Litigating against a contracting party is often a major but sometimes necessary step for entrepreneurs. When a contracting party fails to honour agreements, this can lead to financial loss, uncertainty and disruption of business operations. In this article you will read when litigating against a contracting party is sensible, which legal steps you can take and how to increase your chances.
When is litigating against a contracting party appropriate?
There is litigating against a contracting party when negotiations and extrajudicial solutions do not produce results. This occurs, for example, in cases of:
- non-payment of invoices despite repeated reminders;
- systematic breach of contract;
- refusal to deliver agreed performances;
- disputes about interpretation or performance of the contract;
- urgent situations requiring immediate action.
Breach of contract and liability
In litigating against a contracting party, breach of contract is central. A party that does not comply with its obligations may be liable for the damage caused. Liability generally requires that:
- there is a valid agreement;
- the contracting party is in default;
- the default is attributable;
- damage has been suffered;
- there is a causal link.
Litigating against a contracting party: the step-by-step plan
Step 1: Legal analysis of the contract
A successful proceeding starts with a thorough analysis of the contract, the general terms and conditions and the factual course of events. In litigating against a contracting party this is decisive for the strategy.
Step 2: Notice of default (ingebrekestelling)
In many cases a written notice of default (ingebrekestelling) is required. This gives the contracting party a final opportunity to comply. This strengthens your position when litigating against a contracting party. (Note: an ingebrekestelling is a formal Dutch legal notice putting a party in default.)
Step 3: Extrajudicial phase
Prior to proceedings an extrajudicial phase can be initiated. This can lead to a settlement without the intervention of the court and saves time and costs.
Step 4: Choice of procedure
When litigating against a contracting party you can choose different procedures:
- Kort geding (summary proceedings) in cases of urgent interest;
- full (merits) proceedings for a definitive ruling;
- incidental procedures (e.g. evidence or provisional measures).
Step 5: Judgment and enforcement
After a favourable judgment the decision can be enforced. Think of attachment of bank accounts or assets. This makes litigating against a contracting party effective when voluntary compliance fails.
Summary proceedings (kort geding) or full (merits) proceedings?
An important choice when litigating against a contracting party is whether a kort geding suffices or whether full (merits) proceedings are necessary. A kort geding is faster but leads to a provisional decision. A merits procedure takes longer but provides definitive legal certainty.
Evidentiary position in contract disputes
The evidentiary position is crucial. When litigating against a contracting party, the following are important:
- the written contract and annexes;
- correspondence (e-mail, messages);
- invoices and proof of payment;
- proof of delivery or performance;
- witness statements.
When is litigation pointless?
Not every case is suitable for litigation. In practice we see that litigating against a contracting party is less sensible when:
- the counterparty has no assets to recover from;
- the claim is almost time-barred (approaching the statute of limitations);
- the evidentiary position is weak;
- the costs do not outweigh the interest.
International contract disputes
Even for international contracts it may be possible to litigate against a contracting party in the Netherlands, for example when the counterparty is established here or Dutch law applies.
General information about contractual disputes can be found via the Chamber of Commerce.
What can Arslan Advocaten do for you?
Arslan Advocaten assists entrepreneurs with litigating against a contracting party. We assess your legal position, determine the correct litigation strategy and represent you in proceedings, both nationally and internationally.
Also read more about our expertise in business law, debt collection and payment disputes and international commercial disputes.
Costs and litigation funding in commercial disputes
In business disputes we generally do not work on the basis of free legal aid. Corporate/business law proceedings require a careful legal and strategic approach.
That does not, however, mean that you have to bear the costs yourself. In many commercial disputes it is possible to make use of litigation funding (procesfinanciering).
We collaborate with an independent litigation funder (procesfinancier) who – after a substantive assessment of your case – may decide to pay all litigation costs. This includes, among other things:
- attorney’s fees;
- the court fee (griffierecht);
- any costs of experts;
- court costs during appeal.
If litigation funding is granted, you as a client do not have to pay these costs yourself. The litigation funder bears the financial risk of the proceedings.
The litigation funder receives compensation only in the event of a positive outcome, for example from (a portion of) the proceeds of the case. For you this means that litigation is possible without having to incur costs beforehand or during the proceedings.
Litigation funding is particularly suitable for commercial disputes with:
- a clear legal claim;
- sufficient financial magnitude;
- a realistic chance of recovery from the counterparty.
We always first assess whether your case is suitable for litigation funding and discuss this transparently with you.
About the author
This article was written by Onur Arslan, lawyer and founder of Arslan Advocaten. He specialises in commercial disputes, including contract disputes, debt collection and international proceedings.
Would you like to discuss whether your contract dispute is suitable for legal action or litigation funding?
👉 View Onur Arslan’s profile and contact him directly.
Also read
- Debt collection in bankruptcy: when is it still worthwhile for entrepreneurs?
- Conflict with a business partner: what can you do when the collaboration breaks down?
- Bankruptcy of a contracting party: what are your rights as an entrepreneur?
Frequently asked questions
When is it necessary to litigate against a contracting party?
Litigation is necessary when negotiations and extrajudicial solutions do not produce results, for example in cases of non-payment, breach of contract or refusal to perform. Legal steps are often also necessary in urgent situations.
What is the importance of a notice of default (ingebrekestelling) in proceedings against a contracting party?
A notice of default gives the contracting party a final opportunity to comply and strengthens your position before you start court proceedings. It is often a requirement for initiating a lawsuit.
Which legal procedures are possible when litigating against a contracting party?
You can choose a kort geding for urgent matters, full (merits) proceedings for a definitive ruling, or incidental procedures such as evidence proceedings or provisional measures. The choice depends on the situation and urgency.
What is the difference between a kort geding and full (merits) proceedings?
A kort geding is faster and provides a provisional decision, suitable for urgent matters, whereas full (merits) proceedings take longer but ultimately provide a definitive judgment. The choice depends on the situation and the desired legal certainty.
