The Netherlands — Arrest of Vessels and Maritime Arbitration

Dr Wim A Timmermans, Advocate and Arbitrator, Leiden, The Netherlands

(a)   Introduction

The present article will highlight the provisional arrest of vessels in The Netherlands in relation to (maritime) arbitration. Dutch procedural law allows the arrest of assets as a means to secure a plaintiff’s claim. The procedure for requesting an interim measure is relatively simple. A potential garnisher must make it clear to the court that it has a material claim vis-à-vis the debtor. As a rule, permission to make the arrest will be granted by the so-called voorzieningenrechter (provisional measures judge) within a period of 24 hours. With a view to avoid that the debtor will be informed of the imminent arrest and will thus direct the vessel to another port, the court will take its decision without a hearing taking place. According to the  Dutch procedural law, the garnishee may appeal the decision once the arrest has been laid by commencing summary proceedings in order to lift the arrest.

Below, a brief overview of Dutch procedural law regarding the arrest of vessels will be provided. In addition, Dutch arbitration law will be summarized – in particular with respect to adopting interim measures. Further, a number of relevant court cases will be highlighted. Finally, some conclusions will be drawn.

(b)   Overview of Dutch procedural law re provisional arrest

As it is the case in many jurisdictions, Dutch procedural law distinguishes between (i) arrest of assets as the consequence of a final court judgment (execution arrest); and (ii) arrest as a provisional measure to secure one’s claim towards the debtor. Within the framework of the current article we will discuss arrest of assets as an interim measure only – and, in particular, with regard to sea-going vessels.

As stated above, arresting assets of one’s debtor under an interim measure is relatively easy and fast in The Netherlands. Once it is known that a vessel owned by one’s debtor is heading for or mooring in a Dutch port, the creditor may submit a request to the court, within the district of which the vessel is or will be remaining, for leave of arrest. The request must clarify the following items:

• The nature of the arrest (enforcement or provisional);
• A description of the underlying claim;
• The amount of the claim or a maximum estimation of the amount;
• Specification of the vessel (whether or not sea-going) and whether it flies the flag of one of the states that have ratified the 1952 Brussels Convention;
• If so, it must be clarified why the claim is a maritime claim (cf. Article 1 of the 1952 Brussels Convention);
• Whether or not the claim has already been submitted in the principal matter.

On the basis of the request, the court will then take a decision – usually within 24 hours or even faster. If the request is filed before 12.00 hours, the court will take a decision in the course of the afternoon. Also, during weekend and during evenings and nights the provisional measures judge may be requested to take a decision upon a request. No hearing will take place – with a view to retain the surprise effect upon the shipowner. The judge may have questions and then call the requesting party (or rather its lawyers) to clarify certain matters. A refusal to grant the leave for arrest may be challenged with the Court of Appeal. However, in appeal cases the debtor/shipowner must be heard. As a result, in practice negative decisions are not appealed against but often creditors will file a new request seeking to address the points of criticism raised by the court in its earlier ruling.

Also, as long as the request itself has been drawn up in the Dutch language, all other supporting documents may be in a foreign language known by the judge (English, German, and French – unfortunately, no Russian).

In practice, all Dutch courts with maritime ports in their districts should more or less take the same line in granting leave for arrest. However, in my experience the Rotterdam court, which is the specialized maritime law court, often takes a stricter position, especially with regard to the application of international treaties, like the 1952 Brussels Convention. To give one example – where the Rotterdam court considered a dispute regarding the sale of a vessel as not falling within the scope of Article 1 of the 1952 Brussels Convention, other Dutch courts would allow the arrest in the light of the 1999 Lisbon Convention. The latter Convention lists disputes regarding the sale of vessels as a ground for arrest. It is, however, not in force yet but the other courts applied this provision by way of anticipatory interpretation.

