Governing law and jurisdiction clauses explained for Dutch contracts
Governing law and jurisdiction are two different clauses with two different purposes. Getting them right in your contract matters.
What's the difference between governing law and jurisdiction?
A governing law clause determines which country's law applies to a contract, while a jurisdiction clause determines which court hears disputes; within the EU this is generally governed by the Brussels I bis Regulation, with mandatory consumer protections.
Governing law and jurisdiction clauses are often confused, but they answer two different questions. Governing law determines which country's substantive law is used to decide the contract, while jurisdiction determines which court has the authority to hear a dispute about it. Within the EU, the Brussels I bis Regulation generally governs which court has jurisdiction in cross-border business disputes, and allows parties to agree on a specific court, either on an exclusive or non-exclusive basis.
For consumer contracts, mandatory rules generally protect the consumer's right to sue, and be sued, in their own country's courts, regardless of what the jurisdiction clause says. Arbitration is also a valid alternative to court jurisdiction, if that fits your situation better. At EenvoudigRecht, we draft documents in English with these clauses correctly structured, for a fixed price.
Veelgestelde vragen
What's the difference between a governing law clause and a jurisdiction clause?
Governing law determines which country's substantive law is used to interpret and decide the contract, while jurisdiction determines which court has the authority to hear a dispute. They're often confused, but you can, for example, choose Dutch law with a French court, though that's rarely practical.
How is jurisdiction determined for cross-border disputes within the EU?
Within the EU, the Brussels I bis Regulation generally governs which court has jurisdiction in cross-border civil and commercial disputes, and it allows parties to agree on a specific court through a jurisdiction clause in most business-to-business contracts.
What's the difference between exclusive and non-exclusive jurisdiction?
An exclusive jurisdiction clause means only the named court can hear disputes, while a non-exclusive clause allows that court but doesn't rule out others. Exclusive clauses give more certainty but less flexibility if circumstances change.
Can I choose a jurisdiction clause that overrides consumer protection?
For consumer contracts, mandatory rules under the Brussels I bis Regulation generally protect the consumer's right to sue, and be sued, in their own country's courts, regardless of a jurisdiction clause naming a different country.
Can I choose arbitration instead of a Dutch court?
Yes, that's a valid alternative to court jurisdiction. An arbitration clause replaces court jurisdiction with private arbitration, which can offer more confidentiality and, in some cases, faster resolution, though it comes with its own costs and procedural considerations.
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