What is binding advice?

What is binding advice?

Binding advice is a form of alternative dispute resolution based on Article 7:900 of the Dutch Civil Code. This means that Dutch law must apply to the agreement. The decision of the binding advisor is binding on the parties.

Binding advice comes in two different forms: purely and impurely binding advice, or rather binding advice without a legal dispute and binding advice in a legal dispute. In the first form, the parties agree to leave the determination of their undetermined or partially determined legal relationship to a third party to whose judgement they are bound in advance. In the second form, a third party gives a binding decision on behalf of the parties in a legal dispute between them.

The NAI offers both forms of binding advice: the NAI Binding Advice Rules offer non-purely binding advice and, through the NAI Rules for the appointment of a binding advisor in ad hoc procedures, a binding advisor can be appointed who gives both purely binding advice and non-purely binding advice.

Would you like to read more about what binding advice is? Pauline Ernste’s thesis on binding advice is available online via this link.