Arbitration has always played an important role as a dispute settlement method in the Netherlands, and has a two-century history in the country.
As far as the modern Dutch arbitral scene is concerned, the new Arbitration Act that was adopted in 2014 (2014 Arbitration Act) forms the current framework for arbitral proceedings in the Netherlands. The 2014 Arbitration Act (which entered into force on 1 January 2015) replaced the former Arbitration Act of 1986 (1986 Arbitration Act), which had been in force for almost 30 years.2 The 2014 Arbitration Act is to a large extent included in Book IV of the Dutch Code of Civil Procedure (DCCP),3 and it is divided into two titles. Rather than making a distinction between domestic and international arbitration, Title 1 pertains to arbitration seated in the Netherlands,4 whereas Title 2 relates to arbitral proceedings seated outside the Netherlands.5
The adoption of this approach has the advantage of allowing the courts and parties to avoid disputes that relate to questions of whether cases are domestic or international.6 Moreover, according to some commentators, a sound legal framework for international arbitration can be suitable for domestic arbitration as well.7
The only difference in the treatment of domestic and international arbitrations seated in the Netherlands that could be found in the 1986 Arbitration Act was that it provided parties residing or domiciled outside the Netherlands with different time limits (especially with regards to the appointment and the challenge of arbitrators). Such difference in treatment has been eliminated in the 2014 Arbitration Act.
The 2014 Arbitration Act provides for the assistance of the Dutch judiciary, if necessary, by delegating powers to the president of the district court by, for example, allowing him or her to choose the number of arbitrators in cases where the parties cannot reach an agreement on that issue,8 or giving him or her the power to appoint the delegated judge before whom examination of witnesses can take place.9 Moreover, the court of appeal has the power to set aside awards.10
Over the years, arbitral proceedings have frequently been initiated in the Netherlands, with an increase in the number of users of arbitration, although precise statistics are not available.11 Some commentators suggest that the rising number of arbitral institutions that address the needs of specific industries has contributed to the amount of arbitrations taking place in the Netherlands.12 Around 100 arbitral institutions exist in the Netherlands, with the Netherlands Arbitration Institute (NAI) and the Arbitration Institute for the Construction Industry being the most important arbitral institutions in the country. Other important institutions include PRIME Finance, which deals with financial disputes, and TAMARA, pertaining to maritime and transport arbitration. Other arbitral institutions deal with various areas of trade in commodities (e.g., potatoes, flower bulbs, grain and feed, metal, dried semi-tropical fruits and spices). In addition, the Netherlands is home to the prominent Permanent Court of Arbitration (PCA), which is located in The Hague, and its mandate includes the administration of interstate and investor–state arbitration.
The Netherlands has also signed and ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).13 The Netherlands made no reservations when ratifying the Convention on 14 October 1963, except for the reciprocity reservation. The Netherlands is also party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which was ratified in 1966,14 as well as to almost 100 bilateral investment treaties (BITs)15 and the Energy Charter Treaty (ECT), which is one of the most important multilateral investment treaties.16 EU law has also been a source of influence for the 2014 Arbitration Act.17
II THE YEAR IN REVIEW
i Developments affecting international arbitration
Adoption of the 2014 Arbitration Act
The most notable development pertaining to arbitration in recent years is the adoption of the 2014 Arbitration Act. While the most important UNCITRAL Model Law principles had already been introduced through the 1986 Arbitration Act,18 it was thought that further alignment with the UNCITRAL Model Law would make the Netherlands even more attractive as a place for international arbitration.19 Moreover, the changes made in the laws pertaining to arbitration in various other countries,20 as well as the ones made by institutions in their arbitration rules,21 show that there is an ongoing need for states to keep up with the constantly changing environment of international arbitration.22
For these reasons, several changes have been introduced by the 2014 Arbitration Act.23
The philosophy of the 2014 Arbitration Act is guided by the principle of granting parties procedural freedom and flexibility. For instance, the 2014 Arbitration Act grants the arbitral tribunal power to hold hearings at any place other than the seat of the arbitration, within or outside the Netherlands, and to designate one of its members to hold a hearing, both unless agreed otherwise by the parties.24 It also allows for information and documents to be exchanged electronically, provided the arbitral tribunal has approved the use of such electronic means and unless one or more of the parties to the arbitration have opted out of the use of such means (and provided that the parties have agreed to such opt-out possibility).25
As far as the challenge of arbitrators is concerned, the 2014 Arbitration Act provides that parties to an arbitration may agree that an independent third party, such as an arbitral institution, can also decide on a challenge of an arbitrator, instead of the previously mandatory provision that granted such power exclusively to the president of the district court.26 Similarly, the parties may jointly decide that a third party, and not only the president of the district court, can decide on a party's request to consolidate arbitral proceedings that are either both seated in the Netherlands, or where one is seated in the Netherlands and the other is seated outside the Netherlands.27
