Netherlands Update: Choice of forum in an international agreement: which court assesses the dispute with my foreign contracting party?

Entrepreneurs often choose to include a choice of forum in their contracts or general terms and conditions. This is a provision in which parties agree in which country and in which court they will resolve any legal conflict. The inclusion of a choice of forum before the Dutch court provides clarity for entrepreneurs who do business with foreign contracting parties. Litigation in the Netherlands is often cheaper and faster, but in any case more familiar than with a judge abroad.

For a foreign contracting party, the choice of a Dutch court has major consequences. For example, the foreign party will have to call in legal assistance in the Netherlands.

Because of these far-reaching consequences, the main rule is that an appeal to an international choice of forum is only valid if the other contracting party has agreed in writing to this choice of forum clause. If the choice of forum is included in the (signed) contract, the parties have probably already entered into discussions about this at the time of the conclusion of the agreement. The requirement of written consent does not easily lead to problems in that case. But if the entrepreneur has only included the choice of forum in his general terms and conditions, where it may be less likely to be noticed, then it is not always immediately clear whether the other party has agreed in writing to this forum selection clause.

Conflicts regularly arise about the validity of a choice of forum in general terms and conditions. Recently, the European Court of Justice ruled in such a dispute. In this case, the Court considered whether there had been written agreement to the jurisdiction clause contained in the general terms and conditions.

What was going on? Tilman (in the Netherlands) and Unilever (in England) had signed an agreement. Based on this, Tilman would package tea bags for Unilever. The parties then got into a dispute over the price. Unilever’s general terms and conditions applied to the agreement. The general terms and conditions were not included in the agreement, but could be viewed and downloaded via a (hyper) link in the agreement. The terms and conditions contain a choice of forum before the English courts. Tilman argued that the forum selection clause was not valid because she had not agreed to it in writing.

The Court held that a jurisdiction clause that is not directly attached to the agreement is permissible if (1) the agreement expressly refers to the general terms and conditions contained in the clause and if, moreover, (2) these general terms and conditions have been communicated to the other party. A working link to the website where the other party (before signing the agreement) can take note of the general terms and conditions that apply to that agreement, qualifies as communication of the general terms and conditions to the other party. Furthermore, written consent does not require that the other party has been invited to accept the general terms and conditions by “ticking” a box on that website.

In this case, the link to Unilever’s general terms and conditions (including the choice of forum) was therefore sufficient to assume that Tilman had agreed in writing to the choice of forum clause. The jurisdiction clause was valid and the English court had jurisdiction.

The lesson? The Dutch entrepreneur must expressly point out to the foreign contracting party in the agreement his general terms and conditions (including the choice of forum). He can provide the general terms and conditions to the other party via a link. It is then not necessary for the other party to tick that he agrees to these general terms and conditions. However, it should be clear that the link to the terms and conditions works. To avoid discussion about this, it is advisable to include the forum selection clause (also) in the written agreement. In this way, a judge is more likely to rule that the other party has agreed to the jurisdiction clause. However, a choice of forum clause in the agreement may lead to discussion at the time of the conclusion of that agreement.

By Hocker, Netherlands, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact netherlands@transatlanticlaw.com

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