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Report from the Netherlands: Bill for Revision of Netherlands Arbitration Act Tabled –What Does It Hold in Store for International Users?

Report from the Netherlands: Bill for Revision of Netherlands Arbitration Act Tabled –What Does... REPORT WOUTER J.L. DE CLERCK, MEMBER OF THE ARBITRATION TEAM OF DLA PIPER (AMSTERDAM)* While it would be too bold to rank the Netherlands as a place of international arbitration among established seats such as France (Paris), the United Kingdom (London) and Switzerland (Geneva), particularly its parliamentary capital, The Hague, is firmly on the international arbitration map as a valid alternative seat. Home of the Permanent Court of Arbitration (PCA) since 1901, the city traditionally draws arbitrations between states and private parties and may broaden its reach with the recent establishment of the P.R.I.M.E. finance arbitration institute for the settlement of complex financial transactions. In April 2013, the Dutch government published a bill for the `modernization of Netherlands arbitration law'. Amongst other things, the bill aims to ensure the continued appeal of the Netherlands arbitration act (1986) to international users. In view of this ambition, some of the notable changes that are proposed will be discussed below. First, the bill proposes to clarify the position of foreign parties who find themselves summoned to appear in a Dutch court in spite of what they feel is an agreement to arbitrate. A new provision will specify that the question whether the parties agreed to arbitrate in the contractual sense is to be decided by the Dutch court according to Netherlands law if not an express choice was made for another law to apply to the arbitration agreement. In line with this is the proposal to codify the well-known Lizardi rule, which is understood to preclude a public entity from relying on its internal constitution to argue that it lacked the capacity to enter into an arbitration agreement or that the dispute cannot be settled by arbitration. Both proposed provisions can be traced back to Dutch case law and will not create new rules. It is however expected that they will bolster the strength of arbitration agreements in the Dutch courts and make for greater predictability of judicial decisions in this regard. Second, a number of changes are proposed which, if enacted, will solidify the position of arbitration in the Netherlands as a legitimate and selfcontained dispute resolution process that can mostly do without assistance from the Dutch courts. A provision that instantly draws attention in this regard concerns the proposal to limit set aside proceedings to one full instance on the appellate level, with subsequent appeal to the Supreme Court on questions of law, provided the parties did not agree to exclude Supreme Court appeal altogether. If this particular provision becomes law, it will make the current procedure, which involves up to three instances (on district, appellate and Supreme Court level) considerably more simple and predictable. In the same vein, the bill allows for revision by the arbitral tribunal during set aside proceedings, so that a particular ground for setting aside the award may be eliminated. This is in line with international standards (UNCITRAL model law) and even exceeds those standards insofar as it is proposed that the Court of Appeals will have the power to relegate the matter to the arbitral tribunal ex officio. Moreover, the bill proposes to explicate that the setting aside of an award by the Court of Appeals will only result in the revival of the courts' jurisdiction if the ground for setting aside was the absence of a (valid) arbitration agreement. The parties may agree to the contrary, but the default position pursuant to the proposed provision will be that the parties are bound by their agreement to arbitrate in case of other defects in the award, such as the incorrect appointment of (one of) the arbitrators. A further example of the government's favourable view on De Clerck, Wouter J.L. `Report from the Netherlands: Bill for Revision of Netherlands Arbitration Act Tabled ­ What Does It Hold in Store for International Users?'. European Company Law 10, no. 4/5 (2013): 168­169. © 2013 Kluwer Law International BV, The Netherlands REPORT arbitration is the proposal to allow for the exclusive institutional (i.e. according to the rules of the arbitration institute) challenging of arbitrators if this is agreed by the parties. This may not sound revolutionary in an international context, but it does bode something new for the Netherlands, where currently a party can always resort to the court as a residual forum for a challenge. Third, the proposal to no longer require that the arbitral tribunal deposits the judgment with the court registry (which, currently, triggers the limitation period for a setting aside action) will iron out a procedural kink that is relatively unknown to international users of the Netherlands arbitration act. Fourth, the bill specifies in more detail the test, which is to be applied to a request for document production made by one of the parties in the arbitration. At first sight, the proposed text appears closer to the internationally accepted thresholds of the IBA Rules on the Taking of Evidence in International Arbitration. But it remains to be seen how this particular provision (again, if enacted) will be interpreted and applied in practice. Reference is made in the explanatory text that accompanies the bill to the statutory rules for document production in court proceedings, but these statutes approach the issue of document production from a decidedly different angle, with which non-Dutch users are unlikely to be familiar. The bill has been tabled to be read in the lower house of Parliament from 11 July 2013. OCTOBER 2013, VOLUME 10, ISSUE 4/5 EUROPEAN COMPANY LAW http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Company Law Kluwer Law International

Report from the Netherlands: Bill for Revision of Netherlands Arbitration Act Tabled –What Does It Hold in Store for International Users?