Additionally, parties are able to request assistance from the Dutch courts in matters pertaining to arbitral proceedings seated outside the Netherlands, such as interim measures or preliminary witness examinations.28 It is interesting to note that if a party claims before a court that there is a valid arbitration agreement between the parties before submitting a defence, assistance by the Dutch courts can only be granted if the requested measure cannot be obtained, or cannot be obtained in a timely manner, from the arbitral tribunal. The courts do not have to determine whether the invoked arbitration agreement is valid.29
Furthermore, the 2014 Arbitration Act aims to reduce the length of setting-aside proceedings before the Dutch courts by referring such proceedings to the court of appeal (rather than the district court) and by reducing the maximum instances of judicial review from three to two.30 It also allows parties to opt out of the possibility of appeal in cassation against a judgment rendered by the court of appeal, except if a party to the arbitration is a natural person not acting in his or her professional practice.31
In addition, the time period for the application to set aside an arbitral award is three months and starts to run, according to the 2014 Arbitration Act, when the award is sent to the parties or, if the parties have so agreed, when the award is deposited with the registry of the district court. Alternatively, the three-month period may start to run from the day of the service of the award together with a leave for enforcement on a party, irrespective of whether the other two above-mentioned deadlines have lapsed.32
Finally, the 2014 Arbitration Act also provides that if a state, any other legal entity covered by public law or a state-owned company is a party to an arbitration agreement, it may not rely upon its national legislation or regulations for the purpose of contesting its capacity or power to enter into the arbitration agreement, or the susceptibility to submit the dispute to arbitration against counterparties that were not familiar with such limitations.33
Adoption of the 2015 NAI Arbitration Rules
The other notable development pertaining to arbitration in the Netherlands in the past few years is the adoption of the 2015 NAI Arbitration Rules (2015 NAI Rules). These entered into force on 1 January 2015, together with the 2014 Arbitration Act.34 Several changes have been introduced in the 2015 NAI Rules in an effort to adapt them to modern arbitral practice and to bring them in line with the 2014 Arbitration Act.35
Under the 2015 NAI Rules, all requests to and communications with the NAI must be made electronically via e-mail. Moreover, unless the tribunal decides otherwise, all requests, communications or other instruments in writing between the parties and the tribunal shall be made via e-mail if the parties have agreed that they can be reached for such purposes by such means.36
Under the 2010 NAI Arbitration Rules, the default procedure for the appointment of arbitrators was the 'list procedure'.37 Under the 2015 NAI Rules, party appointment Is the default, with the list procedure remaining available as an alternative.38 Parties can also agree on another procedure for the appointment of arbitrators.39 In addition, under the new rules parties may challenge arbitrators before a third party. That third party shall be a committee appointed by the NAI Executive Board that will decide on requests for challenges against arbitrators.40
Apart from the above-mentioned amendments, the 2015 NAI Rules also contain a new provision on the consolidation of arbitral proceedings. Parties to an arbitration may request the NAI administrator to appoint a third person that will order the consolidation of the arbitral proceedings with other arbitral proceedings pending in the Netherlands or abroad, provided that the NAI Rules apply to both arbitrations, unless the parties agree otherwise.41
The NAI has also introduced rules for the appointment of an arbitral tribunal in ad hoc proceedings which entered into force on 1 October 2015.
Another notable development is the entry into force of the NAI Mediation Rules as of 1 January 2017. The NAI Mediation Rules provide an opportunity for parties to file a request for (confidential) mediation with the NAI in accordance with the NAI Mediation Rules. The appointment of a mediator follows the same procedure as the appointment of an arbitrator under the NAI Rules.
The Netherlands Commercial Court
On 8 March 2018, the Dutch Lower Chamber of Parliament approved a legislative proposal on the introduction of the Netherlands Commercial Court and the Netherlands Commercial Court of Appeal (together: NCC).42
The NCC are placed as chambers within the Amsterdam District Court and the Amsterdam Court of Appeal, respectively. The NCC will specialise in complex (international) commercial cases, and are meant to offer an alternative to international arbitration, and more costly forums to litigate international disputes such as London, Dubai, Delaware or Singapore. The court fees of the NCC are higher than those of regular Dutch courts, but are nevertheless expected to be lower than the administration costs and arbitrator fees in international arbitration proceedings.43
The most distinctive feature of the NCC is that all proceedings will be conducted in English. Judgments of the NCC will also be rendered in English. Judges of the NCC are selected on the basis of their specialised expertise as well as their command of the English language.
The NCC have jurisdiction in civil and commercial matters where (1) the dispute is within the parties' autonomy and is not subject to the jurisdiction of the cantonal court or the exclusive jurisdiction of any other court, (2) the dispute has an international aspect, (3) the Amsterdam District Court is the competent court (pursuant to a forum choice or otherwise) and (4) parties have expressly agreed that the proceedings will be in English and will be governed by the NCC rules of procedure.
