General corporate law, issue 1: International disputes: choice of forum and the Netherlands Commercial Court (NCC)

Introduction

In international disputes, there often is uncertainty about which court has jurisdiction and which law applies. This can lead to parallel proceedings in different jurisdictions, potentially conflicting judgments and inducing significant costs. In practice we frequently encounter this issue in cross-border corporate disputes.

An effective way to reduce or avoid this uncertainty is to include a forum selection clause in contracts. This allows parties to agree in advance on which court will have jurisdiction in the event of a dispute. In addition, the Netherlands Commercial Courts (NCC) offers a specialised and efficient forum for resolving disputes with an international dimension. This blog explores the concept of forum choices and the role of the NCC. How can choosing a forum and using the NCC provide clarity and lead to faster resolution of international disputes?

1. The three-step approach

Jurisdiction is a key issue in international disputes. Determining which court has authority can follow a three-step approach. Primarily, it is relevant to determine which default rules on jurisdiction apply as laid down by (international) law. In addition, to promote legal certainty, parties can include a forum selection clause in their contracts, allowing them to designate a specific court in advance. Finally, parties have the option of choosing a specialised forum, such as the NCC, which is specifically designed to handle international commercial disputes. 

2. General rule - which court has jurisdiction in international disputes

In international disputes, the first question is often: which court has jurisdiction to hear the case? This is determined by national and international rules. Within the EU, the Brussels I-bis Regulation provides the legal framework. Parties may agree in advance, via their contract, on which court will have jurisdiction. However, if no clear forum has been chosen, the default jurisdiction rules apply (consider Article 4 Brussel I-bis).

Because these default rules vary, international parties may face unexpected legal complications. Sometimes, the competent court is that of the defendant’s domicile or the statutory seat of a company (Article 4 Brussel I-bis); in other cases, the place of performance of the obligation may determine jurisdiction (Article 7 Brussel I-bis). For this reason, many parties opt to agree on a forum in advance within their contracts — saving time, avoiding uncertainty, and reducing legal costs.

3. Forum selection clauses

Forum selection clauses are widely recognised and commonly used in contracts within the EU. However, it is essential that such a clause is properly and clearly recorded in the contract. Both case law and the Brussels I-bis Regulation set out the requirements for a valid forum selection clause: (i) both parties must have genuinely agreed to the forum selection, (ii) the chosen court must have been the explicit subject of mutual consent, (iii) the clause must be documented in writing or confirmed electronically and (iv) an oral agreement is only valid if such a practice is customary in the commercial relationship between the parties which, in practice, can be difficult to prove.

Additionally, a court will also have jurisdiction where both parties appear without the appearance being solely for the purpose of contesting jurisdiction. This is known as tacit or implied forum selection.

An invalid or poorly drafted forum selection clause poses significant risks: a party may attempt to avoid the agreement, or a court may decide it has jurisdiction nonetheless. In case of dispute, it is usually the court first seized that decides on its own jurisdiction. To mitigate such risks, parties may designate not just a particular court, but also a specialised forum, arbitration, or binding advice. The NCC is one such specialised court.

4. The NCC as a solution

Why opt for the NCC? One of the key advantages of the NCC is that all proceedings, submissions, and judgments are conducted in English. This lowers the threshold for foreign parties and removes the need for time-consuming translations. In addition, the NCC offers fast and efficient dispute resolution, with clear procedural timelines and a focus on substantive issues rather than lengthy procedural debates.

The judges of the NCC have extensive experience in international commercial and corporate disputes, which contributes to the quality and reliability of its decisions. In this respect, the NCC serves as an attractive alternative to arbitration: it offers the benefits of a transparent judicial process and a predictable legal framework, without the disadvantages often associated with arbitration — such as high costs and limited appeal options.

A further advantage of the NCC over arbitration is that its judgments are automatically recognised and enforceable throughout the EU. In contrast, arbitral awards fall under the New York Convention, which, while widely adopted, often requires additional enforcement steps. NCC judgments, by contrast, can be enforced within the EU without such procedures.

5. Where things may go wrong

Despite the advantages of forum selection and the NCC, there are situations in which the chosen dispute resolution path does not produce the intended result. A common issue is that forum selection clauses are not drafted with sufficient precision or legal accuracy, leaving room for interpretation. This may allow a party to turn to a different court, arguing that the clause is not enforceable.

On top off that the risk exists that a national court disregards a contractually agreed forum selection. In principle, a valid forum selection takes precedence over the default jurisdiction rules explained before. However, there are exceptions; (i) protective provisions (see articles 17-23) which allow consumers or employees to bring proceedings in their home jurisdiction, (ii) exceptional cases based on public and social order or unfair contractual terms and (iii) in non-EU jurisdictions the risk is greater that national law will prevail over a valid forum selection clause, as the Brussels I-bis Regulation does not apply.

6. Solutions

To minimise the risks of unclear forum choices and international disputes, it is essential that companies draft their contracts with care and seek proper legal review. A clear and legally sound forum selection clause is the first step towards predictable and efficient dispute resolution. By not only choosing the competent court but also expressly agreeing on the applicable law, parties can further reduce legal uncertainty.

For companies active in international markets, the NCC offers an attractive solution. By designating the NCC as the exclusive forum in their contracts, parties gain access to a specialised, English-speaking, and efficient judicial process.

By making clear arrangements in advance and relying on specialised courts, businesses can protect themselves against lengthy and costly proceedings. This contributes not only to legal certainty but also to the smoother and more efficient resolution of international disputes.

7. Conclusion

In international disputes, a clear forum selection is essential to avoid legal uncertainty. Without well-defined arrangements, companies risk becoming entangled in lengthy and costly proceedings — potentially resulting in conflicting judgments. The NCC offers an efficient, English-language, and specialised forum for businesses seeking predictable dispute resolution. By using forum selection strategically, companies can save time, reduce costs, avoid legal complications, and strengthen their international position.