The Rotterdam Guarantee Form is traditionally used by Dutch maritime lawyers to put up security in shipping in the Netherlands. The form was created by the Commission Rotterdam Guarantee Form to prevent unnecessary delay due to discussions on wording, each time a vessel is arrested. The Rotterdam Guarantee Form is usually considered to be an acceptable form of security and thus generally contributes to a quick release form arrest. A copy of the form is embedded in this page.

For further information, please feel free to contact our Transport and International Trade contact person.

For more than 30 years, the lawyers of Kernkamp Advocaten have focused on serving public and private sector clients operating in the many facets of the transportation industry.

The lawyers of our Transport and International Trade Practice Group assist multimodal carriers, trucking companies, logistics providers and insurers, with a full range of legal services, with regard to issues like:

• transportation agreements
• equipment leasing, pooling, repair and maintenance and management agreements
• freight forwarder agreements
• warehousing agreements
• cargo loss and damage
• Liability under the CMR-convention
• Issues of Dutch national road transport law (book 8 DCC)

If the case at hand is transportation related, your legal needs require assistance of our specialized team of Dutch lawyers who understand the industry and are able to advise on a wide range of legal issues.

Further information

For additional information please feel free to contact our Transport and International Trade Practice Group contact person.

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.

The ICC Incoterms (International Commercial Terms) make international trade easier and help traders in different countries to understand one another. The use of Incoterms such as ‘cif’, ‘fob’, ‘ex works’ etc. in international contracts is meant to simplify business. These terms describe the rights and obligations of both seller and buyer regarding the delivery of goods. The terms originate in commercial usage; i.e. that which is usual between parties in certain branches of trade. But what if the buyer and seller disagree on the meaning of a certain term?

As the exact meaning of terms can vary per region and because it is often difficult to find out which practices are usual in for example France, China, South Africa or for that matter anywhere else in the world, the International Chamber of Commerce (ICC) has developed a list of standard trade definitions, the Incoterms, in which the rights and obligations under each of the most common terms are laid down. By referring to the Incoterms – for example: CIF Rotterdam (Incoterms 2000) – parties can significantly reduce the risk of conflict regarding the terms of the agreement. The Incoterms are reviewed regularly, lastly in 2000, to keep up with developments in international trade. ICC is currently revising Incoterms 2000. The new edition, Incoterms 2011, is expected to enter into force on 1 January 2011.

The Incoterms are only applicable for purchase agreements, not for contracts of carriage. Furthermore, the Incoterms only regulate certain aspects, such as delivery, payment, transfer of risk, customs or apportionment of costs. Not covered by the Incoterms are issues regarding transfer of ownership, (non-)performance and liability.

There are thirteen Incoterms. These can be divided into four subcategories, namely one E-term, three F-terms, four C-terms and five D-terms. Each type of term lays a different level of responsibility on the seller.

When E- or F-terms are agreed upon, the contract of carriage must be concluded by the buyer. This responsibility lies with the seller if C- or D-terms are agreed upon. Clearing goods for export is the responsibility of the seller (with the exception of EXW, see below). Clearing goods for import is the buyers’ responsibility (excepting DDP). According to the Incoterms 2000, the buyer now has the responsibility for export if FAS is agreed upon. The buyer must now also arrange for import if DEQ is agreed upon. The Incoterms 2000 now follow the principle that the seller is responsible for export and the buyer for import.

A significant difference between the Incoterms 2000 and the previous version from 1990 is that the delivery obligation under the FCA term has been simplified. The 1990 version differentiated between the means of transport and the named place of delivery. Now the seller must always deliver to the carrier. If the agreed upon place of delivery is the sellers premises, the seller is obliged to load the goods, otherwise the seller only has to make the goods available.

The changes in the Incoterms are based on worldwide research and the result forms an easy set of ‘rules’ which are useful for concluding commercial contracts when seller and buyer are based in different countries.

With regards to issues such as contract of carriage, insurance, transfer of risk and apportionment of costs, the Incoterms – in short – have the following meaning:

EXW (ex works)

“Ex works” means that the seller delivers when he places the goods at the disposal of the buyer at the sellers’ premises or another named place (i.e. factory, warehouse etc.) without any obligation to load the shipment. Seller bears all risks until delivery. The buyer must clear the goods for export.

FCA (free carrier)

“Free Carrier” means that the seller delivers the goods to a carrier nominated by the buyer at the chosen place of delivery. The seller must clear the goods for export. If the chosen place of delivery is at the sellers’ premises, the seller is responsible for loading. If delivery occurs at any other place, the seller is not responsible for loading. Seller bears all risk of loss or damage until delivery.

FAS (free alongside ship)

“Free alongside ship” means that the seller delivers when the goods are placed alongside a designated vessel at the named port of shipment. From that moment buyer must arrange for carriage and bears all costs of risk of loss or damage. Since 2000 FAS requires the seller to clear the goods for export.

FOB (free on board)

“Free on board” means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. The buyer has to bear all costs and risk of loss or damage to the goods from that point. The buyer must clear the goods for export.

CFR (cost and freight)

“Cost and Freight” means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. The difference between FOB and CFR is that the seller must arrange for and pay for carriage necessary to bring the goods to the named port of destination. The seller must also clear the goods for export. Risk of loss or damage to the goods is transferred to the buyer once the goods have passed the ships’ rail.

CIF (cost, insurance and freight)

“Cost, insurance and freight” means that the seller as well as arranging for carriage must also arrange and pay premium for (a minimum cover) insurance of the shipment. The goods are delivered when they pass the ships’ rail in the named port of shipment. The seller must clear the goods for export.

CPT (carriage paid to)

“Carriage paid to” means that the seller delivers the goods to the carrier, which the seller has arranged. The seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. Delivery and transfer of risk to the buyer occur when the goods are delivered to the carrier. If there is more than one carrier, risk transfers when the goods are delivered to the first carrier. The seller bears the costs of freight and export. This term is similar to CFR, but CFR can only be used for transport by sea or inland waterways. CPT can be used for any mode of transport, including multimodal transport.

CIP (Carriage and insurance paid to)

“Carriage and insurance paid to” means that the seller delivers the goods to the carrier which the seller has arranged. The seller must as with CPT pay the cost of carriage necessary to bring the goods to the named destination. The seller must also arrange and pay premiums for a minimum cover insurance. Delivery and transfer of risk to the buyer occur when the goods are delivered to the first carrier. The seller bears the costs of freight, insurance and export. CIP is similar to CIF, but is used for any mode of transport other than transport by sea or inland waterways.

DAF (Delivered at frontier)

The so called D-terms are arrival terms. “Delivered at frontier” means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport, not unloaded, cleared for export and placed at the frontier before customs. The buyer must arrange for import clearance. The buyer must arrange and pay for carriage to the frontier. The risk passes to the buyer at delivery on the frontier.

DES (delivered ex ship)

“Delivered ex ship” means that the seller delivers when the goods are placed at the disposal of the buyer on board the ship at the named port of destination. The seller must arrange and pay for carriage to the named port of destination. Risk of loss or damage is transferred to the buyer on board ship at the port of destination. The goods are not cleared for import; this is the buyers’ responsibility.

DEQ (delivered ex quay)

“Delivered ex quay” means that the seller delivers when the goods are placed at the disposal of the buyer on the quay (wharf) at the named port of destination. The seller must arrange and pay for carriage to the named port of destination and discharging the goods on the quay. The risk of loss or damage is transferred on the quay. The buyer must clear the goods for import. Under the Incoterms 2000, the DEQ term requires the seller to clear the goods for import and pay for all formalities, duties taxes and other charges on import.

DDU (delivered duty unpaid)

“Delivered duty unpaid” means that the seller delivers the goods to the buyer, not cleared for import and not unloaded from any arriving means of transport at the named place of destination. The seller pays all costs to the place of destination and clears the goods for export. The buyer must clear the goods for import.

DDP (delivered duty paid)

“Delivered duty paid” means that the seller delivers the goods to the buyer, cleared for import and not unloaded from any means of transport at the named place of destination. The seller bears all costs and risks involved in delivering the goods including any duty for import in the country of destination. DDP represents the maximum obligation of the seller under any agreement.

