Arbitration

Arbitration

Arbitration usually takes place on a voluntary basis. This means that parties have the choice to request an arbitration case over a traditional lawsuit. The parties submit their dispute to one or more arbitrators (this is also known as an arbitration agreement). When entering into an arbitration agreement, it is advisable to seek expert advice.

The choice of arbitrators is often influenced by the arbitrators themselves. Our experts have experience acting as professional and neutral arbitrators in cases. We can also assume an advisory, guiding, or mediating role throughout the entire process. Sometimes companies deal with so-called arbitration clauses. This means that an organization or companies have included in their General Terms and Conditions that certain disputes will be settled via arbitration.

We assist a wide range of clients in drafting, reviewing, and interpreting contracts. In practice, conflicts arising from contractual relationships occur regularly. These conflicts concern, for example, the interpretation of contract provisions, breach of contract (non-performance), and claims for damages. We have extensive experience in contractual dispute resolution, whether through negotiations or judicial proceedings. We have an experienced team of lawyers and legal experts in the field of contract law. Please contact us to discuss the possibilities.

Arbitration in contract law

Arbitration is a form of dispute resolution that originates in the contract itself. In their agreement, the parties stipulate that any potential dispute will not be decided by a state court, but by one or more independent arbitrators. Consequently, arbitration is inextricably linked to Contract Law: the arbitration clause is a contractual provision, and the arbitrator assesses the dispute based on the contractual agreements and the applicable law of obligations. Dutch arbitration law is regulated in Book Four of the Code of Civil Procedure (the Arbitration Act, modernized since January 1, 2015). Therefore, the conclusion and interpretation of an arbitration clause are governed partly by the ordinary rules of contract interpretation and partly by the special rules of Book Four of the Code of Civil Procedure.

Whether you are an international group with cross-border supply contracts or the baker on the corner with a dispute regarding a contract for services: a well-thought-out arbitration clause helps determine where, how, and in which language your conflict will be settled. Our mixed teams of lawyers and in-house counsel advise on whether arbitration is advisable in your situation, and if so, how to formulate a watertight clause.

The arbitration clause and the written requirement

The basis of arbitration is the arbitration agreement. Pursuant to Article 1021 of the Code of Civil Procedure, that agreement must be proven by a written document; an arbitration clause in general terms and conditions may, subject to conditions, be sufficient. If you have a valid arbitration clause, the state court must declare itself incompetent pursuant to Article 1022 of the Code of Civil Procedure as soon as the counterparty invokes it prior to any defenses. Provisional measures and precautionary measures remain possible through the ordinary courts (Articles 1022a and 1022b of the Code of Civil Procedure).

Be careful with consumers: an arbitration clause in the general terms and conditions of a consumer agreement is on the blacklist of Article 6:236 sub n of the Dutch Civil Code and is, in principle, unreasonably burdensome, unless the consumer is given a period of at least one month to opt for a state court instead. For the baker on the corner contracting with consumers, this is a crucial point of attention; this protection does not apply to business-to-business contracts. We assess the validity of your clauses and draft them in such a way that they hold up.

Arbitration versus the ordinary courts: advantages and disadvantages

Arbitration offers clear advantages, but also disadvantages, compared to proceedings before a state court. We have listed the most important considerations for you, so that you can make an informed choice instead of blindly adopting a standard clause.

Advantages

Expertise: you can appoint arbitrators with specific knowledge of your industry (for example, construction, ICT, or international trade). Confidentiality: unlike civil proceedings, an arbitral award is not publicly published, which protects reputation and trade secrets. Flexibility: parties largely determine the procedural rules, language, and pace themselves. International enforcement: thanks to the New York Convention of 1958, an arbitral award is relatively easy to enforce in more than 170 countries, often easier than a Dutch court judgment.

Disadvantages

Costs: parties pay the arbitrators' fees and the institution's administrative costs themselves, which means arbitration can turn out to be more expensive than a state court. Limited appeal: arbitral appeal is only possible if the parties have expressly agreed to it; if they do not, the ruling is in principle final. Annulment is possible only on limited grounds at the Court of Appeal (Article 1064a and Article 1065 of the Code of Civil Procedure), for example in the absence of a valid arbitration agreement or in conflict with public order.

The arbitral award: enforcement and annulment

An arbitral award is binding but cannot be executed without further ado. For enforcement in the Netherlands, leave (an exequatur) from the preliminary relief judge is required pursuant to Article 1062 of the Code of Civil Procedure. Foreign arbitral awards are recognized and declared enforceable in the Netherlands through Articles 1075 and 1076 of the Code of Civil Procedure, in conjunction with the New York Convention of 1958.

There is no ordinary appeal against an arbitral award. However, a party may seek annulment before the Court of Appeal (Article 1064a of the Code of Civil Procedure) on the exhaustive grounds of Article 1065 of the Code of Civil Procedure, or, in limited cases, revocation. Because these grounds are interpreted narrowly, properly arranging the clause and the procedure in advance is crucial. Our lawyers assist you in annulment and exequatur proceedings, from international groups to individual entrepreneurs.

Arbitration, binding advice or mediation?

Arbitration is not the only form of dispute resolution outside of court, and it is not always the best. With binding advice, parties submit a dispute to a third party for decision, but the result functions like a settlement agreement and is subject to a different review than an arbitral award. With mediation, you retain control: a mediator guides the parties toward their own solution without imposing a binding decision. Which route is appropriate depends on the relationship between the parties, the importance of the case, the need for confidentiality, and the desire to continue the relationship.

Commonly used arbitration institutions include the Netherlands Arbitration Institute (NAI), the Council of Arbitration in Construction Disputes, and, internationally, the ICC and the LCIA. In addition, we offer ad-hoc arbitration under, for example, the UNCITRAL rules. We advise on which institution, type of arbitration, and procedural rules best suit your contract and your sector.

How MKB Juristen assists you with arbitration

MKB Juristen works with mixed teams of lawyers and in-house counsel. This allows us to combine litigation expertise with practical, business-oriented advice. We draft arbitration clauses and review existing clauses, act as authorized representatives in NAI and other arbitration proceedings, provide guidance or mediation throughout the process, and conduct exequatur or annulment proceedings where necessary. Whether it concerns an international group or the baker around the corner: we translate arbitration law to your specific situation. Also, take a look at our broader expertise in the field of Contract Law. Contact us to discuss the possibilities without obligation.