Charterparty agreement by email – is the arbitration clause void under Dutch law?

Posted: 17/06/2020

Much concern was caused by the story in Lloyd’s List, which began “Email confirmation of charterparty agreements – now standard practice in shipping – renders the arbitration clause void in the Netherlands, the Dutch Supreme Court has ruled”.

On the face of it, this has the potential to cause great uncertainty for all parties contracting with Dutch companies (and Dutch companies contracting with each other) on many of the established contracts of international trade which provide for English arbitration. So is it as bad as the headline sounds? With the support of leading Dutch shipping lawyer Marcel Verhagen of Dock Legal Experts in Rotterdam, this article seeks to address that question and explain the impact of the Dutch Supreme Court’s decision.

Facts

The relevant facts can be summarised quickly. A Russian company and a Dutch company entered into a charterparty, which provided for English law and arbitration. Disputes arose and the owners began arbitration in London in accordance with the terms of the charterparty. The charterers did not make an appearance in the London arbitration and the owners obtained a default award.

In the usual way, the owners then sought to enforce the award in Holland. In accordance with Dutch procedural law, a petition was filed before the Court of Appeal (where the charterers again failed to appear) which concluded that the award was not capable of enforcement as there was no valid arbitration agreement.

As is common, the relevant charterparty had been agreed by email and before making its decision, the Court of Appeal invited the owners to provide evidence that the emails in which the terms were agreed were authentic. The emails before the court showed “white spots” and the court required evidence from an expert that the emails had not been manipulated.

The owners chose not to engage an independent IT consultant and their Dutch lawyers put forward an IT expert employed by the law firm. This expert was not able to say, categorically, that the emails were authentic. The court therefore found that the owners had failed to prove that the contract containing the arbitration agreement (and therefore the arbitration agreement itself) had been agreed.

The owners appealed but, on advice from the Attorney General, the Supreme Court rejected the appeal. The Supreme Court agreed that the owners had failed to provide a true copy of the arbitration agreement and there was therefore no binding arbitration agreement.

Is this a problem?

The first thing to note is that this decision follows an arbitration in London in which the charterer did not enter an appearance. It is likely that a different decision would have been reached had the charterers participated in the London arbitration.

The key point however is that the decision by the Court of Appeal and the Supreme Court does not say that email confirmation of a charterparty automatically “renders an arbitration clause void”. The Dutch court may however ask that the party seeking to enforce an award prove that the email communication in which the arbitration was agreed is authentic. Any party asked to prove authenticity by the Dutch court would be well-advised to engage an independent IT expert.

Conclusion

As is often the situation, the headline in this case is more exciting than the facts. Parties should not be concerned that existing arbitration agreements with Dutch counterparties are invalid when agreed by email. They should however be prepared to prove that the email correspondence in which the arbitration was agreed is authentic.

Our thanks to Marcel Verhagen of Dock Legal Experts in Rotterdam (www.docklaw.nl) for the Dutch law input into this article.

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