There are also many publications which give a further insight into the use of the Incoterms. It is advisable to consult these publications or seek legal advice before using the Incoterms, so that nasty surprises can be avoided at a later date.

Further information

Should you have any disagreement on the performance of an contract referring to one or more Incoterms or have other questions, please feel free to contact our Transport and International Trade contract person.

The nomination of a commercial agent is frequently the first step to develop business abroad. Why not nominate your agent in The Netherlands, in the Benelux Countries (Belgium, the Netherlands and Luxemburg) or the European Union? Drafting a contract is not very difficult and as commercial agents will have to earn their commission by concluding deals for the principal, such a contract is usually considered to be for the mutual benefit of both parties.

What can go wrong?

What can go wrong? As a law firm dealing with international conflicts on a daily basis, we can tell you what can go wrong. Suppose you have concluded an exclusive agency agreement and your agent seems to have fallen asleep. Suppose your agent starts working for a competitor and even likes the products of your competitor better. Is it possible to terminate agency contracts? What about compensation? The relationship between the principal and the commercial agent is defined by law and by the contract concluded between them. This article is to give you an indication of the Dutch Legal System.

The Law on Commercial Agency in Holland

The law on commercial agency has been incorporated in the Dutch Civil Code. Commercial agents are defined as independent contractors who agree to act as intermediary in conclusion of contracts for the principal or to enter into contracts on behalf of and for account of principal during a specified period or for an indefinite period of time and for commission. The Dutch Civil Code is in line with the EC-Directive 86/653 of 31 December 1986 on self-employed commercial agents.

Under Dutch law there is no necessity to immediately provide a written agency contract. However, the law contains an obliation for both parties to provide the other party with a signed document containing the contents of the verbally agreed agency agreement upon first request of the other party. Obviously it is advisable to make up a written contract immediately. We can provide you with a check list and after receipt of your wishes, we can send you a draft based thereon, if necessary at short notice.

"Goodwill” Compensation"

It is also possible to use your own document or standard contract. However, one should always recognise that the Dutch Civil Code contains some provisions designed to protect the commercial agent. A well known example thereof is the obligation for the principal to pay the agent upon termination of the agency agreement a goodwill compensation of up to one year’s commission based on the average commission over the last five years. The amount of compensation will be fixed by the Court and may vary from this maximum to nothing at all.
Compensation will only be awarded if the agent has developed business and has thereby substantially increased the value of the principal’s business. Moreover the judge will consider all circumstances of the case. There are also other compulsory applicable rules, like the rules on termination of the contract.

Some principals will prefer to have the same contracts with all their agents, wherever they are located. Under certain circumstances, the Dutch rules on Private International Law make it possible to conclude a contract under foreign law.

The services of our firm

Some frequently used services of our firm relating to agency contracts are:

• advice on the conclusion of commercial agency contracts
• drafting of commercial agency contracts
• negotiation with principal or agent
• advice regarding disputes and termination
• litigating commercial agency disputes

If you have any questions regarding the drafting or termination of commercial agency contracts, please feel free to contact our Transport and International Trade contact person for assistance.

Article 31 of the Convention on the Contract for the International Carriage of Goods by Road (CMR) provides a wide choice of jurisdictions in which legal proceedings might be commenced. This includes the courts of a country within whose territory the defendant is ordinarily resident or has his principal place of business, or the place where the goods were taken over by the carrier or the place designated for delivery.

In the pursuit of legal certainty, the CMR is to be applied autonomously, so that the parties to the contract know what to expect, regardless in which country their case is tried. But this is only theory. The choice of forum should be exercised carefully. The courts of different countries often reach widely differing conclusions in their interpretation of the CMR.

Negative declaration proceedings

It has become evident that certain countries are more friendly towards carriers, and other countries more friendly towards cargo interests. The Netherlands traditionally has a name to uphold as a carrier friendly jurisdiction, where more “continental” countries such as Germany and France, are more “shipper-friendly”. The choice of forum is not restricted to those parties who are claiming compensation under the Convention. By seeking a so called negative declaration, a declaration that the carrier has no (or only limited) liability in any given case, a carrier can actively seek to determine in which jurisdiction any dispute is to be resolved. Article 31 Section 2 of the CMR provides that where an action arising out of carriage under the Convention is “pending” before a competent court, “no new action shall be started between the same parties on the same grounds unless the judgment of the court or tribunal before which the first action was brought is not enforceable in the country in which the fresh proceedings are brought”.

