Litigating at the Netherlands Commercial Court: when is a choice of forum clause valid?
Recently, the Netherlands Commercial Court (a court that is part of the Amsterdam District Court) gave judgment in an interesting motion contesting jurisdiction. A case that was brought before this new international body concerned the question whether or not a valid forum clause had been agreed. Litigation lawyer Hidde Reitsma gives and explanation to the judgment.
The Netherlands Commercial Court
The Netherlands Commercial Court (NCC) and the Netherlands Commercial Court of Appeal (NCCA) started on 1 January 2019. International commercial disputes can be resolved by a specialised regular court and litigation can be conducted in English at these courts. The NCC and NCCA are special departments (divisions) of the Amsterdam District Court and the Amsterdam Court of Appeal respectively. Starting point is that the parties agree that they designate the NCC as the competent court. This can be done in advance – in the contract concluded between the parties – or, if a dispute arises, in a separate agreement. The recent judgment concerned the question whether a valid NCC clause had been agreed.
Netherlands Commercial Court Choice of Forum Clause
Article 30 R of the Dutch Code of Civil Procedure (DCCP) stipulates that the Amsterdam District Court or the Amsterdam Court of Appeal has jurisdiction in an international commercial dispute, if the parties have agreed this. This does not apply, however, for matters that fall within the competence of the subdistrict court. This agreement must be proven by a written document, whereby a reference to
general terms and conditions
General terms applicable on all contracts of a corporate business.
» Meer over general terms and conditions general terms and conditions suffices, provided that the clause in question has explicitly been accepted by or on behalf of the other party.
In the case cited above (ECLI:NL:RBAMS:2020:2277), the court held that a valid NCC clause had been agreed between the parties in that case: the requirement of explicitness has also been met if the parties’ choice for the NCC has been expressed clearly, is a conscious choice, and has not been hidden in the general terms and conditions of one of the parties.
Preliminary relief proceedings at the Netherlands Commercial Court
What made this case special was the question whether the parties had explicitly agreed to litigate in the court in preliminary relief proceedings of the NCC. In March 2020, the claimant in the case, a natural person residing in New York, summoned the defendant, a Dutch company, to appear before the court in preliminary relief proceedings of the NCC. The defendant then raised a procedural issue, contesting the NCC’s authority, as the parties had agreed that they could (or might) subject the case to arbitration for the main case, but nevertheless could ask the court in preliminary relief proceedings of the NCC for provisional relief. A quote says: “to preserve its rights pending resolution of any dispute (…) through arbitration”.
The defendant in this case interpreted this clause in such a way that provisional relief can only be requested from the NCC if arbitration is actually pending in the formal legal sense. The court in preliminary relief proceedings took a different position and ruled that the parties must reasonably have meant that the provisional relief may precede and not anticipate the arbitration, as being the commonly used and clear meaning of the English word pending in the aforementioned context. The court in preliminary relief proceedings of the NCC therefore declared itself competent to hear the claim.
Contract interpretation in case of a choice of forum clause
This judgment also shows that not only the literal text, but also what the parties have meant, is taken into account when interpreting a choice of forum clause. In this case, that does not seem odd: otherwise, this would mean that a party does not have the option of requesting provisional relief if the parties have a dispute, but arbitration has not yet started. This is illogical, because obtaining provisional relief is often desired at that stage. Besides, the parties have also explicitly appointed a body for granting that relief, namely the NCC.
Litigating at the NCC
If you do a lot of business with foreign parties, it may be advisable to consider agreeing a choice of forum clause in favour of the NCC. The fact that litigation can be conducted in English facilitates the procedure, for which the NCC charges the same costs as the regular court. From a cost perspective, the customary alternative of arbitration, for example, will be many times costlier, especially if it concerns arbitration proceedings with multiple arbiters. AMS’ lawyers can assists you in NCC proceedings. They also can provide advice on drawing up contracts or general terms and conditions with a provision stipulating that litigation will be conducted in English at the NCC. Of course, you can contact us for this purpose.