(c)    Overview of international commercial arbitration

Arbitration has a long history in The Netherlands. The 1838 Code of civil procedure (Wetboek van burgerlijke rechtsvordering) already contained provisions on arbitration (Articles 620-657). In 1986, the present arbitration law was enacted, which has been contained in a separate and new book 4 of the revised Code of civil procedure (Articles 1020-1076)[1]. The greater part of book 4 deals with arbitration in The Netherlands, whereas the last paragraphs deal with international arbitration.

The current arbitration law has been under criticism, mainly because of the fact that it is not in line with international arbitration practice, in particular, the 1985 UNCITRAL Model Law on international commercial arbitration. Therefore, when the code of civil procedure was revised, a draft for a new arbitration law written by renowned arbitration experts was submitted to the Ministry of Justice in December 2006. This draft which will be discussed below seeks to follow international practice and in particular the UNCITRAL Model law. In March 2012, the draft law was submitted to parliament for discussion.

(d)   Justice system, court hierarchy, arbitration and other modes

Some procedural aspects of arbitration cases (enforcement, appeals, interim measures, etc.) are heard by the general courts of law.

As regards arbitration, special institutions have been founded, among which the well-known Nederlands Arbitrage Institute based in Rotterdam. Specific sectors, such as the building industry and the metal industry have their own standing arbitration tribunals. Also, there is a specialized arbitration institute for the (maritime) transport sector TAMARA (Transport and Maritime Arbitration Amsterdam Rotterdam). An important international arbitration court is the UN Permanent Court of Arbitration, established at the Peace Palace in The Hague, which may hear disputes between states and private parties.

(e)    The 1958 New York Convention and enactment of corresponding law

The Netherlands are among the signatories of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Convention was signed on June 10, 1958. It was ratified by the Dutch parliament on April 24, 1964 and entered into force on July 23, 1964. The 1958 New York Convention has been reflected in Article 1075 of the Dutch Code of civil procedure. Under this provision, foreign arbitral awards may be recognized and enforced in The Netherlands on the basis of a treaty to that effect. Note that this does not refer to the New York Convention only but also applies to other conventions and treaties dealing with recognition and enforcement of foreign arbitral awards. An example of such a treaty is the 1925 Treaty on Enforcement concluded with Belgium. Other treaties and conventions on mutual recognition and enforcement deal with court decisions only and not with arbitral awards.

(f)     Arbitration Law applicable to domestic and international commercial arbitration

Dutch arbitration law is not based upon the 1985 UNCITRAL Model Law on international commercial arbitration. However, the Ministry of Justice announced in 2007 that it will revise arbitration law with a view to bring it more in line with international practice. Currently, a draft law amending the present arbitration is discussed in parliament.

Furthermore, Dutch  arbitration law distinguishes between domestic (“arbitration in The Netherlands”) and foreign arbitration (“arbitration outside The Netherlands”). This distinction is a bit confusing though, as the chapter on arbitration outside The Netherlands consists of three articles only and basically deals with recognition and enforcement of foreign arbitral awards in The Netherlands.

Book 4 of the Dutch Code of civil procedure deals exclusively with arbitration. It contains two chapters, one of which – as already mentioned - providing for arbitration in The Netherlands and the second one providing for arbitration outside The Netherlands but basically with recognition and enforcement of foreign arbitral awards.

The first chapter includes seven sections:

• Arbitration agreement and appointment of an arbitrator;
• Arbitration procedure;
• Arbitral award;
• Enforcement of the arbitral award;
• Setting aside and withdrawal of the arbitral award;
• Arbitral award, containing a settlement between the parties;
• Final provisions.

The principle that an agreement shall bind only the parties who have concluded the agreement is applicable to arbitration agreements, too, i.e., it shall, in principle, not bind third parties. However, certain categories of third persons may be bound by an arbitration agreement. In this regard, one should think of co-debtors next to the principal debtor, such as a guarantor, suretyship, etc. Also, the third person who accepts a so-called third party clause shall be bound, if the main contract provides for arbitration. Further, in transport law, third parties may be bound, too. Example thereof is the holder of a bill of lading not being the shipper. In that case the holder shall be bound to arbitration clauses in the bill of lading. Also, the bankruptcy administrator shall be bound by an arbitration agreement concluded by the bankrupt party.