Once jurisdiction of the NCC is established, separate NCC rules of procedure will apply alongside Dutch statutory rules of civil procedure. These rules of procedure, which have been published in draft form,44 contain provisions tailored to international commercial cases, such as the submission of documents through an NCC portal, case management conferences and the possibility to request a court reporter to be present during hearings to draw up full verbatim transcripts.
Proceedings at the NCC will in principle not be confidential. The applicable private international rules on jurisdiction also remain unaffected. Furthermore, the NCC system does not provide for English-language cassation proceedings. Cassation against rulings of the Netherlands Commercial Court of Appeal is only possibly in (regular) Dutch language proceedings with the Dutch Supreme Court (Supreme Court).
The legislative proposal is now before the Upper Chamber of Parliament. If the Upper Chamber votes in favour of the proposal, the legislation is expected to enter into effect later this year.
ii Arbitration developments in local courts
Annulled foreign arbitral awards may only be enforced in exceptional circumstances.
On 24 November 2017, the Supreme Court ruled on a request for a leave for recognition and enforcement of an arbitral award that had been annulled at its arbitral seat in Russia.45 The Supreme Court refused to enforce the arbitral award on the basis of Article V(1)(e) New York Convention by reason of its annulment, although it reasoned that the Dutch courts have a degree of discretion to enforce the award in exceptional circumstances despite the annulment of the award at the arbitral seat.
On 31 March 2011, the International Commercial Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation (ICAC) ordered Novolipetsky Metallurgichesky Kombinat (NLMK), a major Russian steel company, to pay approximately 8.9 billion roubles to Russian billionaire Nikolay Maximov. The dispute related to the payment and calculation of the purchase price of Maximov's shares in Maxi-Group (a steel company). NLMK commenced annulment proceedings before the Arbitrazh Court of Moscow. The Arbitrazh Court annulled the award in an oral judgment on various grounds, including non-arbitrability of the dispute under Russian law. This decision has been upheld by the Federal Arbitrazh Court of the Moscow District and the Supreme Arbitrazh Court of the Russian Federation in subsequent appeal proceedings.
Despite its annulment, Maximov requested the Amsterdam District Court to recognise and enforce the arbitral award in the Netherlands. The request was denied, and the decision was upheld by the Amsterdam Court of Appeal.
The Supreme Court's judgment focuses on the question whether, and if so under which circumstances, a Dutch court has discretion to recognise and enforce an annulled award despite this being a ground to refuse enforcement on the basis of Article V(1)(e) New York Convention. The Supreme Court first established that the (authentic) English and French versions of Article V New York Convention slightly differ on a national court's discretion to apply one of the grounds to refuse enforcement listed in Article V(1) New York Convention.46 The Supreme Court went on to argue that the English text grants a certain degree of discretion to enforce an annulled award and that this reading of the English text is not irreconcilable with the French text. According to the Supreme Court, this reading is supported by the fact that the New York Convention is aimed at facilitating the recognition and enforcement of arbitral awards.
The Supreme Court further stated that a Dutch court may recognise and enforce an annulled award only in exceptional circumstances, for example, if (1) the annulment is based on grounds that do not comply with the grounds for refusal listed in Article V(1) New York Convention or (2) if the annulment decision is not recognisable or enforceable in the Netherlands pursuant to the applicable conflict of laws rules (e.g., if the annulment decision is contrary to Dutch public policy).47 It ruled that the Amsterdam Court of Appeal did not err in its judgment that such exceptional circumstances did not apply in this case. The Amsterdam Court of Appeal's decision to deny Maximov's request for recognition and enforcement of the award was therefore upheld.
Dutch courts must apply the right to sovereign immunity from jurisdiction ex officio
In Iraq v. Respondent, the Supreme Court examined whether Dutch courts are obliged to assess on their own initiative (ex officio) whether immunity from jurisdiction applies in cases where a respondent State does not appear.48
The case concerned a default judgment against Iraq and the Central Bank of Iraq by The Hague Court of Appeal in 2000. Iraq and the Central Bank of Iraq were ordered to pay (the equivalent of) approximately €3 million pursuant to a contract between Nelcon and the State Organization of Iraqi Ports concluded in 1981. The claim was filed under the settlement mechanism of the Iraq Debt Reconciliation Office in 2005, but qualified as an 'unreconciled claim' and was denied settlement. In 2013, Iraq and the Central Bank of Iraq filed requests before the Dutch court to suspend enforcement of the default judgment.
The Supreme Court first established that (unwritten) customary international law is silent on how national courts should apply the right to sovereign immunity from jurisdiction. Article 6 the UN Convention on Jurisdiction Immunities of States and their Properties (UN Convention) – which is currently not in force – states that national courts should apply this right on their own initiative. However, the Supreme Court found that this principle does not reflect customary international law because it is not included in the preamble to the UN Convention and was originally considered (in early drafting stages) a matter left to national procedural law. Therefore, this matter should be examined according to Dutch procedural law.
The Supreme Court acknowledged that at the time of the default judgment in 2000 Dutch courts were authorised but not obliged to apply the right to sovereign immunity from jurisdiction on their own initiative. The Supreme Court expressly overturned this precedent. In light of observations made by the Dutch legislator on recognition of the right to sovereign immunity from jurisdiction, the Supreme Court ruled that Dutch courts should always apply and examine the right to sovereign immunity from jurisdiction in cases where a respondent state does not appear. This new precedent applies to cases filed after 1 January 2018.
Recognition and enforcement of an arbitral award in one country does not extend to the entire Kingdom of the Netherlands
In Sonera v. Çukurova, the Supreme Court ruled on the applicability of Article 40 of the Statute of the Kingdom of the Netherlands (the Statute) to judgments regarding the recognition and enforcement of arbitral awards or foreign judgments.49
The Kingdom is a sovereign state consisting of four distinct countries: the Netherlands, Aruba, Curaçao and Sint Maarten. Pursuant to Article 40 of the Statute, judgments rendered in one country within the Kingdom are enforceable in other countries of the Kingdom in accordance with their respective rules regarding enforceability.
The case revolved around the recognition and enforcement of an award against Çukurova rendered by an ad hoc arbitral tribunal seated in Switzerland in a dispute relating to a sale of shares by Çukurova to Sonera. Sonera obtained a leave for recognition and enforcement of this award from the Amsterdam District Court. Sonera also obtained a leave for recognition and enforcement from the Court of First Instance of Curaçao. This decision was later overturned by the Common Court of Justice in Curaçao on the grounds that (inter alia) Article 40 of the Statute did not apply to the leave for recognition and enforcement granted by the Amsterdam District Court, meaning that Sonera could not rely on the recognition and enforcement of the leave granted by the Amsterdam District Court within the territory of Curaçao.
The Supreme Court ruled that the recognition and enforcement of arbitral awards and foreign judgments do not fall within the competence of the Kingdom. Instead, each country within the Kingdom individually has the competence and discretion to enact rules for recognition and enforcement and enter into international treaties to that effect. In order to maintain this division of competence between the Kingdom and its countries, leave for recognition and enforcement based on an international treaty and rendered in one country within the Kingdom cannot apply directly to the territory of another country that is not a party to this treaty.
The Supreme Court concluded that Article 40 of the Statute does not apply to a leave for recognition and enforcement rendered within the Kingdom regardless of whether individual countries within the Kingdom are party to the same treaties regarding recognition and enforcement. A leave for recognition and enforcement should in principle be requested in each country within the Kingdom individually, unless otherwise stipulated by the laws of the country where enforcement is sought.
Arbitral proceedings discontinued after 'partial award', rendering the 'final award' unenforceable
On 21 February 2017, the Amsterdam Court of Appeal refused to grant a leave for recognition and enforcement of a 'final award' of an arbitral tribunal seated in the Czech Republic.50 It ruled that this award lacked validity due to the arbitral proceedings having been discontinued prior to the 'final award'.
In the arbitral proceedings Diag Human SE (Diag), a Lichtenstein-based blood plasma supplier, claimed compensation from the Czech Republic for substantial losses caused by, inter alia, a letter from the Czech Minister of Health to a business partner of Diag. The letter had prompted the business partner to terminate its relationship with Diag. The arbitral proceedings resulted in an interim award, a partial award and a final award. All awards were consecutively subjected to a party-agreed arbitral review process. The arbitral panel reviewing the final award stated in its resolution that the partial award effectively contained a decision on the entire claim and resulted in an award against the Czech Republic (which the Czech Republic complied with).
Diag nevertheless sought to enforce the final award in the Netherlands, and the request was denied by the Amsterdam District Court due to the final award having been rendered after the arbitral proceedings had been discontinued.
The Amsterdam Court of Appeal upheld this ruling. Based on the resolution of the arbitral review panel, the Amsterdam Court of Appeal concluded that pursuant to the arbitration law of the seat (i.e., Czech arbitration law) the arbitral proceedings were discontinued as of the partial award becoming binding in 2002 and that any future arbitrators lack competence to render an award in the arbitral proceedings. This (retroactively) invalidates the final award. As a result, the final award does not qualify as a final and binding award within the meaning of the New York Convention.
iii Investor–state disputes
Jurisdiction may be based on attachment of assets in the Netherlands in the absence of other grounds for jurisdiction
Based on an investment treaty award against Venezuela, Crystallex International Corp (Crystallex) filed a claim for damages against Petróleos De Venezuela SA (PDVS), a Venezuela-owned subsidiary, before The Hague District Court.51
On 4 April 2016, an arbitral tribunal acting under the auspices of the ICSID Additional Facility Rules awarded Crystallex a claim for damages against Venezuela in an amount of US$1.387 billion (including interest).52 The dispute was brought under the Venezuela–Canada BIT and related to the unlawful expropriation of a mining investment in 'Las Cristinas', an area in Venezuela containing large undeveloped gold deposits. Following the award, Crystallex levied prejudgment attachments on assets owned by Venezuelan subsidiary PDVS in the Netherlands. It proceeded to claim damages from PDVS before The Hague District Court in the amount of the ICSID award. In the principal, Crystallex requested a declaration that Venezuela and PVDS can be fully equated for the purposes of the obligation to comply with the ICSID award. In the alternative, it requested that PVDS be ordered to compensate damages on the basis of tort and unjust enrichment since it had facilitated and profited from the expropriation. PVDS filed a motion to (1) deny jurisdiction in the proceedings and (2) lift the prejudgment attachments levied against PVDS.
