The Arbitrators v. Knowsley SK
Mr Van Wassenaer Van Catwijck, also acting in his capacity as the representative of Mr Saarberg and Mr Ariens (hereinafter called “the Arbitrators”) v Knowsley SK Limited, Manchester, United Kingdom (hereinafter called “KSK”) Dutch Supreme Court. D.H. Beukenhorst (chairman), A.M.J. van Buchem-Spapens, J.C. van Oven, F.B.Bakels and W.D.H. Asser, 29 January 2010, Case number 09/00505, published on www.rechtspraak.nl, LJN: BK2007
ARBITRATION: DUTCH LAW: OBLIGATIONS OF ARBITRATORS TOWARDS PARTIES IN ARBITRATION PROCEEDINGS
The following two decisions were given by the Dutch Supreme Court (DSC):
(1) Under Dutch law, an arbitral tribunal is only obliged to inform the Parties of the procedure that the tribunal has decided to follow during the arbitration proceedings and to give reasons for the decisions taken during the arbitration proceedings, as well as to give reasons in the arbitral award itself. The arbitral tribunal is not obliged to ensure that a record is kept of what was said at an oral hearing.
(2) Article 843a DCPC, which obliges a party that is in a legal relationship with a different party to release a copy or summary of a document that pertains to that legal relationship to that different party does not apply in arbitration proceedings.
In this matter the parties KSK (the claimant in the arbitration proceedings) and Visser & Smit Hanab B.V. of Papendrecht, the Netherlands (the respondent in the arbitration proceedings, hereinafter called “VSH”) were involved in arbitration proceedings. In those proceedings VSH was claiming money that it said KSK owed to it under a construction contract for extra work done by VSH and for alleged delay and disruption allegedly caused to the work by KSK. The rules of the Netherlands Arbitration Institute (hereinafter called “ NAI”) and Dutch law applied to the arbitration proceedings.
In the course of the arbitration proceedings between KSK and VSH (hereinafter also to be referred to jointly as “Parties” and individually as “Party”) the Arbitrators scheduled an oral hearing. The Arbitrators informed the Parties that they would appoint a secretary (the costs of whom would be for the Party losing the arbitration) to be present at the hearing to take notes.
The hearing was held and the secretary was present and made notes. It should be remarked here that is unusual in Dutch arbitration proceedings for full transcription of discussions at a hearing to be made. The type of notes made by the secretary were a kind of handwritten minutes of meeting. During the arbitral hearing a discussion took place between KSK and the Arbitrators in which KSK complained about the manner in which the hearing was being conducted and alleged that principles of a fair hearing were being breached . Some days after the hearing KSK requested the tribunal to release to it the notes that the secretary of the tribunal had made (hereinafter called “Notes”). KSK wanted a copy of the Notes as it hoped that they would contain an impartial record of the discussion in which KSK had complained about the manner in which the hearing was being conducted. The Arbitrators refused to give KSK a copy of the Notes.
After this refusal KSK demanded for a second time that the Arbitrators would give it a copy of the Notes. KSK argued that under the applicable Dutch law an arbitral tribunal was obliged to release to a Party notes made at a hearing by an arbitral tribunal’s secretary for the following reasons:
1) Article 403 of book 7 of the Dutch Civil Code (hereinafter called “DCC”) says that if a person engages the services of a different person the person whose services were engaged is obliged to give the person who engaged him a full explanation and account of the manner in which he has discharged his obligations. KSK said that to fulfil this obligation the Arbitrators were obliged to release the Notes to KSK.
2) Article 843a of the Dutch Civil Procedure Code (hereinafter called “DCPC”) provides that if a legal relationship exists between two parties, a party who has a legitimate interest in obtaining a copy or a summary of a document that the other party has and that pertains to that legal relationship, can demand that the other party releases a copy or summary of that document to it. KSK argued that a legal relationship existed between it and Arbitrator (KSK had engaged the services of the arbitrator to handle an arbitration and to give a decision in that arbitration) so that also by article 843a DCPC the Arbitrators were obliged to release a copy of the Notes to KSK.
Injunction judge at the Court of Amsterdam (Court of First Instance)
The arbitrators again refused to give KSK a copy of the Notes and KSK commenced proceedings at the summary injunction judge of the court of Amsterdam in which it demanded that the Arbitrators be ordered to give it a copy of the Notes. The injunction judge at Amsterdam refused KSK’s demand. KSK appealed to the court of appeal of Amsterdam.
Court of Appeal of Amsterdam
On appeal the Court reversed the injunction judge’s decision and ordered the Arbitrators to release the Notes to KSK. The Court of Appeal held that before the Notes were released to KSK, the Arbitrators were entitled to delete the parts of the Notes that were not solely a factual record of the hearing, but that also contained the opinion of the secretary concerning discussions at the hearing, or contained an indication of what the secretary felt that the Arbitrators should decide regarding certain points.
After the Court of Appeal’s judgement was rendered, the Arbitrators released the Notes to KSK whereby no parts of the Notes were deleted. The Arbitrators subsequently appealed to the Dutch Supreme Court (DSC). As KSK already had the Notes, it had no interest in the appeal proceedings at the DSC and therefore chose not to appear in those proceedings.
Dutch Supreme Court
On appeal at the DSC, the DSC reversed the court of appeal’s decision for the following reasons: The DSC held that neither the Dutch Arbitration Act (which is contained in the DCPC) nor the rules of the NAI obliged the Arbitrators to make a written report of an oral hearing. Because the engagement that had been accepted by the Arbitrators did not oblige them to make a written report, the same applied to the notes that the secretary made during the oral hearing. The only obligation that article 403 of book 7 DCC placed on the Arbitrators was to inform the Parties of the procedure that the arbitrators had decided to follow during the arbitration and to give reasons for the decisions taken during the arbitration as well as to give reasons in the arbitral award itself.
Concerning article 843a DCPC, the DSC said that the procedure that should be followed when conducting an arbitration is contained in the Dutch Arbitration Act and in the rules that the parties have declared applicable to the arbitration. Within the framework of the act and the rules, in principle, an arbitral tribunal is free to decide what procedure should be followed. This also applies to the question if, and in what manner, a report of an oral hearing will be made and will be put at the disposal of parties. The decisions of an arbitral tribunal concerning these points can only be reversed in arbitral appeal proceeding (if parties have agreed to such appeal proceeding) or in setting aside proceedings.
Art. 843a DCPC, which is generally worded and not specifically meant to be used in arbitral proceedings, cannot be used to limit this freedom of an arbitral tribunal to decide how the arbitration proceedings should be conducted.
For the abovementioned reasons the DSC reversed the decision of the Court of Appeal of Amsterdam.
1) This decision makes clear that the obligations of arbitrators that are engaged to give a decision in arbitration proceedings are very limited and that arbitrators have a very great deal of freedom to decide in what manner proceedings will be conducted. This is the first time that the specific obligations of arbitrators toward parties that have requested those arbitrators to give a decision in arbitration proceedings have been defined in Dutch law.
2) This decision is also of great interest as it makes clear that article 843a DCPC, which is an article that is very often used when a party wishes to obtain documents from a different party, cannot be applied in arbitration proceedings. Again this is new law.
3) An important lesson to be learned by anybody who wishes to embark in Dutch arbitration proceedings is that it is of paramount importance, before the actual arbitration proceedings commence, to make very precise agreements indeed with the tribunal and the opposing party concerning every detail of the arbitral procedure that will be followed. This is particularly important as the Dutch Arbitration Act and the rules of many Dutch arbitration institutes do not contain detailed rules on procedure