The Netherlands at a glance - Houthoff Publicaties

– The Netherlands at a glance –

This page provides information on general topics
you need to know before ‘Doing Business in the Netherlands’.

Specifically: general matters, diplomatic relations/European Union,
the legal system and the Dutch government.

General matters

Geography & climate
The Netherlands (often called ‘Holland’) is a modern, prosperous nation located in north-west Europe. With a population of 17.08 million people and an area of 41,543 km², it is one of the world’s most densely populated countries. The Netherlands is part of the Kingdom of the Netherlands, which also includes Aruba, Curaçao, St Maarten and three other islands in the Caribbean.

The Netherlands has a mild, maritime climate, with comparatively cool summers and mild winters. Summers are generally warmer with colder, rainy periods. Winters can be fairly cold, windy, with rain and some snow. The average temperature is 4°C (39°F) in January and 19°C (66°F) in July.

Language
The official language is Dutch, a language spoken by 23 million people worldwide. English is also widely understood and spoken. A second official language, Frisian, is spoken by approximately 440,000 people in the province of Friesland.

Culture & religion
The culture of the Netherlands is diverse, reflecting regional differences as well as foreign influences, thanks to the Dutch mercantile spirit and their zest for exploring, and the influx of immigrants. The Netherlands has a liberal image, which stems from pragmatism and a ‘live and let live’ attitude. The Netherlands is a consensus-based society, so making compromises and joint problem-solving are essential parts of the Dutch character.

The business community is rather close-knit, and most senior level people know one another. The Dutch are hospitable, but this is often reserved for family and friends. In business matters, they tend to be reserved and formal. Their communication style has been described by some observers as ‘direct’. They tend to avoid small talk and get to the point rather quickly. In addition, punctuality for meetings is taken very seriously.

In the Netherlands, 51% of the population describe themselves as non-religious. The largest religious denomination is the Roman Catholic Church (24%), followed by the Protestant Church in the Netherlands (21%), and Islam (5%). The rapid secularisation of the Netherlands since the 1960s has meant that the importance of religion in the social and cultural lives of many Dutch people has decreased.

Currency
The euro is the official currency. The exchange rate on 9 October 2019 was approximately €1 = $1.0981 (ECB). Bank transfers within the euro area are relatively inexpensive.

Finance and economy
The Netherlands has the 17th largest GDP in the world (2019) (IMF). It has a modern banking and financial system, which is fully integrated into the international system.

The Dutch economy has a strongly international focus. The Netherlands has had a long history as a trading nation. Foreign trade is the lifeblood of Dutch prosperity: the Netherlands is the eighth-largest exporter of goods and capital in the world. Owing to its relatively small domestic market, the Dutch economy is one of the most open and outward-looking in the world. Royal Dutch Shell, Unilever, Philips and Heineken are just a few of the multinationals founded in the Netherlands.

Diplomatic relations/European Union

There is easy access to the single European market (including the financial and commercial centres in Britain, France and Germany) and every corner of the European Union (EU).

The Netherlands is one of the EU’s founding members and plays an active role in many international organisations. It has active diplomatic and economic relations with most countries in the world.

The other EU member states are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden. At the time of publication, the United Kingdom is still an EU member state, but it is preparing to leave the EU.

The Netherlands is also a member state of the European Economic Area (EEA), the Schengen Area, the EU Customs Union and the Council of Europe.

Visit www.government.nl for further
information about how to contact
Dutch embassies, consulates
and permanent representations.

Detailed visa information is
available at www.ind.nl/en.

The Dutch legal system

General – Netherlands Commercial Court (NCC) – Class actions and class settlements – Enforcement of foreign judgement – arbitration and mediation

General

Constitutional framework
The Dutch constitution is the basis of the legal system and enshrines the independence of the judiciary. It is the role of the legislature (with the advice of the Council of State) to ensure that laws are constitutional. In the Netherlands, the constitutionality of a law is not a matter for the courts.

Civil proceedings
The Netherlands has a civil-law system similar to that used in France, Germany and many other European countries. As a member of the European Union, the Netherlands is also subject to EU law. Civil cases are dealt with by 11 district courts located throughout the Netherlands, 4 courts of appeal, and the Supreme Court of the Netherlands (Hoge Raad). The courts are divided into various sectors, for example the family sector and commercial sector. The district courts also have a special chamber that deals with claims under €25,000 and disputes concerning employment, tenancy and consumer sales. This chamber is also referred to as the sub-district court (kantongerecht).

Some courts have specific expertise in certain areas and so have jurisdiction over cases in those areas. For example, the Enterprise Chamber (Ondernemingskamer) of the Amsterdam Court of Appeal has exclusive jurisdiction over matters relating to corporate law. Patent matters must be submitted to the The Hague District Court and maritime matters to the Rotterdam District Court. International business disputes can be heard by the Netherlands Commercial Court in Amsterdam (see 2.4.2).

