Temporary legal solutions for companies2021-12-17T16:13:56+00:00

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Temporary legal solutions for companies

Interim legal services assists companies that need legal support on an adhoc basis.

Madelon van Breemen has gained substantial experience as an interim company lawyer and has therefore gained insight in companies and in particular the needs of the company as well as the way the company operates.

When does the need for temporary legal solutions arise?

Situations in which an interim company lawyer can offer a solution for your company are, for example:

  • When a company wants to launch a new service or product on the market. The legal impact is not just the agreements that need to be made to make this possible, but has a legal impact on the entire company.
  • Another example is where the company is growing strongly and needs legal support on a frequent basis, and the company does not have the size to require a full-time lawyer on the job and is increasingly looking for support from its in-house lawyer.

Which interim legal solutions can be provided by LVH lawfirm?

Madelon van Breemen is able to hit the ground running, get a clear overview of what needs to be done and determines which legal solution is needed. Financial arrangements are then made about the cost of such legal support, the frequency of such legal support and which attorney at law is most suitable for the job.

The major advantage of this construction is that the client has one single point of contact for the legal solution offered and that the other experts in the office can be called in quickly and efficiently where necessary. The client does not have to search for staff and does not have to worry about the quality of the work either.

Would you like to know more about obtaining such interim legal support? Please contact Madelon van Breemen if you have any questions.

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Privacy and Data Protection: Brexit and third countries

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As we all know the UK left the EU with effect from 1 January 2021. How does this affect the transfer and processing of personal data in the UK. The Withdrawal Agreement entered into by the EU and the UK regarding the withdrawal of the UK from the EU sets out a certain transitionary period. This transitional period expired as from 1st July 2021, meaning that the UK is treated as a third country with respect to the transfer and processing of personal date. What does this mean in practice for privacy and data protection?

When can personal data be transferred to a third country?

The Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (GDPR) sets out the rules for the transfer of personal data from controllers or processors in the EU to third countries and international organisations, as set out in Chapter V of the GDPR. The main rule is that personal data may only be transferred to a third country in the event that adequate protection level is available.

The Adequacy Decision of the EC regarding personal data

The good news is that on the 28th June 2021, the EU has passed a Commission Implementation Decision, decision on the adequate protection of personal data by the united kingdom – general data protection regulation (Adequacy Decision). The EU Commission has carefully analysed the law and practice of the UK and concluded that the UK ensures an adequate level of protection for personal data transferred within the scope of Regulation (EU) 2016/679 from the EU to the UK. After a period of 4 years, effective from 1st July 2021, the Adequacy Decision will be reviewed by the EU.

What is the Adequacy Decision?

This Adequacy Decision means that there are no consequences for the transfer and processing of personal data between an EU member state and the UK. There is no need to take action and there is no need to use Standard Contractual Clauses, or to use the Binding Corporate Rules (BCRs).

What are the Standard Contractual Clauses?

The EU has developed so-called standard contractual clauses (SCCs) under the GDPR for data transfers from controllers or processors in the EU/EEA to controllers or processors established outside the EU/EEA. These SCCs have been updated and the EU issued modernised standard contractual clauses on the 4th June 2021. 

What are the Binding Corporate Rules?

The BCRs were developed by the UK to allow multinational corporations, international organisations, and groups of companies to make intra-organisational transfers of personal data across borders in compliance with the GDPR. These companies submit the binding corporate rules for approval to the EU.

When do you use Standard Contractual Clauses or the Binding Corporate Rules?

However, any company within the EU which transfers or processes personal data  country outside EEA (European Economic Area) needs to obtain “adequate” protection. This means that either the SCCs or BCRs will need be used in order to transfer data from controllers or processors in the EU/EEA to controllers or processors established outside the EU/EEA.

Schrems II

The SCCs were updated as a result of the Schrems II judgment of the Court of Justice of 16th July 2020. The court ruled that simply entering into SCCs was not sufficient. Each organisation that exports personal data outside the EEA, needs to assess case-by-case whether the legislation of the receiving country meets the protection requirements that is in line with the SCCs.

What are the innovations of the new Standard Contractual Clauses?

The new SCCs provide businesses with an easy-to-implement template and offer a more legal predictability to European businesses. The new SCCs in particular help SMEs to ensure compliance with requirements for safe data transfers, while allowing data to move freely across borders, without legal barriers. The new SCCs covers all transfers in the entire chain from controller to (sub)processor to controller.

The main innovations of the new SCC include the following:

  1. One single entry-point covering a broad range of transfer scenarios, instead of separate set of clauses;
  2. More flexibility for complex processing chains, through a “modular approach” and by offering the possibility for more than two parties to join and use the clauses;
  3. Practical toolbox to comply with the Schrems II judgments, i.e. an overview of the different steps companies have to take to comply with the Schrems II judgment as well as examples of possible “supplementary measures” such as encryption, that companies may take if necessary.

In the event that an organisation already uses the old SCCs, a transitionary period of 18 months is provided within which the new version of the SCCs need to be used.

Are you looking for an lawyer experienced in the international aspects of privacy law, or if you have any queries or questions relating to the processing or transfer of personal data to a third country, please contact Madelon van Breemen.

Battle of forms: the applicability of General Terms and Conditions

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The battle of forms is where a business enterprise has contracted with another business and both parties claim that their General Terms and Conditions are applicable to the contract that has been entered into. The question is which General Terms and Conditions apply in this instance?

When do General Terms and Conditions apply?

Article 6:217 of the DCC states that agreements are into by offer and acceptance, which also applies to General Terms and Conditions. In order for the General Terms and Conditions to be valid and applicable to the contract, the contract needs to clearly state that the General Terms and Conditions apply. Acceptance of the applicability of the General Terms can also be implied in the event that the other contracting party does not know the content. 

Legal obligation to present the General Terms and Conditions to the other party

Article 6:233 and 6:234 of the DCC does provide for a duty on the party relying on the General Terms and Conditions to inform the other party by presenting the General Terms and Conditions to the other party. If these requirements are met the General Terms and Conditions are applicable to the contract, so the applicability requirement for General Terms and Conditions is less stringent that in relation to the contract itself.

