The Netherlands
A. LEGISLATION AND RULES
A.1 Legislation
There are no developments with respect to the Dutch laws on international arbitration.
A.2 Institutions, rules and infrastructure
In 2024, the Netherlands Arbitration Institute (NAI) celebrated its 75th anniversary with notable events on the next generation of disputes, the publication of the bundle ‘NAI 75 years of Going Dutch’, and the introduction of new NAI arbitration rules (“2024 Rules“).[1] With 70 new cases being filed in 2023, 68 cases pending as of 31 December 2023 and EUR 4 billion under dispute, the NAI has established itself as a cost-efficient alternative to ICC and UNCITRAL arbitration.
The 2024 Rules, which came into effect on 1 March 2024, aim to increase efficiency and expedite proceedings. The 2024 Rules also introduce a new platform for electronic communication and implement various modernizations in terms of sustainability, diversity and inclusiveness. Notable substantive changes include:
- The introduction of a regime of expedited proceedings for cases with a financial interest of up to EUR 1 million, applicable to arbitration agreements made on or after 1 March 2024, unless expressly excluded by the parties. Even if these criteria are not met, parties can opt for expedited proceedings. In the expedited proceedings a sole arbitrator will preside, and there will only be one hearing which is in principle conducted electronically. Additionally, each party is in principle entitled to submit just one written statement.
- The introduction of a standard case management conference at the start of the proceedings. The case management conference aims to streamline the procedure by front loading procedural aspects such as a discussion on the general interest of the claim(s), the option for expedited proceedings, the use of electronical tools, and the furnishing of proof. Additionally, arbitrators can order a midstream conference.
- The new default that allows the consolidation of claims arising from various arbitration agreements to be handled in a single arbitral proceeding, provided that the 2024 Rules apply and that consolidation is not excluded.
- The anonymized publication of out of court decisions on the challenge of arbitrators.
- A default that places the seat in Amsterdam, unless the parties agree otherwise. This rule facilitates access to the Netherlands Commercial Court of Appeal (NCCA) for setting aside proceedings, as section 1064a(1) DCCP stipulates that, subject to the parties’ express agreement, proceedings for the setting aside can be handled by NCCA, but only if the place of arbitration is in Amsterdam. The advantage of proceedings before the NCCA is that these can be conducted in the English language.
To make sure the arbitration agreement ticks all the boxes and the parties make the appropriate choices, the NAI has published a helpful tool that presents the user with various menu options resulting in a downloadable model clause that can be easily copied into an agreement.[2]
B. CASES
In 2024, the Supreme Court provided a ruling in a long-awaited matter concerning the binding force of mediation/arbitration step clauses (see B.1 below). The Supreme Court has also provided guidance on the interpretation of BIT treaties in accordance with article 31 of the Vienna Convention on the Law of Treaties (1969) (VCLT) (see B.2 below). The Court of Appeal in Arnhem-Leeuwarden has, furthermore, clarified that section 700(3) DCCP on Dutch prejudgment attachment does not prescribe a period for initiating exequatur proceedings (see B.3 below). Lastly, in case of arbitration agreements that provide for a seat outside of the Netherlands, the District Court of Amsterdam has confirmed that the jurisdiction for summary relief upon challenge, is limited to such cases where the relief sought would be objectively impossible to obtain in arbitration (see B.4 below).
B.1 Mediation clause in arbitration agreement[3]
In this judgment, the Supreme Court addresses whether a mediation/arbitration step clause can restrict early access to arbitration. The agreement between the parties, CSW and PPSB, included a mediation/arbitration step clause, which provided for a prior mediation to be conducted as an alleged prerequisite to initiating arbitration. The dispute between the parties arose in 2018, after which PPSB initiated arbitral proceedings without prior mediation. CSW invoked the step clause and requested a declaration of no jurisdiction or the issuance of an order to follow the agreed mediation process first. The arbitrator denied both requests and issued a judgment based on the merits of the case.
Following the arbitral proceeding, CSW initiated court proceedings at the Court of Appeal in the Hague to set aside the arbitration judgment (section 1065(1) DCCP), arguing that the mediation step clause was invalidly ignored. The Court of Appeal ruled that the step clause did not impose a binding obligation to mediate first and dismissed the claim. CSW filed an appeal with the Supreme Court.
The Supreme Court dismissed the appeal. The Supreme Court first clarified that a mediation step clause can be intended to either be binding or non-binding. Whether a mediation step clause is intended to be binding is a matter of interpretation of the contract. That will not just depend on the wording of the clause, but primarily on the meaning that the parties, in the given circumstances, could reasonably ascribe to the clause and what they could reasonably expect from each other in that regard (the famous Dutch Haviltex-standard). The fact that the agreement is conducted between professional parties and that the agreement and the resulting dispute are business related, does not automatically mean that the step clause should be interpreted to bindingly prescribe a mediation stepping stone. Even if a step clause prescribes mediation, the scope of that obligation, and thus the question of when a party who wishes to do so may terminate its cooperation in the mediation process, is also a matter of interpretation of the mediation clause. In any event, the application of the step clause should not result in an unacceptable impediment to the parties’ right of access to a court, as guaranteed by article 6 ECHR.
