The New Dutch Arbitration Law
Today, the new Dutch arbitration law (hereafter ‘the new law’) has been approved by the Dutch Senate. The date of entry into force shall be determined by the Minister of Security and Justice by royal decree. We assume that this will be 1 January 2015. The modernisation of the Dutch arbitration law will have an impact on drafting arbitration clauses for Netherlands-seated arbitrations and is expected to lead to amendments of arbitration rules of arbitral institutions based in the Netherlands. An unofficial English translation of the new law can be found here and a translation of a comparison between the new law and the current Dutch arbitration law can be found here.
The new law aims to modernise the current Dutch arbitration law
The Netherlands has been at the forefront of international arbitration for the last two centuries. It is the home of, inter alia, the Permanent Court of Arbitration, the Iran-US Claims Tribunal, P.R.I.M.E. Finance, the Netherlands Arbitration Institute (NAI) and numerous other private arbitration institutions.
The 1986 Dutch arbitration law was one of the most modern national arbitration laws of its time, aiming to facilitate international harmonisation and unification of arbitration law to make arbitration in the Netherlands both nationally and internationally attractive. Upon entry into force, the Dutch arbitration law will be aligned with the revised UNCITRAL Model Law of 2006. Since developments in the field of arbitration have been significant during the last several years, the new law reflects the Dutch ambition and ability to keep in step with those developments and to retain its position as an attractive venue for domestic and international arbitration.
The key amendments to the current Dutch arbitration law of 1986 are set out below. During the legislative process, few changes were made to the original legislative proposal as submitted on 16 April 2013. See our client alert on the said proposal here.
The key amendments that have been adopted after the submission of said legislative proposal have been highlighted below in bold.
Important amendments relate to, e.g.:
The length of annulment proceedings
The Court of Appeal – rather than the District Court – will have jurisdiction over annulments of arbitral awards. This aims to limit the time and costs for parties of annulment proceedings after having completed arbitration proceedings. Under the new law, parties may further limit the length of setting aside proceedings by agreeing to exclude appeal in cassation before the Supreme Court against a judgment of the Court of Appeal. Appeal in cassation cannot be excluded in case one of the parties to the arbitration is a consumer.
The three-month deadline for the application to set aside an award will be triggered by the sending of the arbitral award to the parties or, if applicable, by the registration of the award with the registry of the District Court. The legislator has, however, decided that it will also retain the other trigger for the setting aside term currently applicable: the service of the award together with a leave for enforcement on a party, irrespective of whether the deadline pursuant to the
other trigger(s) has lapsed.
The new law also introduces the possibility for the Court of Appeal to suspend the annulment proceedings and submit the matter for consideration by the arbitral tribunal by reopening the arbitral procedure or taking other measures.
Length of enforcement proceedings foreign arbitral awards limited
With respect to arbitrations seated outside the Netherlands, the Court of Appeal – rather than the President of the District Court – will have jurisdiction to decide on requests for leave of enforcement of the arbitral award. Only in case such request is rejected, cassation appeal before the Supreme Court is possible. The appeal in cassation term is three months after the date of the judgment of the Court of Appeal.
For awards rendered in arbitral proceedings with a seat in the Netherlands, the enforcement procedure remains the same. This means that the President of the District Court will have jurisdiction over requests for leave of enforcement. In case such request is denied, such judgment will be eligible for appeal to the Court of Appeal and subsequently – in case the Court of Appeal also denies the request – cassation appeal.
Revival of the jurisdiction of the state Court
In the case of an annulment of an arbitral award, the jurisdiction of the state court will only be revived if the arbitral award has been annulled on the basis of lack of a valid arbitration agreement, unless the parties have agreed otherwise.
Parties may opt for institutional challenge proceedings
Parties will have the option to appoint an independent third party that will be competent to decide on a challenge of an arbitrator. Thus, parties may elect to submit challenge proceedings to an arbitral institute.