As according to Dutch law, an arbitration tribunal is not authorized to order provisional measures for securing the rights of the plaintiff, ordering such measures must be requested from a general court of law.

Draft Law on arbitration

Main purpose of the draft is to bring Dutch arbitration law more in line with international developments regarding arbitration, in particular in the light of the popularity of the UNCITRAL Model Law in other European countries. In 2007, the Dutch Ministry of Justice announced that it would further elaborate the draft and submit it to parliament, which it finally did in March 2012.

In general, many of the amendments come down to semantic and linguistic changes and a further systematization of the law.

The most important amendments of the draft law include:

• abolition of the requirement to deposit the arbitral award at the court, within the district of which the award was rendered;
• the periods for appeal and cassation have been brought in line with the general term for appeal, i.e., three months;
• the court of appeal will become the instance for hearing a request for annulment of an arbitral award;
• the court may return an arbitral award to the arbitration tribunal for eliminating a ground for annulment (following the English ‘remission’);
• confidentiality will be laid down in the law;
• exclusion of liability of arbitrators and arbitration institutions;
• Dutch courts will render assistance in (international) arbitrations outside The Netherlands.

Articles 1062 and 1063 of the Dutch Code of civil procedure provide for enforcement and refusal of enforcement. An exequatur will be granted by the voorzieningenrechter of the same court where the original of the final decision was deposited. Any of the parties to the arbitration proceedings may file a request for enforcement. The exequatur shall be put on the original award or if no deposit was made, it will be made in the form of a separate resolution. The court secretary shall send an authenticated copy of the award with the exequatur or the separate resolution to the parties as soon as possible.

The voorzieningenrechter may refuse enforcement only if the award or the procedure in which it was reached, apparently is contradicting public order or morale, or if immediate enforcement was unduly allowed or a penalty was unduly imposed.

As already stated above, the second part of Book 4 (Articles 1074-1076) deals with arbitration outside The Netherlands but in fact with enforcement of foreign arbitral award in The Netherlands.

Article 1074 provides that a Dutch court shall declare itself incompetent if an arbitration agreement was concluded providing for arbitration outside The Netherlands. The court shall take such a decision, if a party invokes a valid arbitration agreement relying on any other defense, unless the agreement was invalid under the applicable law. However, a party may request the court to take a provisional measure securing his rights.

Chapter 2 distinguishes between enforcement based on a treaty and enforcement outside a treaty. If there is a treaty, the foreign arbitral award may be recognized and enforced in The Netherlands. The provisions regarding the recognition and enforcement of foreign court decisions shall apply, unless the treaty provides otherwise. Also, the voorzieningenrechter shall be the competent judge (and not the court) and the period for appeal and cassation shall be two months (instead of one month only).

Under Article 1076, recognition and enforcement of foreign arbitral awards outside a treaty may also be awarded. A party against whom the recognition and enforcement is requested may prove that:

(a)    there is no valid arbitration agreement under the applicable law;

(b)    the arbitration panel was composed in contradiction to the applicable regulation;

(c)     the panel acted in excess of its assignment;

(d)    the award is still appealable in the country where it was rendered;

(e)     the arbitral award was annulled by a competent body of the country where the award was rendered; or

(f)      the court holds that recognition or enforcement is contradicting public order.

In the same Article 1076, a number of grounds have been listed for a court to reject claims for refusing recognition or enforcement. These grounds are similar to those contained in the 1958 New York Convention and include:

• absence of a valid arbitration agreement;
• the tribunal was composed in conflict with the applicable rules;
• the tribunal exceeded its powers;
• the arbitral award is still appealable in the country where it was rendered;
• the arbitral award was annulled by a competent authority of the country where it was rendered.

In practice, parties seeking to enforce a foreign arbitral award in The Netherlands often rely on both Articles 1075 and 1076 CCP, as the latter provision has less restrictions, including the requirement of the double exequatur (see further below). In that case, parties primarily rely on Article 1076 and secondarily on Article 1075.

