On 1 October 1838, the legal basis for arbitration in the Netherlands was implemented in Book III of the Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering – “Rv”. This remained more or less unchanged until 1986 when the 1986 Arbitration Act (the “Act”) was adopted and came into force on 1 December 1986. The Act is set out in Book IV of the Code of Civil Procedure.

The Act is quite progressive, and is designed to promote the Netherlands as a seat for international arbitration. The UNCITRAL Model Law on Commercial Arbitration has clearly influenced the drafting of the Act in view of the emphasis placed on inter alia party autonomy. The Act contains a comprehensive set of rules for arbitration in the Netherlands and some articles regulating arbitration outside the Netherlands. Please note that the Netherlands Antilles and Aruba adopted their own legislation with respect to arbitration, which is also based to a large extent on the UNCITRAL Model Law on Commercial Arbitration. This chapter regarding arbitration in the Netherlands does not address arbitration on the Netherlands Antilles and Aruba.

Every arbitration that takes place in the Netherlands is subject to the Act, even when the parties involved are foreign. The regulations contained in the Act often apply subject to the agreement of the parties and there is considerable scope for the parties to formulate their own arbitral procedure (most commonly by adopting a standard set of arbitration rules promulgated by a domestic or international arbitration institution, as appropriate).

One peculiarity of the Act is that in a number of cases the President of the District Court may be called upon to assist with the conduct of the arbitration. One such instance is where the parties have failed to reach agreement on the number of arbitrators. In such a case, the President of the District Court may be petitioned by either party to make a ruling. There is further scope to make applications to the President of the District Court in other cases, such as for the appointment of an arbitrator, the removal of an arbitrator, the examination of an unwilling witness, or the granting or refusal of an enforcement order. In many ways the President’s role is akin to that of an arbitral institution and in the greater part any such interference is very limited.

Review of the Act
During the review of the Dutch Civil Procedural law in 2002, the Minister of Justice announced that the Act would also be reviewed. On 21 December 2006, a preliminary draft bill was presented to the Ministry of Justice by the chairman of the Netherlands Arbitration Institute (“NAI”). It is not yet known when the legislative proposal of the Act will be submitted to the House of Representatives or whether the legislator will accept the preliminary draft bill.

The reasons for reviewing the Act are as follows: after the implementation of the Act, the UNCITRAL Model Law on Commercial Arbitration was adopted by at least 40 countries. Although the UNCITRAL Model Law on Commercial Arbitration influenced the Act, the Act currently does not fully mirror the terms of the UNCITRAL Model Law on Commercial Arbitration. Furthermore, several important sets of institutional arbitration rules have been revised since the implementations of the Act, e.g. the arbitration rules of the International Chamber of Commerce (“ICC”), the arbitration rules of the London Court of International Arbitration (“LCIA “) and the arbitration rules of the NAI. To maintain its reputation as an attractive seat for international arbitration, a review of the Act is desirable.

Arbitration experience in the Netherlands
The Netherlands have positive experience with arbitration. The leading arbitration institute is the NAI. In addition, there are permanent arbitration boards, for example De Raad van Arbitrage voor de Bouwbedrijven (construction) and numerous other trade-specific arbitration panels. Arbitration has even made some inroads into sport-related disputes, and the Royal Dutch Football Association arbitration board is well-established. In the year 2000, the Dutch Centre of the ENDR, a network supported by the European Union for Euro arbitration, was founded.

While not as popular as institutional arbitration in the Netherlands, ad hoc arbitration is also available and the Act contains fall-back provisions which may assist in conducting ad hoc arbitrations.

The oft-cited advantages of arbitration over court proceedings, such as confidentiality, trade expertise of arbitrators, flexibility and expediency, apply with equal force to arbitration in the Netherlands.

The cost of arbitration proceedings in the Netherlands has not traditionally varied markedly from court proceedings. Costs may increase if the arbitral award is challenged in the courts, though the Act has curtailed the grounds for challenge.

In addition to arbitration, there are binding ruling procedures in the Netherlands. A binding ruling by an independent third party resembles arbitration, but there is one essential difference. A binding ruling can only be set aside and declared non-binding if it is in serious conflict with reasonableness and fairness and it would be an abuse of law if the opposite party, on the basis of the binding ruling, should wish to hold the other party to it. In other words, the binding ruling is subject to limited review on the ground that the ruling is in serious conflict with reasonableness and fairness (“marginale toetsing”). Another difference between the binding ruling procedures and arbitration relates to the enforceability of the award/ruling: an arbitration award can be enforced simply on the basis of an enforcement order. In the case of a binding ruling, the ruling must be brought before the District Court for a limited review.