European Company Law , Volume 10 (5) – Aug 1, 2013

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Abstract

REPORT WOUTER J.L. DE CLERCK, MEMBER OF THE ARBITRATION TEAM OF DLA PIPER (AMSTERDAM)* While it would be too bold to rank the Netherlands as a place of international arbitration among established seats such as France (Paris), the United Kingdom (London) and Switzerland (Geneva), particularly its parliamentary capital, The Hague, is firmly on the international arbitration map as a valid alternative seat. Home of the Permanent Court of Arbitration (PCA) since 1901, the city traditionally draws arbitrations between states and private parties and may broaden its reach with the recent establishment of the P.R.I.M.E. finance arbitration institute for the settlement of complex financial transactions. In April 2013, the Dutch government published a bill for the `modernization of Netherlands arbitration law'. Amongst other things, the bill aims to ensure the continued appeal of the Netherlands arbitration act (1986) to international users. In view of this ambition, some of the notable changes that are proposed will be discussed below. First, the bill proposes to clarify the position of foreign parties who find themselves summoned to appear in a Dutch court in spite of what they feel is an agreement to arbitrate. A new provision will specify that the question whether the parties agreed to arbitrate in the contractual sense is to be decided by the Dutch court according to Netherlands law if not an express choice was made for another law to apply to the arbitration agreement. In line with this is the proposal to codify the well-known Lizardi rule, which is understood to preclude a public entity from relying on its internal constitution to argue that it lacked the capacity to enter into an arbitration agreement or that the dispute cannot be settled by arbitration. Both proposed provisions can be traced back to Dutch case law and will not create new rules. It is however expected that they will bolster the strength of arbitration agreements in the Dutch courts and make for greater predictability of judicial decisions in this regard. Second, a number of changes are proposed which, if enacted, will solidify the position of arbitration in the Netherlands as a legitimate and selfcontained dispute resolution process that can mostly do without assistance from the Dutch courts. A provision that instantly draws attention in this regard concerns the proposal to limit set aside proceedings to one full instance on the appellate level, with subsequent appeal to the Supreme Court on questions of law, provided the parties did not agree to exclude Supreme Court appeal altogether. If this particular provision becomes law, it will make the current procedure, which involves up to three instances (on district, appellate and Supreme Court level) considerably more simple and predictable. In the same vein, the bill allows for revision by the arbitral tribunal during set aside proceedings, so that a particular ground for setting aside the award may be eliminated. This is in line with international standards (UNCITRAL model law) and even exceeds those standards insofar as it is proposed that the Court of Appeals will have the power to relegate the matter to the arbitral tribunal ex officio. Moreover, the bill proposes to explicate that the setting aside of an award by the Court of Appeals will only result in the revival of the courts' jurisdiction if the ground for setting aside was the absence of a (valid) arbitration agreement. The parties may agree to the contrary, but the default position pursuant to the proposed provision will be that the parties are bound by their agreement to arbitrate in case of other defects in the award, such as the incorrect appointment of (one of) the arbitrators. A further example of the government's favourable view on De Clerck, Wouter J.L. `Report from the Netherlands: Bill for Revision of Netherlands Arbitration Act Tabled ­ What Does It Hold in Store for International Users?'. European Company Law 10, no. 4/5 (2013): 168­169. © 2013 Kluwer Law International BV, The Netherlands REPORT arbitration is the proposal to allow for the exclusive institutional (i.e. according to the rules of the arbitration institute) challenging of arbitrators if this is agreed by the parties. This may not sound revolutionary in an international context, but it does bode something new for the Netherlands, where currently a party can always resort to the court as a residual forum for a challenge. Third, the proposal to no longer require that the arbitral tribunal deposits the judgment with the court registry (which, currently, triggers the limitation period for a setting aside action) will iron out a procedural kink that is relatively unknown to international users of the Netherlands arbitration act. Fourth, the bill specifies in more detail the test, which is to be applied to a request for document production made by one of the parties in the arbitration. At first sight, the proposed text appears closer to the internationally accepted thresholds of the IBA Rules on the Taking of Evidence in International Arbitration. But it remains to be seen how this particular provision (again, if enacted) will be interpreted and applied in practice. Reference is made in the explanatory text that accompanies the bill to the statutory rules for document production in court proceedings, but these statutes approach the issue of document production from a decidedly different angle, with which non-Dutch users are unlikely to be familiar. The bill has been tabled to be read in the lower house of Parliament from 11 July 2013. OCTOBER 2013, VOLUME 10, ISSUE 4/5 EUROPEAN COMPANY LAW

Journal

European Company LawKluwer Law International

Published: Aug 1, 2013

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