Court: Netherlands Supreme Court
Date: January 8, 2010
LJN Number: BJ9352
Case: Under Commission Regulation (EC) No 1400/2002 of 31 July 2002 car dealers within a selective distribution system must be able to sell actively to any end user resident in an area within the European Union where selective distribution is used. Suppliers are however allowed to impose an obligation on the dealer not to sell new vehicles to independent resellers in areas where selective distribution is used.
Alfa Romeo Nederland decided to ask the District Court of Dordrecht for an injunction, when it noted that Anonymous, an independent reseller, sold new Alfa Romeo’s to the public. Alfa Romeo Nederland alleged that Anonymous committed a tort (an unlawful act under Dutch law), by consciously making use of a breach of obligation by car dealers, who under the selective distribution system are under an obligation not to sell new vehicles to independent resellers, like Anonymous. By acting in this manner, Anonymous brought itself in a better position than genuine Alfa Romeo car dealers, who are bound to act fully in accordance with the distribution agreement and who are expected to invest in marketing and sales of the Alfa Romeo brand.
Both the Court and the Court of Appeal ruled against Alfa Romeo Nederland. It was held that the sole breach of obligation did not necessarily lead to the conclusion that Anonymous committed a tort towards the Dutch dealers of the Alfa Romeo Network. Alfa Romeo Nederland decided to bring the case before the Netherlands Supreme Court.
Held: The Netherlands Supreme Court rules that, if an independent reseller:
(a) resells products that have been obtained by consciously using the fact that a reseller bound by a selective distribution system breached its contractual obligation towards the distributor, and;
(b) by selling the thus acquired products directly competes with other merchants who are tied a similar contractual obligation, and;
(c) this reseller benefits from the fact that these bound resellers are in a less favorable position because of the contractual obligation;
this can constitute a tort or unlawful act under Dutch law towards these other merchants.
Furthermore, the circumstances described under (a) to (c) can constitute a tort towards the distributor, if the unfair competition as described undermines the distribution system, for example where this invites bound resellers to similar strategies or where this would lead to a situation where third parties might not want to join the selective distribution system. The decision of the Court of Appeal is quashed and the case is referred back to another Court of Appeal.
Fortis Corporate Insurance v. Uni-Data Logistics et alia
Court: Netherlands Supreme Court
Date: December 18, 2009
LJN Number: BI6315
Case: Theft of computers during CMR road carriage.
Fortis, as subrogated insurer of the party interested in the cargo, initiated proceedings before the Landgericht Stuttgard, ending in an award against the carrier in the amount of € 19.596,93, the equivalent of the limited liability under Article 23 section 3 CMR. Fortis announced further German proceedings in order to get a full compensation for the total damage sustained, upon which Uni-Data decided to initiate negative declaratory proceedings to determine the carriers non-liability in the more favourable Dutch jurisdiction (referred to by the Germans as the “Holländische Trick”).
These proceedings were initiated more than one year after the incident, which gave rise to a dispute whether negative declartory proceedings are subject to prescription, and if so which period of limiation applies to such proceedings for relief. Basically there are four options. Under the various views negative declaratory proceedings are:
- not subject to prescription, as one should always be allowed to ask the Court for a declaration;
- subject to the one year prescription period of Article 32 CMR;
- subject to the three year prescription period of Article 32 CMR in case of (the equivalent of) wilful misconduct;
- subject to the one year prescription period of Article 8:1711 of the Dutch Civil Code.
The Court of first instance chose option three and ruled against Fortis. The Court of Appeal chose option one and ruled against Fortis, after which Fortis brought the case before the Netherlands Supreme Court.
Held: This case requires interpretation of Article 32 CMR, hence interpretation of uniform private law, which should be done in accordance with the rules laid down in Article 31 and Article 32 of the 1969 Vienna Convention on the Law of Treaties. Under the rule laid down in Article 31(1) of the Vienna Convention, Article 32 CMR should be interpreted in accordance with the ordinary meaning to be given to the terms of the CMR in their context and in the light of its object and purpose. Under Article 31(3), subsequent agreement and practice – to be considered together with the context of agreements and instruments made in connection with the treaty’s adoption – have a crucial role in interpretation. The Netherlands Supreme Court will not use the preparatory work of the CMR-treaty and the circumstances of its conclusion, as these are not published or readily available to the public.
