Some remarks about the coming Netherlands Commercial Court.

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Some remarks about the coming Netherlands Commercial Court,
by Hans J. Hoegen Dijkhof
What is it?
Recently articles have appeared about this alleged new Dutch court which would become
operative in 2018. Please have a look at the website from the Council for the Judiciary (
Dutch: Raad voor Rechtspraak, "the Council"), an official state organ which has positioned
itself between the Ministry of Justice and the judiciary.1
Quote
The Council for the Judiciary (Raad voor de rechtspraak) is part of the judiciary system, but
does not administer justice itself. It has taken over responsibility over a number of tasks from
the Minister of Justice. These tasks are operational in nature and include the allocation of
budgets, supervision of financial management, personnel policy, ICT and housing. The
Council supports the courts in executing their tasks in these areas. Another central task of
the Council is to promote quality within the judiciary system and to advise on new legislation
which has implications for the administration of justice. The Council also acts as a
spokesperson for the judiciary on both national and international levels.
Unquote
The Council recently had to admit having made a loss of EUR 220 million with the failure of
the digitalisation of the Dutch civil procedure (project KEI, Kennis en Innovatie. English:
Knowledge and Innovation).
This was followed by a resignation of the then Chairman.2 This project, budgeted in 2012 at
EUR 7 million, was doomed to fail as every experienced trial attorney foresaw because it
combined digitalisation with a far reaching reform of the necessarily complex Dutch trial law.
1
The Netherlands Commercial Court, https://netherlands-commercial-court.com
2
Het Financiële Dagblad 21 August 2018, Mr. Frits Bakker resigned but was reappointed till January 2019.

At the moment the Council has a deficit of EUR 28 million which will be running up to EUR 40
million and further reaching measures to save money as imposed by the Ministry are
impacting the already plagued Dutch judiciary.3
One may therefore question first of all the presence and durability of the budget for this
project of a Netherlands Commercial Court. Secondly, this seems to be yet another project in
the framework of the more or less successful attempts of the Dutch to present The
Netherlands as the place to be, both tax wise and corporately and now also judicially.
Therefore commercially motivated and perhaps mixing up roles?
The Dutch fiscal and legal presence in the world
Everybody knows that the Peace Palace and the International Criminal Court are in The
Hague and the Dutch have a very attractive tax climate for foreign companies.4
See my
article ‘’The Future of Dutch Tax Planning’’5 and my article on Dutch Bilateral Investment
Protection Treaties.6 The Dutch have major institutions of public international law within their
borders, they have a great system for intermediate BV's and for other international
investment structures. See my article on the Dutch ruling practice.7 They have about 220
double taxation treaties.8 They are a part of the EU and profit from the EU Parent Subsidiary
Directive. They have about 107 bilateral investment protection treaties.9
This all in the line of
creating a level international playing field. In 2012 they came with the Flex BV. 10
We can see the Flex B.V. as a first attempt to also compete legally in the global system. This
very flexible corporate law system, in combination with the above tax framework caused
many international companies to establish themselves fiscally and legally in Holland or
fiscally in London and legally in Holland. This all in the framework of pushing Amsterdam to
be regarded as the European place to establish your business at and The Netherlands as the
country to run one’s investments through, as a result of which an amount of around EUR 4 to
5 billion annually is contributed to the Dutch economy.11
3 Het Financiële Dagblad 21 August 2018.
4
https://www.legallanguage.com/legal-articles/the-hague-international-law/
5
The future of Crossborder Tax Planning: The continuing role of the Netherlands 40 years on, Speech presented
at the 40th Anniversary Conference of the International Tax Planning Association, Amsterdam 7th – 9th June
2015, ‘’IPTA Journal Volume XVI, Number 1’’, pp. 43-47, International Tax Planning Association 2015
6 Dutch double Taxation treaties and Dutch bilateral investment protection treaties: a lucky combination indeed,
www.arcanummanagement.com, April 2013.
7
Remarks on the Dutch Tax Ruling Practice 2015, https://www.hd-
dutchlawyers.nl/userfiles/file/Publicaties/DUTCH%20RULING%20PRACTICE%2027112015.pdf
8:https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/individuals/tax_arrangements/tax_
treaties/tax_treaties_and_income_from_different_countries_sitegbied/tax_treaties
9 http://investmentpolicyhub.unctad.org/IIA/CountryBits/148
10
Invoeringswet vereenvoudiging en flexibilisering bv-recht: http://wetten.overheid.nl/BWBR0031758/2012-10-01
11
The balance sheet total of the Dutch BFI’s in 2010 was EUR 2,900 billion. Dividends are the most important
derived money streams (afgeleide geldstromen). In 2010, Dutch BFI’s received EUR 107 billion of dividend from
foreign subsidiaries. This is almost double the EUR 56 bilion of 2006. In 2010, the pay-out to the foreign
shareholders of these BFI’s was EUR 76 billion. Incoming interest was EUR 24 billion and outgoing interest was
EUR 13 billion. Incoming royalties were EUR 16 billion and outgoing royalties were EUR 14 billion. Interest paid
to external third parties is substantial compared to interest paid intra group. See for further details and
explanations ‘’Uit de schaduw van het bankwezen’’, SEO Economisch onderzoek, Amsterdam, juni 2013, pp. 72 –
75.

