European Antitrust and Competition Law

The European antitrust area covers two prohibition rules set out in the European Treaty on the Functioning of the European Union.

• First, agreements between two or more firms which restrict competition are prohibited by Article 101 of the Treaty, subject to some limited exceptions. This provision covers a wide variety of behaviours. The most obvious example of illegal conduct infringing Article 81 is a cartel between competitors (which may involve price-fixing or market sharing).
• Second, firms in a dominant position may not abuse that position (Article 102 of the Treaty). This is for example the case for predatory pricing aiming at eliminating competitors from the market.

The European Commission is empowered by the EU Treaty to apply these prohibition rules and enjoys a number of investigative powers to that end (e.g. inspection in business and non business premises, written requests for information, etc). It may also impose fines on undertakings who violate EU antitrust rules. Since 1 May 2004, all national competition authorities are also empowered to apply fully the provisions of the Treaty in order to ensure that competition is not distorted or restricted. National courts may also apply these prohibitions so as to protect the individual rights conferred to citizens by the EU Treaty.

Dutch Antitrust and Competition Law

The Netherlands Competition Authority (NMa) enforces the Dutch Competition Act, which came into effect on 1 January 1998. The Dutch Competition Act is based on and closely linked to European law. The Act is based on a prohibition system very similar to that of Articles 81 and 82 of the EU Treaty.

The services of our antitrust and competition lawyers include:

• civil antitrust litigation;
• merger filings, investigations and litigation;
• other civil government investigations;
• antitrust counseling and compliance.

For further information regarding our services, please contact our contact person.

There is no such thing as a Dutch Franchise Act. The laws of The Netherlands do not contain a specific act with repect to franchise and distribution agreements. Hence, a franchise agreement under Dutch law is governed by the rules of general civil law, together with specific rules that are applicable to specific parts of the contract.

A franchise agreement is a Contract by which the franchisor licenses its trade name and/or business system and practices for a fee to an independent company (the franchisee). The licensed rights can include the licensed right to use trademark names, secret commercial know-how and other distinguishing features, in the sale of products or services. The use of franchise agreements is widely spread in The Netherlands, but beware that specific arrangements can be prohibited by EU and national competition law.

The lawyers of our firm represent clients who are interested in entering or exiting their franchise relationship on their own terms. For individuals seeking to invest in a particular franchise opportunity, we will review the terms and conditions set forth in your franchise documents and provide advice and counsel regarding material provisions, including:

• financial obligations;
• the length/term of the agreement;
• choice of venue and choice of law with respect to disputes;
• renewal rights;
• territorial exclusivity;
• requirements for remodelling or refurbishing the location;
• the goodwill associated with the franchisor's trademarks;
• restrictions on transfer;
• default/termination provisions.

For franchisees looking to exit their franchise relationships, our attorneys are skilled and experienced in drafting and negotiating all of the legal documents required to effectuate the sale of your franchise investment.

Further information

For additional information please contact us. Your comments and questions are always welcome. Please feel free to contact our contact person.

An introduction

Bankruptcy in The Netherlands is governed by the Dutch Bankruptcy Act. Intra-EU cross-border insolvency proceedings are governed by Council regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings. Cross-border insolvency proceedings that do not fall within the scope of the EU Insolvency Regulation will be governed by the general rules of Dutch Private International Law.

The Dutch Bankruptcy Act entered into force on 1 September 1986 and has been amended several times. Three species of insolvency procedures are to be distincted in the present Netherlands Bankruptcy Act:

• bankruptcy;
• suspension of payments;
• debt restructuring for private individuals.

Bankruptcy

Any debtor (being a natural person or a private legal entity) can be declared bankrupt by the District Court. Applications for bankruptcy can be filed by:

• the natural person or private legal entity itself;
• a creditor, or
• the public prosecutor.

Bankruptcy proceedings

If the petition is granted, the district court will declare the debtor bankrupt and appoint one or more trustees (in Dutch: curator). The trustee is charged with the administration and liquidation of the bankruptcy estate.

As a general rule, the District Court will only declare a debtor in state of bankruptcy if the debtor has ceased to pay. This is generally considered to be the case if various creditors have difficulty in collecting outstandings.

If the debtor is properly summoned, bankruptcy may be declared in a default judgment. In that case the debtor has a right to ask for a review within 14 days after the judgment of bankruptcy. Appeals must be lodged ultimately within eight days. Both review and subsequent appeals have no suspensory effect.