Assistance of the Dutch state Court in foreign arbitration proceedings
A party will be able to request the assistance of a Dutch state Court with respect to foreign arbitration proceedings (i.e. arbitration proceedings seated outside the Netherlands), e.g. for interim measures or a preliminary witness examination. In case a party invokes before a state Court the existence of an arbitration agreement before submitting a defence, such Court shall only declare that it has jurisdiction in case the requested relief cannot be obtained, or cannot be
obtained in a timely manner, in arbitral proceedings. The Dutch state Court may not decide on the validity of such arbitration agreement.
Provisional measures in (separate) arbitration proceedings
The new law also introduces the possibility for a party to request provisional measures in pending arbitral proceedings. The duration of such measures will not, by operation of law, be limited to the duration of the arbitral proceedings, but may be determined by the arbitral tribunal in its own discretion. Parties cannot exclude the authority of the tribunal to order interim measures. This possibility is a supplement to the current option for parties to agree to give a separate arbitral tribunal the authority to act as emergency arbitrators. A party may request the emergency arbitrators for provisional measures, without the requirement for an arbitral procedure on the merits to be pending.
Decisions rendered as a result of a request for interim measures by such arbitrators will qualify as an arbitral award, unless the tribunal determines otherwise.
Consolidation of arbitral proceedings
Parties may nominate a third party to decide on a party’s request to consolidate Netherlands seated arbitration proceedings. Previously, this was an exclusive authority of the President of the District Court of Amsterdam. If so agreed by the parties, such nominated party may also decide on a request to consolidate Netherlands seated arbitration proceedings and arbitration proceedings with a seat outside the Netherlands.
Greater power of the parties to shape the arbitration procedure
Overall, it is noteworthy that the new law provides parties with broader possibilities to derogate by contract from the arbitration law in the Dutch Code of Civil Procedure (DCCP), resulting in greater power to the parties to shape the arbitration procedure as they wish. This may also make it more attractive for parties to agree on instituting arbitration in the Netherlands.
Parties may, for example, agree:
- on an arrangement in relation to the rules of evidence
- on the issue of whether the arbitral award should be deposited with the registry of the Court within whose district the seat of arbitration is situated
- on the possibility of an arbitral appeal against an arbitral award
- to waive the right to appeal in cassation in annulment proceedings
- to deviate from the quorum required for arbitrators to be able to render a decision
- to exclude the possibility of an oral presentation by the parties to the arbitral tribunal
- to exclude the authority of the arbitral tribunal to (i) order the appearance of a witness or expert, (ii) order an interim measure or (iii) order for a discovery of records by a party and (iv) order a third party to join or intervene in the arbitral proceedings.
The new law also provides for more flexibility. For instance, the tribunal can designate one of its members to hold a hearing at any place within or outside the Netherlands, unless agreed otherwise by the parties.
Use of electronic means
The new law allows for information (e.g. notices or requests for action) to be transferred through the use of electronic means, provided the arbitral tribunal has approved the use of such electronic means and unless (one of) the parties to the arbitration has opted out of the use of such means, provided the parties have agreed to such opt-out possibility.
Interruption of statutory period of limitation
Statutory periods of limitation for claims governed by Dutch law will also be interrupted by the initiation of arbitral proceedings in which the arbitral tribunal has declined jurisdiction. A new statutory period of limitation will start on the day following the date of the award. Such new period will be the same as the original statutory period of limitation, but not longer than five years.
Validity of arbitration agreements
An arbitration agreement will be valid, in case it is valid:
- pursuant to the law that the parties have elected to govern the arbitration agreement
- pursuant to the law of the seat of arbitration; or
- in case no choice of law has been made, the law that is applicable to the (underlying) legal relationship (e.g. the contract) to which the arbitration agreement relates.
Limitation of a state or a state entity to invoke national law to escape an arbitration agreement
A state or state entity that is a party to an arbitration agreement cannot invoke its national legislation to dispute its authority to enter into such agreement or the arbitrability of the dispute in case the counterparty to the arbitration agreement did not and should not have known about such legislation.