The Netherlands Commercial Court: should insurers change their choice-of-forum clause?

Publication September 2016


Introduction

The Dutch Council for the Judiciary proposed a plan to establish a new court in the Netherlands: the Netherlands Commercial Court (NCC). The legal proceedings before the NCC will, in principle, be conducted in the English language. It is envisaged by the Dutch Council of the Judiciary that the NCC will open its doors on 1 January 2018, following the establishment of similar commercial courts in London, Dublin, Delaware, Dubai and Singapore. In this article we consider whether proceedings before the NCC might (also) be of interest to non-Dutch based insurance companies in relation to claims in the Netherlands. As a result, insurers might wish to consider amending existing choice-of-forum clauses and consider including an NCC choice-of-forum clause in their new insurance contracts.

What is the Netherlands Commercial Court?

The NCC will be a specialised court, focusing on large and complex international commercial disputes such as contractual disputes, tort claims, property law disputes and corporate disputes. According to the plans, the NCC will reside in the existing district court and court of appeal of Amsterdam.

The Dutch Minister of Security and Justice informed the Dutch Parliament that legislation altering existing Dutch civil procedure law will be proposed during the course of this year, in order to create the NCC.

Although the procedural rules of the NCC have not yet been published, the plan of the Dutch Council for the Judiciary, sets out the following principles:

  • The proceedings will be held in English, unless both parties agree to proceed in Dutch.
  • The proceedings will be conducted using electronic communication.
  • All disputes will be resolved by three (Dutch) judges in both first instance and appeal, in contrast to other commercial courts where generally only one judge presides.
  • As with arbitration, proceedings can only be initiated before the NCC on a voluntary basis. The NCC will have jurisdiction if parties choose to resolve existing disputes before it and in respect of disputes arising out of, or in relation to, contracts containing an NCC choice-of-forum clause.
  • The NCC will not provide any specific instruments for preliminary relief. Parties searching for preliminary relief before a Dutch court will, however, continue to have access to preliminary relief proceedings at the regular courts.

According to the plans, the NCC will be financed solely out of court fees. The costs per case are currently estimated at approximately €26,500. It is not yet determined how the court fees per party will be calculated. However, it is to be noted that these costs are higher than the ‘general’ court proceedings in the Netherlands in relation to complex and large international commercial disputes, where the court fees amount up to a maximum of €7,806.

It is possible for parties to agree on the amount of legal costs, prior to or at the start of the legal proceedings before the NCC. Where parties do not agree on the amount of legal costs, the NCC will apply the court-approved scale of costs.

The Netherlands Commercial Court vs. arbitration

The NCC may also prove to be a viable alternative to arbitration. Key differences between arbitration and proceedings before the NCC are:

  • In arbitration, parties are normally free to select arbitrator(s), while in proceedings before the NCC, parties cannot choose the presiding judges.
  • Unless agreed otherwise between the parties, arbitration proceedings usually do not allow for parties to lodge an appeal against an arbitral award. Under the proposed rules of procedure of the NCC, parties are allowed to lodge an appeal against a judgment in first instance to the NCC, unless the possibility to appeal is waived by the parties. Furthermore, parties may appeal a decision in appeal of the NCC to the Dutch Supreme Court or, if parties agree, appeal a first instance decision of the NCC to the Dutch Supreme Court (without going through the court of appeal).
  • Arbitral awards can be enforced relatively easily in many jurisdictions as a result of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Judgments of the NCC (as well as other commercial courts) will not benefit from the application of the New York Convention. Enforcement and recognition of NCC judgments will rely on the general rules for enforcement and recognition of foreign court decisions.

What will the introduction of the Netherlands Commercial Court mean in practice?

As of 2018, parties will (likely) have the option to choose to resolve their dispute through the NCC, which will provide for modern, efficient and pragmatic (partly electronic) proceedings, in English. The relatively low costs compared to other commercial courts, the expected efficiency and the current reputation of Dutch courts in general are expected to give the NCC a strong starting position for competing in the international arena of (alternative) dispute resolution and will provide a civil law based alternative to generally common law based existing commercial courts.

Benefit for non-Dutch based insurance companies

In the Dutch market, it is not uncommon that insureds are insured with non-Dutch based insurance companies. Proceedings before the NCC may be particularly appealing for such insurers as they provide for the possibility of proceedings before a Dutch court in English, both in relation to written communications as well as court hearings.

This is expected to result in greater involvement by the non-Dutch based insurance companies during legal proceedings in the Netherlands, more efficient communications between non-Dutch based insurance companies and their counsel in relation to the proceedings and greater cost efficiency to the proceedings in general.

The above will clearly be of benefit to insureds against whom proceedings have been brought and to insurance companies in disputes over coverage.

In order for policy disputes to be resolved through the NCC, insurers need to consider amending existing choice-of-forum clauses and including an NCC choice-of-forum clause in their new insurance contracts. Alternatively, insurers could agree with their insured that policy disputes will be resolved before the NCC.


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