Snapshot: bringing complex commercial claims in Netherlands

Bringing a claim – initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

A claimant may consider a prejudgment attachment on the defendant’s assets to secure the execution of a successful judgment. Although the means for discovery under Dutch law are less far reaching than in the US and the UK, Dutch law provides for the possibility of a pre-trial witness hearing in order to verify the facts in anticipation of initiating litigation. On the basis of the witness statements, the potential claimant can decide whether or not to pursue the claim. On a final note: the party found to be in the wrong by the court is usually ordered to pay the adverse costs (court registry fee and attorney’s fees). However, such orders do not cover the actual costs. In civil cases the attorney’s fees are calculated on the basis of a court-approved scale of costs, which covers only a fraction of the actual attorney’s fees incurred.

Establishing jurisdiction

How is jurisdiction established?

The jurisdiction of first instance courts over commercial disputes is mainly divided between the district courts and the subdistrict courts. The latter have exclusive jurisdiction over matters with a quantum of maximum €25,000 and in certain subject matters such as employment law and tenancy law (without maximum as to quantum). The Enterprise Chamber of the Amsterdam Court of Appeal, a chamber specialising in corporate law disputes, has first instance jurisdiction (and some exclusive competences) to intervene in specific corporate law matters. The Court of the Hague has a chamber specialised in intellectual property matters which has exclusive jurisdiction over certain intellectual property disputes.

Parties can agree to take their international (complex) commercial disputes before the Netherlands Commercial Court (NCC), which is a chamber within the Amsterdam District Court and the Amsterdam Court of Appeal. The entire proceedings (first instance and appeal) before the NCC (including the judgments) are conducted in English. The Court of Rotterdam has a chamber specialised in trade and shipping disputes that also offers the parties the possibility to conduct the proceedings (partially) in English.

Jurisdiction over foreign parties is established by the Dutch courts on the basis of European regulations and international conventions or treaties. If these do not apply, the Dutch court must apply the Dutch rules of international private law laid down in the Dutch Code of Civil Procedure (DCCP) to establish whether it has jurisdiction.

The most important EU regulation on jurisdiction in civil and commercial cases is Regulation (EU) No. 1215/2012, which applies in the event that a defendant is domiciled in an EU member state or if one of the exclusive grounds of jurisdiction applies. The most common exclusive ground of jurisdiction is a choice-of-court agreement between the parties for a court in an EU member state. In absence of any exclusive grounds of jurisdiction, the key principle is the ‘home court’ rule: the defendant must be sued before the court of the jurisdiction of his domicile. This principle also applies under the Dutch rules of private international law. Both EU and Dutch law furthermore contain alternative competence rules, for instance, in contractual matters on the basis of the place of performance of the obligation in question or in matters of tort on the basis of the place of the harmful event or the place of the damage. An important rule under both EU and Dutch international private law in the event of multiple defendants is that once a court has established jurisdiction over one of the defendants, this court also has jurisdiction over the other defendants in the same proceedings, provided that the claims against the various defendants are connected in such a way that this justifies a joint hearing before the same court for efficiency reasons.

If proceedings involving the same cause of action and between the same parties are brought in the courts of different EU member states, any court other than the court first seised must stay its proceedings until such time as the jurisdiction of the court first seised is established. Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised must decline jurisdiction in favour of that court. The same principle applies under the Dutch rules of international private law. The Dutch court must decline jurisdiction if the case is already pending before a court in a non-EU jurisdiction whose judgment can be recognised and enforced in the Netherlands.

Preclusion

Res judicata: is preclusion applicable, and if so how?

Preclusion applies under Dutch law to the extent that judicial findings contained in a judgment have a binding effect in other proceedings before Dutch courts. The preclusive effect is that the judicial findings with regard to a certain claim are to be considered as a fact in a second suit between the same parties regarding the same claim, and the preclusive effect may lead to a dismissal of such new action.