In addition, the court which was addressed to enforce the award may rule that recognition or enforcement contradicts public order.

Note that – other than the New York Convention – Article 1076 does not contain the so-called double enforcement requirement (double exequatur requirement), i.e., that an arbitral award, enforcement of which is requested in a country other than the country where it was rendered, must also be enforceable in the country of origin. This is confirmed in subsection 6 of Article 1076, which states, inter alia, that “[…] no documents have to be submitted, from which it appears that the arbitral award is enforceable in the country where it was rendered.” As a result, in events where enforcement was refused in the country of origin such a refusal need not be an obstacle, if enforcement is requested on the basis of Article 1076. Obviously, however, the claimant should clarify to the court why the refusal of enforcement in the country of origin should be considered questionable, and, therefore, not taken into account.

(g)   Recognition and enforcement of foreign awards and agreements – Law and procedure

The procedure for recognition and enforcement of foreign arbitral awards has been laid down in Book 4 of the Dutch Code of civil procedure.

Book 4 distinguishes between enforcement of arbitral award rendered in The Netherlands and foreign arbitral awards. Article 1062 and 1063 deal with enforcement and refusal of the enforcement of domestic awards. Permission of the voorzieningenrechter, within the jurisdiction of whom the arbitration took place, is required (exequatur). The voorzieningenrechter may refuse enforcement only if the award or the procedure in which it was reached, apparently is contradicting public order or morale, or if immediate enforcement was unduly allowed or a penalty was unduly imposed.

With regard to the recognition and enforcement of foreign arbitral awards two procedures are distinguished: (a) when a treaty applies; (b) when no treaty applies.

When a treaty applies, the award can be recognized and enforced. Article 1075 refers to Articles 986-991 of the Code, which provide for the recognition and enforcement of foreign court decisions (judgments). However, if the applicable treaty contains a provision that deviates from those contained in said articles, the treaty shall apply. Also, other than provided for by Articles 985-991, the voorzieningenrechter shall be the competent judge and the period for appeal and cassation shall be two months (normally, in court proceedings, the term is three months, whereas in domestic arbitration, the term is one month only).

Under Article 985, an exequatur is required for recognition and enforcement of foreign court decisions. The court (voorzieningenrechter) shall not assess the merits of the case. The competent court shall be the court within the district of which the counterpart of the requester has its permanent residence or the court, within the district of which enforcement is requested. The latter may apply if assets of the party against whom enforcement is sought are situated within the district of the relevant court.

(h)   Jurisdiction of courts (for enforcement of award and agreement)

As stated above, the court which shall have jurisdiction with regard to the enforcement shall be the court of either the residence of the person against whom enforcement is requested or the court, within the district of which enforcement is sought, for instance, if assets against which recourse can be taken are situated there.

(i)      Arbitration tribunals in The Netherlands

Nederlands Arbitrage Instituut

Arbitration agreement

As stated above, a well-known arbitration tribunal is the Rotterdam based Nederlands Arbitrage Instituut (NAI). It was founded in 1949 in the form of a foundation (stichting), whose objective it is to promote the settlement of disputes through arbitration, binding advice, and mediation.

NAI suggests including the following arbitration clause for parties wishing to arbitrate in The Netherlands:

“All disputes arising in connection with the present contract, or further contracts resulting therefrom, shall be finally settled in accordance with the Arbitration Rules of the Netherlands Arbitration Institute”.

Additionally, various matters may be provided for:

• The arbitral tribunal shall be composed of one arbitrator/three arbitrators.
• The place of arbitration shall be ........... (city).
• The arbitral procedure shall be conducted in the ........... language.
• Consolidation of the arbitral proceedings with other arbitral proceedings pending in the Netherlands, as provided in art. 1046 of the Netherlands Code of Civil Procedure is excluded.