Time may be of the essence

So if damage occurs, time may be of the essence. The party that initiates proceedings first can benefit enormously from the mere initiation of proceedings, whether or not the case will be actually tried or settled shortly thereafter.

For instance, upon delivery of goods carried from The Netherlands to France, damage occurs and parties face the question where to bring suit. The carrier that is on the defence will probably be called before the French court by cargo interests. It is therefore advisable for the carrier to strike first and bring the case before a Dutch court, in order to make a Dutch court formally declare that the carrier is not liable. The carrier has thus ensured that his case will be tried in a carrier-friendly jurisdiction. This legal version of the “pre-emptive strike” is wide spread.

The German courts have not sat still and they have interpreted Article 31 Section 2 CMR in such a way that the pre-emptive strike seems to have lost a lot of its worth for carriers. In a decision of 20 November 2003 the Bundesgerichtshof (BGH) decided that a declaratory action did not constitute a pending action and did not prevent the plaintiff from initiating further proceedings in Germany.

Position on limitation and damages in the Netherlands

Under Article 29 CMR the carrier is not entitled to avail himself of the provisions of this chapter which exclude or limit his liability or which shift the burden of proof if the damage was caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court or tribunal seised of the case, is considered as equivalent to wilful misconduct.

So what is the Dutch equivalent of wilful misconduct? The Supreme Court of The Netherlands has ruled that under Dutch law, the equivalent of wilful misconduct is acting “recklessly with knowledge that damage would probably result”. This is the same term as used in the Warsaw Convention and has given raise to similar debate, focusing on whether a subjective or objective test should be applied in determining whether the reckless actor had knowledge that damage would probably result.

In The Netherlands the Supreme Court has held that in accordance with the laws of The Netherlands the equivalent of wilful misconduct under Dutch law comes down to subjective conscious recklessness, which is nearly equivalent to intent. As a result, if proceedings are brought in The Netherlands, the carrier nearly always benefits from the Conventions rules regarding the limitation of damages, unless where there is sufficient proof of intent, like for example theft by the driver (Overbeek v. Cigna & Philip Morris v. Van der Graaf, HR 5 January 2001, NJ 2001/391 and 392).

Custom duties and other charges

There are also other grounds for carriers to initiate negative declaration proceedings in the Netherlands, such as the Dutch interpretation of Article 23 Section 4 of the CMR:

“In addition, the carriage charges, Customs, Duties and other charges incurred in respect of the carriage of the goods shall be refunded in full in case of total loss and the in proportion to the loss sustained in case of partial loss, but no further damage shall be payable.”

In a case where the consignment has been stolen during carriage, the cargo interests may be facing additional charges, taxes and levies, such as excise duties, penalties and VAT payable. Authorities may decide that the stolen goods are deemed to be imported in the country where they have been stolen. As a consequence cargo interests may be confronted with liabilities, that exceed the limitation considerably and in some cases – liquor, cigarettes – even exceed the value of the goods. The question is whether the cargo interests can reclaim these levies based on Article 23 Section 4 CMR (so on top of the limited liability).

Here again the answer to this question depends on the court where the case is tried. National courts disagree on the scope of costs mentioned in paragraph 23 section 4 CMR: what are “other charges incurred in respect of the carriage of the goods”?

The broad interpretation of the English Courts

Two doctrines have evolved. In London, the House of Lords has ruled in Buchanan & Co. v. Babco Forwarding & Shipping (UK) [1978] A.C. 141, “other charges” include expenses consequential on the way in which the carriage was actually carried out; and hence that they include the expenses consequential on breach of the contract of carriage, such as the cost of surveying damaged goods, the amount of extra duty or VAT payable because the goods did not reach their designated destination, and return carriage charges. English courts have therefore taken a broad interpretation of “other charges”. Other countries that favour a broad interpretation are Belgium and France.