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

Whether foreign laws apply is determined by the court on the basis of rules of international private law, as laid down in the Dutch Civil Code (DCC) and EC Regulations. A contractual choice of law in agreements between the parties or the application of international law on contracts (for instance Regulation (EC) No. 593/2008) or extra-contractual liability (for instance Regulation (EC) No. 864/2007) may for example result in the Dutch courts having to apply foreign law to determine issues being litigated before them. This only relates to the merits of the case; procedural issues are governed by Dutch law. The parties must provide the Dutch court with information on the applicable law (usually by submitting written legal opinions on foreign law aspects, by introducing experts on foreign law to the oral hearing, or by requesting the court to appoint an expert to advise the court on foreign law aspects). The Dutch courts can also request information on applicable foreign laws from the competent authority in the jurisdiction concerned. In 2019, the Netherlands Commercial Court (NCC) was created as part of the Dutch court system. The key principle of the NCC is that proceedings are conducted in English and that judgments are rendered in English. A matter may be submitted to the NCC in the event: (1) the Amsterdam District Court or Amsterdam Court of Appeal has jurisdiction on the basis of a choice of forum; (2) the parties have expressly agreed in writing that proceedings will be in English; (3) the action is a civil or commercial matter within the parties’ autonomy; and (4) the matter concerns an international dispute (which is the case if foreign law applies or at least one of the parties is domiciled outside the Netherlands).

Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

A claimant may consider a prejudgment attachment to secure the execution of a successful court decision. Under certain circumstances a defendant may claim security for costs.

Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

The request for a prejudgment attachment will be judged by the president of the competent court, in most cases in ex parte proceedings. The test for awarding such request is relatively low, applying a marginal test. The requirements as to the request for an attachment may vary depending on the nature of the assets subject to such request. The request must in any event contain the nature and object of the attachment, the nature and quantum of the claim and its legal basis. If proceedings have not been initiated, the claimant is obliged to initiate the proceedings within a certain period of time after the prejudgment attachment is executed, usually within 14 days (although the court may extend this term upon the claimant’s request). If the claimant fails to timely initiate the proceedings, the attachment will be lifted automatically. If the outcome of the proceedings is unsuccessful for the claimant (the court denies the claim), the attachment will also be lifted upon expiration of the term to lodge an appeal against the court decision.

The Review of Attachment and Enforcement Law Act, which entered into force in three stages (1 October 2020, 1 January 2021 and 1 April 2021), provides extra protection for impecunious debtors in order to guarantee a subsistence minimum. For creditors with an enforceable judgment, it is now possible to have the bailiff request banks to provide bank account information on the debtor. This was already possible in the case of a European Account Preservation Order on the basis of Regulation (EU) No. 655/2014.

Since 1 April 2021, pre-judgment attachment on vehicles can be done by the bailiff by way of an entry in the registry of the Netherlands Vehicle Authority.

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

There are no general requirements for pre-action conduct before commencing civil proceedings in the Netherlands, such as, for instance, a ‘letter before action’. When ‘mismanagement proceedings’ are initiated against a Dutch company before the Enterprise Chamber of the Amsterdam Court of Appeal, a court specialising in corporate law disputes, such proceedings require a letter before action addressed to the company’s management detailing the objections against the company’s policy and affairs. An interest group that aims to start a class action should make sufficient efforts to achieve the claim’s object in negotiations with the defendant prior to summoning the defendant. The consequence of non-compliance with such pre-action conduct is inadmissibility of the claim. In practice, such inadmissibility defences rarely succeed.

Other interim relief

What other forms of interim relief can be sought?

Interim relief is usually sought by means of summary proceedings heard by the president of the competent court. Such proceedings can be initiated in urgent matters. As long as the measure is of a provisional nature, various remedies are available. The most frequently requested remedies are of a monetary nature (debt payment or advance payment of damages, provided that the monetary claim is undisputed or easy to establish), or injunctions (for instance, to comply with a contractual obligation), or an order to desist from making certain statements or performing certain acts. Non-monetary injunctions can be enforced with a penalty. Although decisions in summary proceedings are strictly provisional and can generally be overturned in proceedings on the merits on the same matter, in practice the outcome of summary proceedings can be of a final nature. With some exceptions (eg, in intellectual property cases), the parties to summary proceedings are not obligated to initiate proceedings on the merits after a summary judgment is rendered.

