ICC Decision Tree
Choosing the right dispute resolution mechanism for your contract is an important decision. This decision tree will help you determine whether arbitration or litigation is better suited for your specific situation. Various factors, such as the location of your counterparty, enforcement considerations, confidentiality, flexibility, and costs, play a role in this decision. By answering the following questions, you will receive an indication of which method may be most appropriate for your contract.
Question 1
When including a dispute resolution clause in a contract, you have the choice between arbitration and litigation before the state courts. A relevant factor to make the choice is whether your counterparty is located in the Netherlands.
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Is your counterparty based in the Netherlands?
If you answer this question with yes, the Dutch courts will usually have jurisdiction, even without a choice of forum clause for the Dutch courts. You are now referred to question 7 to find out whether there may be factors to make you want to choose for arbitration.
If you answer this question with no, it is important where your counterparty is located. You are referred to question 2.
Question 2
When your counterparty is located outside the Netherlands, it is relevant whether this party is located within or outside the EU.
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Is your counterparty based in the EU?
If your counterparty is located in the EU, a judgment from a Dutch court may be recognised and enforced easily in the country of your counterparty and a judgment rendered by a court of your counterparty’s country may also be easily recognised and enforced in the Netherlands. You are now referred to question 3.
If your counterparty is not located in the EU, a judgment from a Dutch court may not be recognised and enforced easily in the location of your counterparty and a judgment rendered by a court of your counterparty’s residence may not be easily recognised and enforced in the Netherlands either, depending on where your counterparty is located. You are now referred to question 4.
Question 3
When your counterparty is located in the EU, the question arises whether you have objections against litigating before the court of the country of your counterparty in case of a dispute.
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If your counterparty is located in the EU, do you mind whether you have to litigate before a Dutch court or the court of the country of your counterparty?
In case you mind litigating abroad and your counterparty does not wish to agree to litigation before the Dutch courts, arbitration may be an agreeable alternative. In case of arbitration, the dispute could be heard in a neutral location, by a neutral tribunal in the English language (or any other language the parties prefer). You are now referred to question 6.
In case you do not have a strong preference where to litigate, you are referred to question 7 to see whether there are others reasons to choose for arbitration.
Question 4
If your counterparty is located outside the EU, it is relevant whether your counterparty is located in either Iceland, Norway, Switzerland, Mexico, Singapore or the United Kingdom.
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Is your counterparty located in any of the aforementioned jurisdictions?
In case your counterparty is located in one of the aforementioned jurisdictions, a judgment from a Dutch court may be recognised and enforced easily in the location of your counterparty and a judgment rendered by a court of your counterparty’s residence may also be easily recognised and enforced in the Netherlands. You will now be referred to question 5.
In case your counterparty is not located in one of the aforementioned jurisdictions, a judgment from a Dutch court may not be (easily) recognised and enforced in the location of your counterparty and a judgment rendered by a court of your counterparty’s residence may also not be easily recognised and enforced in the Netherlands. An arbitral award, on the other hand, may be easily recognised and enforced in the country of your counterparty under the New York Convention. There are more than 170 countries party to this convention. You will now be referred to question 6.
Question 5
When your counterparty is located in Iceland, Norway, Switzerland Mexico, Singapore or the United Kingdom [add states], the question arises whether you mind litigating before the court of the country of your counterparty should it come to a dispute.
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If your counterparty is located in one of the aforementioned states, do you mind whether you have to litigate before a Dutch court or the court of the country of your counterparty?
In case you mind to litigate abroad and your counterparty does not want to agree to litigation before the Dutch courts, arbitration may be an agreeable alternative, where the dispute could be heard in a neutral location, by a neutral tribunal in the English language (or any other language the parties prefer). You are now referred to question 6.
In case you would not mind to litigate abroad, you are referred to question 7 to see whether there are other reasons to choose for arbitration.
Question 6
In most, if not all jurisdictions, court proceedings are in principle public and judgments are published. In some jurisdictions, the court file is also public. Arbitration is generally considered to be confidential. Hearings are in any case not open to the public and arbitral awards do not have to be published.
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Is it important for you that a dispute that may arise with your counterparty is treated as confidential?
In case you prefer your dispute to be treated as confidential, this may be a reason to opt for arbitration. If you choose ICC arbitration, it is advised to stipulate in your arbitration clause that the award is not to be published. Follow the link to find more about The ICC Model Clause.