Scope of application
The Act is applicable to all arbitrations in the Netherlands, whether ad hoc or institutional, and regardless of the nationality of the parties (Article 1073 Rv).

General principles
Article 17 of the Dutch Constitution provides that no party may be prevented against his will from being heard by a court to which he is entitled to apply by law. Therefore, arbitration must be based on the consent of all those involved.

The principle of party autonomy is enshrined in the Act, together with the principle of equality of the parties, and the right of each party to present its case and to be heard (an elaboration of this principle is given in Article 1039 Para. 1 Rv). Infringement of party autonomy may result in the annulment (“vernietiging”) of an arbitral award (Article 1065 Para. 1c and Para. 5 Rv).

Transitional provisions
The Act applies to all arbitrations since 1 December 1986.

Formal requirements
An arbitration agreement must be evidenced in writing (Article 1021 Rv). The requirement is a statutory provision, which coincides with arbitration legislation abroad and also with provisions in treaties on arbitration.

In order for the arbitration agreement to be valid, it must meet a number of requirements, set out in Article 1020 Rv. Arbitrators do not have jurisdiction to hear a case in the absence of a valid arbitration agreement.

Arbitrability
The question whether a dispute is suitable for arbitration (“arbitrability”) may arise in the arbitration itself if there is a challenge to the jurisdiction of the arbitrator pursuant to Article 1052 Rv. The issue may also arise if the case comes before an ordinary court where a party invokes the arbitration agreement to stay the court proceedings. Some disputes are not suitable for arbitration, such as certain proceedings in family law (divorce, adoption), bankruptcy proceedings and certain aspects of corporate law (e.g. status of a limited liability company or liquidation proceedings).

If arbitrators render an award on a matter which is not suitable for arbitration, such an award is in conflict with public policy and can therefore be quashed.

The constitution of the arbitral tribunal
The parties are free to agree on any uneven number of arbitrators. If the parties purport to agree upon an even number of arbitrators, these arbitrators must appoint an additional arbitrator as chairman pursuant to Article 1026 Sub. 3 Rv. In certain other countries, an even number of arbitrators is permitted and the courts in the Netherlands are willing to enforce the awards of foreign tribunals in such circumstances. If the parties fail to determine the number of arbitrators or cannot reach agreement on the number of arbitrators, the President of the District Court will determine the number of arbitrators at the request of any of the parties.

The arbitrator(s) are appointed according to the procedure agreed between the parties. An appointment shall be made within a period of two months (three months in case at least one of the parties is domiciled outside of the Netherlands) from the date on which the dispute is submitted to the tribunal, unless the arbitrator(s) had already been appointed.

Where a party fails to make an appointment within the two-month period, the non-defaulting party may request the President of the District Court to make the appointment.

Replacing an arbitrator
Pursuant to Article 1029 Rv, the arbitrator accepts his appointment in writing. He may be relieved from the appointment upon his own request or by the joint decision of the parties. An arbitrator may be challenged if there is justifiable reason to doubt his impartiality or independence (see Article 1033 Rv).

An arbitrator selected by one party can only be challenged by that same party for reasons which become apparent after his appointment. A party cannot challenge an arbitrator appointed by a third party or by the President of the District Court if he has acquiesced in the appointment, unless a reason to challenge the arbitrator becomes known to him thereafter.

The general rule that an arbitrator may be challenged where there are justifiable reasons to doubt his impartiality or independence derives from Article 10 of the UNCITRAL Arbitration Rules.

In the event that an arbitrator is incapable of performing his duties, he shall be removed upon the request of either party or, in default thereof, by the President of the District Court. Where an arbitrator is thus removed, he shall be replaced in accordance with the same procedure as per the original appointment.

The arbitration is suspended during the period for replacing an arbitrator unless otherwise agreed by the parties.

Arbitrators’ fees
The Act does not include stipulations regarding the arbitrators’ fees. A distinction should be made between institutional arbitration and ad hoc arbitration. In the former case, the arbitration institution will have a fee schedule, and in the latter case, the determination of fees is left to the arbitrators and the parties. Normally the arbitrators request a deposit before the start of the arbitration.

