow the arbitral tribunal to right a wrong by resuming the arbitral proceedings or by taking another measure that the arbitral tribunal deems appropriate. Such a decision of the Court of Appeal cannot be appealed. These amendments have further limited the intervention of the state courts in the arbitral process, making the Dutch Arbitration Act more arbitration friendly and the arbitral process more efficient.

Recognition and enforcement

The Netherlands has signed and ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, in respect of which it has elected to enforce only awards from other contracting states – the 'reciprocity' reservation.

If no treaty concerning recognition and enforcement is applicable, or if an applicable treaty allows a party to rely upon the law of the country in which recognition or enforcement is sought, recognition and enforcement may be sought on the basis of the Dutch Arbitration Act. The grounds for refusal resemble those in the New York Convention. Leave for enforcement may be denied, if:

• the party against whom recognition or enforcement is sought asserts and proves that a valid arbitration agreement under the law applicable thereto is lacking;
• the arbitral tribunal is constituted in violation of the rules applicable thereto;
• the arbitral tribunal has manifestly not complied with its mandate;
• the arbitral award is still open to an appeal to a second arbitral tribunal or to a court in the country in which the award is made;
• the arbitral award has been set aside by a competent authority of the country in which that award is made; or
• the court finds that the recognition or enforcement would be contrary to public policy.

The Dutch Arbitration Act provides for an asymmetric system of appeal. Only decisions denying leave for enforcement can be appealed. This remedy is not, however, available against the grant of leave. The idea is that the remedy of setting aside is an adequate safeguard for the party opposing recognition and enforcement.¹¹

Interim measures

The Dutch Arbitration Act contains quite distinctive provisions relating to interim measures. There are three ways for parties to obtain interim relief under the Dutch Arbitration Act. First, parties are allowed to request that an arbitral tribunal which has already been constituted takes interim measures at any stage of the proceedings on the merits.¹² The interim measures should relate to the claim or counterclaim in the pending arbitral proceedings and shall only apply for the duration of the proceedings. Second, parties to an arbitration agreement may agree that a separate arbitral tribunal may be appointed, irrespective of the arbitral proceedings on the merits being pending, with the power to award interim relief at the request of one of the parties.¹³ Third, interim measures can be obtained through state court proceedings if the requested measure cannot be obtained, or not in a timely manner, through arbitration.¹⁴ Only state courts can provide for pre-judgment attachment or precautionary seizure.

The provisions in the Dutch Arbitration Act regarding interim measures in arbitration are based on the strong and long-standing Dutch tradition of kort geding, which can be characterised as provisional or preliminary relief proceedings before the state courts. Through these proceedings, which can be initiated prior to the proceeding on the merits, a party can obtain provisional relief for the preservation of rights or a status quo. The interim measures obtainable through a kort geding are generally much broader than those typically available in other jurisdictions. They can include, for instance: enforcement of a contract, specific performance, freezing of assets, blocking of a share transfer, payment into escrow accounts or providing a bank guarantee. Courts provide for speedy and easy access, and generally show little hesitation in granting interim measures. When the requesting party can show that the requested interim measure is of a provisional nature and that, taking the interests of the parties into consideration, an immediate interim measure is required, the court is likely to award such measure. Once awarded, the requesting party is not required to initiate proceedings on the merits.¹⁵ The interim measure is enforceable regardless of whether further proceedings are initiated.

The stand-alone arbitral proceedings are a fairly unique and successful feature of NAI arbitration that has been incorporated in the revised Dutch Arbitration Act. Similar provisions were introduced in the 2012 ICC Arbitration Rules. However, there are a number of significant differences. The 2012 ICC Arbitration Rules enable parties to seek 'urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal' (article 29 and appendix V to the 2012 ICC Arbitration Rules). By contrast, the Dutch Arbitration Act merely requires that the interim measure requested is urgent. An advantage of the Dutch Arbitration Act therefore is that the parties do not need to demonstrate that the relief sought 'cannot await constitution' of the arbitral tribunal. Furthermore, the ICC emergency arbitrator can only issue an order, which is not an arbitral award. The Dutch Arbitration Act, however, allows the tribunal in summary proceedings to render an arbitral award, which can be declared enforceable simply by leave of enforcement granted by the competent state court. Finally, under the 2012 ICC Arbitration Rules, the ICC emergency arbitrator's order must be followed by arbitral proceedings on the merits at all times. Under the Dutch Arbitration Act, this follow-up is not compulsory. The party seeking urgent interim relief is not required to initiate arbitral proceedings on the merits. The parties may therefore use stand-alone arbitral summary proceedings as their only means of dispute resolution, and in fact do so in practice on a regular basis.

It should be noted that summary arbitral proceedings are only available when the seat of the arbitration is in the Netherlands. In contrast, interim measures can be obtained through the Dutch state courts if parties are bound by an arbitration agreement regardless of the seat of the arbitration.

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Footnotes

1. This new hearing centre is meant to serve various purposes, including (i) the further facilitation of international arbitration in the Netherlands while meeting the under capacity of the Peace Palace, (ii) the accommodation of the Dutch local division of the Unified Patent Court and (iii) the accommodation of the Netherlands Commercial Court.

2. The amendments to the Dutch Arbitration Act necessitated a revision of the Arbitration Rules of the Netherlands Arbitration Institute (see www.nai-nl.org/en/). With these new Rules the Netherlands Arbitration Institute has implemented some measures to speed up arbitral proceedings. Both the revised Dutch Arbitration Act and the new Arbitration Rules of the Netherlands Arbitration Institute apply to arbitral proceedings initiated on or after 1 January 2015.

3. For an extensive commentary on important elements of arbitration law in the Netherlands, see B van der Bend, M Leijten and M Ynzonides (eds), A Guide to the NAI Arbitration Rules: Including a Commentary on Dutch Arbitration Law, Kluwer Law International, 2009. A new edition, incorporating the revision of the Dutch Arbitration Act, is forthcoming.

4. Article 1020 DCCP. Restrictions may apply in cases concerning, for example, intellectual property rights, bankruptcy law and company law.

5. Article 1021 DCCP.

6. Article 1053 DCCP.

7. Article 1064 DCCP.

8. Article 1065(5) DCCP.

9. Dutch Supreme Court, 25 April 2009 (International Military Services/Iran II), NJ 2010/171, ECLI:NL:HR:2009:BH3137.

10. Article 1067 DCCP.

11. With the revision of the Dutch Arbitration Act, the legislator decided to hold on to the decision of the Dutch Supreme Court that – also in cases of enforcement of foreign arbitral awards in the Netherlands under the New York Convention – an appeal against the grant of leave to enforce is not permitted, and that the asymmetry in the right to appeal does not conflict with the principle of equality of arms under article 6 ECHR. See Dutch Supreme Court, 25 June 2010, case No. 09/02566, LJN BM1679, NJ 2012/55.

12. Article 1043b(1) DCCP.

13. Article 1043b(2) DCCP

14. Article 1022a DCCP.

15. An award may be rendered within a matter of days after submission of the request

Previously published in Global Arbitration Review’s EMEA Review 2016.

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