Advantages of binding advice
Companies choose binding advice to resolve business disputes because of the following advantages:
- Confidentiality: Safeguarding sensitive business information, such as trade secrets and intellectual property, and protecting reputation.
- Speed: Efficiently resolving a business dispute in one year instead of years of litigation in court. Binding advice can lead to an even faster resolution of a dispute than arbitration because the procedure can be less formal.
- Lower total costs: Save on legal fees because the dispute is resolved in one go and there is no appeal.
- Customised: Procedures tailored to the parties and the dispute.
- Reimbursement of legal costs: Protection against futile claims and full reimbursement of reasonable legal costs for the winning party.
- Expertise: Disputes are settled by expert binding advisers with relevant expertise.
- Flexible: Unlike arbitration, binding advice is not subject to any formal legal rules. This allows for more flexibility in the procedure.
When is binding advice less suitable or not suitable?
In some cases, there are indications that binding advice is not or less suitable for resolving the dispute:
- If it is likely that the other party will not comply with the binding advice, an (arbitral) award is more practical. In most cases, if a party fails to comply with binding advice, it will have to initiate legal proceedings before the national court to enforce the obligations arising from the binding advice. This is a procedure that costs extra time and money. An (arbitral) award has enforceable title, whether or not after leave to enforce.
- If one of the parties is established outside the EU and/or assets are located outside the EU. An arbitral award can be enforced in more than 140 countries through the New York Convention. A binding opinion must first be enforced by the national court and can then be enforced in all EU Member States, except Denmark, through the EEX Regulation.
- When the substantive applicable law is not Dutch law.