Both motions were based on (inter alia) grounds of sovereign immunity from jurisdiction and enforcement. Building on recent case law of the Supreme Court,53 The Hague District Court found that the right to sovereign immunity from jurisdiction and execution in Articles 6, 18 and 19 of the UN Convention are reflective of Dutch legal practice. Therefore, they are applicable to sovereign immunity claims despite the UN Convention not being in force.54
The Hague District Court first examined PVDS' claim to sovereign immunity from jurisdiction. Article 6 of the UN Convention establishes sovereign immunity from jurisdiction only insofar PVDS' actions amount to sovereign acts (acta iure imperii). The Hague District Court found that this was not the case, even though it was undisputed between Crystallex and PVDS that the ICSID award related to sovereign acts by Venezuela. In order to establish jurisdiction, Crystallex relied on the principle of jurisdiction by necessity (forum necessitatis). Pursuant to this principle, a Dutch court may establish jurisdiction if a claimant can show that it is effectively prevented from bringing the dispute before any other forum (Article 9(b) DCCP) or that it cannot be reasonably expected to do so (Article 9(c) DCCP). Neither ground was found to be applicable, as Crystallex had not been effectively denied access to the Venezuelan courts and, respectively, the matter was insufficiently connected to the Dutch jurisdiction.
Instead, The Hague District Court established jurisdiction on the basis of Crystallex's prior prejudgment attachments in the Netherlands (Article 767 DCCP). This basis for jurisdiction is generally applied as a 'last resort' in case a creditor wishes to take recourse on assets located in the Netherlands but cannot rely on any (other) ground for jurisdiction. This was the case for Crystallex. Moreover, there is no treaty between Venezuela and the Netherlands which would allow Crystallex to obtain a leave for recognition and enforcement of a Venezuelan judgment against PVDS in the Netherlands. However, the prior prejudgment attachments do not serve as a basis for jurisdiction with respect to Crystallex's principal claim for declaratory relief. The attachments were levied for the purpose of monetary payment obligations, i.e., Crystallex's alternative claims, which led The Hague District Court to deny jurisdiction on the principal claim.
Finally, The Hague District Court examined PVDS' motion to lift the prejudgment attachments. It ruled that PVDS cannot rely on a claim to sovereign immunity from execution. The Hague District Court applied Article 19 of the UN Convention, which it stated is applicable to both prejudgment and post-judgment attachments in the Netherlands. It found that the seized assets were in use for non-governmental commercial purposes, referring in particular to the attached shares in a Dutch holding company used as an investment vehicle. This amounts to an exception from sovereign immunity from execution under Article 19(c) of the UN Convention. For these reasons, PVDS' motion to lift the prejudgment attachments was rejected.
Yukos: the highest-value arbitration award of all time set aside by a Dutch court
On 18 July 2014, and following three interim awards of 30 November 2009 on jurisdiction and admissibility,55 an investment treaty tribunal seated in The Hague under the 1976 UNCITRAL Rules found in three final awards that certain former shareholders of the defunct oil group Yukos should be compensated for the expropriation of their investment in Russia.56 The tribunal awarded US$50 billion-worth of damages to the claimants, a record-breaking sum in the history of arbitration.
In a judgment of 20 April 2016, The Hague District Court set aside all interim and final awards rendered against Russia. The Hague District Court reached its decision on the ground that the arbitral tribunal that had rendered the awards lacked jurisdiction.57 Accordingly, The Hague District Court annulled the three interim awards of 30 November 2009, as well as the three final awards of 18 July 2014. For a more detailed description of the reasoning of The Hague District Court, reference is made to Chapter 26 of the previous edition of this publication.
The former Yukos shareholders have lodged an appeal against this decision with The Hague Court of Appeal. They also submitted a bifurcation request to hear arguments regarding the tribunal's jurisdiction first, but this request was denied on 23 January 2017 by The Hague Court of Appeal. At the time of writing, the appeal proceedings are still pending.
