Half a year Netherlands Commercial Court: an update

On 1 January 2019, the Netherlands Commercial Court ("NCC") was launched and ready to hear cases regarding international commercial disputes in the English language. We would like to use this six-months anniversary of the NCC to reflect on the progress to date. At the start of the NCC, a post was published on this website to introduce the NCC and its main goals.

The first NCC case

On 11 February 2019, the first – and to date the only – case was submitted to the NCC Court in Summary Proceedings. In short, this case concerned an Irish party seeking an order permitting the sale of pledged shares (in a Dutch company) in a private transaction (a debt-for-equity swap) instead of a public auction. Under Article 3:251(1) Dutch Civil Code a sale in a public auction is allowed, but to sell the shares in a private sale (as was the intention), judicial permission is required. The judge granted the requested permission; see the NCC's judgment dated 8 March 2019.

This judgment contains several aspects worth mentioning with regard to the NCC's competence and the other requirements for submitting a case to the NCC.

First of all, the NCC Court in Summary Proceedings found that it had jurisdiction based on the Brussels I bis-Regulation, the Lugano Convention and the choice of forum agreed by the parties (paragraph 6.2):

"It is clear, in my view, that the Amsterdam District Court has jurisdiction under articles 25(1) and 26(1) of the Brussels Regulation (recast) (1215/2012) and article 24 of the Lugano Convention. There is a choice-of-court clause in the Pledge documentation. The parties (except for the Swiss Parent and Q-Invest) signed a choice-of-court agreement prior to the application. All of the parties either entered an appearance or sent a similar notice acknowledging the proceedings without objection as to jurisdiction. At the hearing, counsel representing Elavon, Crossbow, Rabobank, the IPS entities and Q-Invest expressly confirmed that this court should deal with the matter in any event."

Subsequently, the Court considered that the matter evidently qualified as an 'international dispute' as meant in Article 1.3.1(b) of the NCC Rules of Procedure (paragraph 6.3 under b):

"The application obviously involves a matter of international dimensions. To begin with, Elavon is based in Ireland and the IPS entities are part of a Swiss-based group. That is enough to make this case an international dispute. But that is not all. Apollo/Crossbow and Rabobank have international activities and the Group’s business operates (or plans to operate) in international markets for pressurised dispensers in Europe and North America. Given the above, the documentation is in English. These circumstances, or any combination of these circumstances, might be enough to meet the test in any particular case. The sum total makes it obvious we are dealing with an international dispute in this matter."

Finally, the parties had agreed in writing that the Amsterdam District Court has jurisdiction and – more specifically – that this case should be heard by the NCC and that the proceedings should be conducted in English, as required by Article 1.3.1(d) of the NCC-Rules of Procedure (paragraph 6.3 under d):

"Elavon, Crossbow, Rabobank and the IPS entities signed a pre-application agreement. I am satisfied that it is a valid NCC agreement. It expressly states that the proceedings will be in English before the NCC (constituted as a chamber of the Amsterdam District Court). While it is true that the Swiss Parent and Q-Invest did not sign that agreement, in their communications with the court they did not raise any objections as to the language of the proceedings or the chamber of the Amsterdam District Court dealing with the case. In fact, at the hearing counsel for Q-Invest confirmed the case should be dealt with by the NCC in English. In light of the above, the parties should be allowed to conduct the proceedings in English before the NCC, as they obviously wish to do so."

The judgment is written from the first-person perspective, the judge's point of view. This deviates from the third-person singular references commonly used in Dutch judgments. It is striking to see how this change of perspective leads to such an easy-to-read judgment in comprehensive terms. This can only be welcomed. The concluding paragraph is an excellent example thereof (paragraph 6.22):

"For the above reasons, I am persuaded that the proposed transaction will deliver maximum value for the Shares in the circumstances. I have dealt with and rejected the defences that are material to the issue in the application. Accordingly, I will give the appropriate order as set out below."

After the NCC handed down the judgment in this case, the lawyers representing the parties were asked to participate in a survey (see the NCC's update no. 6). Their feedback was particularly positive on the NCC's professionalism, flexibility and speed as well as on the quality of the judge and his decision. The remaining question is of course whether these high expectations will also be met in future (more complex and lengthier) NCC proceedings. The parties involved, including the NCC itself, appear to be confident in that regard.

A few further remarks on the NCC

Since no other cases have yet been submitted to the NCC, it too early for an in-depth evaluation of the method of operation and the effectiveness of the NCC. We would, however, like to highlight a few interesting aspects of the NCC.