The Netherlands Commercial Court in the framework of the will of the Dutch to
compete internationally
The present Government and Parliament seem to be doing their best in the wake of the
Panama and Bermuda papers to destroy what was built up in the past. The Government
wants to be more strict than the EU in the implementation of EU Directives and UBO
registers.12
By reducing previously existing possibilities for international tax planning13
and by
what looks like criminalising tax advisors, the Government strives to improve the international
image of the Netherlands which is seen as a tax paradise by many.14 The big issue now is
abolishing dividend tax for foreign shareholders in 2020 and lowering corporate taxes but
increasing substantial interest taxes.15 In this framework, we have to look at this new project
of the Netherlands Commercial Court in progress.
We may regard this project as yet another manifestation of the clear Dutch will to continue to
compete internationally and thus to maintain the basis for the health of the very open Dutch
economy. We have the Dutch double taxation treaty network, coupled with the peculiarities of
the participation exemption, the ruling system, the transparency of certain Dutch investment
structures like the FGR, we have the bilateral investment protection treaties, we have public
law international institutions at The Hague and we now get the Netherlands Commercial
Court, as an instrument to draw judicial and arbitration cases from London, New York, Dubai
and Singapore, to Amsterdam, where they will allegedly be decided efficiently and
pragmatically under what is alleged by the Council to be the best judicial system in the world.
Whether this will succeed in any way, is the question. There was another failure which was
the Holland Financial Centre Project. This cost around EUR 250 million. It started in 2007 as
a Dutch foundation and it was stopped in 2013. It mixed up the roles of the financial sector,
the government, AFM and DNB.16
Critical remarks on the Netherlands Commercial Court project ("NCC")
Is it a coincidence the abbreviation is NCC, in view of the abbreviation ICC at Paris?17
The NCC says on its website that adjudication competes with arbitration. Who is behind this
project? Did the Council invent this project itself? Or are the government and the big Dutch
law firms behind it? By the way, in the meantime many big foreign firms have established
themselves in Holland. Is big business in favour of this project? How will the international
legal world look at this project?
12
https://www.hvk-stevens.com/wp-content/uploads/2017/12/12212017-Newsletter-Luxembourg-UBO-register-
on-its-way.pdf
13 Profit shifting: https://read.oecd-ilibrary.org/taxation/action-plan-on-base-erosion-and-profit-
shifting_9789264202719-en#page5
14
https://ec.europa.eu/taxation_customs/business/company-tax/transparency-intermediaries_en
15
https://www2.deloitte.com/nl/nl/pages/tax/articles/tax-policy-intentions-coalition-agreement.html
16
https://archive.is/20130629111351/http://www.hollandfinancialcentre.com/
17
ICC PARIS, https://iccwbo.org/