Which General Terms and Conditions apply to the agreement?

In the event that both parties declared their General Terms and Conditions to be applicable, Article 6:225(3) DCC provides for a solution to determine which set of General Terms and Conditions apply. This article is what is referred to as  the “first shot” principle. The “first shot” principle is where one party applies the General Terms and Conditions to be applicable and the other party in turn does the same. In this case the first party declaring their General Terms and Conditions to be applicable goes first provided that the applicability if the other General Terms and Conditions are expressly rejected. Often this wording is included in the General Terms and Conditions themselves, which may not be sufficient.

When are General Terms and Conditions considered to be rejected?

Case law has shown that by merely adding wording to your company’s General Terms and Conditions is not sufficient for the “first shot” principle to apply under Dutch law. This means specific wording needs to be included in the contract or offer. It needs to be very clear to the other side that your company will and is rejecting their General Terms and Conditions.

Battle of forms: UN Convention on International Sale of Goods

In the event that the parties to the agreement are selling commercial goods internationally ,then the United Nations Convention on Contracts for the International Sale of Goods (CISG) United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) (CISG). United Nations Commission On International Trade Law is applicable to the contract when both parties have their place of business in a nation that have signed CISG: List of Contracting States | Institute of International Commercial Law (pace.edu) the CISG. It is important to note that the CISG is a lex specialis, meaning that this Convention is applicable to the contract in priority of the Netherlands Dutch Civil Code. For example, when one party has their place of business in the Netherlands, and the other party in Germany, then the CISG is applicable to the agreement in priority to the national jurisdiction. The CISG applies to the international sale of goods only to services and does not apply to consumer goods.

The CISG can also be specified by the contracting parties as the choice of law. This means that the contract for the international sale of goods is governed by the CISG even if one of the parties is from a nation that has not signed the CISG. Similarly, parties can also opt out of the CISG in the contract.

Which General Terms and Conditions apply to the international agreement?

Article 19 of the CISG states that the General Terms and Conditions are applicable in accordance with the “last shot” rule. This means the last party declaring their General Terms and Conditions to be applicable is successful, which is different to the relevant provision in the Dutch Civil Code (DCC). The CISG is generally very pro seller, which is something worth taking into consideration when you are the seller of the goods. Especially bearing in mind that you can opt into the CISG even if one of the parties is from a non-signatory nation.

If the CISG is expressly excluded by parties in the contract, and parties have agreed for the contract to be governed by Dutch law, then the provisions of the Dutch Civil Code apply to the applicability of the General Terms and Conditions.

Are you looking for an attorney at law who specialises in the use and applicability of General Terms and Conditions for an international agreement?. Please feel free to contact Madelon van Breemen.

Liability for damage to an aircraft

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When transporting cargo or passengers, airlines are faced with several conditions that can cause damage to their aircraft. This damage occurs in most cases when the aircraft is still on the ground. When parked, leaving the gate or taxiing to the runway. But who is liable for this damage and what does an airline have to pay for itself?

 

LVH advocaten regularly helps airlines to recover the damages they have suffered from the right party. This was also the case in a matter where an aircraft was pushed back from a gate (the push-back service) by the ground handler and the North Holland District Court ruled on the issue of liability for the damage.

 

Damage to aircraft wing after collision at Schiphol Airport

In 2016, an aircraft of El Al Israel Airlines (hereafter: El Al) at Schiphol Airport was pushed backwards from the gate by the ground handler (the push-back driver). In doing so the aeroplane hits the blastfence of the airport with one of its wings (the wingtip), causing a big crack in the wing. As a result, the aircraft could not take off anymore and first had to be repaired at Schiphol Airport. Passengers and crew had to disembark and were accommodated in a hotel until a replacement flight could be arranged.

 

Liability for aircraft damage by ground handler

The ground handler was of the opinion that it was not (fully) liable for the damage suffered by the airline as a result of the collision. The airline was therefore forced to start legal proceedings in order to obtain compensation for the damages. The basis of this claim for damages was the ground handler’s culpable breach of its obligations under the IATA Standard Ground Handling Agreement (SGHA). On the basis of the SGHA, the ground handler is liable for the loss and damage to the aircraft if caused by negligent acts or omissions of the ground handler.

 

Negligence ground handler

In this case, the court has established that the driver who performed the push-back was negligent in his actions, because he deviated from the applicable guidance (and limit) lines prescribed by Schiphol on the platform of the gate during the push-back. The ground handler argued that the collision was caused by local weather circumstances (slipperiness), but failed to prove this. The (negligent) actions of the driver were therefore at the risk of the ground handler and the court upheld the claim for damages.

 

Compensation for the airline

However, the amount of the compensation was under discussion. The SGHA contains an exoneration with regard to consequential damage in case of damage to the aircraft. Therefore, according to the court, certain costs were not eligible for compensation. The costs for the new final wing tip of € 321,574.00 were awarded, as well as the legal interest thereon from the date of default.

This is an interesting case that illustrates how damage can occur to an aircraft and the associated liability. The basis for the liability in this case was the agreement concluded between the parties (SGHA) and the applicable guidelines for the performance of the services. Due to the specific circumstances in this case the ground handler was held liable for damage to the aircraft due to negligent acts.

 

Questions about damage in the aviation industry?

LVH Advocaten regularly assists airlines and other companies in the aviation industry in disputes concerning damage. Do you have questions about the possibility of recovering damages in the aviation industry or are you looking for advice on recovering damages or assistance in legal proceedings? Feel free to contact us for the possibilities. We will be happy to assist you in all your aviation related legal disputes.

 

Fiscal support measures during Corona crisis

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On the 17th March 2020, the Cabinet announced a large number of measures. These measures are aimed at supporting companies and freelancers. The measures include measures to maintain employment on the one hand and measures to ensure that companies do not go bankrupt and that self-employed people can maintain an income on the other hand.