Apart from the NAI discussed above, further arbitration institutions include:

• TAMARA – Transport And Maritime Arbitration Rotterdam-Amsterdam
• United Nations Permanent Court of Arbitration
• Chamber of Commerce

TAMARA

TAMARA or Transport And Maritime Arbitration Rotterdam Amsterdam (www.tamara-arbitration.nl) was founded in 1988 and offers international business a dispute resolution centre for disputes in shipping, shipbuilding, transport, storage, logistics, and international trade. The recommended arbitration clause reads as follows:

“Any dispute arising out of or in connection with this agreement shall be referred to Arbitration in Rotterdam in accordance with the TAMARA Arbitration Rules (available at the Rotterdam Chamber of Commerce, Information Department and at the TAMARA foundation, P.O. Box 23158, 3001 KD Rotterdam / www.tamara-arbitration.nl)”.

Or

“Any dispute arising out of or in connection with this agreement shall be referred to Arbitration in Rotterdam in accordance with the TAMARA Arbitration Rules”.

TAMARA offers also the possibility of conducting e-arbitration proceedings, i.e., virtual arbitration proceedings at which all documents are exchanged through the Internet.

Permanent Court of Arbitration

An outstanding arbitration court is the UN Permanent Court of Arbitration (www.pca-cpa.org) established in The Hague at the Peace Palace, where also the International Court of Justice is established.

The PCA is an intergovernmental organization with over one hundred member states, which was established in 1899 to facilitate arbitration and other forms of dispute resolution between states. The PCA provides services for the resolution of disputes involving various combinations of states, state entities, intergovernmental organizations, and private parties.

The PCA's Secretariat, the International Bureau, headed by its Secretary-General, provides full registry services and legal and administrative support to tribunals and commissions. Its caseload reflects the breadth of PCA involvement in international dispute resolution, encompassing territorial, treaty, and human rights disputes between states, as well as commercial and investment disputes, including disputes arising under bilateral and multilateral investment treaties, including the Energy Charter Treaty.

The PCA can assist in the selection of arbitrators, and may be called upon to designate or act as appointing authority.

Currently, some 50 arbitrations are pending involving states, state enterprises, and private sector companies. Many of the arbitrations are not made public, including the pending arbitration between the Russian Federation and Yukos.

(j)     Recent developments: overview of recent judgments by courts

Below, I will discuss some recent case law re arrest of vessels, in particular, under arbitration proceedings. However, I will also highlight some interesting court decisions re enforcement of foreign arbitral awards in The Netherlands.

(i)                                          Request for leave of arrest granted but cancelled in summary proceedings (I)

In a court case of May 2010 before the court of Middelburg (voorzieningenrechter – provisional measures judge), the voorzieningenrechter had initially granted leave for the arrest of a vessel owned by the Cypriote shipping company for a claim against its Russian parent company. When the Cypriote vessel was actually arrested in the Zeeland waters (Wester Schelde) on its return from Antwerp, the shipowner started summary proceedings against the claimant, a Panamanian shipping company. It argued that in Dutch court practice, vessels of a subsidiary may – in principle - not serve for recovery of claims against the parent company. As the Panamanian company failed to prove that the Cypriote company was especially established with the objective of frustrating claims of creditors, even though it was a wholly owned subsidiary, the Middelburg court ruled that the arrest must be lifted.

It appears that it is standing practice of Dutch courts – which is in line with other jurisdictions – not to allow creditors to recover their claims on subsidiaries of their debtors. Piercing the corporate veil is allowed only in the event of wilful abuse of the corporate vehicle.

(ii)                                        Request for leave of arrest granted but cancelled in summary proceedings (II)

In another dispute between a Panamanian and a Russian company, the Middelburg court had also granted leave to the Panamanian company for arrest on vessels belonging to the Russian shipping company. When one of her vessels was arrested when leaving the canal from Ghent to Terneuzen, the garnishee commenced summary proceedings against the garnishor demanding it to lift the arrest. This was awarded by the Middelburg court (September 2010), mainly on the grounds that the garnishor failed to reject the claim of the garnishee that the underlying arbitral award rendered in Russian was defective. Also, summary proceedings are not considered suitable for establishing essential issues such as the validity of the underlying arbitral award. Therefore, the court ordered that the arrest should be lifted.