Cases are examined on their facts and their legal merits both at first instance and on appeal. The Supreme Court, however, does not review the facts of a case.

Civil litigation in the Netherlands is often a relatively speedy process – it can take from several months to a year (but occasionally longer) to obtain a final decision. The courts often try to speed up the process by calling on the parties to enter into settlement negotiations during a rather informal hearing (mondelinge behandeling). If the matter is urgent and, in view of the parties’ interests, requires an immediate remedy, it is possible to start summary proceedings to obtain provisional measures. A decision can sometimes be obtained in just a few days. It is not unusual for litigation to go no further than these summary proceedings, as the parties may consider the summary decision to reliably indicate the eventual outcome in the proceedings on the merits.

In the Netherlands, unlike its neighbours, the time limits for bringing a civil claim are relatively long. The applicable time limit is determined by the nature of the claim. Usually, it is five years. However, a time limit of two or three years applies for certain types of claims.

Two key elements stand out regarding these time limits in the Netherlands. The first is that a time limit may be interrupted (and extended) by an ‘act of interruption’ (stuitingshandeling), such as a letter from a creditor stipulating their intention to use the right of performance. A new time limit will begin following such an act of interruption. The second is that a contracting party must complain in due course after discovering that a party has failed to perform an obligation, at the risk of forfeiting all rights to a legal claim.

Administrative proceedings
In most administrative law matters, the party who does not agree with the administrative decision must object to the decision-maker itself and ask for reconsideration. If the decision is not reconsidered, the party can start proceedings at the competent court. This can be the administrative section of one of the 11 district courts or a specific administrative court that decides in the first and only instance. Applications for provisional relief (pending the outcome of the proceedings) can also be submitted to the district court or the specific administrative court, depending on the matter.

A decision of the district court can be appealed at the competent administrative court of appeal. Depending on the matter, this can be the Administrative Jurisdiction Division of the Council of State (Afdeling bestuursrechtspraak van Raad van State), which is the highest general administrative court when acting as appellate court, the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven) for economic administrative law, the Central Appeals Tribunal (Centrale Raad van Beroep) for social security and public service law or the Supreme Court (Hoge Raad) for tax matters.

Criminal proceedings
Criminal cases are dealt with by the criminal sector of the 11 district courts located throughout the Netherlands, the 4 courts of appeal, and the Supreme Court of the Netherlands.

Netherlands Commercial Court (NCC)

On 1 January 2019, the Netherlands Commercial Court (NCC) opened its doors for international business disputes. It holds proceedings and issues judgments in English. The NCC District Court and the NCC Court in summary proceedings are a special chamber in the Amsterdam District Court. Their decisions can be appealed to the NCC Court of Appeal, a chamber in the Amsterdam Court of Appeal. The Supreme Court can hear the NCC Court of Appeal’s decisions.

An international business dispute can generally be submitted to the NCC if it concerns a civil or commercial matter within the autonomy of the parties, unless the matter must be decided by the sub-district court or by another court that has exclusive jurisdiction. The Amsterdam District Court must have jurisdiction to hear the case, for example on the basis of a choice of forum by the parties. The parties must expressly agree in writing (not in general terms and conditions) that the court proceedings will be held in English before the NCC. More information can be found on the NCC’s website: https://www.rechtspraak.nl/english/ncc.

Class actions and class settlements

Collective actions are becoming increasingly common in the Netherlands. The Netherlands has two different collective redress mechanisms: the representative collective action (class action) and the collective settlement mechanism (WCAM settlements).

Class actions
A representative entity, either a foundation or an association with full legal capacity, can initiate collective proceedings to protect the similar interests of an unnamed group (the class). Monetary damages cannot currently be claimed in a class action. However, this will change when the Act on redress of mass damages in a collective action of 20 March 2019 (WAMCA) enters into force (the date of entry into force is not yet known). The WAMCA also introduces stricter requirements for the standing of the representative entity and the scope of collective actions, to prevent abuse and ensure that the class action has a sufficient connection with the Netherlands. The WAMCA contains procedural changes to make proceedings more efficient and effective. Class members who do not want to be bound by the judgment can opt out after the appointment of an exclusive representative. Foreign claimants must – generally – opt in. If a settlement agreement is reached and declared binding by the court during the proceedings, all class members have an opportunity to opt out. The WAMCA will apply to collective actions relating to events that took place on or after 15 November 2016.