The package of measures includes the following elements:

– A reduction in employers’ wage costs to avoid redundancies

– Temporary income support for the self-employed

– Relaxation of tax deferrals

– Increase in the guarantee for business financing

– Interest rebates for loans contracted with Qredits

– Widening the guarantee for SMEs – Agricultural Credits

– Extension BMKB scheme

– Open emergency counter for entrepreneurs in affected sectors.

What can LVH’s lawyers help you with?

We can advise you on all measures. Ultimately, most measures are measures that have an effect and offer support in the somewhat longer term.

Measures that may have an immediate effect

Postponement of payment
In the short term, the measure of requesting deferral of payment of the various taxes in particular has a direct effect. This measure makes it possible to request deferral directly. It frees up resources that can be spent on keeping the company afloat.

Reduction of provisional assessment
At the beginning of the year, a large number of companies were subject to a provisional assessment of income tax (for IB entrepreneurs) or corporate income tax. This assessment relates to the tax year 2020 and is based on an expected profit for the year 2020. For a large number of the companies that have received such an assessment, it now appears that, as a result of the corona crisis, they will make no or significantly less profit than previously estimated. On this basis, the provisional assessment can be reduced.

If the amount of the provisional assessment has already been paid, the reduction will result in a refund.

We would be pleased to discuss with you which measures can help you further and how we can support you in doing so. For questions and/or advice you can contact David Harreman via harreman@lvh-advocaten.nl or 010-2092756.

Peter Verheijden

+31 (0)10 209 27 76
verheijden@lvh-advocaten.nl
(more…)

Do airlines have to compensate passengers financially in case of a strike?

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The rights of air passengers in case of delay, cancellation or denied boarding are regulated by EU Regulation 261/2004. The Regulation entitles passengers in certain cases to standardized financial compensation of €250, €400 or €600 depending on the flight distance.

 

Passengers cannot claim such financial compensation if the cancellation or delay is caused by an ‘extraordinary circumstance’ which could not have been avoided even by taking all reasonable measures. As an example of an extraordinary circumstance, recital 15 of the preamble of the Regulation, explicitly mentions the case of strikes. But as it turns out, a strike is not always an extraordinary circumstance. As a result, in some cases passengers are still entitled to financial compensation in the event of a strike.

 

Judgment on strike in aviation: Airhelp Ltd vs. Scandinavian Airline System SAS

On March 23, 2021, the Court of Justice of the EU issued a judgment on this subject in the case of Airhelp Ltd vs. Scandinavian Airline System SAS (C-28/20). The case involved the following. The passenger’s flight had been cancelled by the airline SAS due to a strike by its pilots. Airhelp, a claimagency that had taken over this passenger’s rights, claimed compensation in proceedings before the Swedish court, arguing that the strike would not be an extraordinary circumstance. The strike of its own pilots would be inherent in the normal exercise of activity of an airline. The Swedish court referred the matter to the CJEU for a preliminary ruling.

The court considered therein that a strike organized by a trade union of airline employees, which is aimed in particular at increasing wages, does not fall within the concept of an “extraordinary circumstance” that can relieve the airline of its obligation to pay compensation for cancellation or long delay of the flights concerned. This is also the case where the strike is organized in compliance with the conditions set out in the national regulation.

 

Strike of own staff airline

The court views a strike with these characteristics as an event inherent in the normal exercise of the airline’s activity as an employer. Measures relating to working conditions are part of the normal management of the airline. A strike is seen as a consequence thereof. The Court points out that the right to strike is a right guaranteed by the Charter of Fundamental Rights of the European Union and that it is foreseeable for any employer that employees may exercise this right. The Court also notes that, in principle, the employer has the means to prepare himself – upon announcement of the strike.

In short, according to the Court, a strike of the staff of an airline, which is related to the employment relationship between the airline and its staff that can be discussed in a dialogue between the social partners within the company, including wage negotiations, does not fall under the concept of “extraordinary circumstance” within the meaning of the Air Passenger Rights Regulation. In other words, a strike arising from a conflict over working conditions is not an extraordinary circumstance and passengers must be compensated in the event of such a strike of airline staff.

 

Strike by external parties or with an external solution

It is important to note that the court also emphasizes that events with an external origin that cannot be controlled by the airline can constitute an extraordinary circumstance, because it arises, for example, from a natural event or an act of a third party. This includes strikes by other airlines, airport staff or air traffic controllers. Furthermore, the court mentions that there can be an extraordinary circumstance if the strike stems from requirements that can only be met by the government. In that case, control over the resolution of the strike is beyond the airline’s control and passengers are not entitled to compensation.

 

Passengers not always entitled to compensation under Reg. 261/2004 in case of strike

Whether the strike constitutes an extraordinary circumstance therefore depends on the circumstances and in particular the influence of the airline (internal or external cause / solution). A strike with an external cause is in principle an extraordinary circumstance as a result of which passengers are not entitled to compensation under Regulation 261/2004.

 

Lawyers specialized in aviation

LVH Advocaten assists airlines on a daily basis with advice and litigation on Regulation 261/2004 and other aviation related issues. If you have any questions regarding this article, please feel free to contact us for more information.

 

Consequences of Brexit for aviation: a brief overview

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This article briefly discusses the consequences of Brexit for the aviation industry. On January 31, 2020, the United Kingdom officially left the European Union (EU). From that moment, a transition period started during which the United Kingdom continued to apply European law. In the meantime, negotiations for a Trade and Cooperation Agreement (TDA) took place.

 

At the end of 2020, the European Commission and the United Kingdom concluded on a Trade and Cooperation Agreement, which includes agreements on future cooperation with the EU. This cooperation also entails air traffic. This article discusses (1) the impact of Brexit on air transport and (2) the new cooperation.

 

Loss of aviation rights due to Brexit

By leaving the EU, the UK has lost several important rights:

  • UK airlines will no longer participate in the fully liberalized EU aviation market. Consequently, they can no longer operate flights between EU destinations under the licences issued by the UK;
  • The UK no longer participates in the drafting of European Aviation Safety Agency (EASA) standards.