When an arrest is successful and not challenged in court or the challenge was rejected, shipowners may release their arrested vessel by providing adequate security. As a rule, this is fulfilled by providing a Rotterdam Guarantee Form. However, if the underlying claim of the garnishor is declined by the court, in practice it takes quite some time before the Rotterdam Guarantee Form 2008 is returned to the shipowner.

However, shipowners whose vessels have been arrested in the Netherlands need to be careful when putting up security to get their ships released quickly. Recent case law shows that, even if owners have a strong case for rejecting the claim, they may still have to wait until the final judgment before being able to reduce or release the security. In the worst case, this may take several years.

Furthermore, there are a number of interesting Dutch court decisions re arrest of vessels but they are not related to arbitration. An example of such a court decision is the following 2009 Rotterdam court judgment.

The Rotterdam District Court has upheld the right of an Algerian court to order the arrest of a container vessel by a Dutch bunker supplier for the non-payment of bills. In so doing it dismissed an application by the owner and former owner of the vessel to lift the arrest on the grounds that the claim could not be enforced against the ship because, among other things, proper justice in the case was not achievable in Algeria.

The bunker supplier had arrested the ship in Algeria pursuant to a claim in respect of various bunkers supplied to the time-charterer of the vessel. Meanwhile, the time-charterer had been declared bankrupt, and the claim could not be recovered against the estate. The ship was under Belgian ownership when the bunkers were supplied, but was subsequently sold to Lithuanian interests for which it operated under the Lithuanian flag.

The Algerian court allowed the arrest on behalf of the bunker suppliers, applying the Arrest Convention 1952 and the provisions of local law, on the basis of which a particular ship can be arrested for a maritime claim. The owner and former owner applied to the Rotterdam court, in whose jurisdiction the bunker supplier was based, to have the arrest lifted. They alleged that the arrest was wrongful and maintained that the claim could not be enforced against the ship because it had been directed against the former time-charterer and the ship had been sold to new owners.

The original bunker supply contract was subject to Dutch law. The owner and former owner argued that under Dutch law, no recourse against the ship was possible, any more than it was under the law of Lithuania, the vessel's flag state. They also maintained that:

• the Algerian court had not been informed about the change of ownership;
• it was impossible for them to ask for a court order in Algeria; and
• the Algerian court system was basically corrupt.

The Rotterdam court considered that the Arrest Convention applied and that the claim in respect of which the arrest had been made was a maritime claim in the sense of the convention. The court further found that, materially speaking, the demand to order the lifting of the arrest in Algeria was tantamount to a demand to lift the arrest altogether. The Rotterdam court stated that since Article 5 of the Arrest Convention channels claims for the lifting of an arrest to the court which allowed the arrest, that court was the one which should be addressed in respect of questions concerning the rights and wrongs of the arrest and the lifting thereof.

The Rotterdam court added that the only possible exceptions might be where the decision of the arrest court could be considered contrary to public policy or based on evident factual or legal inaccuracies.

On the basis of the documents presented, the court was of the opinion that the arrest court had been sufficiently informed of the fact that the claim was directed against the bankrupt time-charterer and that the ship had meanwhile been sold to new owners. Thus, the arrest court had not been misinformed.

The court said the allegation that no proper justice could be administered in Algeria was not substantiated.

There was no reason to assume that the Algerian court would not take into account the question of whether the claim was recoverable against the ship, and which law (i.e., Dutch, Algerian or Lithuanian) covered such issues. Breach of public policy had not been established.

The court did make the point that a decision by the Dutch courts might have been justified if it had seemed likely that it would be impossible to obtain a summary decision in the arrest jurisdiction within a reasonable timeframe. However, the parties had presented contradictory opinions from local lawyers in this respect and the Rotterdam court could not accept the allegation of the owner and former owner that obtaining a timely summary decision was impossible.

In conclusion, the court found that there were no grounds to question the competency of the Algerian court to judge the rights and wrongs of the arrest in this case.

