22 August 2024
In the Netherlands, we have the litigation costs order. If a lawsuit is lost, that party can be ordered to pay the legal costs.
This applies not only to a Dutch litigant, but also to a foreign litigant. But how does this work with a foreign party? If a foreign party fails to meet its payment obligation, one has to get the money there. This can still be quite tricky.
Dutch law offers the possibility of bringing an incidental claim for security for legal costs. This means that the defendant, who is summoned by a foreign litigant, can claim that the foreign plaintiff must first provide security for legal costs and any damages related to the proceedings. This incident is governed by Article 224 of the Code of Civil Procedure (CPC).
The idea behind this is that if the defendant wins the proceedings and the plaintiff is ordered to pay the legal costs, he will not be forced to go to a far-off foreign country to try to recover these costs there, where the recognition of the Dutch judgment may also become an issue.
If a foreign claimant is ordered to provide security for legal costs and he fails to do so, that foreign claimant is declared inadmissible in his proceedings. The proceedings are then terminated.
An exception may be made to the above obligation if it appears that a treaty exists between the countries where the parties are domiciled. Such an exception exists in the case of a US plaintiff. As early as 1956, the Netherlands and the US concluded a treaty stipulating that a US national (and that includes companies), does not have to provide security for any litigation costs. A claim for security in the case of a US plaintiff will therefore be rejected.
Do you have questions regarding this article? Or do you need legal advice? Please feel free to contact us.