With EU membership, the UK had access to 44 countries, representing approximately 85% of international air traffic. This right expires, which means that UK airlines will not have unrestricted access to EU air routes. Indeed, this is reserved for EU airlines. An EU airline exists if more than 50% of the company belongs to an EU person who has effective control.

 

Trade and Cooperation agreement and aviation UK

The loss of those rights is partially addressed by the Trade and Cooperation Agreement (TDA), but it does not equal the level of economic integration the UK had when she was a member state. The TDA includes a free trade agreement that provides for continuous sustainable aviation connectivity. It ensures equal competition between operators and protection of passenger rights. However, market access is not as good as the single market that member states have access to.

Specifically, the following benefits have been agreed on for UK aviation:

  • Unlimited point-to-point air traffic is possible between EU and UK airports;
  • EU member states can agree on a bilateral fifth freedom with the UK for additional EU air cargo;
  • EU-UK cooperation in aviation safety, aviation security and aviation management continues;
  • Ground handling, slots and passenger rights provisions have been agreed, in addition to horizontal clauses on environmental, social and competition equity.

 

Conclusion Brexit and international aviation

In short, the level playing field mainly remains. The United Kingdom can continue to fly within the European Union after Brexit without restrictions and passenger rights will remain protected. However, border control will change, which means that British airports will have a different layout.

 

LVH Advocaten specializes in aviation law. We regularly assists airlines in all kinds of aviation related issues. If you have any questions about the consequences of Brexit for aviation, please feel free to contact us.

 

No forced takeover of Corendon due to Covid-19

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On the 7th of December 2020, the Court of Amsterdam dismissed the claim relating to the takeover of tour operator Corendon in an interim injunction.

 

In December 2019, Sunscreen (Sunweb) and industry partner Corendon Holiday entered into a purchase agreement in respect of the shares in Corendon Holiday. Sunscreen would acquire these shares for € 146 million. However, in October 2020, Sunscreen terminated the agreement for the underlying reason that not all suspensive conditions would have been met. In response, Corendon initiated interim injunction proceedings.

 

Corendon requested cooperation closing Sunscreen

In Court Corendon claimed full and unconditional cooperation from Sunscreen, including payment of the purchase price and acceptance of the shares. In the preliminary proceedings the Court dismissed Corendon’s claims, despite the fact that it had become sufficiently plausible that the Court in following main proceedings will come to the conclusion that Corendon has complied with all conditions.

Reasons for rejection in preliminary relief proceedings were the interests involved, like the particularly extensive and possibly irreversible consequences that such a forced takeover could entail. These consequences, including a possible bankruptcy by having to pay the purchase price to Corendon, are a result of the Covid-19 crisis. That crisis affected the entire travel industry. It is therefore clear from this ruling that the Court has taken the consequences of the Covid-19 crisis into account.

 

Consequences of the corona crisis on the travel sector are weighed

Interestingly, the interim relief judge did not rule out that “the real motive for Sunscreen to exit the transaction is not in the AOC Conditions, but the Covid-19 crisis, in particular the impact of that crisis on the results of the company (Sunweb) and on the attitude of the shareholders (in particular Triton) towards the acquisition of a company in a sector which has been hit very hard by the Covid-19 crisis and whose recovery is currently uncertain”.

The foregoing implies that the Court in preliminary relief proceedings cannot grant a forced takeover. The consequences of the corona crisis are incalculable. However, the interim relief judge did consider that the parties should continue with their negotiations in order to adapt the deal to the changed situation. After all the judge ruled that Sunscreen cannot simply evade the deal.

 

Approval of the ILT to fly – Air Operator Certificate (AOC)

Another interesting part of this ruling was found in the AOC conditions. Corendon had to request approval for the permit to fly from the Inspectie voor Leefomgeving en Transport (ILT: the Dutch Aviation Authority) on the basis of the purchase agreement. In the event of a takeover such as this, the ILT can check the new flight company. Sunscreen therefore requested security from the ILT regarding the AOC. Corendon, on the other hand, took the view that these arguments were merely a smokescreen for abandoning the takeover and that the AOC conditions had been met. The Court in preliminary relief proceedings concluded that it was not likely that a new AOC would have to be submitted for approval. The judge also concluded that there is no obligation for ILT under EG Regulation 1008/2008 to give a confirmation prior to closing and that ILT will in any case check after closing whether the confirmation given in advance is correct. For the time being, therefore, the objections of Sunscreen did not hold.

 

Legal questions about the aviation industry?

The aviation industry was hit hard by the Covid-19 pandemic. This ruling just shows that the consequences of the corona crisis on the continuity of these companies were taken into account, which is a good outcome for companies in this sector.

In case you have any questions about this article or you are looking for assistance in corporate or aviation law related issues? Please feel free to contact LVh advocaten. W regularly assists parties in the aviation industry.

 

When does a commercial agreement become a legally binding agreement?

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It may be that your commercial enterprise was still negotiating the terms of a commercial contract and the negotiations did not result in an agreed written contract. At least that is what you thought until you received an invoice. When does a commercial agreement become legally binding according to the Dutch Civil Code (DCC)?

An agreement is constituted by offer and acceptance, after an offer has been made which has been accepted (article 6:217 – 6:225 DCC).

This seems to be quite straightforward, but a lot of discrepancies can arise between an offer and acceptance, in addition to confusion as to whether the offer was a legally binding offer, or whether the acceptance was a legally binding acceptance. Under the DCC there are 3 requirements that need to be met before an offer or acceptance is legally binding and after which they constitute a legally binding agreement. These relate to the intention of the party making the offer, the manner in which it is declared and the alignment between the offer and the acceptance. Intention, declaration and alignment of the offer/acceptance all need to be in accordance with the legal requirements in the DCC and subsequent case law.

In order to establish whether the offer and the acceptance are aligned, the offer needs to be directed to the party for which it is intended. The offer and acceptance both consist of an intent and of a declaration which has been disclosed and has been understood by the receiving party in the same way as how it was intended by the disclosing party, based on the circumstances that the receiving party could reasonably have understood (3:33 and 3:35 DCC). The declaration is form free (3:37 DCC), so this can be verbally or in writing. 