WCAM settlements
Collective settlement proceedings allow the parties to a settlement agreement to jointly ask the Amsterdam Court of Appeal to declare the settlement binding on all class members. In doing this, the court assesses factors like the reasonableness of the agreed compensation. Class members who do not want to be bound can opt out. The collective settlement proceedings are independent proceedings, apart from class action proceedings. So far, nine class settlement agreements have been declared binding since the Act on the Collective Settlement of Mass Damage (WCAM) entered into force in July 2005. In three of those cases, the Amsterdam Court of Appeal assumed jurisdiction although a substantial number of class members (the potential claimants and beneficiaries) were based outside of the Netherlands.

Enforcement of foreign judgments

A judgment by a foreign court is not automatically recognised and enforced by the Dutch courts unless a treaty on recognition or enforcement applies. However, if a person has obtained a final judgment for the payment of money from a foreign court that is enforceable in the relevant jurisdiction, and if that person files the claim with a court in the Netherlands, the Dutch court will generally recognise the foreign judgment if the court finds that (i) the jurisdiction of the foreign court is based on grounds that are internationally acceptable and (ii) the appropriate procedures were duly followed. In this event, the Dutch court will issue a similar decision to that of the foreign court and that decision – as a Dutch decision – will be enforceable in the Netherlands. However, a Dutch court will not allow a foreign judgment to be recognised if the court finds that the foreign judgment is (i) against ‘Dutch public policy’ according to Dutch legal standards or (ii) incompatible with a judgment issued by a Dutch court in a dispute between the same parties, or incompatible with a prior foreign judgment that is subject to recognition in the Netherlands in a dispute between the same parties on the same subject matter and with the same cause.

The Brussels I Regulation (recast) governs the enforcement in the Netherlands of judgments in civil or commercial matters issued by a court in another EU member state following legal proceedings that were instituted on or after 10 January 2015. Leave to enforce is no longer required, meaning that this type of judgment is directly enforceable. For a judgment which the Brussels I Regulation continues to apply to, the Dutch court’s leave for enforcement can be obtained within a few weeks. For EFTA member states, a similar procedure for obtaining leave for enforcement applies. For judgments made under the European Enforcement Order or the European Payment Order, the enforcement of judgments by other EU member states in the Netherlands (and vice versa) is even quicker and easier because, like Council Regulation (EU) No. 1215/2012, no leave for enforcement is required in the country where enforcement is sought.

Dutch courts generally recognise contractual choice-of-law clauses and jurisdiction clauses, but not if they are considered to contravene ‘public policy’ by Dutch legal standards.

Arbitration and mediation

Arbitration
Arbitration is quite common in civil and commercial cases. On 1 January 2015, the new Dutch Arbitration Act (de Nederlandse arbitragewet) entered into force. The principal reasons for modernising Dutch arbitration law are: codifying best practices, increasing consumer faith in arbitration, reducing the costs for parties, restricting the procedure for setting aside awards to one fact-finding instance, and making the Netherlands a more attractive venue for international arbitral proceedings. The new Dutch Arbitration Act gives greater power to the parties to structure the proceedings in a way they consider appropriate, while limiting court interference to a considerable extent.

The Netherlands is a party to the New York Arbitration Convention, so Dutch arbitral awards are in principle easily enforceable in over 160 states worldwide (and vice versa).

Parties can chose to arbitrate at the Netherlands Arbitration Institute (NAI). More information on the NAI and the NAI Rules, including standard clauses, is provided at www.nai-nl.org/en.

Mediation
Mediation is also becoming more common, not only in divorce and other family-related cases but also in civil and commercial cases. New legislation to strengthen the position of mediation and its quality has been proposed and is currently being negotiated in parliament.

Dutch Government

Democracy and stability
The Netherlands is a constitutional monarchy with a parliamentary system. Although His Majesty King Willem-Alexander formally heads the government, it is the prime minister who governs in practice, together with the other ministers and state secretaries. The ministers are accountable to the Dutch parliament for the government’s actions, including those of the monarch.

The Dutch parliament consists of the House of Representatives (the 150-member Tweede Kamer) and the Senate (the 75-member Eerste Kamer). Both houses together are officially referred to as the States General (Staten Generaal). The members of the House of Representatives are directly elected by the people (using proportional representation). Elections usually take place every four years. The House of Representatives has the power to compel the government to resign by means of a motion of no confidence. Members of the Senate are elected by the provincial councils, i.e. by the members of the 12 provincial legislatures.

Every year, on the third Tuesday in September – a day known as Prinsjesdag – the government presents its budget for the coming year, and the King delivers a speech from the throne outlining the government’s policy and plans for the coming year. The budget requires the approval of parliament. The monarch also plays a role in the formation of a new government, which always consists of a coalition of various political parties. There are currently 15 political parties represented in the House of Representatives. Four of them together form the current coalition government.

Question?

Isabella Wijnberg
Advocaat | Counsel
Class Actions & Litigation
Mail Isabella
+316 2342 2348

Last edit: January 2020