The Supreme Court further concluded that a judge (or arbitrator) may stay proceedings at the request of a party if a binding step clause is not adequately adhered to. Nevertheless, the judge or arbitrator is not obliged to do so. The court or arbitrator may decide not to stay the proceedings, for example because the case is too urgent, or because it seems unlikely that mediation will resolve the issue.
In this particular instance, the Supreme Court upheld the appeal court’s finding that the mediation step clause was nonbinding. Nevertheless, this case shows that mediation step clauses can be drafted to be binding and that a tribunal can order a stay to fulfil a mediation obligation. If the proceedings are stayed, the interpretation of the mediation clause in accordance with the Haviltex rule will also be relevant in determining when a party may unilaterally terminate its participation in the mediation process.
B.2 Crimea-related arbitration proceedings[4]
The Supreme Court issued a judgment in annulment proceedings initiated by the Russian Federation, related to an arbitration between the Russian Federation and NJSC Naftogaz of Ukraine and others (“Naftogaz“). The Supreme Court denied the annulment. The Supreme Court reached similar decisions in proceedings between the Russian Federation and JSC CB Privatbank (“Privatbank“), the Russian Federation and Aeropoort Belbek LLC (“Belbek“), the Russian Federation and Everest Estate LLC et al. (“Everest“).[5]
Naftogaz, Privatbank, Belbek and Everest Estate initiated arbitration proceedings before the Permanent Court of Arbitration in The Hague against the Russian Federation based on a 1998 BIT between Ukraine and the Russian Federation. In all cases, the arbitration tribunals issued interim and partial awards, finding that the Russian Federation had breached the BIT by expropriating the investments without compensation. The Russian Federation sought to set aside these arbitral awards by applications to the annulment court (in this case: the appellate court of The Hague), arguing (inter alia) that the BIT did not apply to Crimea and that the tribunals lacked jurisdiction.
One particular argument raised by the Russian Federation relates to the good faith interpretation of the BIT in accordance with article 31 of the Vienna Convention on the Law of Treaties (1969) (VCLT). The tribunals had assumed jurisdiction based on the BIT by determining that the expropriations fell within the scope of the BIT as these took place within the “territory” of the Russian Federation, referencing article 1(4) of the BIT. In a somewhat morbid twist, the Russian Federation claimed the tribunal could not assume jurisdiction because it could not rule that Crimea was Russian “territory” (and rule on ‘Russian expropriation’), as the word “territory” should be understood to mean “sovereign territory.” A ruling on whether Crimea could or should be considered Russian sovereign territory encroach on a heavily debated political subject, which went far beyond the tribunals’ remit, according to Russia. The tribunals, in turn, considered that the word “territory” should be interpreted within the meaning of article 31(1) of the VCLT, which directs that the treaty be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose. Among other considerations, the tribunals considered that the “ordinary meaning to be given to the terms” should not be cut down or diluted by importing the concept of “lawful” of “sovereignty” where the parties have chosen to use the word “territory” without any such limitation.
Similar arguments were put forward by the Russian Federation before the Appeal Court of The Hague and the Supreme Court, to no avail. The Supreme Court underlined that article 31 of the VCLT indeed determines that the treaty be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose and that the appellate court correctly determined that the BIT provided no grounds to assume that the effect of the BIT should be limited to “sovereign territory,” which would also seem to run contrary to the intent behind the BIT. The meaning of the word “territory” in the BIT, within the interpretation of article 31 of the VCLT, includes areas over which a state exercises effective control, the treaty parties intended the BIT to apply broadly to protect investments regardless of changes in territorial control, and the Russian Federation exercised effective control over Crimea since its annexation in 2014. Because of the above, the appellate court was justified in ruling that there was no reason to believe that Crimea does not fall within the “territory” of the Russian Federation as referred to in the BIT. This is not delimited by the fact that, at the time of the conclusion of the BIT, the contracting parties did not foresee the territorial conflict that has since ensued.
B.3 Dutch freezing orders in relation to the (timing of) exequatur proceedings[6]
This case relates to prejudgment attachment after an arbitral award, but before an exequatur (or: leave to enforce) has been granted. Section 700(3) DCCP stipulates that, unless a principal claim has already been initiated at the time of granting the attachment, the attachment is granted on the condition that “the claim on the merits” is initiated within a period determined by the interim relief judge. The initiation of arbitral proceedings qualifies plainly as a claim on the merits. Prejudgment attachment can also serve to freeze assets in the interbellum between award and exequatur. The question then becomes how the ‘claim on the merits period’-rule should be interpreted in this context, with some interim relief judges in the past set a period within which an exequatur proceeding should be initiated. This was also the case in this instance.
BBC and PPE entered into an agreement in 2023 for the transport of cranes. The agreement provided for arbitration in London, subject to English law. BBC initiated arbitral proceedings in June 2023 and filed its claim one month later. The arbitrator ruled in favor of BBC’s claim in December 2023. Subsequently, BBC wanted to enforce the judgment in the Netherlands. Because enforcement would first require exequatur proceedings, BBC by way of interim relief requested a prejudgment attachment with three Dutch banks with whom PPE was expected to hold accounts. The interim relief judge of the District Court of Gelderland provided leave. The court, however, imposed the condition that BBC should initiate exequatur proceedings within four weeks following the judgment. BBC filed an appeal.
Unlike the court in first instance, the Court of Appeal of Arnhem-Leeuwarden decided that the initiation of foreign arbitration proceedings (which had already been completed) fulfilled the merits-claim requirement for prejudgment attachment. Moreover, the Court of Appeal considered that Dutch law (interpreted in conjunction with the New York Convention (1959)) does not prescribe that exequatur proceedings are initiated within a certain period. Considering this, it would be unnecessary to also require that exequatur proceedings were initiated within a certain period; if the attachments were successful and BCC wished to enforce them, it must first seek permission for enforcement in accordance with section 1075 DCCP (which requires an exequatur). Until permission was obtained, the attachments remained in place and PPE could, if necessary, seek their lifting in summary proceedings. Therefore, PPE’s interests were not harmed by the absence of a time limit.
B.4 No court jurisdiction due to ambiguity in arbitration agreement[7]
In this case, the District Court of Amsterdam addressed the question of whether ambiguities in an arbitration agreement are sufficient for the Dutch civil court to accept jurisdiction in accordance with section 1074d DCCP. Section 1074a to section 1074d DCCP provides jurisdictional rules for summary proceedings before a civil court in the event of an arbitration agreement that is conducted outside of the Netherlands. Section 1074d DCCP determines that if the jurisdiction of the civil court is challenged, it can only assume jurisdiction in the event that the injunction requested cannot also be obtained in arbitration at all or in such time that it is an effective remedy. In this specific instance, the court was requested to assume jurisdiction because the arbitration clause did not specify an arbitration institution. The claimant argued that, because this was not specified and an institution would presumably need to be agreed upon between parties, it would be impossible to timely obtain injunctive relief.
The case concerned a dispute between Subway and an agent, which entered into a Business Development Agent Agreement (BDAA) in 2009. The BDAA stipulated that any dispute should be settled in arbitration and that the place of arbitration should be New York, determining that “the arbitration shall be administered by an arbitration agency, such as the American Arbitration Association (AAA) or the American Dispute Resolution Center, in accordance with its administrative rules […]”. Subway terminated the BDAA in 2023. As tends to happen, the agent disagreed with the termination and informed Subway about its intention to initiate arbitral proceedings before the NAI (assumingly in the Netherlands). Subway argued that the arbitration could only take place in the United States. One month later, the agent initiated summary proceedings at the Amsterdam district court.
The agent argued that the interim relief judge had jurisdiction based on section 1074d DCCP. Although the wording of the BDDA and the arbitration clause was clear regarding the parties’ intention to resolve their dispute through institutional arbitration, it did not specify which institution should handle the dispute. Instead, the arbitration clause allowed the parties to choose between various, and presumably all, arbitration institutes. Based on this ambiguity, and Subway’s insistence on arbitration in the United States (without commitment to a specific institution), the agent argued that it was impossible to obtain the required relief in time through arbitration.
The interim relief judge responded in the negative and ruled that the court lacked jurisdiction to assume jurisdiction based on the agent’s claims. The court ruled that it was not impossible for the agent to obtain summary relief in arbitration, as the arbitration agreement presumably provided sufficient grounds to initiate proceedings before the AAA (referenced as an example in the Agreement) or the NAI (albeit in New York) and the rules of both institutes allowed for summary proceedings and relief. There must be more substantial, objective reasons why the requested decision cannot be obtained in time through arbitration for a party to successfully invoke section 1074d DCCP. Such a reason may exist if the applicable arbitration rules make it impossible to obtain a judgment in time. In this specific instance, that was not the case.
[1] https://nai.nl/2024-nai-arbitration-rules/
[2] https://nai.nl/draft-a-model-clause/.
[3] Supreme Court 12 July 2024, ECLI:NL:HR:2024:1078.
[4] Supreme Court 6 December 2024, ECLI:NL:HR:2024:1810
[5] Supreme Court 6 December 2024, ECLI:NL:HR:2024:1813; Supreme Court 6 December 2024, ECLI:NL:HR:2024:1807; Supreme Court 6 December 2024, ECLI:NL:HR:2024:1812.
[6] Court of Appeal Arnhem-Leeuwarden 12 March 2024, ECLI:NL:GHARL:2024:1754.
[7] District Court of Amsterdam 21 February 2024, ECLI:NL:RBAMS:2024:1268.
