Jachtbouw Nederland

Doing business with foreign party.

The Dutch water sports industry/shipbuilding is highly regarded abroad. It is not for nothing that many Dutch-built yachts bob up and down in international waters and at various foreign boat shows they make a good impression with what can be considered ‘Dutch Glory’.

There are also many transactions between Dutch companies and foreign parties, both in shipbuilding and in sales and repair/maintenance. Germany plays a leading role. Trade relations between the Netherlands and Germany are close. Not only do many Germans buy a ship in the Netherlands, but the Netherlands is also a popular vacation destination where many Germans have their ship moored in a marina. Therefore, it is important to know where the Dutch entrepreneur stands in case of a possible dispute and to prevent eventualities in the agreement if possible.

Which judge is competent?
This subject is regulated in Article 15(1)(c) of the so-called Regulation 44/2001 of the Council of the European Union of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation). In a nutshell, in a dispute between a trader and a foreign consumer, where the trader carries out commercial or professional activities in the consumer’s Member State of residence, the consumer can choose whether to bring the dispute before the courts of the Member State where the trader is established or before the courts where the consumer is domiciled. Thus, a German customer (if he is a consumer) has the choice.

Case law shows that the aforementioned adjustment of the court’s jurisdiction depends on whether the entrepreneur has engaged in so-called turnover-increasing activities in the consumer’s country of residence (in this case, Germany). This is met, for example, when:
– the entrepreneur advertises in Germany (leaflets, television and the like),
– aims to target foreign countries with a website (by offering it in several languages),
or with a foreign toplevel domain (.nl).

If a Dutch boat broker has set up his website in German, it can already be concluded that turnover-increasing activities aimed at foreign countries have been developed. The above happened to a Dutch boat brokerage in a dispute with a French consumer. Despite the choice of law and forum in his contract, he now has to litigate in France, with all the costs and complications that entails.

Reservation does not work.
Unfortunately, stating in an agreement that the Dutch court is competent and Dutch law is applicable is not the solution. Such an agreement is only valid if it was concluded after the dispute arose, but that is of course seldom or never the case. In the case of an agreement with our German consumer, he can choose the court to which he wishes to bring the case. The Dutch entrepreneur, however, has no choice: if he or she has a dispute with a German consumer, a German court is involved. When both parties are entrepreneurs, a choice of law is based on the choice made by the parties. If entrepreneurs have not agreed on jurisdiction, then the place of jurisdiction is the place where the contractual obligation is to be fulfilled. In the case of a sales contract, the place where the boat is to be delivered or where the buyer has obtained actual control of these goods applies. In the case of a building contract, the place where the service (construction or repair) must take place applies.

Which law applies?
In addition to the competent court, it is also important which law applies to a contract. The same applies as above with regard to the competent court. In the case of a consumer the choice of law may not result in the German consumer being deprived of the legal protection of the so-called objectively applicable law, i.e. the law which would apply on the basis of statutory provisions if the parties had not made a choice of law. Again, this applies to the extent that a Dutch entrepreneur has directed his professional activity to Germany or conducts activities here. Thus, for those who do not direct their activities to the German market and do not engage in activities in Germany, Dutch law applies.

In the case of entrepreneurs, a choice of law can again be validly made in the contract. In the absence of such a choice, Dutch law will usually apply, since under European law the law of the country where the seller is established applies as a main rule. This is the case when a Dutch boat builder builds a vessel in the Netherlands under a contract of affirmation or repair or when repairs are carried out in the Netherlands. If the Dutch boat builder would build the vessel in Germany, German law would apply.

In contracts with a foreign consumer, keep in mind that, when engaging in activities in the foreign market where the consumer lives, the consumer has the right to have the dispute adjudicated in his country. This only does not apply when the entrepreneur exclusively concentrates his activities on the Netherlands. In agreements between entrepreneurs, legally valid arrangements can be made about the competent court and the applicable law. Make sure to choose the same legal system. If entrepreneurs have not made an agreement in this respect, the jurisdiction of the court lies with the place of execution or the place of delivery of the party that provides the so-called characteristic performance.


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