Arbitration clause

What we do

Arbitration proceedings can be initiated in two ways: based on a compromise after a dispute has arisen between the parties, or by the inclusion of an arbitration clause in the original agreement. An arbitration clause is an agreement between the parties to the effect that disputes arising under the agreement shall be settled by an arbitral tribunal.

An arbitration clause can be included directly in the agreement or take effect between the parties via the general terms and conditions. In the consumer sphere, an arbitration clause in the general terms and conditions is not always legally valid. In business-to-business agreements, an arbitration clause in the general terms and conditions is much more common, particularly in certain sectors such as construction or international transport.

We offer guidance in drafting arbitration clauses and in challenging the validity of an arbitration clause. Furthermore, we have the experience and expertise to assume various roles during an arbitration case: from arbitrator to advisor. Contact us to discuss the possibilities.

The arbitration clause within our expertise in Arbitration

The arbitration clause is the foundation of every arbitration proceeding: it determines whether, how, and where your dispute will be settled outside of state courts. This page is part of our broader Arbitration. Whether you are an international group with contracts in dozens of jurisdictions or the contractor or baker around the corner looking to make a watertight agreement with a single supplier — our mixed teams of lawyers and in-house counsel ensure that the clause does what it is supposed to do. Where it comes to going to the arbitration tribunal, we assist you with legal assistance in arbitration.

Legal framework: arbitration agreement

The agreement to arbitrate is regulated in Article 1020 of the Code of Civil Procedure. That article distinguishes two forms: the arbitration clause, by which parties undertake to submit disputes that may arise in the future to arbitration, and the compromise, by which an already existing dispute is submitted to arbitration. An arbitration clause may also form part of general terms and conditions, articles of association, or regulations. Pursuant to Article 1021 of the Code of Civil Procedure, the agreement to arbitrate is proven by a written document; a written record is therefore of great importance. Moreover, an arbitration clause cannot lead to the determination of legal consequences that are not at the free discretion of the parties.

What should be included in a good arbitration clause?

A watertight arbitration clause prevents costly disputes afterwards regarding jurisdiction and procedure. When drafting, we pay attention to, among other things:

• Scope — which disputes fall under the clause (only the agreement, or also related disputes)?
• Arbitration institution and rules — for example, the Netherlands Arbitration Institute (NAI) or the ICC International Court of Arbitration, or ad hoc arbitration.
• Place of arbitration, language and number of arbitrators — determining procedural costs, duration and the appointment of the arbitrators.
• Applicable law — essential, especially in international contracts.
• Carve-out for emergency measures — the possibility to request summary proceedings or conservatory attachment from the state court.
• Confidentiality — an important advantage of arbitration over public courts.

An agreement tailored to this prevents an arbitration tribunal from later declaring itself incompetent and the dispute ending up before the ordinary courts after all.

Arbitration clause and the consumer

Strict requirements apply in the consumer sphere. Pursuant to Article 6:236(n) of the Dutch Civil Code, an arbitration clause in general terms and conditions is presumed to be unreasonably onerous, unless it grants the consumer a period of at least one month—after the user has invoked the clause in writing—to subsequently choose the court competent under the law. If that opt-out is missing, the clause is voidable pursuant to Article 6:233 of the Dutch Civil Code. The Supreme Court further clarified this in 2019: if the statutory option to choose is lacking, the entire clause is void, and offering the consumer a choice afterwards is of no use. In addition, a clause may be unreasonably onerous if the consumer has not received clear, transparent information beforehand regarding the differences between arbitration and ordinary proceedings. An arbitrator must assess this ex officio.

Arbitration clause for entrepreneurs (B2B)

An arbitration clause is common among entrepreneurs and is even the standard in many sectors — think of construction, international transport, and trade. The consumer protection under Article 6:236(n) of the Dutch Civil Code does not apply here, but that does not mean that every clause is valid. General terms and conditions must have actually been agreed upon and declared applicable again with new quotations; an arbitrator examines their jurisdiction as soon as the counterparty disputes it. In sector-specific arbitration, established institutions and regulations often come into play. We assess whether your clause holds up in the given context and assist with drafting or, conversely, in challenging it.

Advantages, disadvantages and international enforceability

Arbitration offers confidentiality, expert arbitrators, often a shorter turnaround time, and—internationally—an award that can be enforced in over 170 countries thanks to the New York Convention of 1958. On the other hand, appeals are generally excluded and the costs of the arbitral tribunal are borne by the parties. For cross-border contracts, worldwide enforceability is often a major factor; for smaller domestic disputes, the ordinary courts may actually be more cost-effective. If an award is reached, we assist with the enforcement of the arbitral award. If arbitration is too burdensome for your situation, a lighter alternative such as binding advice provide a solution.

Contesting the validity of an arbitration clause

If you are faced with an arbitration clause to which you do not consider yourself bound, there are several avenues available. You can challenge the jurisdiction of the arbitral tribunal in a jurisdictional dispute, invoke voidability (for consumers pursuant to Articles 6:233 and 6:236 of the Dutch Civil Code), or argue that the general terms and conditions were not validly agreed upon. Our lawyers and in-house counsel will quickly assess whether the clause is tenable and determine together with you whether arbitration or recourse to the state courts is the best course of action.

Frequently asked questions about the arbitration clause

What is the difference between an arbitration clause and a compromise?
An arbitration clause is included in the agreement in advance for disputes that may still arise; a compromise is only concluded after a dispute has already arisen. Both fall under Article 1020 of the Code of Civil Procedure.

Is an arbitration clause in general terms and conditions valid?
Between businesses, it often is, provided the terms have been agreed upon. For consumers, the clause is likely unreasonably burdensome pursuant to Article 6:236(n) of the Dutch Civil Code, unless the consumer is granted a statutory time limit for choosing a court of law.

Can I still go to the ordinary court after an arbitration clause?
In principle, no: a valid arbitration clause excludes the state court, which declares itself incompetent. If the clause is void or voidable, the path to the court remains open. However, for urgent measures such as summary proceedings or attachment, the state court generally remains competent.