10 November 2014

New Arbitration Act to further boost the Netherlands’ competitive position as arbitration venue

The revised Dutch Arbitration Act as recently adopted by the Dutch First Chamber will further enhance the efficiency and flexibility of the arbitration process and will offer a more time- and cost-efficient framework for the dispute resolution process. As a result of the revised Act, delays through state court proceedings will be avoided, the administrative burden will be reduced and party autonomy will be maximised. In addition, the revised Act offers a more effective model for proceedings on recognising and enforcing as well as setting aside arbitral awards.

The revised Act will boost the position of the Netherlands as a leading arbitration venue for both domestic and international disputes. This development will significantly benefit parties planning to resolve their disputes through arbitration in the Netherlands. The revised Dutch Arbitration Act will enter into force on 1 January 2015 and will apply to arbitral proceedings initiated on or after that date.

All arbitrations taking place in the Netherlands, regardless of the nationality of the parties or the subject matter of the arbitration, are subject to Book IV of the Dutch Code of Civil Procedure (Dutch Arbitration Act). Most provisions in the Dutch Arbitration Act are of a regulatory – thus not mandatory – nature, and they were inspired in large part by the 1985 UNCITRAL Model law. Originally, it was designed to promote the Netherlands as a venue for international arbitration. The forthcoming revision of the Dutch Arbitration Act (the revised Act) takes this goal an important step further.

 

What is new?

The most striking changes in the revised Act relate to the efficiency and effectiveness of the arbitration process and, in particular, the remedies available against an arbitral award. Other significant changes relate to the enforcement of an arbitral award and the interim measures available to the parties.

 

Enforcement of foreign arbitral awards

The revised Act significantly shortens the proceedings for the enforcement of foreign arbitral awards by providing that leave for enforcement of these awards can be sought from a court of appeal rather than from a district court. Decisions denying leave for enforcement can further be appealed before the Supreme Court. 

Setting aside an arbitral award

Setting aside proceedings will be briefer and more efficient as they will be limited to one full instance, the court of appeal, with the possibility of an appeal against the court of appeal’s decision before the Supreme Court. This possibility may be excluded by the parties. The revised Act also provides for the partial setting aside of arbitral awards. If only a part of an arbitral award is affected by a ground for setting aside, the remainder of the award remains valid if and only so far as it is not inextricably linked to the part of the award to be set aside. In addition, the revised Act provides that the court of appeal may suspend setting aside proceedings to allow the arbitral tribunal to right a wrong by either resuming the arbitral proceedings or by taking another appropriate measure. The revised Act excludes the possibility to appeal against this decision of the court of appeal.

Maximised party autonomy

The revised Act offers maximised party autonomy and importantly reduces administrative burdens. This means that parties choosing the Netherlands as a forum for dispute resolution enjoy an even broader freedom in determining the procedure to be followed by the arbitral tribunal in conducting the proceedings. The parties may, for example, exclude the authority of the arbitral tribunal to order the appearance of a witness or expert or the disclosure of documents.

Institutional challenge to arbitrators

The revised Act introduces the option for the parties to appoint an independent third party to decide on the challenge of an arbitrator. The third party may, for example, be an arbitral institution. 

Provisional measures

The revised Act contains distinctive provisions on interim measures and distinguishes between three types of provisional relief:

  • at any stage of proceedings, provisional measures taken by the arbitral tribunal that decides on the merits of the case
  • if no arbitration proceedings on the merits are pending, urgent provisional measures taken by a stand-alone arbitral tribunal
  • if it is not possible to (timely) obtain a provisional measure through arbitration, that measure can be taken by a state court.

The revised Act now also includes stand-alone summary arbitral proceedings. This new feature, already known under the Arbitration Rules of the Dutch Arbitration Institute, enables the parties to seek urgent interim or conservatory measures. In summary proceedings, the arbitral tribunal may render an arbitral award that can be declared enforceable simply by the leave of enforcement granted by the competent state court. 

Revival of state courts jurisdiction

Under the revised Act, state court jurisdiction revives only if the arbitral award is set aside because there was no valid arbitration agreement. If the arbitral award is set aside on other grounds, state court jurisdiction no longer revives. By introducing a further limitation of the intervention of Dutch courts in the arbitral process, these amendments make the revised Act more arbitration friendly and the arbitral process more effective. 

Reduced administrative burden

One of the procedural changes introduced by the revised Act in order to facilitate the arbitration process is the option for the parties to use electronic means whenever a written form is required. Another significant change is the abolishment of the compulsory filing of the arbitral award with the district court. This filing only remains required if the parties so agreed. 

Validity of the arbitration agreement

An arbitration agreement is considered and decided upon as a separate agreement. The arbitral tribunal may decide on the existence and validity of the contract of which the arbitration agreement forms part or to which the arbitration agreement is related.

Also, the validity of the arbitration agreement is enhanced, as the revised Act explicitly clarifies that an arbitration agreement is materially valid if:

  • it is valid in accordance with the law chosen by the parties to govern the arbitration agreement
  • it is valid in accordance with the law of the seat of arbitration
  • it is valid in accordance with the law which applies to the underlying legal relationship (for example, the contract). This rule applies when the parties did not choose a certain law to govern the arbitration agreement.

The new features offered by the revised Act further help to reduce the time and the costs involved in arbitration, and further enhance the competitive position of the Netherlands as a venue for both domestic and international arbitration.