The alignment of the offer and acceptance is often the reason for a dispute between the parties, because of the parties have understood the offer or acceptance to have been something different. For example, you are contemplating selling your company and a buyer has appeared wanting to buy your company subject to certain terms and conditions to be agreed upon during the discussions. It may be that an agreement is in place already, and negotiations have not started yet or have not started at all. A consequence for the seller may be that he may no longer be permitted to sell the company to another party. A consequence for the buyer may be that he is under a duty to pay the purchase price plus delivery of what is being sold.

In some situations it may happen that the negotiations break down, and then the question is what are the consequences of stopping the negotiations?

There is set case law on this originating from Plas/Valburg where the Supreme court defined three defined pre-contractual stages, being the following:

  1. The negotiations have broken down without any obligation to compensate the costs of the other side.
  2. The negotiations have progressed to such a stage that stopping the negotiations would lead to substantial costs being incurred. In this stage, damages are due and payable by the withdrawing party.
  3. The negotiations are in such an advanced phase that stopping the negotiations would be in breach of good faith. The parties may each rely on the fact that the negotiations would have resulted in an agreement. The withdrawing party is then under an obligation to pay the costs incurred by the other party and in some cases even loss of profit.

This judgment had an enormous impact in the legal world and resulted in a draft amendment in the DCC which was never implemented, but was applied by the Supreme court in VSH/Shell. So, based on case law, it became more and more accepted to apply the above stages.

In the Supreme Court judgment CBB/JPO however, these phases were amended in such a way that the rights to compensation of the non-withdrawing party were reduced.  So the protection for the non-withdrawing party became less. Thereafter the Supreme Court ruled in Greenib/Van Dam that damages were payable for broken down negotiations. So, therefore re-instating the Plas/Valburg stages, whereby compensation for the costs incurred by the non-withdrawing are to be compensated by the withdrawing party.

The facts in this case were that the negotiations regarding a Hyundai dealership were in such a phase that the other party could reasonably have relied on the fact that a legal agreement would have been entered into. The court decided that negotiations could not just stop without any consequences, and therefore order the payment of damages to compensate the other party.

So, as you might understand, the formation of a legally binding agreement is quite complex and there are a lot of issues to take into consideration starting from the point where parties are commencing the negotiations to the point where both parties believe that a legally binding agreement has been entered into.

Are you negotiating the terms of an agreement, and are you concerned about any of the above, then please contact Madelon van Breemen.

IATA Travel Pass: ins and outs

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International air traffic has been (partially) stopped for quite some time now. The corona crisis has had an enormous impact on the aviation industry. Restarting air traffic brings with it the necessary challenges in terms of information supply to passengers, the requirements of various governments, but also the requirements for airports and airlines.

 

Digital corona passport

IATA (International Air Transport Association) has come up with a global solution, the IATA Travel Pass, a digital corona passport. A global standardized way to validate and verify all national regulations regarding COVID-19 for passenger travel. With a mobile application, IATA aims to safely introduce the restart of air travel. The app allows governments to manage passengers’ health credentials, namely what tests passengers have undergone and whether they have been vaccinated. With this, IATA also hopes to counter fraud via forged papers.

The IATA Travel Pass contains four modules that can be combined:

  1. The passenger receives information on the testing and vaccination requirements for the notified trips;
  2. The passenger can find COVID-19 testing locations in the area of departure and arrival;
  3. It ensures secure transmission of testing and vaccination information to passengers;
  4. It allows the passenger to (a) create a digital passport, (b) verify a test or vaccination, and (c) share the test with authorities to travel. Also, the passenger can easily manage their travel information digitally without contacting third parties.

 

Safe travel with the IATA Travel Pass?

This initiative will hopefully allow people to travel safely again soon. Meanwhile, the digital corona passport has been tested on various components. On March 15, 2021, the app was used on a Singapore Airlines flight to London where the actual management of health data was also tested. The IATA Travel Pass has been successfully implemented, according to IATA’s CEO Alexandre de Juniac. IATA expects to launch the app in April 2021 for iOS and Android devices.

Whether everything will go as smoothly as IATA hopes remains to be seen. They will now have to gain the trust of governments to open borders without quarantine. Verifying tests and vaccinations of travelers should help. It will also be questionable whether all airlines will participate, as there are (yet to be determined) costs involved. On the other hand, there is an urgent demand within the aviation industry for a cost-effective international solution for safe travel.

An important issue is of course how traveler data will be protected. IATA states that travelers themselves have control over their data and that IATA does not store it centrally. Only the traveler releases the data to the relevant authorities.

 

Legal questions related to aviation?

LVH Advocaten is a specialist in the field of aviation. Do you have any questions as a result of this article or any other aviation related topic. Please feel free to contact us for more information.

 

Requirements for CO2 reduction in state aid to KLM?

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An important topic in aviation is the reduction of CO2 emission. Aircraft burn kerosene and therefore emit CO2. Recently, the preliminary relief judge of the District Court of The Hague issued a judgment in the context of CO2 reduction by the Dutch airline KLM and the state aid that KLM received due to the corona pandemic. What conditions for CO2 reduction can be attached to that state aid?

 

Claim for CO2 reduction in aviation by Greenpeace

Greenpeace brought a claim before the District Court for stricter climate conditions to be attached to the state aid granted to KLM. The State aid was provided by the Netherlands in order to guarantee the continued existence of KLM after the corona pandemic, in view of its importance to the Dutch economy. Conditions relating to sustainability and quality of life are attached to this aid, which are in line with the climate objectives that apply to international aviation.

 

Rejection of Claim for Stricter Climate Conditions in State Aid to KLM

The Court in preliminary relief proceedings has rejected the claim of Greenpeace. Greenpeace wants a reduction of emissions that goes beyond the international agreements and objectives. Contrary to Greenpeace’s assertion, the Court in preliminary relief proceedings found that the UN climate treaties, the ECHR and the judgment of the Dutch Supreme Court in the Urgenda case do not require the State to do more to reduce KLM’s CO2 emissions.

