Netherlands: Renegotiation of Existing BITs by the Netherlands May Directly Affect Current Investments

In Short

The Situation: The Netherlands has 79 bilateral investment treaties ("BITs") in place with non-EU countries. On March 22, 2019, the Dutch government published a new model BIT ("2019 Model") as a template for negotiating new non-EU BITs and replacing existing ones. The 2019 Model offers investors less protection than do existing BITs.

The Result: The Netherlands plans to renegotiate existing BITs based on the 2019 Model. Investors that currently rely on a Dutch BIT may be affected, in particular if existing sunset protection no longer applies.

Looking Ahead: In May 2019, the Netherlands obtained authorization from the European Commission to renegotiate its existing BITs with Argentina, Burkina Faso, Ecuador, Nigeria, Tanzania, Turkey, the United Arab Emirates, and Uganda, and to start negotiations for new BITs with Qatar and Iraq.

In response to public criticism of existing BITs and to implement its new sustainable trade and investment policy, the Dutch government sought to replace its 2004 model BIT. In May 2018, it published a draft version of the 2019 Model for public consultation. Subsequently, an amended version was published in October 2018. Following discussions in Dutch Parliament, further amendments were made that resulted in the current 2019 Model. Read the 2019 Dutch Model BIT (source document in Dutch).

Pure Holding Companies May No Longer Qualify for Investment Protection

Under the 2019 Model, an "investor" must either have substantial business activities within the Dutch jurisdiction or be owned or controlled by such a person or entity. There are no fixed criteria for what is "substantial." The 2019 Model nonexclusively lists indicators such as location of registered office or headquarters, number of employees, turnover, and the nature and maturity of the activities. These indicators should be assessed in each specific case.

The Scope of Investments Is Narrower

An "investment" is defined as requiring a certain duration, the commitment of capital or other resources, and the assumption of risk. Claims to money arising solely from commercial contracts for the sale of goods or services, the domestic financing of such contracts, or any related order, judgment, or arbitral award are excluded. 

The Level of Substantive Protection Is More Limited

The "most-favored-nation" clause no longer allows investors to claim a breach of this provision due to more favorable treatment accorded to investors in other treaties, absent measures adopted or maintained pursuant to those obligations. Under the fair and equitable treatment provision, legitimate expectations cover only investments that were induced by specific representations by the contracting party. Therefore, general changes in regulatory regime may no longer be covered. The concept of "indirect expropriation" is confined to deprivation of "fundamental attributes of property." Whether this is the situation requires a case-by-case, fact-based inquiry, using factors such as economic impact of the measures(s), their duration, character, object, and context.

Investor-State Dispute Settlement

With respect to investor-state dispute settlement ("ISDS"), investors may choose to resolve disputes under the International Centre for Settlement of Investment Disputes ("ICSID") Convention or on the basis of the ICSID Additional Facility Rules and the United Nations Commission on International Trade Law Arbitration Rules. The appointment of arbitrators, however, will be reserved for the Secretary-General of ICSID or for the Secretary-General of the Permanent Court of Arbitration, depending upon which rules apply.

Compensation in the Case of Noncompliance

Arbitrators may limit or deny compensation in the case of an investor's noncompliance with corporate social responsibility policies. In particular, this applies to the Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.

Prescription Periods

Investors should be aware of prescription periods for the filing of a request or consultations. Claims must be commenced two years after local remedies were exhausted or ceased, or within five years of the date on which the investor first acquired or should have acquired knowledge of the infringement and resulting loss.

Sunset Clauses in Existing BITs May No Longer Apply

If a BIT is replaced by a new BIT based on the 2019 Model, such clauses may not be applicable. On one occasion, the Dutch government has already stated a preference for using a replacement, since termination of the existing BIT would trigger a sunset clause entitling investors to a 15-year protection extension.

Three Key Takeaways

  1. Pure holding companies may no longer qualify for investment protection unless their owners have substantial business activities in the Netherlands.
  2. Sunset clauses may no longer apply if existing BITs are replaced by new BITs.
  3. Investors should carefully monitor pending negotiations and evaluate whether current investments need restructuring, with a view to maintaining optimal investment protection and access to ISDS.

Attachments Renegotiation of Existing BITs.pdf

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions