John Wolfs of Wolfs Advocaten takes part in Negotiating Effective Contracts & Dealing with Disputes

QUESTION ONE – What is your best practice approach when advising General Counsel, to ensure dispute resolution clauses are to their real advantage and do not obstruct enforcement proceedings?

One of our top clients is a multinational Dutch entertainment group which organises concerts all over the world and licenses music and concert footage to TV stations all over the world.

When advising clients, regarding concert-related performance agreements and TV license deals, we first check whether or not the activities are taking place in the European Union (EU), whether it is feasible to apply Dutch law and if the courts in the Netherlands will have exclusive jurisdiction to determine any dispute. Outside of the EU market, we normally advise our client to opt for arbitration under the Rules of Arbitration of the ICC. This depends on the condition that the member state in question has ratified the New York Convention (convention on the recognition and enforcement of foreign arbitration awards). However, we do not lose sight of the fact that in certain situations – depending on the contract’s interest and risk – a client may have a preference to contract under foreign law and make the local court competent for dispute resolution. We determine this in consultation with local lawyers.

QUESTION TWO – Are there any particular rules around funding litigation in your jurisdiction that General Counsel should be aware of?

Funding litigation does not have a wide-spread acceptance in the Netherlands, unlike many Anglo-Saxon jurisdictions. Therefore, although it is allowed, there are at the moment no specific legal requirements around funding litigation when it comes to the position of a company. Nevertheless, there is certainly a trend visible that shows that popularity is on the rise. Therefore, despite the lack of any legal provision, there are certain aspects of which a General Counsel should be aware of.

One of those aspects deals with the essential element of funding litigation, i.e. no-cure-no-pay. The General Counsel needs to be aware of the fact that Dutch attorneys, unlike the third party funder, are in general not allowed to offer their legal assistance on the basis of no-cure-no-pay. Therefore, litigation funding should cover a reasonable and cost-covering fee for the attorney. For the same reason, in most cases, a law firm may not offer litigation funding itself. Nevertheless, Dutch attorneys are allowed to agree on a result-fee, however, this will never be based on a percentage of the result!

The General Counsel should furthermore be aware that finding a third party prepared to finance large amounts of cases will likely not be an easy task, given the fact that it is yet fairly uncommon. In addition, the parties that do offer such financing, are currently fairly picky. However, there is a growing number of parties that see the gap in the market and intend to fill it over the course of the coming years.

Apart from this, it is also important to understand that litigation costs awarded by Dutch courts are generally fixed on a certain amount, which is in many cases substantially lower than the actual costs. This can affect the conditions of the funding and more specifically the percentage of the contingency fee.

On a concluding note, it can be said that although litigation funding is currently not common in the Netherlands, it is nevertheless working hard to make a strong case for itself. Given this development, it can be interesting for a General Counsel to consider funding litigation in the Netherlands. In doing so, he should take into account the previous point.

QUESTION THREE – What techniques are typically used by international counterparties in your experience when attempting to gain the initiative during a dispute?

The most striking example of gaining a head start from the outset is the requirement to contract to the other party’s national law and to leave dispute resolution exclusively to the national court of the country of residence of the other party. By acting accordingly, the opposing party also immediately raises a blockade for direct representation of interests by the lawyer on the other side, since foreign lawyers are often not allowed to represent their client in the national courts abroad because of the legal monopoly of the native legal professionals. The lawyer on the other side will, therefore, have to be assisted by a native lawyer whom he cannot easily instruct due to lack of knowledge of the indigenous procedural rules. Another disadvantage not to be underestimated is the foreign language that the lawyer from abroad often does not have or does not sufficiently control, making him powerless to properly represent the interests of his client abroad.

How important are civil procedural rules?

As indicated above, civil procedural rules are very important and not to be underestimated since they can put the foreign lawyer offside because of the aforementioned process monopoly of the native legal professionals. However, in the Netherlands, the District Court of Amsterdam accepts procedures taking place in the English language instead of Dutch. Dutch arbitrated tribunals often also cover proceedings in English. Apart from that, one of the first topics to decide upon is whether or not to raise an objection against the competence of the Court, depending on the interest of the client.

TOP TIPS FOR: Successful negotiations

Listen more than you talk: Finding common ground means knowing common ground exists, which could lead to a win-win situation.

Always get when you give: Whenever you make a concession, make sure you receive something in return.

Always be willing to talk: Take emotion out of the equation and don’t (ever) take it personally.

Don’t have an ‘all-or-nothing’ attitude: Negotiation requires finding compromises.

Don’t underestimate anyone, including yourself.

Don’t argue, but discuss items in which there are disagreements.

Don’t be afraid to ask for what you want – be specific about what you want and definitely don’t want.

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