(1) Litigating before the NCC as foreign lawyer

Similar to proceedings before the 'normal' Dutch court, visiting lawyers who are a member of the Bar in an EU or EEA Member State or Switzerland have the same privileges as Dutch lawyers when litigating before the NCC if they work together with a Dutch lawyer. Other visiting lawyers are not entitled to carry out procedural acts before the NCC. However, in general, they will be allowed to plead at hearings before the NCC. The main difference with litigating before the NCC as opposed to litigation before most regular Dutch District Courts and Appeal Courts is the principle that proceedings before the NCC will be held in English, which the majority of the visiting lawyers will undoubtedly prefer over Dutch.

(2) Referral to the NCC

Also during ongoing proceedings, the parties can request the acting court to refer their case to the NCC District Court. For referral, it is required that the District Court of Amsterdam has jurisdiction (on the regular grounds of Article 99 et seq. of the Dutch Code on Civil Procedure) and that the matter of course also meets the NCC admissibility criteria. It is for the referring court to consider whether these requirements are met.

(3) Which cases cannot be litigated before the NCC?

Also intellectual property disputes can for example be submitted to the NCC. In general, the main restriction for the NCC to hear cases is that the matter may not fall within the exclusive jurisdiction of another court. As patent matters fall within the exclusive jurisdiction of the District Court of The Hague (Article 80 of the Dutch Patent Act) and maritime matters within the exclusive jurisdiction of the District Court of Rotterdam (Article 625 of the Dutch Code on Civil Procedure), the NCC is not competent to hear these cases – not even if all parties involved would agree. The NCC also is not competent to hear cases that are within the exclusive jurisdiction of the Netherlands Enterprise Court at the Amsterdam Court of Appeal (Ondernemingskamer) or the Subdistrict Court (kantonrechter).

The NCC promises a tailor-made approach and will for example schedule a case management hearing at the beginning of the proceedings. Also, the parties may instruct a Court Reporter to draft a verbatim transcript of the court hearings (at their own expense). If such a transcript is drafted at the parties' instructions, the NCC may refer to that transcript as replacement for drafting their own court records.

(5) Fees

The NCC charges a court fee varying from EUR 7,500 (for the NCC in Summary Proceedings) to a maximum of EUR 20,000 (for the NCC Court of Appeal). These are fixed fees, therefore irrespective of the complexity of the case or the amount of the claim made. Although the NCC's fees are higher than the fees charged for cases before a regular District Court or Court of Appeal, they appear to be fair and reasonable in comparison to the court fees in other countries. Also arbitration will in general be more expensive. In addition, the parties will most probably save costs as they do not need to have procedural documents translated.

For the cost award, the NCC applies a flat-rate system (similar to the regular Dutch courts). Parties are, however, entitled to agree other arrangements in that regard.

(6) Class actions and class settlements before the NCC

The Netherlands are an attractive forum for class action suits, for example for cartel damages claims.

Similar to proceedings before the other Dutch courts, it is possible to bring a class action suit (collectieve actie) – in English – before the NCC on the basis of Article 3:305a of the Dutch Civil Code to request a declaratory decision on liability. In order for the NCC to be competent to hear such case, the specific NCC requirements of course have to be met (as set out in the NCC Rules of Procedure). These include the requirements that the matter concerns an 'international dispute' and that the parties involved have explicitly agreed to submit their dispute to the NCC. These proceedings, however, do not cover the award of the (individual) damages.

If parties have reached an out-of-court settlement agreement on damages, they can request the NCC Court of Appeal to declare that settlement agreement binding for all parties that suffered damage (unless they opt-out in time) (Article 7:907 et seq. of the Dutch Code on Civil Procedure). As the Amsterdam Court of Appeal has exclusive jurisdiction for this type of claims (Article 1013 of the Dutch Code on Civil Procedure) and the NCC Court of Appeal is a division of the Amsterdam Court of Appeal, also the NCC Court of Appeal is competent to hear such cases. Annex 1 to the NCC Rules of Procedure explicitly references this possibility. Of course, all other admissibility requirements for a NCC procedure have to be met too.

For the sake of completeness, we also reference the recently approved legislative proposal that introduces collective actions for damages. The proposal broadens the scope of Article 3:305a of the Dutch Civil Code to enable collective actions for monetary damages on an "opt-out" basis. If a claim is successful, the judge will also determine the amount of damages. The date of entry into force of this legislation was expected to be 1 July 2019, but that date does not seem feasible anymore.

In conclusion

We keep a close eye on the developments around the NCC and look forward to future NCC judgments. If there are new developments, you may most likely expect a follow-up post from us.

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