Suspension of payments

With the suspension of payments procedure the Dutch Bankruptcy Act intends to provide for a legal instruments in order to restructure and continue an enterprise in financial distress, which in whole or in part is viable. The suspension of payments procedure, however, rarely ever fulfilled its goal and companies that do ask for suspension of payment generally are declared bankrupt within a few weeks after the initial decision on the suspension of payments request.

Debt restructuring for private individuals

This relatively new arrangement under the Dutch Bankruptcy Act provides a possibility for private individuals in a debt position without any prospects to make a fresh start without being chased for life by his creditors.

further information

We are frequently consulted by clients from abroad with regard to issues related to Dutch Bankruptcy Law. Our firm's lawyers represent both applicants and defendants in bankruptcy proceedings before all Dutch Courts.

Obviously, this is a very brief introduction that will not answer your specific questions. For additional information please feel free to contact our contact person. Your comments and questions are always welcome.

This article outlines the personal liability of directors of limited companies (B.V.’s) and public limited companies (N.V.’s) in the Netherlands.

Civil liability

If a director acts in a manner that may later turn out to be detrimental to the company, this does not automatically lead to personal liability. Taking calculated risks is, after all, part of running a business and being an entrepreneur, so the law allows directors a certain amount of discretion in fulfilling their responsibilities as a director.

Article 2:9 of the Dutch Civil Code requires directors to fulfil their duties towards the legal entity with due care and attention. Should they fail this duty of care, then the directors are personally liable for any damage caused to the company as a result thereof. The Dutch supreme court has ruled that such is the case if the directors have acted in a manner that constitutes serious misconduct. The Supreme Court holds that if the actions of the directors held liable would not have been taken by any other reasonably acting and experienced director in their stead, then this constitutes serious misconduct.

Examples of circumstances wherein directors have been held liable by their company are:

• Diverting the company’s funds for personal use;
• Fraudulent or illegal practices;
• Taking large and unsecured financial risks.

Article 2:9 only covers the directors’ personal liability towards the company itself. In certain circumstances, however, creditors of the company can also hold the directors separately liable for damage resulting form actions taken during their directorship, such as providing incorrect information or making promises on behalf of the company that they knew the company could not fulfil.

Liability during bankruptcy

Should a company be declared bankrupt, then the Ditch Civil Code provides the trustee in bankruptcy with the means to hold the company directors personally liable on the following grounds.

The law states that on the bankruptcy of a company limited by shares, each director shall be jointly and severally liable to the bankruptcy estate for the amount of the company’s debts that cannot be satisfied out of the liquidation of its assets if the management has manifestly performed its duties improperly and it may be assumed that these actions constituted an important cause of the bankruptcy.

The law automatically holds that the directors have performed their duties improperly in the following circumstances:

• The management has not filed the company’s accounts within 13 months of the end of the financial year;
• The books and accounts of the company have not been kept in accordance with good accounting practices and do not provide a true insight into the financial position of the company.

In such cases the burden of proof is shifted to the directors, who must then prove that their failure to file the accounts or administrate properly did not constitute an important cause of the bankruptcy. In such cases it is extremely difficult for the directors to avoid liability.

If the trustee is of the opinion that there are other grounds for personal liability the trustee can also hold the directors liable, though it is then up to the trustee to prove that there has been serious misconduct leading to bankruptcy. Should the trustee believe that persons who are not officially directors, but can be deemed to have run the company, are largely responsible for the bankruptcy, Dutch law provides that the trustee may hold these persons liable in the same manner as the actual company directors.

Fiscal liability

Directors of a Dutch company, such as a B.V. or an N.V., can also be held personally liable for unpaid tax debts of the company, in such cases where the directors have not reported the inability of the company to pay to the tax authorities. This form of liability regards taxes such as wage withholding tax and VAT ("BTW"), owed by the company to the Dutch Treasury. Once the tax authorities have made a director liable for overdue taxes imposed on company, it is up to the director to prove that the tax debt was left unpaid for reasons not attributable to him. Fiscal liability often occurs after bankruptcy, as the company is then no longer able to pay its own tax debts.

Further information

In most cases liability of legal entities appointed as directors also leads to liability of the persons behind that legal entity, even if both are foreign companies or persons living outside of The Netherlands. Should you be confronted with claims by third parties or a trustee in bankruptcy relating to the directorship of a company, it is important to seek legal advise at an early stage. Should you be considering liquidating a company in the Netherlands, it is of the utmost importance to identify any possible grounds for liability and to act accordingly before actual liquidation

Our firm has many years of experience in advising on matters regarding bankruptcies and civil liability of directors. We have also have inside expertise as court appointed liquidators at the court of Rotterdam, and can give you an immediate insight into the possible actions of your creditors or a trustee in case of bankruptcy.