In addition, I will briefly highlight a number of other interesting decisions of Dutch courts regarding enforcement.

(i)                                          Annulment of arbitral award because of absence of one of the arbitrators’ signature

In re Bursa Büyüksehir Belediyesi (Bursa, Turkey) v. Güris Insaat ve Mühendislik S.A. (Ankara, Turkey), the Court of Appeal of The Hague annulled - in its decision of November 28, 2006 - an ICC arbitral award rendered in The Netherlands on the ground that the signature of one of the arbitrators was missing. According to the Appellate Court this defect could not be repaired by submitting the dissenting opinion of the third arbitrator simultaneously with the deposit of the award with the competent court. The Court pointed out that if one of the arbitrators refuses to sign the award, note of this must be made by the other arbitrators. This is a rule of mandatory nature (ius cogens). Therefore, the arbitral should be regarded as null and void due to a formal defect.

(ii)                                        An enforcement order given in France may not be enforced in The Netherlands on the basis of the EU Brussels I Regulation

In re SNP Petrom S.A. (Bucharest, Romania) v. Nis Oil Industry of Serbia and NIS Jugopetrol (Novi Sad, Serbia)[2], the District Court of Rotterdam awarded a request by Petrom to annul an earlier resolution made by the Voorzieningenrechter of the District Court of Rotterdam to enforce an enforcement order (“Ordonnance d’ Exequatur”) issued by the French Président du Tribunal de Grande Instance. Petrom argued that this resolution was contradicting Regulation (EC) No. 44/2001 of December 22, 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. This Regulation unambiguously excludes its application to arbitration. The Rotterdam Court agreed with Petrom and annulled the earlier resolution of the Voorzieningenrechter of the District Court of Rotterdam or in the words of the Court:

“Following Article 1, subsection 2, beginning and sub d) European Execution Regulation, arbitration falls outside the substantive scope of the regulation. Just like this was the case under the preceding regime of the European Execution Treaty, the recognition and enforcement regime of the European Execution Regulation does not extend to judicial resolutions on requests regarding enforcement of arbitral awards. Therefore, the Ordonnance d’Exequatur does not qualify for (recognition and) enforcement on the basis of the European Execution Regulation.”

(iii)                                     Relation between Articles 1075 (enforcement on the basis of a treaty) and 1076 (enforcement outside a treaty)

In re Dubai Drydocks (Dubai, UAE) v. Bureau voor Scheeps- en Werktuigbouw [Bureau for Ship and Equipment Building X (Dordrecht, The Netherlands)[3], the Voorzieningenrechter awarded a request for enforcement of an arbitral award rendered by the Dubai International Arbitration Centre. In 2003, the parties concluded an agreement for the construction of a floating crane for Drydocks. The agreement provided for arbitration in Dubai (with the precursor of DIAC). Applicable law would be the law of the UAE and the rules of procedure of DIAC. A dispute arose and Dubai Drydocks decided to submit the dispute to DIAC for settlement, to which the Dutch party agreed. A single arbitrator was appointed but prior to the preliminary hearing, the Dutch party communicated through its Dutch lawyer that it withdrew from the proceedings. No further communications were sent to the DIAC, the Dubai Drydocks Co. or their lawyers. The single arbitrator, Mr Lindsay Gordon, awarded Dubai Drydock’s claim and ruled that X should compensate all costs connected to the proceedings. When it turned out that X refused to execute the award, Dubai Drydock requested the District Court of Dordrecht to enforce the arbitral. It did so on the basis of Article 1076 Code of Civil Procedure and, alternatively, on the basis of Article 1075 CCP. As pointed out above, Article 1075 deals with recognition and enforcement on the basis of an international treaty, whereas Article 1076 deals with recognition and enforcement outside a treaty. The advantage of founding a request for recognition and enforcement of a foreign arbitral award on Article 1076 is that one not bound by the restrictions of the New York Convention. Although both countries – UAE and The Netherlands – are parties to the 1958 New York, as a result of which the convention shall apply, Article VII (1) of the Convention leaves open the possibility of relying on national law to enforce a foreign arbitral award. Article 1076 is an example of a provision giving way to enforcement. Therefore, the District Court based its decision on said Article 1076 and not on Article 1075 (implementation of the 1958 New York Convention). The Court found that there was a valid arbitral award duly signed and submitted in its original version. Also it found that there was a valid arbitration agreement. Moreover, the Court rejected X,’s defense that the arbitration was not conducted in accordance with the rules of procedure agreed by the parties in their 2003 contract by pointing out that X’s Dutch lawyers had sent a fax to DIAC, in which it implicitly acknowledged to participate in the proceedings (by stating that the situation that the respondent did not appear was not applicable). In the Court’s view, the defendant should have raised its defense of DIAC’s not having jurisdiction prior to all other defenses. As it failed to do so, defendant must be considered to have appeared voluntarily in the proceeding.

