On 16 December 2017 the Dutch government published a proposal for the introduction of state courts, to be located in Amsterdam, for litigation of international commercial disputes in the English language. This follows on from earlier proposals from the Dutch judiciary. The proposal is expected to be adopted and the courts are expected to open in the course of 2017.
The key features of the proposal are:
- The parties may agree to litigate in English at the Amsterdam District Court or Court of Appeal. That agreement must be explicit, i.e. can not be based on a reference to a clause in general conditions. The agreement may be reached before or after the dispute arose and even while normal litigation in the Dutch language is already pending.
- The English language equivalent of the District Court will be called Netherlands Commercial Court, while the English language equivalent of the Court of Appeal will be called Netherlands Commercial Court of Appeal (NCCA).
- The proposal even envisages the possibility to obtain interim relief (kort geding) and other forms of provisional measures (e.g. pre-action hearing of witnesses) in English before those courts.
- The subject matter jurisdiction of the NCC(A) will be limited to international commercial disputes and excludes disputes regarding employment, agency, lease, consumers and small claims. The NCC(A) could also decide disputes over enforcement of domestic and foreign court judgments and arbitral awards, as long as the parties have agreed so explicitly.
- Amsterdam was chosen as location for the court as this city is seen as the financial hub of the Netherlands, with headquarters of many multi-nationals and where the internationally oriented law firms have become concentrated. While the legal seat of the NCC(A) will be in Amsterdam, these courts will draw the most qualified and experienced judges from all over the Netherlands. The NCC(A) will be housed in the brand new court facilities at IJdok 20.
- To cover the cost of these services the court fees will be higher than normal: for main proceedings at the NCC €15,000 and at the NCCA €20,000 and for interim relief proceedings €7,500 at the NCC and €10,000 at the NCCA.
While it may seem simple to allow litigation to take place in a different language, the proposal shows that many aspects need to be addressed, like intervention by third parties and the language to be used to dispute jurisdiction of the NCC (Dutch). For some aspects translation into Dutch is deemed unavoidable, e.g. if the judgment must be recorded in the land register or in case of a further appeal to the Supreme Court. The courts have had a major role in developing the proposal and it is well thought through, leaving the judges significant discretion to deal with any other practicalities.
The proposal seeks to offer international business a solution for the increasing demand for practical and cost effective litigation in the English language, and to thereby further support international trade with the Netherlands. It is expected to reduce the time and cost of resolving disputes and that is why the explanatory note openly challenges arbitration as an alternative to state court litigation.
The Dutch government anticipates some 100 cases will be heard by the NCC per year and some 25 per year at the NCCA. We, however, expect the NCC(A) to actually become more popular than that, as it would in many matters be much more practical and cost effective to conduct the proceedings in the English language, despite somewhat higher court fees. It is expected that the NCC(A) will in due course publish a recommended forum clause.
Given the Netherlands' important position as a gateway to Europe and its investor friendly climate, this is an important development.
Many foreign companies choose to structure via the Netherlands to take advantage of its tax and investment regimes/treaty protections, location, EU free movement benefits, advanced Infrastructure and international outlook. Dutch law is chosen as the governing law of many international contracts and Dutch courts are often chosen as the preferred forum. The Dutch court system is known for its efficiency, relative speed and relatively low costs. The Netherlands is already an important jurisdiction for (international) cartel damages claims and current reform in the possibilities for collective action will make the Netherlands even more popular. With Brexit on the horizon, options to litigate in English certainly make litigating in the Netherlands all the more attractive.