Please feel free to contact Maria Bowmer, our Company and Corporate Law contact person, with any questions you may have.

Kernkamp Advocaten offers professional debt collection services for any size commercial debts in The Netherlands. The firm has ample experience in collecting outstanding debts for our international client base and is committed to pursue debtors in The Netherlands quickly and efficiently to ensure a maximum return at a minimum cost.

Why use a Netherlands Law Firm?

It's a fact that both consumers and companies experiencing financial difficulties will normally prioritise their creditors for payment. This suggests those creditors who demonstrate the seriousness of continued non-payment are most likely to be paid first.

The use of a local Dutch Law Firm is an excellent way of demonstrating the seriousness with which you will pursue continued non-payment of an account. We can take them to court in their own jurisdiction, and the debtor knows it. Making use of our services is one of the most efficient and cost-effective ways of prioritising an account for payment and recovering bad debt.

What we do to recover your debts

Before starting the collection procedure, we will check the information supplied. Normally, we only require the identity of the debtor and details of the debt (for example, copy invoices) in order to initiate recovery.

Assuming that the information is sufficient to enable us to proceed, We obtain payment of your overdue accounts using an established combination of letters, faxes, emails and telephone calls each aimed at bringing about the early settlement of your account. Where appropriate, we will agree to a payment scheme with the debtor and monitor the fulfillment of this scheme. In such case you will receive regular quarterly updates on the debt recovert. Most assignments are completed at this stage without further litigation.

Should these initial steps fail to result in payment of the claim, we will, with your prior consent, take appropriate legal action, and initiate legal proceedings.

No cure, no fee

Our no cure, no fee structure is transparent. If and when our intervention is succesful, we will charge the following scale fee:

These scale fees relate to undefended cases. Where a case is defended or contentious, or requires additional input, such as settlement negotiations, our fees will be calculated in accordance with time spent in dealing with the case, or in an alternative manner, to be discussed beforehand with you after it has become apparent that the opposing party raises defences.

VAT

The above costs are exclusive of VAT.

Disbursements

For each debt recovery (cure or no cure), we will charge the actual disbursements made with your prior consent, like bailiff's fees and court charges. We reserve the right to request a retainer to guarantee the firms disbursements before initiating proceedings.

Cost effective service

In as far as is possible we will also collect interest, legal penalties and charges from the debtor, in order to ensure that successful debt collection is a cost effective or even beneficial exercise for the client.

Arbitration has become a widespread and preferred method of resolving disputes in many industries, such as the maritime, securities and construction industries. Less formal than court proceedings, arbitration is supposed to be quicker and more cost effective. Another useful advantage of arbitration is the better enforceability of arbitration awards internationally. Whatever the reason, parties nowadays tend to agree on arbitration on a wide scale.

New York Convention on Arbitration

The Netherlands is a party to the New York Convention on arbitration and arbitration awards. As a consequence the Dutch Courts are bound to recognize an agreement in writing in which the parties undertake to submit to arbitration should any disputes arise between them. At the request of one of the parties the Court will refer the parties to arbitration in a matter in respect of which the parties have made an arbitration agreement, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

The Convention provides that each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. Arbitral awards rendered in other Contracting States are recognised and enforceable in The Netherlands and vice versa. The convention has been implemented in Dutch legislation, more specifically in the 1986 Arbitration Act (Section 1020-1076 of the Dutch Code of Civil Procedure).

Ad hoc and Institutional Arbitration

As in other jurisdictions the parties may opt for ad hoc arbitration or institutional arbitration. There are various arbitration institutes in The Netherlands to opt for, but ad hoc arbitration remains a good and legally sound alternative.

Properly structured, ad hoc arbitration should be less expensive than institutional arbitration and, thus, better suit smaller claims and less affluent parties. Ad hoc arbitration places more of a burden on the arbitrators to organize and administer the arbitration in an effective manner. A distinct disadvantage of the ad hoc approach is that its effectiveness may be dependent upon the willingness of the parties to cooperate and the talents of the appointed arbitrators to keep the arbitration process going.

An institutional arbitration is one in which a specialized institution with a permanent character intervenes and assumes the functions of aiding and administering the arbitral process, as provided by the rules of that institution. Often, the contract between the parties will contain an arbitration clause which will designate an institution as the arbitration administrator. If the institutional administrative charges, which may be substantial, are not a factor, the institutional approach is generally preferred.

