Dispute resolution in the Netherlands, an attractive alternative

The Netherlands is a tested and proven jurisdiction which for decades has been used by Kazakh companies and entrepreneurs as an investment hub and a gateway to Europe. 

For dispute resolution Kazakh companies also often make a choice for jurisdiction of a foreign court, e.g.  the United Kingdom or Switzerland. This is especially the case when a foreign counterparty is involved. Although these jurisdictions certainly provide advantages as a forum for disputes, the Netherlands offers a high quality, efficient and cost-effective alternative as well. 

Procedural aspects
The main methods for dispute resolution can be distinguished, i.e  proceedings before the state courts and arbitration by an arbitral tribunal.

Under the EU Brussels I Regulation, court judgements rendered in the Netherlands are recognised and enforceable in all Member States of the European Union and the European Economic Area (the EU and Iceland, Liechtenstein and Norway). If judgements must be enforced in countries outside the European Economic Area, arbitration is often preferable above resolution by the state courts. This because the Netherlands is also a contracting state to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), thereby allowing enforcement of arbitral awards rendered in the Netherlands in all 159 states that have acceded to that convention, including Kazakhstan since 1995.

The legal basis for arbitration between commercial enterprises and states can often be found in so-called BITs (bi-lateral investment treaties). The Netherlands has concluded a large number of BITs, including the one with Kazakhstan, dated November 27, 2002.

Dispute resolution in the form of arbitration requires mutual agreement of parties expressed in (the arbitration clause of) an agreement.  This agreement can be executed either in advance, e.g.  included in a joint venture agreement, or afterwards once a dispute arises.

If arbitration has been mutually agreed, the arbitration must be organized in accordance with the conditions and under the arbitration rules defined by the parties. In the absence of agreed conditions or rules, the parties may decide on ad hoc arbitration but then still an agreement between the disputing parties should be in place.

Often in practice the arbitration clause recommended by the International Chamber of Commerce (ICC) is used:
“All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.” 

Alternatively, the arbitration clause recommended by the Netherlands Arbitration Institute (NAI) may be added to the agreement:
“All disputes arising in connection with the present agreement, or further agreements resulting therefrom, shall be settled in accordance with the Arbitration Rules of the Netherlands Arbitration Institute.”

We advise parties to also stipulate in the arbitration clause:

- The law governing the contract;
- the number of arbitrators;
- the place of arbitration; and/or
- the language of the arbitration.

Attaching assets
An attractive aspect typical for Dutch law is the possibility to levy a provisional attachment on the assets of a foreign party located in the Netherlands. Since a large number of internationally active companies have a holding, finance or operational company in the Netherlands, and since a lot of goods pass through the Dutch ports, it might be attractive to attach a foreign debtor’s assets in the Netherlands. An added advantage may be that in the absence of a forum choice made by the parties, a ‘saisie foraine’ gives the Dutch courts jurisdiction to resolve the dispute between the parties. 

The NCC
A potentially interesting new development is the proposed institution of the Netherlands Commercial Court! It appears it will soon be possible in the Netherlands to litigate international trade disputes in the English language. To this end, on 16 December 2016 a draft bill was submitted for public consultation. The proposal introduces a new chamber for international trade disputes of the Court of Amsterdam - the Netherlands Commercial Court ("NCC") - and of the Amsterdam Court of Appeal - the Netherlands Commercial Court of Appeal ("NCCA") – that may give judgments in English in these disputes. An important condition is that parties must have expressly agreed on the jurisdiction of the NCC.

In short, the draft bill contains the following:

1. In principle, the language of litigation at the NCC / NCCA is English;
2. litigation at the NCC / NCCA is only open to parties who have expressly agreed thereto, an international dispute is involved and the Amsterdam Court is competent to hear the dispute;
3. small claims court cases (‘kantonzaken’) are excluded. This means, among other things, that for claims up to EUR 25,000, but also for rental disputes and labor disputes that belong to the jurisdiction of the small claims court no litigation at the NCC/NCCA is possible;
4. if litigation at the NCC / NCCA is possible, the judge in preliminary relief (‘de voorzieningenrechter’) of the Court of Amsterdam is also authorized to handle those cases in English that have been imposed by law on this judge (such as summary proceedings or the request to grant leave for attachment or claims for an advance on claims);
5. in principle, the judgment is in English, except when - at the request of the parties - the proceedings were conducted in the Dutch language or when the judgment follows on a defense that the NCC/NCCA has no competence to hear the case;
6. for litigation before the NCC/NCCA somewhat higher court fees will apply than for ordinary legal proceedings in the Dutch language.

The Peace Palace, founded in The Hague in 1913, houses the International Court of Justice and the Permanent Court of Arbitration. Awards issued by the Permanent Court of Arbitration are considered to have a high authority. Furthermore, The Hague houses the International Criminal Court, the International Criminal Tribunal for the former Yugoslavia, and the Iran–United States Claims Tribunal.

Besides these resident institutions, The Hague, Amsterdam and Rotterdam are also often used for ad hoc arbitrations, also because use may be made of the facilities of established institutions and the excellent infrastructure connecting the Netherlands with the rest of the world.

Summary
In summary, the Netherlands may be a very convenient location for the resolution of disputes involving Kazakh business community or other international parties. The lawyers of Buren N.V. will with pleasure advise you whether dispute resolution in the Netherlands is a good option for you and how you can secure this in relation to your contract partners.