Transparency of the Regulatory System
Dutch commercial laws and regulations accord with international legal practices and standards; they apply equally to foreign and Dutch companies. The rules on acquisition, mergers, takeovers, and reinvestment are nondiscriminatory. The Social Economic Council (SER)–an official advisory body consisting of employers’ representatives, labor representatives, and government appointed independent experts–administers Dutch mergers and acquisitions rules. The SER’s rules serve to protect the interests of stakeholders and employees. They include requirements for the timely announcement of mergers and acquisitions (M&A) and for discussions with trade unions.
As an EU member and Eurozone country, the Netherlands is firmly integrated in the European regulatory system, with national and European institutions exercising authority over specific markets, industries, consumer rights, and competition behavior of individual firms.
Financial markets are regulated in an interconnected EU and national system of prudential and behavioral oversight. The domestic regulators are the Dutch Central Bank (DNB) and the Netherlands Authority for the Financial Market (AFM). Their EU counterparts are the European Central Bank (ECB) and the European Securities and Markets Authority (ESMA).
Traditionally, public consultation in the drafting of new laws is achieved by invitation of various civil society bodies, trade associations, and organizations of stakeholders. In addition, the SER has a formal mandate to provide the government with advice, both solicited and of its own accord. New laws and regulations are subject to legal review by the Council of State and must be approved by the Second and First Chambers of Parliament.
International Regulatory Considerations
The Netherlands is a member of the WTO and does not maintain any measures that are inconsistent with obligations under Trade Related Investment Measures (TRIMs).
Legal System and Judicial Independence
Dutch contract law is based on the principle of party autonomy and full freedom of contract. Signing parties are free to draft an agreement in any form and any language, based on the legal system of their choice.
Dutch corporate law provides for a legal and fiscal framework that is designed to be flexible. This element of the investment climate makes the Netherlands especially attractive to foreign investors.
The Dutch civil court system has a chamber dedicated to business disputes called the Enterprise Chamber. The Enterprise Chamber includes judges who are experts in various commercial fields. They resolve a wide range of corporate disputes, from corporate governance disputes in a firm to high-profile shareholder conflicts over mergers or hostile take-overs. In 2017, as part of its takeover bid of AkzoNobel, U.S. paint manufacturer PPG appealed the Akzo board’s decision to reject PPG’s takeover offer in the Commercial Court, but was unsuccessful.
In mid-2018, the Enterprise Chamber will establish an English-language chamber. The Netherlands Commercial Court (NCC) and its appellate chamber (NCCA) will offer parties the opportunity to litigate in English and will provide judgments in English. Both the NCC and NCCA will focus primarily on major international commercial cases.
Laws and Regulations on Foreign Direct Investment
In April 2018, the Ministry of Economic Affairs and Climate Policy introduced a proposal that, if it becomes law, will make it mandatory for foreign investors who seek to acquire significant ownership of corporations active in the telecommunications sector to notify the Dutch government. The government expects to submit the proposed law to the Parliament for a vote in late 2018, and the proposed law could come into force by the end of 2018. This is the first law to establish an investor screening mechanism in sectors of vital interest to Dutch national security.
Competition and Anti-Trust Laws
Structural and regulatory reforms are an integral part of Dutch economic policy. Market competition is strengthened through laws aimed at stimulating market forces, liberalization, deregulation, and legislative quality, along with a tightening of competition policy.
As an EU and Eurozone member, the Netherlands is firmly integrated in the European regulatory system with national and European institutions exercising authority over specific markets, industries, consumer rights, and competition behavior of individual firms.
The Authority for Consumers and Markets (ACM) provides regulatory oversight in three key areas: consumer protection, post and telecommunications, and market competition.
Expropriation and Compensation
The Netherlands maintains strong protection on all types of property, including private and intellectual property, and the right of citizens to own and use property. Expropriation of corporate assets or the nationalization of industry requires a special act of Parliament, as demonstrated in the nationalization of ABN AMRO during the 2008 financial crisis (the government returned it to public shareholding by IPO in 2016). In the event of expropriation, the Dutch government follows customary international law, providing prompt, adequate, and effective compensation, as well as ample process for legal recourse. The U.S. Mission to the Netherlands is unaware of any recent expropriation claims involving the Dutch government and a U.S. or other foreign-owned company.
ICSID Convention and New York Convention
As a member of the International Center for the Settlement of Investment Disputes (ICSID), the Netherlands accepts binding arbitration between foreign investors and the state. The Netherlands is one of the initial signatories of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (UNCITRAL) and permits local enforcement of arbitration judgments decided in other signatory countries.
The Hague is the seat of the Permanent Court of Arbitration (PCA), an intergovernmental organization that is not a court, but like the ICSID, is a facilitator of independent arbitral tribunals to resolve conflicts between PCA member states, including the United States.
International Commercial Arbitration and Foreign Courts
The Netherlands has maintained a Treaty of Friendship, Commerce, and Navigation with the United States since 1957 that provides for national treatment and free entry for foreign investors, with certain exceptions. The Embassy is not aware of any American company raising an investment dispute with the Netherlands over the last 10 years.
Dutch bankruptcy law is governed by the Dutch Bankruptcy Code, which applies both to individuals and to companies. The code covers three separate legal proceedings: 1) bankruptcy, which has a goal of liquidating the company’s assets; 2) receivership, aimed at reaching an agreement between the creditors and the company; and 3) debt restructuring, which is only available to individuals.
The World Bank’s 2017 Ease of Doing Business Index ranks the Netherlands as number 8 in resolving insolvency. The Netherlands ranks better than the OECD average on bankruptcy time, cost, and recovery rate.