The narrow interpretation of the Dutch Courts

The Dutch Supreme Court has chosen a more narrow interpretation. In a 2006-ruling Phillip Morris v. Van der Graaf (HR 14 July 2006, NJ 2006/599) the Supreme Court held that paragraph 23 section 4 of the CMR-treaty is to be explained in a narrow sense. The Supreme Court held that no other costs will be refunded, with the exception of those pertaining to a normal execution of the carriage as such. So costs pertaining to a certain customs regime will not be refunded. Also, duties and other charges that came to life due to the theft, need not be refunded.

Initiation of proceedings in The Netherlands

Under Dutch law, a Dutch court case is pending as soon as a writ of summons has been served. In cases where time is of the essence, it is possible to draft the writ within hours or days, all depending on the availability of the necessary information and the complexity of the case. So the time between the decision to initiate proceedings in The Netherlands and the time at which proceedings are actually pending can be short and will avoid unpleasant surprises, such as the other party initiating proceedings in a less carrier friendly jurisdiction.

Forum shopping should always be considered for claims falling under the scope of the CMR regime. Staying one step ahead can make all the difference.

Judicial sale by public auction

The Netherlands is a suitable jurisdiction to enforce claims against ships. The arrest of vessels is a broadly used manner to obtain payment or security for a long outstanding claim. It is not always that vessels are subsequently released. Especially where various parties arrest a vessel there is always a risk that the vessel will not leave port in the same ownership. With a certain frequency seagoing vessels are sold before the Dutch Courts through a judicial sale by public auction. Most of the times, the auctions take place at the request of the bank, but in theory any creditor may decide to auction a vessel. It is rare that creditors with a claim that is ranked below a priviledged claim of the bank takes these steps, especially if he fears that the proceeds will not be sufficient to recover a fair amount of the claim. In general the vessels sold have in common that they have too many debts. The public auction is meant to devide the nett proceeds of the ship under those entitled thereto. Who comes later, that is after the auction, comes too late.

One creditor must take the initiative to auction the vessel. At the request of a creditor that is in possession enforceable legal title against the ship owner the Court will fix a date for the public auction, at which a ‘Dutch Auction’ will take place. The Conditions of Sale will be made availabe upon request.

Inspection of the vessel

Vessels at auction are sold on an "as is where is" basis. Subject to the Conditions of Sale, the vessel may be inspected on application to the attorney of the enforcing creditor.

Dutch Auction

The judicial sale by public auction is conducted in the Dutch language. The auction takes place in one brief session, consisting of two parts. The session begins with a customary manner of bidding. Parties interested in the vessel may bid. The highest bid wins, that is to say, initially wins only a bidding premium as fixed in the conditions of sale (normally half a per cent of the highest bid). After the first part the real Dutch Auction will start. During the second part a sum will be fixed that will have to be paid on top of the earlier mentioned highest bid. In order to come to this sum, the bailiff will call out diminishing amounts to be paid in excess of the price as already fixed. The person who first accepts the vessel, by calling out "mine", acquires the vessel. If nobody calls mine, the vessel goes to the person who was the higest bidder during the first part of the session. The bidding therefore goes up and then down again.

Purchase price

The purchase price consists of the total of:

• the highest bid made during the first bidding part, plus
• the sum at which ‘mine’ has been called during the second part, plus
• the bidding premium (if one is not the highest bidder in the first part), plus
• the Costs of the auction, as fixed by the Court before the auction.

The purchase price of the vessel is normally payable within eight days of the auction. Only upon payment will the purchaser receive the protocol of adjucation, which is a necessary document to take possession of the vessel and to register the vessel in a ship register of choice.

Formalities

The specific formalities of a public auction are described in the terms and conditions of the judicial sale. One of the formalities will almost always be the deposit of a certain amount of money before the auction actually takes place. Our attorneys know the formalities and are in a postion to advise you on short notice. Over the last few decades potential buyers of seagoing vessels have instructed the lawyers of Kernkamp Advocaten with regard to the auction of vessels and to do the bidding on their behalf. Having local knowledge at your disposal can make all the difference for a successful purchase.

Further information
Please feel free to contact our Transport and International Trade contact person for further information.