Greenhouse gas emissions from international aviation

According to the Court in preliminary relief proceedings, the UN Climate Conventions do not relate to the emission of greenhouse gases as a result of international aviation. Since KLM’s emissions are almost entirely due to international flights, the state has no duty to intervene. The responsibility for reducing CO2 emissions lies – on the basis of the Kyoto Protocol, among other things – with the International Civil Aviation Organization (ICAO). Furthermore, the Court in preliminary relief proceedings considered that the reduction in CO2 emissions that Greenpeace is demanding goes beyond the agreements that have been made at an international level.

In the Urgenda judgment mentioned above, it was ruled that the State must reduce the emission of greenhouse gases on the basis of the UN Climate Convention and the duty of the State to protect citizens. However, Greenpeace’s reliance on this judgment does not succeed because that judgment only relates to the emission of greenhouse gases in the Netherlands. KLM’s CO2 emissions relate to international flights.

Also considering the fact that the Court in preliminary relief proceedings may only judge the State with restraint (marginal review) and the fact that the State has already attached conditions to the aid, Greenpeace’s claim was denied.

 

Are you looking for a Dutch lawyer in Aviation Law?

For legal questions in the field of aviation, please contact LVH Advocaten. LVH advocaten will be happy to advise you on all kinds of aviation law related issues.

 

Cooperation between LVH and AeroDelft – Attention for CO2 reduction

The aforementioned statement does not alter the fact that within the aviation sector there is considerable attention for the reduction of CO2 emissions. Since 2020 LVH Advocaten has been a partner of AeroDelft, a foundation dedicated to making aviation more environmentally friendly. With Project Phoenix, students from Delft University of Technology have set to work within AeroDelft to build the first aircraft to fly on liquid hydrogen. The goal is to completely eliminate CO2 emissions during flight. A progressive initiative that LVH Advocaten is happy to support.

 

Directors and officers liability towards third parties: The Beklamel-Standard

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The corona crisis can cause difficulties for your company. It may not be able to supply all its customers with products, pay all its suppliers on time or otherwise fail to meet its obligations towards its contracting parties and other third parties. As a director of such a company, you may wonder which agreements you can still enter into and which risks you can still take with a view to the continuity of the company you manage.

On top of this, the question may arise as to whether the decision you take may have consequences for your private situation. Can a situation arise in which you are held personally liable for debts of the company?

As a director of a legal entity, you are in principle protected against liability for the company’s debts towards a contracting party or other third parties. However, this protection is not absolute. In some cases, the liability of the company may be transferred to you as a director, so that you are personally liable.

Director’s liability towards third parties

As a director, you may be held liable by the company itself, by the receiver in the company’s bankruptcy estate, but also by creditors of the company. This article discusses this third form of directors’ and officers’ liability.

What is the Beklamel standard?

In principle, directors’ and officers’ liability always requires that the director himself or herself is personally and seriously at fault. The Supreme Court has ruled that there can be such a serious personal accusation if the director is accused by a creditor of having entered into obligations in the name of the company towards the creditor when he knew or should have known that the company would not be able to meet its obligations and would not be able to recover the damage suffered by the creditor as a result. The Beklamel standard is this standard formulated by the Supreme Court for the acceptance of a personal serious accusation, on the basis of which directors’ liability can be established.

The application of the Beklamel standard

As a director, it is therefore important that you do not enter into such obligations on behalf of the company. It is understandable that, especially at a time like this, this can cause a director concern. As a director, are you still allowed to make risky decisions? When will you know, or should you know, that the company will no longer be able to meet the obligations you enter into? In some cases, difficult decisions have to be made, but if this can lead to personal liability, you as a director may be deterred from doing so. The following are therefore some examples of the application of the Beklamel standard in legal practice. The aim is to show how the Beklamel standard is applied in practice so that the somewhat cryptic description of the Supreme Court becomes more tangible.

1. Hopeless situation and insufficient continuity perspective in the case of directors’ and officers’ liability

In the case of a company which, clearly for the director, was in dire straits and placed new orders while in the meantime older invoices were left unpaid, the judge ruled that the Beklamel standard had not yet been met. There was no serious personal accusation to be made against the director. The judge ruled that personal liability requires that the company is in a hopeless situation at the time of entering into the obligation and actually has insufficient prospects of continuity.

The latter criterion was also used in a judgment from 2006, in which the court ruled that the circumstance that the company on whose behalf the commitment was entered into had negative equity capital and the parent companies and subsidiaries associated with this company also had negative equity capital does not yet mean that there was a hopeless situation and an insufficient continuity perspective. This required additional circumstances, which were lacking here. The director was not personally to blame.

2. Complaint standard and serious personal blame

A ruling from October 2019 concerned a case concerning directors who had already been involved in several bankruptcies. They always made use of several interconnected companies that at first sight looked alike, with one company being used to win orders and collect amounts of money while the obligations were entered into by another company and subsequently not complied with. In this situation, the court logically ruled that the directors were personally to blame and personally liable for the debts.

3. Complaint standard and obligations towards creditors

The court ruled in 2008 that the fact that the liquidity position of the company in question was precarious and the tax authorities had seized the ground does not necessarily mean that the director should know that the company will not be able to fulfil the obligations it has entered into, at least not within a reasonable period of time. However, at the time when the company no longer complied with the settlement with the tax authorities, this company (and also its director) had to assume that the tax authorities would proceed with the enforceable sale of the goods affected by the seizure of the land and that, as a result, it would have to discontinue its business operations. From that moment on, the court ruled, the director should reasonably have known that the company would no longer be able to fulfil its obligations towards its creditors entered into after that date. The director was personally liable for the damage suffered by the creditors in question.