Why not the "Dutch" Commercial Court?
Why was it not called the Dutch Commercial Court? ‘’Netherlands’’ is more posh and more
correct in the eyes of the Government and not a pars pro toto, Holland being known as one
of the formed United Provinces, originating with the Union of Utrecht in 1579, but as the most
important one. The Dutch are only seldom referred to as Netherlanders. But stubbornly we
call ourselves The Netherlands. What is The Netherlands? It is basically a densely populated
country of 17,5 million people on about 42.000 square kilometers. It has a hard working
population and is supposed to be in second position on the list of the most competitive states
in the world. It is well regulated and well governed, so much so, that we might say that the
state controls every aspect of a person’s private, work and business life. But NY or Shanghai
are cities just as big or bigger than the entire Dutch population and the non directly elected
prime minister of The Netherlands may just as well be regarded as the mayor of a relatively
big city.
Impartiality
Are Dutch judges that impartial? Certain people may question this.18
Is there not a bias
favoring politically correct positions or cases? There are anyway various cases in which
people deplored they were subject to Dutch jurisdiction and became the victim of very easy
attachments and of costly trials before the Dutch Ondernemingskamer (Enterprise Chamber).
The Chamber may order a costly enquiry into the policy and the course of events in the
business. As a consequence hereof, the business can be charged with a heavy invoice. The
Chamber may also appoint a special director, without whose signature the B.V. cannot be
represented. The Chamber can also determine that for the duration of the trial the shares
(except one) can be transferred fiduciarily to an administrator. The fees of this administrator
are also invoiced to the B.V. Security has to be put up for all invoices in advance.
This easy way of attaching and easy jurisdiction and extensive powers of the Enterprise
Chamber may have been a drawback of being in Holland for various substantial international
holding companies. Couple to this the far reaching powers of the public prosecution. 19
Is the fact that the Council is already initiating this NCC project without any parliamentary
approval yet, the bill20 not being adopted yet by the Dutch Senate - or only indirect approval,
not a sign that it is assumed things will go forward as desired anyway and the Council and
the Court of appeals has become commercially involved with the big firms? Presently, the
number of trial cases is decreasing and every institution tries to uphold the need for it being
used. Like Dutch universities do their utmost to attract foreign students and a university
sometimes seems to be run for those involved in the university as teachers, researchers,
collaborators, etc.
18
See also the Chipsol affair: https://en.m.wikipedia.org/wiki/Chipshol
19
ING case. See FD 5 september 2018, no. 209, front page.
20
Bill NCC, https://www.rijksoverheid.nl/documenten/kamerstukken/2017/07/18/tk-wetsvoorstel-inzake-
netherlands-commercial-court

Litigation costs
It is contended that litigation costs are lower in Holland. That can be doubted because the
international big firms are also in Amsterdam and they can charge as much as EUR 500 to
EUR 1.000 an hour for a partner and one is quickly a partner if not an equity partner.
Secondly, the raise of court registry fees which began already five years ago, is still not at an
end, although it is said these higher fees had the effect to reduce the number of court cases
instituted. But that is what the government wants in view of the costs. Then, on the other
hand, the Amsterdam Court wants to attract "complex international commercial cases". That,
if succeeding, will exert a lot of pressure on the Court and it remains to be seen what the
effect on the costs of this Court will be.
Definition problem
What are "complex international commercial cases". This is not easy to define and I have
seen no definition yet. Can it be that a complex commercial case involving a small amount, is
dealt with by the NCC? Would the plaintiff have this right or would he be referred to an
another court? Where is his legal security then?
Jumping the relative jurisdiction rules
Bringing the case before the NCC is also jumping the rules for bringing a case in first
instance before one of the other 10 Rechtbanken (courts in first instance, the normal line
being a Cantonal court for small and labour cases, then a Rechtbank, then a Court of
Appeals and then the Supreme Court. The case is now brought before the NCC by
agreement. In this way, the NCC attracts cases which otherwise would have landed in a
Rechtbank somewhere and the NCC becomes a kind of arbitration court?
The draft trial rules of the NCC are very wide
The draft can be found through this link
https://www.rechtspraak.nl/SiteCollectionDocuments/concept-procesreglement-ncc_en.pdf
One notes that both chambers of the NCC, the First Instance Chamber and the Appeal
Chamber, are located in the same building, the courthouse of the Court of Appeals
Amsterdam. Does this create the necessary distance?
Article 1.2.1 means that people in any city anywhere can agree to have their case decided by
the NCC. The jurisdiction rules are very wide. The powers of the court are virtually unlimited.
The rules are vague.
Creating internal competition between Dutch courts
Is it also not the case that by creating this NCC, for example the Rechtbank Rotterdam, or
other reputable Dutch courts in first instance, are prejudiced by the NCC, like their local
members of the Bar?