From the authentic English and French text of Article 32 CMR – “an action arising out of carriage under this Convention” respectively “les actions auxquelles peuvent donner lieu les transports soumis à la présente Convention”, the Netherlands Supreme Court concludes that negative declaratory proceedings fall within the scope of Article 32 CMR. This approach is in line with German Case Law (BGH 20 november 2003, I ZR 102/02, European Transport Law 2004, p. 255, BGH 20 november 2003, I ZR 294/02, European Transport Law 2004, p. 264 and BGH 20 november 2008, I ZR 70/06, European Transport Law 2009, p. 303). The difference between the wordings of Article 32 CMR (that speaks of actions) and Article 31 CMR (that speaks of legal proceedings) does not point at a different scope of application of the two Articles and should be disregarded (compare: Netherlands Supreme Court 11 februari 2000, nr. C98/207, NJ 2000, 420, OGH Österreich 18 september 1985, Transportrecht 1987, p. 219; BGH 20 november 2008, I ZR 70/06, European Transport Law 2009, p. 303).
Where the claimant in the negative declaratory proceedings claims that the damage was not the result of (the equivalent of) wilful misconduct, the applicable prescription period is the one year period of Article 32 CMR. Hence the Netherlands Supreme Court quashed the decisions and declared the case non-admissable.
Court: Netherlands Supreme Court
Date: December 4, 2009
LJN Number: BJ7834
Case: Sagro Aannemingsmaatschappij Zeeland initiated institutional arbitration proceedings under the rules of the Netherlands Arbitration Institute against a German company and against ASB Greenworld. Greenworld appeared in the arbitral proceedings and raised the plea that the arbitral tribunal lacked jurisdiction on the ground that there was no valid arbitration agreement. Arbitrators dismissed the plea and awarded the claim as filed by Sagro. Subsequently Greenworld filed an application to the Court in order to set the arbitral award aside for absence of a valid arbitration agreement. The Court denied the application but the Court of Appeal later indeed did quash the arbitral award for absence of a valid arbitration agreement. Later appeals to the Netherlands Supreme Court were dismissed. This did not end proceedings. Greenworld subsequently held the arbitrators and the Netherlands Arbitration Institute personally liable, for committing an unlawful act (or tort) under Dutch law. The claim was dismissed in two instances and Greenworld appealed to the Netherlands Supreme Court, which led to a landmark decision on arbitrator liability in The Netherlands.
Held: The mere fact that a decision is set aside does not make the decision wrong. Arbitrators render judicial or quasi-judicial functions that render them comparable to judges. Like judges, arbitrators should be at liberty to judge cases. When arbitral awards are set aside, this does not necessarily mean the decisions were wrong and decisions can only be held to be unlawful in exceptional cases.
As a general rule formulated by the Nehterlands Supreme Court, arbitrators can only incur personal liability in the event of intent, willful misconduct or if arbitrators manifestly failed to exercise due care and skill.
The appeal failed.
Court: Netherlands Supreme Court
Date: November 27, 2009
LJN Number: BJ6596
Case: If an employment contract is terminated by the employer on notice subsequent with
permission of the Dutch Employment Authority (CWI), the dismissal may nevertheless be manifestly unreasonable under Article 7:681 of the Dutch Civil Code.
A dismissal may be manifestly unreasonable if the consequences of the termination
are unreasonably harsh for the employee when compared to the interests of the
employer. This may be the case if no or minimal redundancy payment is made by the
employer. If the Court indeed finds that the dismissal was manifestly unreasonable, it will award the employee reasonable compensation. The court is free to determine the size of that compensation. To avoid uncertainty about the amount of severance pay, some courts applied the Cantonal Court Formula, a formula designed to calculate a compensation in case of a termination of the emploment contract by the Court (which is one of the ways one can end employment contracts in The Netherlands).
The Court of Appeal in The Hague decided on 2 December 2008 that a certain dismissal, given with permission of the Dutch Employment Authority (CWI), was manifestly unreasonable. The Appeal Court awarded a compensation to the employee. To determine the extend of the compensation, the Appeal Court used the Cantonal Court Formula and applied a general deduction of 30%.