Taking entrepreneurial risk does not lead to personal liability

The text of the Beklamel standard is sharper than its application in practice. Moreover, it is not always the case that where there is smoke, there is also fire. At least, that is difficult for creditors to prove. As a director, you therefore need not fear that taking a – not even negligible – entrepreneurial risk may lead to your personal liability. According to case law, restraint is required in deciding whether the director knew or should have known that the company would not be able to fulfil the obligations entered into. The mere knowledge of a risk is not sufficient for directors’ and officers’ liability. However, if at the time of entering into the obligations the management board member knew or should have known that the risk would turn out incorrectly and the company would not be able to recoup the damage suffered as a result, he can be blamed personally and severely. In that case, the director should not have taken the decision and should not have entered into any obligations. If a company is in a critical phase, the dividing line is thin and it is wise to obtain legal advice on whether you still have to conclude a certain agreement and to what extent there is a risk of private liability.

Lawyer director’s liability

Do you have questions about your director’s liability or your risk as an entrepreneur? Please feel free to contact Justin de Vries for further advice.

You can find more corona information in our helpdesk.

Is it possible to stop paying the rent of business premises?

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In recent weeks, Leeman Verheijden Huntjens Advocaten received many questions from both tenants and landlords of business premises about rent payment and other rights and obligations in these special times. Rent costs are one of the largest cost items in the retail and hospitality sector, so in order to get through these difficult times, tenants are investigating whether they are (temporarily) not allowed to pay rent or whether they are allowed to pay less rent.

The closure of shops and other business premises has rent law consequences. For example, what can you do as a landlord if the tenant (temporarily) no longer pays the rent? And what risks do you run as a tenant of business premises if you can no longer (fully) meet the payment of the rent or an operating obligation due to reduced turnover?

This article answers the most frequently asked questions regarding the payment of rent for retail premises, cafes, restaurants and other business premises during the corona crisis. The answers relate to both leases within the meaning of Section 7:290 of the Dutch Civil Code (shops and catering industry) and leases for (other) business premises within the meaning of Section 7:230a of the Dutch Civil Code (office premises).

Is the tenant of business premises allowed to (partially) suspend payment of the rent?

The main rule is that a tenant must continue to pay the rent of a retail space, catering or other business premises. This is only different if the tenant and the landlord jointly agree that the rent may be paid later or agree that the rent does not have to be paid (in part) for a certain period of time. Postponement of the rent payment or (partial) remission can prevent the tenant from going bankrupt, which is also in the landlord’s interest. On the other hand, a lessor also has financial obligations to fulfil.

The purpose of suspending the rent payment is to persuade the lessor to fulfil his obligations under the lease agreement. This is the case, for example, when there is a defect that the lessor has to remedy and, despite a reminder to do so, he does not remedy it. Moreover, the defect must be sufficiently serious and there must be a sufficient link between the suspension of the rental payment and the lessor’s failure to fulfil his obligation.

Claiming suspension of the rent payment is not possible due to closure of the business premises or reduced turnover. After all, suspension does not achieve the aforementioned objective.

Incidentally, many lease agreements exclude the right to suspend payment of the rent for the business premises.

What if the lessee of business premises no longer pays the rent due to the corona crisis?

Failure to pay the rent on time can be a ground for termination of the lease by the lessor. The lessor may also terminate the lease in the event of force majeure, for example due to a drop in turnover due to the corona virus. For this, the lessor must always go to court. A judicial dissolution usually only comes into play in the event of payment arrears of at least three months or if payment has repeatedly not been made on time in the past. If the court agrees with the lessor, he will dissolve the lease agreement and issue an eviction order.

After the proceedings have started, a tenant can still ‘stop’ the dissolution by paying the rent arrears or a large part thereof.

Tenants of business premises who foresee that they will not be able to pay the rent (on time) are advised to inform their landlord about this. In doing so, it is important that they provide an insight into their financial situation and make an estimate or a proposal as to when the rent can be paid and any rent arrears can be made good. If a tenant has the means, it is wise to at least pay (part of) the rent. Avoid a rent arrears of three months or more.

Most rental agreements contain a penalty clause for not paying the rent on time, even in case of force majeure. If a lessor of a shop, restaurant or other business premises claims this penalty, the lessee may ask the court to mitigate the penalty. It is expected that judges will honor a claim for mitigation if the late payment is the result of a (mandatory) closure and/or reduced turnover due to the corona virus.

Does it make sense for a tenant to invoke force majeure because of the corona crisis?

A successful invocation of force majeure (e.g. by corona) does not mean that the tenant no longer has to pay rent for the business premises. A landlord can demand payment from the tenant as soon as this is possible again. Force majeure does not stand in the way of this.

It is not possible for the landlord to claim compensation for failure to pay the rent on time in the event of force majeure.

It is not yet clear whether the Lessee can successfully invoke force majeure due to the corona virus and its consequences. Whether there is force majeure must be determined on the basis of the law, the agreement or generally accepted views. It will therefore depend on the circumstances of the case. When a business premises is closed down, it also plays a role whether this is voluntary or the result of a government measure relating to the coronavirus.

In the event of an obligatory closure of the catering establishment or shop, the lessee must comply with the government measure imposed. In that case, there is most likely a situation of force majeure. If the closure is not compulsory by the government, but due to a shortage of staff or reduced visitor numbers, for example, the position may be taken that there is simply an entrepreneurial risk. In general, tenants of business premises must take such entrepreneurial risks (such as an economic crisis or natural disaster) into account when concluding the lease. If the consequences of the corona virus are regarded as an entrepreneurial risk, invoking force majeure is unlikely to succeed. Clarity about this will ultimately have to follow from case law.

What if the lessee no longer complies with the obligation to operate?

Many leases for business premises include an operating obligation for the lessee. The leased property must then be used in accordance with the agreed purpose, such as clothing shop, café, restaurant or storage space. Such an operating obligation is usually combined with a penalty clause. If the lessee does not comply with the obligation to operate, he is liable to pay a fine and may claim damages from the lessor.

In this case, too, it is important whether the lessee can successfully invoke force majeure. If the closure of the catering facility or shop is the result of a government measure, the lessee cannot be blamed for not meeting his operating obligation. The lessee can then invoke force majeure. In that case, the lessor cannot claim a (contractual) fine or damages. If the closure is on a voluntary basis, there may be a violation of the obligation to operate. The reasons for the closure then fall under the normal entrepreneurial risk (see above). However, a tenant can ask the court for mitigation of the fine.