The Netherlands Arbitration Institute

The Netherlands Arbitration Institute was established as a non-profit foundation in 1949. Its Governing Board consists of representatives from the business community and the legal profession, as well as members of the judiciary, all of whom have extensive experience in the fields of arbitration, binding advice and mediation. The Governing Board also includes representatives from the Dutch Central Chamber of Commerce in The Hague, the Dutch Organisation of the International Chamber of Commerce and the Dutch Association for Industry and Trade, and Accountancy. The secretariat is located in Rotterdam.

The NAI administers arbitration pursuant to the 2001 NAI Arbitration Rules. Binding advice proceedings are also administered pursuant to the same Rules, while mediation is administered pursuant to the 2009 NAI Mediation Rules.

Transport And Maritime Arbitration Rotterdam-Amsterdam TAMARA

The Dutch Legal Community realised that there was a need for quality arbitration in Maritime and International Trade Issues. The foundation "Stichting Transport and Maritime Arbitration Rotterdam-Amsterdam (TAMARA)" for arbitration in transport cases was established in 1988 by Dutch maritime lawyers and interest groups in the fields of shipping, transport and international commerce. Over the past years, the TAMARA foundation has become a well-established arbitration board, in particular in Dutch maritime circles, and is a well known alternative for settling disputes by means of arbitration.

Disputes that are commonly handled by the TAMARA foundation are disputes relating to shipbuilding (yachts, freighters, drilling platforms), financing and insurance, chartering, cargo claims, stevedore and agency services, physical distribution and ship broker’s services, as well as relating to other modes of transport.

Arbitration via the TAMARA foundation has increasingly become an alternative for traditional court procedures and for the London arbitration. Arbitration via the TAMARA foundation offers settlement of disputes at least the same standard as a traditional court procedure or the London arbitration, but within a significantly shorter period of time and at considerably lower cost. In order to enhance these goals, the TAMARA rules were revised in 2008. They provide a tight, modern procedure, enhancing speed and efficiency.

Other Arbitration Institutions

The two Arbitration Institutions discussed above, are just two of the many Arbitration Institutions in The Netherlands. Our lawyers assist our clients before a huge number of other Arbitration Institutions, amongst which the Arbitration Board for the Building Industry in the Netherlands, that traditionally arbitrates a majority of the building conflicts in The Netherlands. Another industry where a lot of disputes are resolved through arbitration is the Health Care Industry. The Dutch Forwarders Association FENEX also avails over its own Arbitration Institution, not unlike a lot of other sector specific associations.

Further information

Arbitration in The Netherlands is a reliable option to resolve conflicts. Kernkamp Advocaten assists clients from all over the world. The firm offers services that are reliable, efficient and professional, and tailored to meet the needs of our clients.

Should you be looking for representation in arbitration proceedings in the Netherlands, or you query the validity of an arbitration clause, our firm of experienced professionals can provide you with an excellent and cost effective service. For further information, please feel free to contact our Arbitration contact person. Your questions are always welcome.

Civil law country

The Kingdom of The Netherlands has a civil law, as opposed to a common-law, system and the procedure before the Dutch Courts is essentially carried out by the parties filing, through their lawyers, written submissions. Verbal hearings do take place, but play a relatively minor role in civil litigation. All cases are decided by professional judges. It is not possible to ask for a jury trial.

Court of first instance

The lower Court of first instance is the Cantonal Court, that basically deals with small claims, disputes regarding leases of residential and business premises and employment cases. The higher Court of first instance is the District Court, where parties need to be represented by a Dutch registered lawye. There are 19 District Courts in the Netherlands.

Appeal

Appeals against decisions of the Courts of first instance are heard by one of five Courts of Appeal and further appeals (solely on points of law) are dealt with by the Netherlands Supreme Court in The Hague.

Initiation of proceedings

Dependent on the nature of the case, proceedings are initiated by issuing a writ of summons (which is done by a balilff) or by filing an application. In the summons procedure the case is pending from the date of the summons. The writ must be served at the office of the clerk of the court by the claimant by the last day on which the office is open prior to the cause list date indicated in the summons procedure. The clerk of the court enters the case to the cause list of a single chamber.

In an application procedure the case is pending from the moment when the application is lodged with the office of the clerk of the Court.

Recovery of legal fees

Each party initially bears its own costs. In ordinary civil cases, the losing party must bear the legal costs as fixed by the court, which is in most cases substantially lower than the actual legal costs.

Contingency Fees

Contingency Fee arrangements are forbidden. However, balanced success fees are possible.