Four other Appeal Courts of The Netherlands use a different formula to calculate the compensation in cases like the one at hand. The case in The Hague, was to first to be referred to the Netherlands Supreme Court.
Held: The Netherlands Supreme Court puts first that a compensation based on article 7:681 DCC will only be awarded if it is decided first that – based on all the circumstances of the case – the dismissal is manifestly unreasonable. The sole fact that the employer has not awarded a compensation to the employee is not in itself reason enough to deem the dismissal manifestly unreasonable. According to the Supreme Court the Cantonal Court Formula can not be applied in cases of manifestly unreasonable dismissal. The compensation based on manifestly unreasonable dismissal has a different character than the compensation that the Cantonal Court can award in cases of judicial rescission of the employment contract for changes in the circumstances.
The compensation in rescission cases is a compensation in fairness, but the compensation in unreasonable dismissal is a compensation for damages of the employee as a result of the dismissal. The damages relate to the nature and the gravity of the breach of obligation by the employer. Whether there is manifestly unreasonable dismissal must be decided by the court in proceedings where the normal rules of evidence apply and the damages must be assessed in accordance with the applicable rules. The court must therefore, in cases of unreasonable dismissal, base its decision on the circumstances of the specific situation and must also properly explain his decision. A general formula, such as the Cantonal Court Formula, is not suitable for the legal requirements of these proceedings. The same goes for a general deduction.
The predictability of judicial decisions about the compensation with manifestly unreasonable dismissal is mainly dependent of the manner in which the courts provide an insight to the factors that play a role in their decision. It is conceivable that a certain harmonization of judicial decisions is possible by clearly stating the factors that are of importance in cases like these and make it understandable what financial consequences are attached to each factor.
The decision of the Appeal Court of The Hague is therefore reversed and the Appeal Court of Amsterdam must decide the case anew with observance of this decision of the Netherlands Supreme Court.
Court: Netherlands Supreme Court
Date: November 27, 2009
LJN Number: BH2162
Case: World Online (WOL) was a European Internet Service Provider (ISP) which came to prominence in the late 1990s dotcom boom. CEO Nina Brink stepped out of the company shortly after World Online’s IPO in 2000 and cashed in heavily, after which the share price collapsed. The IPO proved a disaster and left the reputations of the banks, the Amsterdam stock exchange and the company itself tarnished.
Investor group VEB, which represents nearly 11,000 small investors, initiated legal proceedings against World Online and its IPO managers ABN AMRO and Goldman Sachs, alleging that misleading information had been supplied in the course of the IPO. The Amsterdam Court of Appeal ruled partially in favour of the VEB. According to the Court of Appeal World Online and ABN AMRO and Goldman Sachs acted improperly towards investors buying shares in the IPO or shortly thereafter. On four counts the prospectus was incorrect and incomplete, resulting in World Online, ABN Amro and Goldman Sachs misleading investors. Both parties appealed to the Netherlands Supreme Court.
Held: The Netherlands Supreme Court rejected the complaints of World Online, ABN AMRO and Goldman Sachs. The points on which the Court of Appeal had established that the defendants committed an unlawful act thereby remain in position.
The appeal of VEB is succesful in two additional points. First, the prospectus was misleading where it failed to disclose the price for which Nina Brink, the chairman of World Online, had sold the shares that she indirectly owned through her company Kalexer, about three months before the IPO. Second, the opening price as communicated by ABN AMRO in the first trading day was misleading.
The consequence of this ruling
It has now been established that World Online, ABN AMRO and Goldman Sachs committed a tort (unlawful act) on the following counts:
- The issue prospectus contains misleading information on the career of CEO Nina Brink and the acquisition of a subsidiary Telitel;
- The issue prospectus was not correct where it stated that the sale (almost three months before the IPO) by the chairman of World Online shares it owned through her company Kalexer, had occurred for a purchase price of $ 6.04 per share ;
- The statements of CEO Nina Brink to the press just before the IPO gave the public a false impression about the size of the stake held by founder Nina Brink in World Online. Furthermore, World Online, ABN AMRO and Goldman Sachs should have taken corrective action when confusion arose;
- In the period just before and after the IPO World Online issued press releases about a dozen alliances with major companies, but in fact there was hardly any, and none had real substance. ABN AMRO and Goldman Sachs failed in their duty as lead managers to guide and instruct World Online so that no overly optimistic picture of its business would be created.
- Finally, ABN AMRO has acted unlawfully at March 17, 2000 where it effectuated a deceptive opening price of € 50.20, lying well above the fixed issue price.
This decision ends part of the dispute. Stil open is the actual discussion about whether damages have been sustained as a result of the unlawful acts that now have been established, and if so, what damages can be awarded.
Court: Netherlands Supreme Court
Date: November 20, 2009
LJN Number: BJ6999
Case: Lego is the producer of the well known Lego and Duplo “studs and tubes” interlocking brick system. All relevant Lego patents have expired. Mega Brands markets and sells similar construction bricks in Germany and Belgium and intended to enter the Dutch market. Before the Court Lego upheld that Mega Brick’s Micro and Mini building systems should be qualified as a slavish imitation of the Lego and Duplo bricks. The Court held that the Lego bricks and the Mega bricks are indeed practically identical as to their form, size, construction and application and that the product of Mega Brands should be regarded as an unlawful slavish imitation, that was likely to confuse the public. Mega Bloks could and should have made other choices as to the size of the bricks without affecting the soundness and usability of Micro and Mini as building bricks.
Mega Bricks appealed and the Court of Appeal held that the imitation was lawful as there is a strong wish among the potential buyers of the bricks to buy bricks that fit and have the same looks as the Lego bricks they have at home. The need for compatibility and exchangeability with an existing and widespread system, dictated the design. Under these circumstances, an imitation will be justified by the realistic need among consumers for compatibility. The Court of Appeal quashed the ruling of the Court and held that the marketing and sale Mega Brands bricks cannot be qualified as a slavish imitation of the basic elements of Lego and Duplo. Lego appealed to the Netherlands Supreme Court.
Held: The Netherlands Supreme Court confirmed the decision of the Court of Appeal. A necessity for imitation exists in this case. The imitation of the Lego brick is justified by the consumers’ need for compatibility and exchangeability. Mega Brands may bring the bricks on the Dutch market. It has a duty to care that avoid unnecassary confusion of the public, but under the circumstances the criteria are met.
Court: Netherlands Supreme Court
Date: October 14, 2005
LJN Number: AT7537
Case: Under Dutch law it is possible for the Dutch Government to grant licenses to explore and exploit natural resources on the Dutch Continental Shelf. For licensing purposes the Continental Shelf is divided into quadrants. Each of these quadrants is given a unique number; a full quadrant is subdivided into blocks.
Unocal held a license to explore and exploit natural resources in block Q1, but never operated a well in the block. The Continental Netherlands Oil Company (Conoco) held such a license for the adjacent block L16a. Both blocks form part of the Logger Field, an oilfield in the North Sea. Since 1985, Conoco has exploited wells in block L16a. One of the wells that has been operational had been drilled within 125 meters from the border between the blocks, which establishes a breach of the Governmental Licensing regulations.
The legislation moreover contains obligations to enter into a pooling agreement in case adjacent blocks form part of one and the same oilfield. In December 1992 Unocal requested the Minister to order Conoco to enter into a pooling agreement, but the Minister did not honour the request. Due to the exhausted status of the oilfield there was no legal ground to force the parties to enter into a pooling agreement. The law does not contain regulations regarding pooling historical revenues. For this, one needs to address the civil courts.
Unocal indeed decided to bring the case before the civil court, claiming that Conoco committed a tort against the licensees of the adjacent block. Conoco defended the claim, among others by alleging that the Rule of Capture forms part of Dutch law. Under the Rule of Capture, the various surface owners atop a common pool can take all the oil they can get, even if they disproportionately drain the pool or reduce the output of nearby wells and neighbouring producers. The problem with the rule of capture is that it encourages bad behaviour, reason why this theory is rejected in a lot of jurisdictions.
Held: The decision of the Supreme Court is long and technical. It is a very interesting decision for the Dutch legal community, but also for clients who are in the energy and natural resources business. Two important decisions have been made:
- It was held by the Supreme Court that the Rule of Capture does not form part of Dutch law.
- Moreover, the Supreme Court held that if it is established that it has indeed been economical feasible to explore the oil from within block Q1, then Conoco committed tort by withdrawing oil from the adjacent block Q1.