Other examples of interim relief are the seizure of evidence (through the same route as described for a (prejudgment) attachment) and the pretrial witness hearing.

Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

There are no pre-action requirements to engage in mediation as a form of alternative dispute resolution (except when the parties have contractually agreed thereto). During the course of the proceedings, Dutch courts often actively encourage mediation, however, the parties are free to choose whether or not to engage in mediation, and there are no legal consequences for failing to do so.

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

The court registry fees to be paid by a natural person being a defendant are of a lower amount than the court registry fees to be paid by a corporation being a defendant.

Class actions

Are any of the considerations different for class actions, multiparty or group litigations?

Yes, there are certain additional considerations that apply in case of collective actions. The entity bringing a collective action must be sufficiently representative. A court will also assess whether the entity is capable of properly safeguarding the interests it represents and whether the interests of the persons that are being represented in the action are sufficiently similar. A representative entity will not be able to bring a collective action unless the representative entity has reached out to the defendant and made a reasonable attempt to settle the case.

On 1 January 2020, the Mass Claims Settlement Act in Collective Action (WAMCA) entered into force. The provisions of the WAMCA apply to collective actions regarding events that took place on or after 15 November 2016 and that have been initiated on or after 1 January 2020. The WAMCA introduces additional requirements with respect to representative entities bringing a claim. The representative entity must:

  • have a non-commercial objective;
  • meet certain governance requirements;
  • have sufficient resources to conduct the proceedings;
  • have sufficient control over the legal action;
  • have an accessible internet page with information about its governance and the collective action; and
  • have sufficient experience and expertise to conduct the proceedings.

 

A representative entity can only bring a collective action if the claim has a sufficiently close relationship with the Netherlands. The representative must register the legal action in a central register within two days of filing the writ of summons.  

A draft bill amending the WAMCA to transpose Directive (EU) 2020/1828 on Representative Actions for Consumers into Dutch law is currently being considered by the legislator. The WAMCA already provides for a representative action. Therefore, a very limited adaption is needed. The Directive imposes some more substantive requirements and conditions on this action, such as the financing of the action. The Directive also stipulates that each member state must draw up a list of organisations that can initiate collective actions in another member state. Those organisations must have been involved in consumer protection activities for at least 12 months. This is not a requirement under the WAMCA, which allows setting up an ad hoc entity for the purpose of the class action.

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

There are no rules preventing third parties from funding the cost of litigation or agreeing to pay adverse costs. In case of a collective action, the court will review the third-party funding arrangements when determining whether the interests of the persons being represented are sufficiently safeguarded. Under the WAMCA, a representative entity must have sufficient control over the legal action. This requirement will limit the influence the third-party funder can have on the legal action. A draft bill amending the WAMCA to transpose Directive (EU) 2020/1828 on Representative Actions for Consumers into Dutch law is currently being considered by the legislator. The Directive imposes extra requirements with regard to the financing of the collective action to avoid a conflict of interest between the third-party funder and the persons being represented. For example, third-party funding is prohibited in a collective action against a competitor of the third party or against someone on whom the third party depends.

The Dutch Claim Code 2019 includes a principle on the relationship between a representative entity and a third-party funder that provides that the representative entity should operate independently from the third-party funder and that the funding conditions should not conflict with the collective interest of the persons that are being represented by the representative entity.

Contingency fee arrangements

Can lawyers act on a contingency fee basis? What options are available? What issues should be considered before entering into an arrangement of this nature?

Pursuant to the rules of the Dutch Bar Association, Dutch lawyers are not allowed to work on the basis of contingency fees that depend entirely on the outcome of the case. Lawyers are allowed to enter into a fee arrangement that provides that the fees will be increased in the case of a successful outcome as long as the standard hourly rates charged during the case cover the actual costs incurred and provide a modest compensation to the lawyer instructed.

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