Ecuador loses annulment proceedings against Chevron
On 18 July 2017, The Hague Court of Appeal affirmed the ruling of The Hague District Court rejecting Ecuador's request to annul interim and partial arbitral awards rendered in favour of US petroleum company Chevron.58
In 1964, the Ecuadorian government had awarded TexPet, a subsidiary of Chevron since 2001, with concessions to explore and exploit oil in the Ecuadorian Amazon. In 1995, Ecuador, Texpet and PetroEcuador's signed a settlement agreement to set up a remedial plan to remedy environmental damage caused in TexPet's operating area. The same parties entered into a 'Final Release' in 1998, which conditionally released TexPet from the government's and PetroEcuador's claims in relation to the environmental impact of TexPet's exploration and exploitation activities in the area. Furthermore, on 11 May 1997 the US–Ecuador BIT (the BIT) entered into force.
Although TexPet had been released from the government's claims, a group of citizens brought a claim against Chevron before the Court of Lago Agrio for environmental pollution allegedly caused by TexPet's activities in Ecuador. The claim was granted, and TexPet was ordered to pay damages. Chevron and TexPet initiated arbitration proceedings administered by the Permanent Court of Arbitration (PCA) to prevent the enforcement of the decision of the Court of Lago Agrio, requesting a declaration from the tribunal that Ecuador was solely liable for the pollution, and that the court proceedings in Ecuador violated the protections granted by Ecuador to investors under the BIT. The tribunal issued several interim and partial awards.
Ecuador initiated annulment proceedings before The Hague District Court. In its 2016 judgment, The Hague District Court rejected Ecuador's request to annul the award. Ecuador appealed this decision, asserting on the basis of Article 1065 DCCP that there was no valid arbitration agreement and that the awards were contrary to public policy and were not (sufficiently) reasoned.
In the appeal proceedings, The Hague Court of Appeal examined the question of the existence of a valid arbitration agreement. According to The Hague Court of Appeal, this depended on the qualification of inter alia both the 1995 settlement agreement and the 1998 Final Release as an 'investment agreement' under the BIT. To that end, The Hague Court of Appeal found that the term 'investment' should be interpreted broadly, and concluded that the dispute between TexPet and Chevron and Ecuador qualified as an 'investment dispute' within the meaning of the BIT. Therefore, there was a valid arbitration agreement between TexPet, Chevron and Ecuador under Article VI of the BIT.
Ecuador's arguments based on public policy related primarily to interim measures imposed by the arbitral tribunal ordering Ecuador to suspend the enforcement of the decision of the Court of Lago Agrio. The Hague Court of Appeal found that the interim measures did not amount to a violation of public policy, stating that Ecuador had failed to show that the tribunal had taken insufficient account of the interests of the claimants in the Court of Lago Agrio proceedings.
Ecuador's argument that the awards were not (sufficiently) reasoned was not raised in the proceedings before The Hague District Court and addressed in the appeal proceedings for the first time. Therefore, the argument was rejected. To the extent Ecuador intended this to be a ground for violation of public policy, The Hague Court of Appeal found that Ecuador failed to sufficiently substantiate this argument.
At the time of writing, the PCA-administered arbitration proceedings are still pending.
On 6 March 2018, the Court of Justice of the European Union (CJEU) ruled in Slovakia v. Achmea, that the arbitration clause contained in Article 8 of the 1991 Netherlands–Slovakia BIT has an adverse effect on the autonomy of EU law, and is therefore incompatible with EU law.59 This decision is the first precedent with respect to the incompatibility of arbitration clauses contained in intra-EU BITs with EU law. The CJEU first found that the arbitral tribunal constituted under the BIT must rule on the basis of the law of the relevant contracting state involved in the dispute as well as other (international) agreements between the contracting parties, including EU law. This may entail that the arbitral tribunal may be called to interpret or apply EU law. Furthermore, the CJEU did not consider the arbitral tribunal concerned to be part of the judicial system of either the Netherlands or Slovakia and ruled that it can therefore not refer to the CJEU for a preliminary ruling. Finally, the CJEU observed that the arbitral award is not subject to (limited) review by a court of a Member State. According to the CJEU, this means that the BIT effectively removes matters concerning the application or interpretation of EU law from the review of national courts and hence from the system of judicial remedies which the TFEU requires Member States to establish on questions of EU law. It remains to be seen what the effects of this judgment will be for intra-EU BITs more generally.
On 7 March 2018, the municipality of The Hague opened The Hague Hearing Centre, a dedicated venue located in The Hague tailored to, inter alia, hosting hearings in international arbitrations.
III OUTLOOK AND CONCLUSIONS
The Netherlands always strives to stay ahead of developments in (international) arbitration, and the adoption of the 2015 Arbitration Act and the 2015 NAI Rules as well as the introduction of the Netherlands Commercial Court and the opening of The Hague Hearing Centre demonstrate that fact. Moreover, the effective management and adjudication by the Dutch courts of cases relating to arbitration shows the generally pro-arbitration stance of the country. These factors, along with the many bilateral and multilateral investment treaties that the Netherlands has entered into, as well as the presence of prominent arbitral institutions, promise a bright future for arbitration in the Netherlands.