In case you do not mind that the hearing is open to the public and that the judgment or award is published, you could also choose for litigation before the state courts, save if there are other reasons to choose for arbitration. You could explore this further with the next questions.
Question 7
Court proceedings usually take place in accordance with strict procedural rules, with limited options to amend the procedure to the wishes of the parties. Arbitration, on the other hand, gives the parties more flexibility and the arbitration could potentially be tailored to meet the requirements of the case and the wishes of the parties.
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Is it important for you that you could possibly have more influence over the manner in which the proceedings are conducted?
If it is important for you that you could possibly have more influence over the manner in which the proceedings are conducted, arbitration may be interesting for you.
If it is not important for you to have more influence over the manner in which the proceedings are conducted, you could also choose for litigation before the state courts, save if there are other reasons to choose for arbitration. You could explore this further with the next questions.
Question 8
When you opt for arbitration, there is generally no possibility to appeal the decision of the tribunal; the arbitral decision is final and binding on the parties. In case of court litigation, there is generally an option to appeal the decision of the court of first instance (most certainly in the Netherlands, although not necessarily in the same way in other jurisdictions) and cassation proceedings may also be possible.
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Is it important for you that appeal is excluded?
​In case you wish to exclude the option of appeal, it may make sense to choose for arbitration. However, please note that there may exist the option to challenge an arbitral award in setting aside proceedings before the state courts, but the scope of these proceedings is much more limited than the scope of a regular appeal.
In case you wish there is an option of appeal, we could understand you choose for court litigation, although appeal could sometimes also be agreed upon for arbitration.
Question 9
When you litigate before the state courts, you usually litigate in the language of the country of the court, e.g., French before the French courts, or Dutch before the Dutch courts. In arbitration, the parties can choose the language of the proceedings. English is often chosen, but that is not required.
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Is it important for you that the proceedings can be conducted in a language that is understandable to all parties?
If you wish that the proceedings can be conducted in a language that is understandable to all parties, it may make sense to choose for arbitration, although in some jurisdictions, state court proceedings could also take place in English.
If you do not mind the language of the proceedings, you could opt for state court proceedings.
Question 10
In case you opt for arbitration, an administrative fee must usually be paid if the arbitration is administered by an arbitration institute (such as the ICC), and the claimant (and in case of ICC arbitration also the respondent) should pay an advance for costs of among others the arbitrator or arbitrators. The advance that must be paid depends in most cases on the amount in dispute.
​In case of court litigation, the parties do not have to pay the costs of the judges, just registration (court) fees, which are relatively low in the Netherlands, but may be relatively high in other jurisdictions.
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Are you willing to accept to pay an advance for costs at the beginning of the proceedings?
In case you do not mind to pay the said advance on costs, there is nothing that prevents you from choosing for arbitration. Should you ultimately prevail in the arbitration and should the tribunal thus decide in your favour, it is likely that your counterparty must bear the costs of the arbitration and must reimburse to you the advance you paid.
In case you do not want to pay the said advance, but just registration fees, you may wish to choose for state court litigation.
Question 11
In case of state court proceedings, at least in the Netherlands, often only a fraction of your actual legal costs are reimbursed if you prevail. In case of arbitration, this is not necessarily the case and your counterparty may be ordered to compensate all your legal costs, assuming these are reasonable. Of course, should you lose, you may also be ordered to pay your counterparty’s reasonable costs.
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Is it important for you that your legal costs can be compensated and do you accept that you could be ordered to pay your counterparty’s legal costs if you do not prevail on the merits?
If this is important for you, this may be a reason to choose for arbitration, or to include such an arrangement in your contract.
If this is not important, or if you mind to compensate your counterparty’s costs, this may be a reason to opt for litigation before the state courts.
Thank you for the participation!
Based on the answers you provided, it appears that Arbitration may be the most suitable dispute resolution mechanism for your contract. However, this decision tree serves as a general guide only and does not constitute legal advice. We strongly recommend consulting with a legal professional, especially if you're surprised by the output, to review your specific circumstances and ensure the best approach for your contract.
Thank you for the participation!
Based on the answers you provided, it appears that Litigation may be the most suitable dispute resolution mechanism for your contract. However, this decision tree serves as a general guide only and does not constitute legal advice. We strongly recommend consulting with a legal professional, especially if you're surprised by the output, to review your specific circumstances and ensure the best approach for your contract.