Furthermore, X argued that in the present case the requirement of double exequatur applied (i.e., the award must be enforceable both in the country where it was rendered and in the country where enforcement is sought). The court found that this requirement did not apply, as plaintiff based its request for enforcement on Article 1076, which other than the New York Convention, does not include such a requirement.

After having rejected all of X.’s arguments, the Court awarded the request and granted leave for enforcement. However, the court satisfied the defendant’s request for the provision of adequate security in the form of a bank guarantee.

(k)   Conclusions

Arrest of vessels is relatively easy in The Netherlands. In that regard, The Netherlands are a creditors’ paradise. The procedure is short, easy, cheap, and more important the debtor will not be heard with a view to make sure that the debtor may direct the vessel to a non-Dutch port.

However, the Rotterdam court – being the specialized Dutch court in maritime cases – is rather strict in applying the norms of the 1952 Brussels Convention.

The debtor-shipowner may suddenly be confronted with the arrest of its vessel when sailing or mooring at a Dutch port. In that case the shipowner has two options:

• Provide security in the form of the Rotterdam Guarantee Form 2008; or
• Commence summary proceedings in order to lift the arrest.

Dutch courts are reluctant in allowing lifting the corporate veil, when vessels of subsidiaries are arrested in relation to claims to the parent company.

Arbitration is provided for in the Dutch Code of civil procedure, book 4 of which is entirely devoted to arbitration. This book 4 was enacted in 1986. Although Dutch arbitration is not modeled after the 1985 UNCITRAL Model law, many of Book 4’s provisions are in line with the UNCITRAL’s model law but others are not. Therefore, in 2006, a draft law amending the current Book 4 was published, which seeks to bring Book 4 more in line with the UNCITRAL Model law and recent practice. In March 2002, the draft was submitted to parliament.

In The Netherlands, several arbitrations institutions have been established, including the Rotterdam based NAI (Nederlands Arbitrage Instituut), which functions according to its Rules of Procedure based on the UNCITRAL Model Law.

The most conspicuous peculiarities of Dutch arbitration law include:

• An arbitral tribunal is not entitled to adopt interim measures; a plaintiff wishing to impose interim measures (like freezing orders etc.) should address the court of law, within the district of which the arbitration is conducted;
• An arbitral award rendered in The Netherlands takes effect only as from the moment it was deposited with the court of law, within the district of which the arbitration is conducted;
• Under a recent Supreme Court decision, a defendant in an enforcement procedure may not lodge an appeal against an exequatur; this is not considered unequal treatment of the parties, as the defendant is entitled to request the annulment of the arbitral award in the country of origin; on the other hand, the plaintiff has the right to challenge a negative decision on the request for an exequatur;

Dutch law provides for two procedures for enforcement of foreign arbitral awards: one for requesting an exequatur of a foreign arbitral award rendered in a country adhering to the 1958 New York Convention or other (bilateral) treaties providing for recognition and enforcement of arbitral awards; and one for recognition and enforcement outside a treaty. It is possible, however, to found a request for enforcement of an arbitral award rendered in a New York Convention state on the ‘outside treaty’ provision, thus avoiding restrictions of the New York Convention.