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Enforcement of international judgements (part II)

Updated: Aug 9, 2023

Foreign arbitral award


An arbitral award is not enforceable until the court grants leave for enforcement, called an exequatur. Enforcement of an arbitral award in the Netherlands always requires an exequatur. The most important treaty in this context is the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards). Both the Netherlands and the United States are parties to this treaty.


Exequatur procedure


Exequatur for enforcement of an arbitral award from a country not party to the New York Convention can only be obtained under Article 1076 of the Dutch Code of Civil Procedure. However, most countries are party to the New York Convention. Although Article 1075 of the Dutch Code of Civil Procedure was written for that situation, an application for exequatur can also be based on Article 1076 of the Dutch Code of Civil Procedure. Here it is not Article 1075 of the Dutch Code of Civil Procedure that prevails as lex specialis, but rather the "most favored nation principle" of Article VII of the New York Convention, which provides that the Convention does not prevent a party from relying on a national regulation that is more favorable than the Convention for enforcement of an arbitral award. The applicant is free to base an application for exequatur concerning an arbitral award from a country party to the New York Convention (primarily or alternatively) on Article 1075 of the Dutch Code of Civil Procedure or on Article 1076. The advantage of Article 1075 is that the grant of leave is not subject to cassation. This may be convenient for the applicant. The advantage of Article 1076 is that no enforceability in the country of origin is required if an enforceable title is no longer executable in the country of origin because it is time-barred, for example. Then the Dutch court can still issue an exequatur.


The court grants exequatur unless one of the grounds for refusal listed in Article V, paragraph 1 of the New York Convention arises or if the case is not arbitrable or the arbitral award is contrary to public order. The court does not subject the case to reexamination.


In practice


When parties choose to submit a dispute to arbitration, they thereby in principle waive their right to submit that dispute to the public courts. This right of access to the public courts is protected by Article 6 ECHR (European Convention on Human Rights and Fundamental Freedoms). The ECtHR has consistently held that this is not an absolute right, and that this right can be waived by choosing arbitration. That choice of arbitration must then have been made freely, lawfully and unambiguously.


Whether the waiver of recourse to the public courts was unambiguous must be considered in light of the national law where the arbitration clause was agreed upon. For example, the court ruled that the fact that the standard is set higher in the Netherlands with respect to an arbitration clause does not mean that the Dutch court will judge foreign arbitration clauses in the same way. A striking example in this regard is the case before the Amsterdam Court of Appeal on November 10, 2020. One of the parties had included in its general terms and conditions that any dispute regarding the contract was to be settled by arbitration. Since the plaintiff in this case had already done business several times with the party invoking these general terms and conditions, and had even previously settled matters by arbitration, she also could not rely on the fact that she did not know about the arbitration clause.


In addition, the right of access to the public courts is a matter of public order, so that also under Article 1076 of the Dutch Code of Civil Procedure the court is obliged to assess whether the choice for arbitration can stand the test of Article 6 ECHR.


In addition to Article 6 ECHR, Article 5 and Article 8 ECHR are also matters of public order. The ECHR is a European human rights treaty that takes precedence over Dutch law and thus occupies a special position within the Dutch legal order. So do Articles 5, 6 and 8 ECHR. These regulate the right to liberty and security, the right to a fair trial and the right to privacy.


In examining whether the arbitral tribunal has followed the rules of procedure, the Dutch court must exercise restraint. Indeed, the possibility of setting aside an arbitral award on public order grounds should not be used as a disguised appeal. Also, it is a matter of public interest that arbitral clauses can continue to function effectively. The civil court should thus intervene only in striking cases.


In testing whether there is a conflict with public order, a number of points are important. First and foremost, there is only a conflict with public order if the content or execution of the arbitral award conflicts with mandatory law of such a fundamental nature that compliance with it may not be prevented by restrictions of a procedural nature.


An example of a right of such a fundamental character is the right to be heard. This right need not be assessed with restraint. A striking example in this regard is the case of the Amsterdam Court of Appeal of January 29, 2019. On the basis of the general terms and conditions that applied, the company from which these general terms and conditions originated was allowed to initiate arbitration proceedings as soon as the debtor's payment period had expired. The proceedings could be initiated without notifying the other party. In the opinion of the Amsterdam Court of Appeal, these general terms and conditions are unreasonably onerous and in violation of the right to be heard.


The ECJ ruled that Article 81 EC is also a fundamental provision (and thus a matter of public order). Article 81 EC prohibits cartels. The Dutch court holds that cartel formation is contrary to public order.


Consumer law on unfair terms is also a matter of public order. The court must then examine whether there is a violation of the right of public order.


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