1 Marc Krestin is a managing associate and Marc Noldus is an associate at Linklaters LLP.
2 The 2014 Arbitration Act applies to arbitrations initiated on or after 1 January 2015. The former Arbitration Act of 1986 remains applicable to arbitrations initiated before this date.
3 Articles 1020–1076 DCCP.
4 Articles 1020–1073 DCCP.
5 Articles 1074–1076 DCCP.
6 'Memorie van Toelichting', (1984) Tijdschrift voor Arbitrage (TvA) 19; HJ Snijders, Nederlands Arbitragerecht (Kluwer, Deventer 2011) 49; W Hugenholtz, Hoofdlijnen van Nederlands burgerlijk procesrecht (Convoy, Dordrecht 2015 24th Edition) 212; AJ van den Berg, R van Delden and HJ Snijders, Netherlands Arbitration Law (Kluwer Law and Taxation, Deventer/Boston 1993) 120.
7 G Meijer and M Paulsson, 'National Report for the Netherlands', in J Paulsson (ed) International Handbook on Commercial Arbitration (Kluwer Law International 2012) 1; A J van den Berg, R van Delden and H J Snijders (n 6) 120; A J van den Berg, 'Hoe gastvrij is Nederland voor internationale arbitrage', Lecture given at the Erasmus University Rotterdam – 11 April 1990 (Kluwer, Deventer, 1990) 4.
8 Article 1026(2) DCCP.
9 Article 1041a (1) DCCP.
10 Article 1064a (1) DCCP.
11 HJ Snijders (footnote 6) 45.
12 G Meijer and M Paulsson (footnote 7) 3.
13 Rijkswet 14 October 1963 (Stb 417). The instrument of ratification was deposited with the Secretary-General of the United Nations on 24 April 1964, in accordance with Article VIII(2) of the Convention, and the Convention entered into force on 23 July 1964, pursuant to Article XII(2) of the same Convention.
14 Rijkswet 21 July 1966 (Stb 339). The instrument of ratification was deposited with the World Bank on 14 September 1966, in accordance with Articles 68(2) and 73 of the Convention, and the Convention entered into force on 14 October 1966, pursuant to Article 68(2) of the same Convention.
15 For a list of the bilateral investment treaties signed by the Netherlands, see investmentpolicyhub.unctad.org/IIA.
16 Rijkswet 15 May 1996 (Stb 282). The instrument of ratification was deposited with the Government of the Portuguese Republic on 16 December 1997, in accordance with Articles 39 and 49 of the Treaty, and the Treaty entered into force on 16 April 1998, pursuant to Article 44(1) of the same Treaty.
17 G Meijer, 'Netherlands' in K Nairn and P Heneghan (eds), Arbitration World (4th edition, Thomson Reuters 2012) 595.
18 V Lazic, 'Arbitration Law Reform in the Netherlands: Formal and Substantive Validity of an Arbitration Agreement', (2007) 11(1) Electronic Journal of Comparative Law 2.
19 Toelichting (footnote 19) 27.
20 Examples of reforms to arbitration laws in recent years include the Federal Law on Arbitration (Arbitral Proceedings) in the Russian Federation (No. 382-FZ) and the Federal Law on Amendments to Certain Legislative Acts of the Russian Federation (No. 409-FZ), both of which entered into force on 1 September 2016; the Arbitration Law of Belgium (Bill No. 53-2743) adopted by the House of Representatives of Belgium on 16 May 2013 which amends the Sixth Part of the Belgian Code of Civil Procedure; and the Arbitration Law of Saudi Arabia with the enactment of its New Arbitration Law 1433H (2012G) – on 9 April 2012, the Council of Ministers approved the New Arbitration Law, and a royal decree on the law was issued on 16 April 2012. Finally, the Law Commission of England and Wales suggested In December 2017 that reforms to the English Arbitration Act 1996 should be considered. For a detailed description of arbitration law reforms in other jurisdictions, we refer to the relevant chapters of this edition.
21 Rules that have changed recently include the 2013 arbitration rules of the Belgian Centre for Arbitration and Mediation, the 2014 arbitration rules of the London Court of International Arbitration and the 2017 arbitration rules of the International Chamber of Commerce.
22 E R Meerdink, 'Symposium herziening arbitragerecht' (2005) TvA 75.
23 Note that the changes commented on in this chapter are based on a selection by the authors and are not limitative or exhaustive.
24 Article 1037(3) DCCP.
25 Article 1072b DCCP.
26 Article 1035(7) DCCP.
27 Article 1046 DCCP.
28 Articles 1074a–1074b DCCP.
29 Article 1074d DCCP.
30 Article 1064a(1) DCCP.
31 Article 1064a(5) DCCP.
32 Article 1064a(2) DCCP.
33 Article 167 Dutch Civil Code (DCC).
34 The 2015 NAI Rules shall apply in the form they have at the time at which the arbitration is initiated (Article 62(2) 2015 NAI Rules).