Arbitrators’ liability
The liability of arbitrators in the Netherlands to a large extent mirrors the liability of judges, hence an arbitrator may only be held liable in exceptional cases. Where the arbitrator has ignored fundamental principles of law, this may constitute a violation of public policy which is in turn a ground for annulling the award or refusing its enforcement order. In exceptional circumstances, the arbitrator may be liable in damages to the parties for rendering an award which is contrary to public policy and is incapable of being enforced. Furthermore, the arbitrator may be held liable if an award is filed late, or if there has been excessive delay in the conduct of the proceedings.

Competence to rule on its own jurisdiction
The tribunal is competent to rule on its own jurisdiction in the first instance and will decide upon the existence or validity of the arbitration agreement (subject to subsequent judicial control).

Power to order interim measures
Article 1051 Rv provides that the arbitral tribunal has the power to grant interim measures if the parties so agree. In the absence of such an agreement, an application must be made to the President of the relevant District Court.

Commencement
In general, arbitration proceedings commence when a party to a dispute serves a written notice informing the other party that it is commencing arbitration and setting out the disputes submitted to arbitration. The parties may agree on a different procedure for initiating an arbitration.

General procedural principles
Dutch law includes a number of fundamental principles of procedural law. These principles include the equal treatment of parties and the right of each party to defend its own rights and to put forward arguments to that effect. The arbitration tribunal has the right to request oral submissions, to call witnesses or experts and to order the submission of documents, with regard to which the arbitration tribunal is free to apply whatever rules of evidence it deems fit (Article 1039 Rv). The arbitrators may at their discretion determine the relevance and weight of evidence.

Rules governing the procedure
Article 1036 Rv of the Act provides that: “The arbitration is conducted in a manner agreed upon by the parties or, in the absence of such an agreement, according to the directions of the arbitration tribunal.”

The manner in which the arbitration reference is to be conducted is in most cases set out in the arbitration agreement. Where the parties have not agreed on the applicable procedure, the arbitrators determine the manner in which the case is to be conducted (for example, directions on when submissions must be delivered). The chairperson of the arbitral tribunal plays an important role in such matters.

Disclosure of documents
The arbitral tribunal may order the disclosure of documents (often upon the request of parties). There is no formal sanction for breach of this order, although the arbitral tribunal is at liberty to draw inferences from any noncompliance. Generally, it is a matter for the parties to determine which documents they disclose. In the event that documents are withheld by a party unconscionably, the resulting arbitral award may be quashed if the other party obtains such documents afterwards and can establish that they would have affected the decision of the arbitration tribunal.

Procedural powers of the tribunal
The arbitration tribunal may regulate the manner in which witnesses are examined and is entitled to examine witnesses under oath.

In the event that a witness fails to appear voluntarily, or refuses to make a statement, the arbitration tribunal may permit the requesting party, within a term to be determined by the arbitration tribunal, to apply to the President of the District Court requesting the appointment of a delegated judge (“Rechter-Commissaris”) before whom the witness will be examined. Arbitrators have the opportunity to be present at the examination of the witness. Further procedural powers of the tribunal include:

• the selection of an expert to deliver an opinion;
• the termination of an arbitration reference if a claimant fails to take certain procedural steps;
• rendering an expedited award where the defendant defaults in presenting a defence without good reason;
• ordering parties to provide information to the tribunal; and
• allowing third parties who have an interest in the arbitration to join as a party or be heard as an intervener.

Place and language of arbitration
The language of the proceedings and of documents to be submitted to the tribunal is determined by the parties. In the absence of such an agreement, the tribunal will decide the applicable language. Submitting an arbitration claim in a language other than that agreed between the parties may be a ground for dismissal of the case. The place of the arbitration is usually stipulated by the parties in their agreement; in default thereof it will be determined by the arbitration tribunal having regard to the circumstances of the arbitration (Article 1037 Rv). The location of the arbitration is important, as the arbitration award is filed at the office of the District Court at the locality of the arbitration.

Submissions
The tribunal shall also determine the timetable for submissions, unless the parties have already agreed a timetable.

Oral hearings and written procedures
The arbitral tribunal has discretion as to whether there should be an oral hearing and may request an oral hearing even if the parties have elected a `documents only´ format for the arbitration. Article 1043 of the Act provides: “At any stage of the proceedings, the tribunal may order the parties to appear in person for the purpose of providing information or attempting to arrive at a settlement.”

Evidence
The tribunal shall, subject to any agreement between the parties, determine matters regarding evidence.

