Arbitration

Definition

Arbitration is a confidential alternative to court litigation in which the parties appoint neutral arbitrators to issue a binding award. It is valued for confidentiality, expertise, and cross-border enforceability under the New York Convention. In the Netherlands, arbitration is governed by Book 4 of the Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering), and institutions such as the NAI are commonly chosen.

Example

A construction joint venture agrees that disputes will be settled by NAI arbitration in Rotterdam rather than in the ordinary courts.

Why this is a business risk

Choosing arbitration without understanding its costs and timeline can be a nasty surprise. Arbitration is typically faster and more confidential than litigation, but institutional fees and arbitrator costs can exceed court fees significantly, especially for smaller disputes. A poorly drafted arbitration clause that names an institution that no longer exists, or omits the seat, can paralyse proceedings before they start.

How to manage it

• Use the model clause of the chosen institution (NAI, ICC, LCIA) verbatim: these are tested and avoid procedural challenges.
• Specify the seat (place of arbitration), language, and number of arbitrators: three for large disputes, one to control costs for smaller claims.
• Consider adding an escalation step (negotiation or mediation) before arbitration to encourage early settlement.
• Check that emergency arbitrator provisions are available if you may need urgent interim relief.

Legal references

• Rv Boek 4 (art. 1020 e.v.) Dutch Code of Civil Procedure: arbitration Dutch law

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.