Can the tenant claim a rent reduction for the business premises?

A tenant can only claim a reduction in rent if there is a reduction in rental enjoyment as a result of a defect. A defect exists when the tenant does not have the rental enjoyment that he could expect when entering into the tenancy agreement as a result of a state or property of the rented property or any other circumstance that cannot be attributed to the tenant. The coronavirus and its consequences can most probably not be regarded as a defect. This means that the renter cannot claim a reduction in the rent. In case law it will ultimately have to be decided whether the consequences of the corona virus (e.g. closure) can be regarded as a defect and whether a lessee can claim a rent reduction as a result.

In most business premises leases, the right to rent reduction is limited to defects that the lessor knew or should have known when entering into the agreement. If such a provision is included in the lease, reliance on rent reduction will not succeed.

Can the lessee invoke unforeseen circumstances due to the corona virus?

After entering into a rental agreement for business premises, there may be unforeseen circumstances. If this is the case, one of the parties (i.e. the renter or lessor) can ask the court to change the rental agreement or dissolve it in whole or in part. This can only be claimed if, according to standards of reasonableness and fairness, it cannot be expected that the tenancy agreement for business premises will remain unchanged.

Unforeseen does not mean unforeseen, but it must be circumstances that have not been taken into account in the rental agreement. If, for example, the lease contains a provision stating that the rent must also be paid in the event of force majeure, this is no longer an ‘unforeseen’ circumstance.

An appeal to unforeseen circumstances is seldom honoured by the court, but if there ever could be a reason to do so, it is now. Thought can be given to dissolution of the tenancy agreement for the future or (temporary) alteration of the rent.

Tenancy law lawyer

As you have been able to read, not all questions can be answered unequivocally. A number of things are still uncertain. The advice is therefore to try to reach a settlement first. Also make sure you have a good record in writing of the agreements made. If this does not work out, please contact the tenancy lawyers of Leeman Verheijden Huntjens Advocaten for legal advice. They can advise you in your specific situation about which steps to take or which risks you run. If necessary, we will start court proceedings for you. The Tenancy Lawyers assist both tenants and landlords.

You can find more corona information in our helpdesk.

Terminating a commercial contract

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This article will explain in which way commercial agreements can be terminated under the Dutch Civil Code (DCC).

The general rule in the Netherlands is that there is substantial freedom of parties to enter into an agreement. There are however specific agreements such as rental agreements, employment agreements, agency agreements and franchise agreements, referred to as specific agreements in the DCC where additional rules are set out. In the event that you are contemplating the cancellation of specific commercial contracts, as referred to above, then there are specific provisions regarding termination that need to be adhered to. Furthermore, the DCC makes a distinction between compulsory law and regulatory law, meaning that if a provision in the DCC states this is compulsory law, the article in the DCC is overriding to anything agreed to between the parties by way of a contract.

In this article I will deal with the non-specific agreements as regulated within the DCC, and how these type of agreements may be ended under the DCC.

Parties may agree to terminate the legally binding commercial agreement by:

  1. Cancelling the agreement in accordance with the terms as set out in the agreement entered into between the parties. For example, this could be by way of an agreed notice period set out in the agreement. Termination is also possible, where both parties agree to terminate the agreement based on mutual consent.
  2. Contracts for a fixed term – with or without an early termination clause – are generally regulatory law, meaning there is substantial freedom to contract. Agreements such as these can be terminated in accordance with the terms of the agreement, provided they are sufficiently clear and also provided the terms are complied with.
  3. Terminating a commercial contract with an indefinite term which does not contain a provision regulating the termination of the agreement is also possible, but only in accordance with the rules set out by the Supreme Court. However, such termination may require a certain notice period based whereby there are sufficient grounds based on reasonableness and fairness that a notice period for termination is required or where damages need to be paid to compensate the non-terminating party for their loss. This can be quite tricky especially as parties need to agree on a reasonable notice period, and each party has a different interest. For example a distributor will have greater interest in a longer termination notice to compensate for the loss than the principal.
  4. Rescission, which is regulated in 6:265 DCC is also a ground for termination. Recission is where the contract is cancelled and parties are placed in the situation where the performance of the commercial contract is reversed. For example where goods have been delivered, and they are returned. However, there are situations where this is not possible and then the other party is awarded damages.  The above-mentioned article dictates that there must be a breach of the agreement, and this breach is such that it justifies recission of the agreement, so it needs to be a material breach.  The breach is such that it cannot be remedied, either temporarily or permanently or where the party is in formal breach as set out in article 6:82 and 6:83 DCC. For example when a fatal deadline has been exceeded or where the party has been notified to be in breach and has not remedied the breach within a certain time-limit. An agreement can be rescinded by obtaining judgment of the court or by way of an extra-judicial declaration of rescission. Rescission is not compulsory law and is therefore often excluded in commercial contracts, so please check the commercial contract.
  5. Revocation, which  is where parties are put in the situation as if the commercial contract had never existed. This is a strict legal principle, where the intent to enter into the agreement was not correct. Under the DCC there are four grounds for revocation of the agreement. These grounds are mistake, threat, deception and abuse of circumstances.

Damages are due and payable in the event that one of the parties is in formal breach. The DCC sets out what is considered to be damages, and this includes material loss and other loss. Contractual damages is regulated in article 6:95 to 6:106 DCC and is not compulsory law, which means that parties can deviate from this by agreement. Material breach under the DCC includes loss and loss of profits. Reasonable costs for mitigating the damages as well as reasonable costs to determine or limit damage and liability and extra-judicial legal costs to determine the damage and extra-judicial costs to exercise your rights. Furthermore, article 6:101 DCC states that in the event that the person suffering damage has contributed  to the damages due to his or her own fault, then the damages awarded may be reduced by this amount.

Legal advice on terminating international commercial agreements

Again, if your business enterprise is contemplating cancelling an existing commercial contract, the above shows you how important it is to do this correctly from a legal point of view.

If you have any questions, please feel free to contact Madelon van Breemen.

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