Court: Netherlands Supreme Court
Date: October 23, 2009
LJN Number: BI9632
Case: The European Patent Organisation (EPO) is an intergovernmental organisation that was set up on 7 October 1977 on the basis of the European Patent Convention (EPC) signed in Munich in 1973. The European Patent Office, a body of the European Patent Organisation, entered into an agreement of employment with the plaintiff as a patent examiner.
The internal "Service Regulations for Permanent Employees" of the EPO are applicable to the employment contract of the plaintiff. These regulations include an incapacity benefit for employees unfit for work due to disability. Article 13 of the Convention refers disputes between the European Patent Organisation and the employees of the European Patent Officeincludes to the Administrative Tribunal of the International Labour Organization.
Due to repetitive strain injury, the plaintiff became totally occupationally disabled in 2002. He received a compensation of € 254.082,18 and was entitled an invalidity penson. The plaintiff held the EPO responsible for further damages resulting from his occupational disabilities. The EPO refused to accept responsibility, a decision which was upheld by the Internal Appeals Committee.
The plaintiff then applied to the District Court in The Hague suing for damages from the EPO. The EPO argued that the court in The Hague was not competent to hear the case, as article 13 of the European Patent Convention contains an internal legal procedure which has exclusive jurisdiction. The court of first instance, and the court of appeal, dismissed the case, ruling that the Convention provides a sufficiently fair and equitable judicial process. The courts did not agree with the plaintiff that the Convention does not offer a fair trial as meant in article 6 of the European Convention on Human Rights.
Held: The Netherlands Supreme Court ruled that the case is indeed related to the employment contract of the plaintiff with the EPO. Therefore, the EPO has rightfully argued that the internal legal procedure should have been followed and has rightfully invoked its immunity from jurisdiction.
The plaintiff also argued before the Supreme Court that the Administrative Tribunal of the EPO tends to dismiss requests for oral hearings of cases brought before the Tribunal. Since 1992, about 2.200 cases have been brought before the Tribunal, and only once did the Tribunal grant the request to organise an oral hearing. According to the plaintiff, this leads to an unfair trial, as article 6 of the European Convention on Human Rights includes the right to a public hearing before an independent and impartial tribunal. The Netherlands Supreme Court upheld the decision of the Court of Appeal that the procedure before the Tribunal will only then be deemed an "unfair trial" when the Tribunal dismisses requests for oral hearings even when parties have given valid reasons for wanting an oral hearing. Whether this was the case had neither been argued by the plaintiff nor had it become evident that such was the case during the proceedings before the Dutch courts. Therefore, the decision of the Court of Appeal to dismiss the case on the basis of immunity of jurisdiction is upheld.
The People's Republic of Bangladesh v. Tulip Computers International
Court: Netherlands Supreme Court
Date: October 2, 2009
LJN Number: BJ1249
Case: In 2001 the State of Bangladesh entered into an agreement with Tulip Computers in the Netherlands for the sale and purchase of computers and computer courses. In November 2002, Tulip commenced legal proceedings before the District Court in 's-Hertogenbosch (The Netherlands) to have the agreement rescinded. Tulip also claimed damages from Bangladesh for an alleged breach of contract by Bangladesh (which, allegedly was connected to a regime change in Bangladesh). On May 14th, 2003, this led to a default judgment against Bangladesh, in which the agreement was rescinded and damages to an amount of € 4,216,648.– were awarded to Tulip.
On November 15th, 2004 Bangladesh issued a writ and thus initiated proceedings to have set aside the default judgment. The court decided that the claim by Bangladesh was non-admissible, as it had not been filed in due time. The Dutch Code of Civil Procedure regulates, that a foreign party may start proceedings to set aside a default judgment rendered against it within eight weeks after the foreign party has committed a so-called act proving that it had knowledge of the default judgment.
It appeared that Tulip had tried to enforce the Dutch judgment in Scotland. During these Scottish proceedings, Bangladesh's lawyer had filed a "note" to the court, from which it was apparent that Bangladesh had knowledge of the Dutch default judgment. As this note was filed on the 16th of September, 2004, this meant that the proceedings by Bangladesh in The Netherlands had commenced outside the eight week deadline (in fact, just few days too late, as eight weeks after the 16th of September 2004 would have been the 11th of November 2004).