Recoupment of all litigation costs near impossible
Is it also not so that if a plaintiff wins a Dutch case, he almost never gets a full
indemnification of all his litigation costs? Dutch law distinguishes between the extra-judicial
costs and the judicial costs. As a rule only the judicial costs are being fully awarded although
they might be compensated by the court which means that either party wholly or partly bears
his own judicial costs. The judicial costs are, if awarded, calculated under a Tariff of costs to
award (Dutch: Tarief te liquideren kosten). 21
That Tariff was drawn up rather conservatively
and has only recently been indexed.
Efficient and pragmatic?
The concept is praised as being efficient and pragmatic. But is Dutch law really efficient and
can any system of adjudication ever be efficient or would a high rate of efficiency not
prejudice the quality of the adjudication and the judgments pronounced? What is efficient and
what is pragmatic? Are these not other words for "chopping with a dull ax", as the Dutch use
to say? Increasingly judges got more power in the Dutch civil trial, in the sense that they are
not passive anymore, but actively engaged in the conduct of the civil trial, all in the
framework of reducing the costs for the government. A big stride in this respect was the
introduction of the obliged appearance of parties in a court hearing after the exchange of writ
and answer already. Thus preventing a case from being really thoroughly tried out.
No financial deposit required for Dutch attachments or civil trials
The easy way of attaching assets is praised by the Council. Indeed it is relatively easy to
obtain a Dutch judicial consent for a conservatory attachment. 22 The Dutch at any rate do
not require any financial deposit being made before or after a conservatory attachment is
made or when a trial is instituted, except in the latter case where there is no treaty in place
with the country of the plaintiff. Then a modest deposit (cautio judicatum solvi) for the trial
costs only, can be asked and as a rule will be granted. This Dutch system of no deposits for
attachments or civil trials has been criticised by many. As it may be that through an obscure
company a heavy attachment is allowed and in the end, maybe after appeals, the plaintiff is
condemned and there are no funds to recoup the damages caused by the attachments and
by the extra judicial and judicial litigation costs. This system may be to the advantage of
plaintiffs but the rights of defendants are not respected by this system which is therefore
basically flawed. See also Regulation (EU) No 655/2014 of the European Parliament and of
the Council of 15 May 2014. 23
A final look at the motives and advantages presented by the Council
- Why The Netherlands Commercial Court? Because of the urge felt to promote the Dutch
system and the Dutch legal professions. Another attraction point for The Netherlands to
foreign investors or foreign big players, beside tax and corporate legal.
21
Rate to liquidate costs, https://www.rechtspraak.nl/English/Pages/International-Insolvency.aspx
22
http://wetten.overheid.nl/BWBR0024096/2018-07-01
23
Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a
European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial
matters, see https://eur-lex.europa.eu/legal-content/EN/ALL/?qid=1486463503669&uri=CELEX%3A32014R0655.
See also the UK World Wide Freezing Order.

- Specialized Dutch judges? Where do they come from and what experience do they have
and why and how specialised are they then? How much are they paid extra then, if at all?
Will there not be a drain on other Dutch courts?
- English or Dutch as the language of proceedings? Does the possibility of a choice not take
back the advantage of English?
- Ability to bifurcate proceedings into a merits and quantification of damages phase? Is that
so unique then?
- Evidence may be tendered in French, German, English or Dutch, saving time and
translation costs? Another half hearted choice I am afraid.
- No risk of high adversary party costs award if its claim are dismissed? What is presented
as an advantage is in fact a present to the plaintiff, disregarding the defendant's position.
- Paperless litigation? Seems to be feasible in general.
- Recovery options (prejudgment seizure)? Again, what is presented as an advantage is
seen by the victims of these easy attachments as a serous flaw of the Dutch system of
conservatory attachments.
The funny thing is that any disadvantages are not mentioned on the Council website.
Conclusion
Time will tell.
Amsterdam, 5 September 2018
By Dr. Mr. Hans J. Hoegen Dijkhof
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Some remarks about the coming Netherlands Commercial Court.

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