Further information

If you have any questions regarding litigation in The Netherlands, you are welcome to contact our litigation contact person.

This is a short introduction about how Dutch companies can be set up. It serves to give you an idea of the rules and regulations applicable to the formation of a company in The Netherlands.

Two-tier corporate structure

Depending on the size of the company, either a one-tier board or a two-tier structure will be applicable. For companies with more than a hundred employees in the Netherlands (and conform with other formal requirements) a two-tier board must be introduced. This is the most prominent difference between Dutch and Anglo-American companies as Anglo-American companies only have one-tier boards. In the two-tier structure, the policies of the Board of Directors are periodically reviewed by a separate supervisory Board of NCO’s.

Employee participation

Furthermore, the participation of employees in the corporate decision making process goes a lot further than in the UK or the United States. For companies with more than 50 employees it is obligatory to install an employees council. The employees council mainly has an advisory role, but does in certain cases have the power to block decisions regarding employees.

It is however unusual that conflict occurs between employees representatives and employers as there is generally a mutual understanding between the labour unions and the employer organisations who together with the Dutch government feel that there is a joint responsibility to improve the economy. General strikes – even strikes as such – are rare in the Netherlands.

Corporate Governance

The Netherlands has a formal Corporate Governance Code (“code Tabaksblat”). As in the UK, this code provides general minimum standards for corporate governance though it is permissible to deviate from the code to a certain degree (“comply or explain”).

Though the Code does not formally apply to all corporate entities (small companies are exempt), it is of great importance to set up any corporate body and its in accordance with its spirit.

Incorporation of a “B.V.”

The B.V. (“besloten vennootschap met beperkte aansprakelijkheid“) is a legal entity with limited liability and is the vehicle most commonly used for small enterprises. Shares of a B.V. must be registered and are not freely transferrable. An N.V. is the Dutch equivalent of a public limited company and requires a significantly larger and freely transferrable share capital.

The minimum paid up share capital of a B.V. is EUR 18,000, which amount must be at the disposal of the new company at the time of incorporation. A B.V. can be set up by one or more shareholders, which may also be foreign entities. At least one company director must be named in the articles of association.

Procedure

Any resident or non-resident person (whether an individual or a corporate body) can incorporate a B.V. in the Netherlands. The incorporator/first director must arrange the following:

1. a written statement indicating the purpose of the company;
2. state the name of the future B.V.;
3. recite the objects of the B.V.;
4. decide on the amount of capital etc.;
5. make a choice with regard to the financial year of the B.V.;
6. choose a registered office and place of business (not a P.O. Box);
7. provide particulars of the managing director and, if applicable, other directors;
8. provide a letter of good standing;
9. provide proof that the minimum capital of EUR 18,000 has been paid-up.

After approval by the Ministry of Justice and the fulfilment of all other formalities, the B.V. can be incorporated and entered into the company register. The entire procedure can take from one to several weeks.

If you are planning to start a business in the Netherlands, Kernkamp Advocaten can provide you with all necessary assistance and advise you on the incorporation of the company. Since the emphasis of our practice is on company law and transport law, we can help you not only with the process of incorporation itself, but also with drafting and fine-tuning of the articles of association, shareholders agreements etc. We also advise on the conclusion of employment or agency contracts for the new enterprise and can help you with the lease of business premises.

Please note that we do not provide fiscal or accounting services, nor do we provide a business address or domicile for structures set up for taxation purposes.

Further information

For further information, please feel free to contact our Company and Corporate Law contact person.

Kernkamp Advocaten offers a full range of commercial and corporate legal services to businesses of all sizes. Our clients include small entrepreneurs, national companies and multinationals. We regularly assist foreign corporate clients with regard to the incorporation of companies in The Netherlands.

Our attorneys can assist in insolvency matters and can advise financial stakeholders by providing strategic advice and advancing appropriate resolutions. Our lawyers advise with respect to security instruments, registration and priorities of claims and secured charges, the Dutch Bankruptcy and Insolvency Act and other Dutch legislation affecting debtors and creditors.

The lawyers of the firm offer legal and strategic advice on a wide range of business transactions and matters, including the following:

• Company formation
• M & A
• Management buy-outs and buy-ins
• Joint ventures
• Shareholder agreements
• Insolvency

Further information

For additional information please feel free to contact us. Your comments and questions are always welcome.

Related:

• Antitrust & Competition Law
• Dutch Franchise Law
• Dutch Bankruptcy Law
• Liability of Directors
• Debt collection in The Netherlands