Dutch Supreme Court clarifies requirements for preliminary witness hearings

Preliminary witness hearings

Under Dutch civil procedural law, any party in a proceeding whose statements have been challenged by another party, may request the judge to hear witnesses, if those statements can have a decisive impact on the outcome of the case. In some cases, it might also be useful to hear a witness prior to proceedings. For example, when a party's chances in court largely depend on the statements of a witness, it may be relevant to hear what that witness has to say, before initiating the proceedings on the merits. In that case, the party may request the court to examine the witness in a preliminary hearing.
 
Proof of contract

In the case at hand, the petitioner has had a long-standing business relation with the defendant. The petitioner had been active as director and counsel of several companies of the defendant.
 
In 2005, a company of which the petitioner was the director bought four seagoing vessels from a Turkish company. This transaction was financed by a USD 42.5 mln. secured loan from the defendant. Part of this transaction, the petitioner claimed, was that the defendant would pay a compensation of USD 75,000 and USD 45,000 each month to the petitioner, until the exploitation of the vessels would become profitable. However, in 2008, at the instigation of the defendant the Turkish company repurchased the vessels, leaving the petitioner empty-handed.
 
In 2010, a meeting took place between the petitioner and two supervisory directors of the defendant. During this meeting, one of the supervisory directors made some handwritten notes (in Turkish). The petitioner managed to obtain these notes and submitted them (including an English translation) to court. The petitioner argued that these notes proved that there was an agreement on the compensation that the petitioner claimed to be entitled to. The petitioner argued that by disrupting the transaction and de facto inducing the Turkish company to buy back the vessels, the defendant breached its contractual obligations towards the petitioner and therefore was liable for the petitioner's damages.
 
Court of Appeal

The petitioner filed a request for a preliminary witness hearing of the supervisory directors during the 2010-meeting. By this preliminary hearing, the petitioner intended to examine whether it could be sufficiently proved that the (alleged) contract between him and the defendant had been concluded.
 
Both the District Court of Amsterdam and the Court of Appeal of Amsterdam denied the petitioner's request. The Court of Appeal ruled that the preliminary witness hearing can take place only, if the challenged statements concerned could have a decisive effect on the outcome of potential proceedings on the merits. As the defendant did not explicitly challenge the legitimacy of the handwritten note, the Court of Appeal ruled that there was no reason to summon and examine the witnesses. The mere fact that the defendant challenged the deductions made by the petitioner and the petitioner's right to any compensation, were not enough.
 
Moreover, the Court of Appeal ruled that any potential question asked to the supervisory directors on the long-standing business relation between the petitioner and the defendant, could not – in proceedings on the merits – lead to the conclusion that a contract had been concluded, because the supervisory directors were not competent to represent the defendant. The Court of Appeal therefore ruled that the petitioner had insufficient interest in the preliminary witness hearing and denied the request.
 
Supreme Court

The Supreme Court started by setting out that the aim of preliminary witness hearings is to enable parties to better estimate their chances in potential future proceedings on the merits. Therefore, it is not required that the petitioner argues and substantiates which facts and arguments he wants to use in the proceedings on the merits, nor does he have to the elaborate on the exact extent of his damages, in order to successfully request the preliminary hearing.
 
According to the Supreme Court, a request for a preliminary hearing may only be denied, if (i.) there is an abuse of power, (ii.) the request would be contrary to the principles of due process law, (iii.) there would be a substantial reason to deny the request, or (iv.) the petitioner would have insufficient interest in the preliminary hearing.
 
The Supreme Court ruled that none of these exceptions were applicable. Just because the defendant had not challenged yet that there was a contract with the petitioner, does not mean that it could not challenge the contract at a later stage in the proceedings. In addition, the Supreme Court held that preliminary hearings may also be used for better understanding the context in which a contract was concluded. That context on its turn could have a decisive impact on the outcome of the proceedings on the merits.
 
The Supreme Court therefore ruled that the Court of Appeal's interpretation of the requirements for preliminary witness hearings was too strict and set aside the Court of Appeal's verdict.
 
Feel free to reach out to Marcel Willems and Mathijs van Riet should you have any questions on this subject.