Limitation period in Netherlands - DLA Piper REALWORLD (2024)

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

General construction law is, in principle, governed by Dutch civil law, as codified in the Dutch Civil Code. The Dutch legislature has created a separate section in the Dutch Civil Code for a number of special agreements, including specific rules for general construction contracts.

In addition, Dutch construction law is created in detail by uniform general conditions or unilateral general conditions. For these conditions to apply, parties must explicitly or tacitly agree with these conditions.

Finally, public law lays down the rules regarding spatial planning and safety within which parties are permitted to carry out construction projects.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The Environmental & Planning Act (Omgevingswet) combines the national regulation of building law, housing law and environmental law and establishes a single procedure, a single governing all-inclusive permit for, among other things, a construction project. The activities that can be included in this one permit for the construction project as a whole, include e.g.:

• the construction works;
• an exemption from the environmental plan if the project conflicts with the zoning environmental plan;
• any demolition works;
• construction and operation of certain environmental sites/establishments;
• any felling or clearing of green areas;
• any special uses of a (monumental) building or an area; and
• many other (environmental) activities for which a permit is required.

Whether or not a specific activity must be included in this one permit depends mainly on the type of works.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The Working Conditions Act (Arbeidsomstandighedenwet) prescribes the rights and obligations of employers and employees in relation to working conditions. This legislation applies in all circumstances where works are carried out and other further (statutory) rules apply. The Act applies to the working conditions at construction sites.

The Environmental plan and Environmental Buildings Decree prescribes the minimum construction requirements that all structures in the Netherlands must meet. These requirements concern safety, health, usefulness, energy efficiency and the environment. In addition, all municipalities apply additional rules in local building regulations. These rules can therefore differ between municipalities. Additional regulations might be set at local (municipal) level via the Environment plan.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The Environment prescribes the minimum construction requirements that all structures in the Netherlands must meet and also includes several obligations – when refurbishing or construct a new building – to enhance sustainability ((i) gasless buildings; (ii) minimum of EV-charging points; (iii) use of renewable energy; and (iv) setting stricter energy-efficiency criteria). These requirements concern safety, health, usefulness, energy efficiency and the environment. In addition, all municipalities apply additional rules in local building regulations. These rules differ between municipalities.

Under the Environmental Buildings Decree for every house or building that is to be sold or let, an energy performance certificate (EPC) (describing the energy efficiency of the building) must be present. For office buildings specifically, an obligation applies to have at least and EPC label C, and per 2030 label A applies.

The Environmental & Planning Act (Wet Milieubeheer) and more specifically the Environmental Activities Decree, set in respect of the storage and disposal of waste and/or pollution.

The Environment & Planning Act also contains rules on ecology/nature (through the implementation track and associated acts on nature conservation law). These regulations act provides for protection of animal and plant species by regulating or preventing activities that (may) have significant negative effects on the flora and fauna nearby a development. The past few years, this legislation has become increasingly important in relation to the impact of nitrogen emissions due to the construction and/or operation of a property or other works and the (negative) effects thereof on (preserved) Natura 2000-areas.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

Project developers and the government usually enter into agreements regarding infrastructure and mains services. Project developers usually make monetary contributions towards the costs that the government will incur in installing mains services. A development agreement will be entered into for this purpose. As a result of net congestion in the Netherlands, we see more often that private initiatives such as setting up energy hubs are taken, so that customers can be provided with sufficient electricity from private parties instead of from public providers.

If a project also includes infrastructure works, those works are commissioned by the government. The government lays down specific rules regarding the carrying out of such works.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

There is no obligation to include specific provisions in a construction contract, but the Dutch Civil Code prescribes rules which apply by law to construction contracts. Some rules can be agreed to be not applicable, but some rules are mandatory law.

In addition, there are all kind of “NEN-standards” on all kind of topics (such as safety or , sustainability) that are generally declared applicable in the market.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

In general, Dutch construction law does not require that contracts are standardized. General conditions are often declared applicable to the contracts. These general conditions are often uniform or standardized.

The relationship between client and contractor are often made subject to the following general conditions:

• Uniform Administrative Conditions for the Execution of Works 2012 (Uniforme Administratieve Voorwaarden 2012 (UAV 2012));
• Uniform Administrative Conditions for the Execution of Works for Integrated Forms of Contracts (Uniforme Administratieve Voorwaarden voor Geïntegreerde contractvormen (UAV-GC 2005));
• Stichting Waarborgfonds Koopwoningen (SWK) and Woningborg N.V. If the builder becomes insolvent, both of these institutions provide an extra security primarily for the benefit of private individuals; and
• International forms of contract, like the FIDIC (Fédération Internationale Des Ingénieurs-Conseils) models are also used for more extensive works.

The relationship between client and architect or structural engineer is often subject to the following general conditions:

• The New Regulations 2011 (De Nieuwe Regeling 2011 (DNR 2011)); and
• Regulations Governing the Relationship between Principals and Consulting Engineers 2001 (Regeling van de Verhouding tussen Opdrachtgever en advisorend Ingenieursbureau 2001 (RVOI 2001))

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The main parties involved in a construction project are:

Client

This can be a developer or an owner.

Contractor

This is the party that carries out the works. A contractor can engage sub-contractors to meet its obligations.

Structural engineer

This is the party that has taken on the obligation to design the method of construction for the works.

Architect

This is the party that must design the works.

