In a judgement dated 8 November 2019, the Dutch Supreme Court found that a judge, when ruling on a request for leave to enforce an arbitration award in a consumer case, must check on their own initiative whether the rules of European and national consumer law have been complied with.
What was the case about?
A foundation asked the preliminary relief judge to grant leave to enforce an arbitration award that was issued by an arbitrator of Stichting Arbitrage Rechtspraak Nederland.
In the arbitral award, a claim was awarded against a natural person for payment of overdue rent instalments. The arbitration clause that designated Stichting Arbitrage Rechtspraak Nederland as the tribunal was included in the general terms and conditions. The consumer did not appear in either the arbitration proceedings or in the proceedings for the enforcement of the arbitral award. Collection costs were also awarded by the arbitral tribunal (article 6:96 paragraph 6 of the Dutch Civil Code).
Questions referred for a preliminary ruling
The Dutch Supreme Court noted first that if an arbitration clause is included in general conditions, the regime of European consumer law (Directive 93/13/EEC) and that of national consumer law (article 6:236 preamble and under n Dutch Civil Code) apply in parallel.
The Supreme Court ruled that the preliminary relief judge that assesses a request for leave to enforce an arbitral award in a consumer case is obliged to examine on their own initiative whether or not:
(i) the arbitration clause or contractual basis of the claim is ‘unfair’ within the meaning of European consumer law; and
(ii) the arbitration clause grants the consumer a period of at least one month after the other party has invoked the arbitration clause to choose to have the dispute submitted to the ordinary court; and whether the consumer has actually been granted this period.
If it is plausible that one of the circumstances mentioned under (i) above occurs, or that one of the circumstances mentioned under (ii) does not occur, the preliminary relief judge must in principle refuse to grant leave. If leave is refused, this means that the arbitral award cannot be enforced against the consumer.
The preliminary relief judge does not have to examine on their own initiative whether the creditor sufficiently substantiated that collection costs should be awarded and whether the creditor has complied with other applicable rules for the award of collection costs, such as sending a so-called fourteen-day letter (article 6:96 paragraph 6 of the Dutch Civil Code).
Consumer arbitration: including and granting the one-month period
The Dutch Supreme Court ruling confirms the importance of stipulating in the arbitration clause that the consumer is granted a period of at least one month after the other party has invoked the arbitration clause to choose to have the dispute submitted to the regular court.
In addition, the consumer must actually be granted this period. In order to be able to prove that these rules have been complied with, it is advisable to clearly record correspondence with the consumer in this regard.