Bangladesh argued before the Netherlands Supreme Court that the note filed during the Scottish proceedings only proves that its Scottish lawyer had knowledge of the default judgment; The State of Bangladesh itself had not committed any act proving knowledge of the default judgment. The Dutch decision had, however, already been referred to at an earlier date in the Scottish proceedings. The court had decided on May 7, 2004: "The Lord Ordinary (…) grants warrant to the Keeper of Registers of Scotland to register the certified copy of the Judgment of the Court of Hertogenbosch, Holland at the instance of Tulip Computers International BV against the People’s Republic of Bangladesh (Ministry of Education) dated 14 May 2003 for payment of € 4,216,648.00 together with interest (…)". This court decision was attached to the aforementioned note of September 16th, 2004 filed on behalf of Bangladesh, and it was also referred to in said note.
Held: The contents of the note unambiguously prove that the Scottish lawyer representing Bangladesh had knowledge of the default judgment on the 16th of September 2004. The exact instructions given by Bangladesh to its Scottish lawyer are not relevant, as under Dutch law, documents submitted to a court by a lawyer as well as statements made during proceedings by a lawyer are directly attributable to his / her client. Therefore, the fact that Bangladesh had argued that its instructions to the Scottish lawyer did not mention the default judgment is not relevant when deciding whether proceedings had been lodged within the time period stipulated in the Dutch Code of Civil Procedure. Filing the note with the Scottish court referring to the Dutch default judgment, is an act directed at the outside world, proving knowledge of the main components of the Dutch default judgment. The decision not to admit the claim by Bangladesh was therefore upheld by the Netherlands Supreme Court.
Anonymous v. The Kingdom of Morocco
Court: Netherlands Supreme Court
Date: September 11, 2009
LJN Number: BI6317
Case: A national of the Kingdom of Morocco, started working as a chauffeur for the Moroccan Ministry of Foreign Affairs and Cooperation in 1976. From 1976 until 1986, and in 1993 and 1994, he performed his duties in Morocco. From 1986 until 1993, and from 1994, he performed his duties for the Consulate-General of the Kingdom of Morocco in Rotterdam, The Netherlands. In 2000, parties entered into a new agreement, containing a choice for Moroccan law. In 2004, the Consul-General confirmed in writing that Dutch social security contributions were being paid for the chauffeur by the Consulate-General. He has been granted a residency permit for The Netherlands, which states that he is a "member of staff" of the Consulate-General.
On March 18, 2005, the chauffeur became ill. On April 20, 2005, the Moroccan Minister of Foreign Affairs and Cooperation terminated the contract of employment, coming into effect with retroactive force as from the 18th of March 2005. The chauffeur asked the court in the Netherlands to declare the contract termination null and void. The Kingdom of Morocco invoked state immunity. An answer to this issue should be sought along the lines of the European Convention on State Immunity of 1972 and although not signed and therefore not (yet) in force in The Netherlands, the United Nations Convention on Jurisdictional Immunities of States and Their Property of 2004. Article 11 reads:
"1. Unless otherwise agreed between the States concerned, a State cannot invoke immunity from jurisdiction before a court of another State which is otherwise competent in a proceeding which relates to a contract of employment between the State and an individual for work performed or to be performed, in whole or in part, in the territory of that other State.
2. Paragraph 1 does not apply if:
(…)
(e) the employee is a national of the employer State at the time when the proceeding is instituted, unless this person has the permanent residence in the State of the forum".
Both the court of first instance and the Court of Appeal have granted this invocation of state immunity by the Kingdom of Morocco.
Held: The chauffeur had relied upon the Dutch Ministry of Foreign Affairs' interpretation of "permanently resident" as meant in article 37 of the Vienna Convention on Diplomatic Relations of 1961. For matters concerning the Kingdom of The Netherlands, a diplomatic or consular employee is deemed to have permanent residence in The Netherlands after working and living here for a continuous period of at least ten years. From 1994 until March 2005, he has worked and lived in The Netherlands without interruption. When the procedure started, he had lived and worked in The Netherlands for at least ten successive years. Hence one would anticipate that no state immunity would be granted. Given these circumstances, the Court of Appeal failed to motivate why the Kingdom of Morocco was nonetheless granted immunity in this matter. The decision of the Court of Appeal was therefore quashed and the case was sent back to another Court of Appeal.