35 See footnote 26.
36 Article 3 2015 NAI Rules.
37 Article 14 of the 2010 NAI Arbitration Rules.
38 Articles 13 and 14 2015 NAI Rules
39 Article 13(6) 2015 NAI Rules.
40 Article 19 2015 NAI Rules.
41 Article 39 2015 NAI Rules.
42 The legislative proposal was published on 17 July 2017: Parliamentary Papers II 34 761, nr. 2 . See also C H van Rhee, 'The Netherlands Commercial Court in an International Context', TvCR 2016/4, pp. 120, 121; D J Oranje 'The coming into being of the Netherlands Commercial Court', TvCR 2016/4, pp. 122–6; P E Ernste and F E Vermeulen 'The Netherlands Commercial Court – an attractive venue for international commercial disputes?', TvCR 2016/4, pp. 127–37.
43 H J Snijders 'NCC en arbitrage', TvA 2018/1, pp. 5, 6.
44 An English translation of the draft NCC rules of procedure dated June 2017 can be accessed on the following website: https://www.rechtspraak.nl/SiteCollectionDocuments/concept-procesreglement-ncc_en.pdf.
45 Supreme Court 24 November 2017, ECLI:NL:HR:2017:2992, NJB 2017/2296 (Nikolay Maximov/Novolipetsky Metallurgichesky Kombinat).
46 According to the English and French versions, recognition and enforcement 'may be refused […] only if' respectively 'shall only be refused […] if' ('ne seront refusées […] que si') one of the grounds listed in Article V(1) New York Convention applies.
47 See for instance a recent Dutch judgment in Yukos, where the Amsterdam Court of Appeal refused to recognise the Russian insolvency order relating to Yukos Oil by reason that the insolvency order was issued contrary to public policy (Amsterdam Court of Appeal 9 May 2017, ECLI:NL:GHAMS:2017:1695).
48 Supreme Court 1 December 2017, ECLI:NL:HR:2017:3054, NJB 2017/2343 (Republic Iraq and Central Bank of Iraq v. Respondent).
49 Supreme Court 8 December 2017, ECLI:NL:HR:2017:3104, NJ 2018/7 (Sonera Holding BV v. Çukurova Holding AS).
50 Amsterdam Court of Appeal 21 February 2017, ECLI:GHAMS:2017:527 (Diag Human SE v. Czech Republic). The judgment was only published on 29 September 2017.
51 The Hague District Court 18 October 2017, ECLI:NL:RBDHA:2017:11906, NJF 2018/18.
52 Crystallex International Corporation v. Bolivarian Republic of Venezuela (Award, 2016) ICSID Case No. ARB(AF)/11/2.
53 Supreme Court 30 September 2016, ECLI:NL:HR:2016:2236, JOR 2016/353 (MSI/Gabon); Supreme Court 14 October 2016, ECLI:NL:HR:2016:2371, JWB 2016/369 (NN v. Dutch State); and Supreme Court 14 October 2016, ECLI:NL:HR:2016:2354, JIN 2016/226 (Dutch State v. Servaas). For a discussion of these judgments, we refer to Chapter 26 of the previous edition of this publication. See also See S Barten and M Krestin, 'State Immunity from Enforcement in The Netherlands: Will Creditors be Left Empty-Handed?', Kluwer Arbitration Blog, 25 April 2017.
54 The UN Convention will enter into force 30 days after the 30th instrument of ratification, acceptance, approval or accession with the UN Secretary-General. At the time of writing, there are 28 signatories.
55 Hulley Enterprises Limited v. The Russian Federation, UNCITRAL, PCA Case No. AA 226, interim award on jurisdiction and admissibility; Yukos Universal Limited v. The Russian Federation, UNCITRAL, PCA Case No. AA 227, interim award on jurisdiction and admissibility; Veteran Petroleum Limited v. The Russian Federation, UNCITRAL, PCA Case No. AA 228, interim award on jurisdiction and admissibility.
56 Hulley Enterprises Limited v. The Russian Federation, UNCITRAL, PCA Case No. AA 226, final award; Yukos Universal Limited v. The Russian Federation, UNCITRAL, PCA Case No. AA 227, final award; Veteran Petroleum Limited v. The Russian Federation, UNCITRAL, PCA Case No. AA 228, final award.
57 The Hague District Court, 20 April 2016, ECLI:NL:RBDHA:2016:4230.
58 The Hague Court of Appeal, 18 July 2017, ECLI:NL:GHDHA:2017:2009.
59 Court of Justice of the European Union 6 March 2018, Case C-284/16 (Slovak Republic v. Achmea B.V.). For a discussion of this decision, please see Fouchard and M Krestin, 'The Judgment of the CJEU in Slovak Republic v. Achmea – A Loud Clap of Thunder on the Intra-EU BIT Sky!', Kluwer Arbitration Blog, 7 March 2018.