The Act authorises the arbitral tribunal to appoint experts, and the parties will have an opportunity to pose questions to the expert, and comment on the expert’s opinion. The cross-examination of witnesses is most unusual in the Netherlands; however, the parties are free to agree on a cross-examination procedure.

Choice of law
Parties often select the applicable law in their arbitration agreement and the arbitral tribunal will uphold this choice. The parties are also at liberty to refer to the lex mercatoria, although this choice of substantive law has not enjoyed wide acceptance in the Netherlands.

Where parties have neither selected a national law nor opted for the lex mercatoria, the arbitration tribunal will generally select the law of the country most closely connected with the contract between the parties (generally the law of the place where the principal obligations are to be performed).

Decisionmaking by the tribunal
The parties can agree on the procedural aspects of how the tribunal is to render its award. Unless otherwise agreed by the parties, the arbitration tribunal decides by a majority of votes (where there is more than one arbitrator). The appointment of a clerk (“griffier”) to record the arbitral decision is quite popular in the Netherlands. The clerk ensures that certain (agreed) formalities are complied with.

Form, content and effect of the award
Article 1057 Rv regulates the formal requirements of an arbitral award. The award is made in writing and signed by the arbitrators. Where a minority of arbitrators refuses to sign the award, this fact shall be recorded in the award.

The requirement of a written award is mandatory. It is common in arbitrations in the building industry for a verbal decision to be made, followed by a written award. This procedure often leads to delay in receiving the written award. The arbitral tribunal ensures that an original copy of the award is filed with the court registry of the court at the seat of the arbitration.

Finally, an arbitral award must contain reasons, otherwise it is liable to be set aside. The extent and effect of this requirement is the subject of much debate. In 2004 the Supreme Court ruled that annulment of the award due to the absence of reasons is only possible if the award is rendered without any reasons at all for the decision. Annulment is not possible when the reasons and explanations for the decision are deficient or inadequate, unless such deficiency in the reasoning is so obvious that it is considered to be on a par with no reasoning at all.

Settlement
In accordance with Article 1069 Rv, arbitrators may render an award to reflect a settlement reached by the parties. Such recorded settlement is a valid arbitral award for the purposes of enforcement, and can only be quashed if it is contrary to public policy. The settlement award must be signed by both parties.

Costs
The Act does not contain rules on the costs of the arbitration. An arbitration tribunal is free to award costs and has wide discretion as to how the costs are to be allocated. It is usual practice for costs to follow the event (i.e. costs are awarded in favour of the successful party).

Correction and interpretation of the award
Article 1060 Rv allows for the rectification of an award. Rectification of an interim award is not allowed, since the omission can be repaired in a later rendered interim award or in the final award. The parties are at liberty to request the correction of typographical or computational errors within 30 days of the award being rendered. Corrections of names, addresses, date of signing and place of the award are also permitted within the same period. Enforcement, however, is not suspended pending resolution of a request for corrections, unless the President of the District Court, who may be called upon for assistance, deems it necessary to suspend further proceedings for urgent reasons until there is a ruling on the request for corrections.

In a situation where the plaintiff has neglected to claim interest or costs of the proceedings, arbitrators may not rectify this omission on their own initiative (Amsterdam Court of Appeal 23 May 1958, NJ 58 465: “Arbitrators exceed their jurisdiction if, on their own initiative, they order the payment of interest or costs of the proceedings”). If such a fundamental principle of procedural law is violated, an award can be quashed (Article 1065 Para. 1 Rv).

The jurisdiction of the courts
In a number of cases, the Act envisages that the District Court will assist in the conduct of the arbitration. For instance, the District Court may be called upon to appoint an arbitrator; to remove or replace an arbitrator; to examine reluctant witnesses; to obtain information regarding foreign law; to fix a date for the hearing; to lift, suspend or set aside a penalty; and to grant or refuse enforcement of an award.

Generally, it could be said that the role of the President of the District Court is important in a limited number of cases where the arbitration procedure, for whatever reason, falters. Such instances remain exceptional in Dutch arbitration practice.

Stay of court proceedings
Where parties have referred their dispute to arbitration, a court seized of the dispute must grant a stay of the proceedings.

However, the arbitration agreement does not prevent a party from applying to the President of a District Court for protective measures to preserve the status quo between the parties, such as to ensure that no assets will be moved out of jurisdiction, or for a decision in summary proceedings.

An appeal against the competence of the tribunal should be made before the formal defence on the merits is filed.

Interim protective measures
Article 1022 Para. 2 Rv contains the following provision in relation to interim protective measures: “An arbitration agreement shall not preclude a party from requesting a court to grant interim measures of protection, or from applying to the President of the District Court for a decision in summary proceedings …”

Obtaining evidence and other court assistance
The arbitral tribunal has no power to compel a witness to give evidence to the tribunal. Article 1041 Sub. 2 Rv provides the possibility for the appointment of a delegated judge (“Rechter-Commissaris”) to hear the witness. Attendance by the witness can be secured under Dutch Civil Procedure Law by way of a summons (“dagvaarding”).

Applications for a witness to be heard before the commencement of the arbitration proceedings should be made to the District Court, as the Act does not make provision for a witness hearing before the commencement of arbitration proceedings.

Challenging the award before the courts
Article 1065 Rv sets out the grounds on which an award can be challenged.

The grounds are as follows:

• there is no valid arbitration agreement;
• the arbitrator has not been correctly appointed;
• the tribunal lacks substantive jurisdiction;
• the award has not been signed and/or does not contain sufficient reasons;
• there have been serious irregularities affecting the proceedings; or the award is contrary to public policy.

The court will not automatically set aside an award if a party is successful in challenging the award.

The application to challenge the award should be lodged with the court at the seat of the arbitration within three months of receipt of the award by the parties.

Domestic awards
Pursuant to Article 1062 Rv, the recognition and enforcement of an arbitral award in the Netherlands must be sought by way of an application to the President of the relevant District Court.

The President will only grant enforcement of the award after the period for challenging the award has elapsed.

In practice, enforcement of arbitral awards is nearly always granted in the Netherlands, subject only to exceptional cases on the grounds set out in Article 1063 Rv, namely:

• the content of the arbitral award is contrary to public policy or public morals;
• the manner of formation of the arbitral award is contrary to public policy or public morals; and
• a penalty is unlawfully imposed.

If enforcement has been granted by the President, the only legal remedy available for a respondent is to apply for the annulment of the civil request, being a revocation of an award in the event of fraud, forgery or upon the emergence of new evidence. An application for revocation shall be brought before the Court of Appeal.

Foreign awards
The Netherlands are party to the New York Convention 1958.

Article 1076 Rv governs the enforcement of foreign arbitral awards rendered in New York Convention States and non-New York Convention States.

An award may be challenged on several grounds as set out in Article 1076 Rv, including if:

• the arbitral tribunal exceeded the terms of its reference in the award;
• there was no valid arbitration agreement between the parties; or
• the award is contrary to public policy.

The European Court of Justice (Eco Swiss/Benetton, 1 June 1999) and the Court of Appeal (Sesam/BetoncentraleTwente, 12 October 2000) have ruled that an arbitral award rendered in violation of regulations governing European Union anti-trust law (Article 81 EC Treaty) can constitute a violation of public policy.

An award may also be contrary to public policy if there is a violation of a fundamental principle of fair procedure, such as the denial of one party’s right to be heard by the arbitration tribunal.

It should be noted that the Dutch requirements for a valid arbitration agreement are less stringent than those prescribed in Article II of the 1958 New York Convention. Thus, in summary, a party seeking to enforce a New York Convention award in the Netherlands may, in appropriate circumstances, apply to the court either on the basis of Article 1076 Rv or the 1958 New York Convention.

An appeal against a decision of the President of the Court will generally be a matter for the Court of Appeal. An appeal against an arbitral award is not possible before the courts in the Netherlands, unless the parties have expressly provided for this in their arbitration agreement.

The Act does not address the problem of multi-party proceedings, nor the possibility of rectifying errors in an interim award.

The Act is also silent on the confidentiality of the arbitral award. It has been the general practice in the Netherlands since 1919 to publish arbitral awards as this is perceived to be in the public interest. There has been some speculation on the possibility of a party to an arbitral award bringing a claim for damages against an institution which has published the award.

The Act also does not address the issue of dissenting opinions. Dissenting opinions are extremely rare in domestic arbitrations in the Netherlands, although it would appear to be open to arbitrators in an international arbitration to render a dissenting opinion and attach this to the award.

CMS Derks Star Busmann
Mondriaantoren, Amstelplein 8A
1096 BC Amsterdam, The Netherlands


Marlous de Groot
T +31 20 301-6315
F +31 20 301-6333
E marlous.degroot@cms-dsb.com


Mark Ziekman
T +31 20 301-6315
F +31 20 301-6331
E mark.ziekman@cms-dsb.com