Construction supervisor

This is the representative of the client on the construction site. The construction supervisor inspects the works on behalf of the client.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The contractor bears the risk of the works until the moment of delivery. Generally, upon delivery of the works, a list of delivery defects, which the contractor must repair, is drawn up in a report of delivery. After delivery, a contractor is liable for defects that have not been discovered at the delivery of the works, unless such defects are not attributable to the contractor. This provision can, however, be explicitly deviated from in the event of a professional client. Depending on the general conditions or statutory regulations declared applicable, the liability of a contractor in respect of hidden defects is, under the aforementioned UAV 2012, subject to an expiry period varying from five to ten years, commencing after delivery or at the end of the defects liability period and a limitation period, pursuant the Dutch Civil Code, varying from two to twenty years after discovery of the defect. These periods generally commence after delivery or at the end of the defects liability period.

In respect of the other parties involved with a construction project, the contractor is, in principle, only responsible for carrying out the works. Generally, the client provides the contractor with the design and guarantees the design. There is an interaction between the responsibilities of these two parties in that during the performance of the works, a contractor is obliged to warn its client about obvious mistakes in the construction, working methods and/or instructions. However, it is not uncommon that the client also commissions the contractor to provide for the designing of the works. In this event, the contractor guarantees the soundness of the design.

Invoking force majeure can, in principle, only play a role during the phase prior to delivery of the works, for example, in situations involving delay and/or price increases. A situation that has recently come up is the war between Russia and Ukraine. Force majeure will not often be invoked after the works have been delivered. The phenomenon of force majeure is embedded in general civil law, which means that a contractor can, in principle, always rely on it. The circumstances of the situation will, however, affect whether the contractor will succeed in alleging force majeure, since in any case it must be established that the breach of contract cannot be attributed to the contractor.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

In the Netherlands, public-private partnerships (PPPs) are a common form of collaboration between the government and the business sector in order to realize a project jointly. They divide the duties and risks and they each retain their own responsibilities. Public-private partnerships are generally encouraged in the Netherlands.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

Construction contracts are generally concluded on the basis of a fixed price agreed in advance. Certain items are often charged for as extras after the works have been completed. Furthermore, adjustments for additional work or a reduced amount of work can be made during the project. It is however possible to agree upon a fixed price, having the constructor bearing the financial risk. If at the time the contract is entered into no price or only a guide price has been agreed on, the client must pay a reasonable price.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

Under standard general conditions it is often agreed that the contractor must adequately insure the works. Construction All Risks (CAR) insurance is common. It provides insurance against risks during the construction process. To cover its liability each party will have to take out the requisite liability insurance and business liability insurance. Additionally, the parties must also either have already taken out or obtain professional indemnity insurance, as well as fire insurance and storm and tempest insurance.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The parties can agree that additional security will be provided before the construction works can commence. This security may consist of bank guarantees, group guarantees, step-in rights, completion guarantees and, for example, deposits in escrow. All of these require the additional agreements to be entered into, as well as proof of, for example, the bank guarantee provided. A bank guarantee is a valuable document issued by a recognized banking institution, which the bank issues either to the bearer or in the name of a specified beneficiary.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

There are various ways in which payments can be structured between parties (charging net costs plus fee, fixed price, etc). The most clear-cut method is the situation in which the client pays all parties (contractor, architect, structural engineer) separately. Another possibility – particularly in respect of private housing – is that the private buyer pays the contractor who must, in turn, transfer the payment to the developer.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The parties to a construction contract usually agree on a fixed date for completion or a the number of working days on which work is possible. The delivery date can also be postponed after mutual consultation. A contractor can be held liable for delayed delivery of the works if the delay is attributable to it. In that case, the parties usually agree a penalty payable for each day that the delay continues. Such a penalty can replace the actual damages incurred by the client. However, force majeure – mostly due to the war between Russia and Ukraine – is nowadays regularly cited by the contractor causing a delayed delivery, in which case the client more often waives the contractually agreed penalties. If a penalty is not agreed on, the contractor may be liable for the damages incurred as a result of the delay.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

It is possible to make variations to the works while they are being carried out, either at the instruction of the client, or – with the client’s consent – at the instigation of the contractor. In the latter case, the design responsibility will, in principle, be borne by the contractor. Any addition to or reduction in cost as a consequence of these variations should be agreed on by the parties. Additional rules regarding these costs apply depending on the general conditions or legal regime which applies.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The Dutch Civil Code provides no criteria for completion, except that a completion file will be provided by the contractor to the client upon notification that the works are ready to be completed. This obligation is of regulatory nature and can therefore be waived by the parties. Pursuant to Dutch case law, the works have to be suitable for the envisaged use. That means that, in general, inferior defects or omissions are no reason for withholding consent with completion.

Construction works are generally deemed to be completed in accordance with a completion procedure agreed on in advance. The terms of such procedures depend on the conditions which apply to the construction contract. Often, a preliminary inspection of the works is carried out, followed shortly afterwards by the actual delivery. The delivery is effected in the presence of the parties to the contract, who will note which details must be rectified. The client will be assisted by his construction manager.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

The period of limitation or expiry period can differ between contracts. This mainly depends on which general conditions or legal regime the parties have declared applicable to the (construction) contract in question. Additionally, the parties can agree that different provisions regarding the duration of the limitation periods or their operation will apply. Limitation periods can vary from two to twenty years.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

In general, under Dutch law, it is possible to exclude or limit liability, apart from liability for intentional acts or gross negligence. A developer can exclude or limit liability to the end-user for the construction, apart from intentional acts or gross negligence. It is however likely that parties will arrange for certain guarantees or maintenance contracts to be put in place, in similar terms to those between the developer and the builder. Any construction guarantee/liability arrangement between developer and contractor may be made to apply directly to the end-user.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

Here the contractor/designer does not have a contractual relationship with the third party concerned and it can only be held liable to the third party under the general law on civil liability. Usually, a contractor’s liability to a contracting party for damage caused to third parties is either excluded or limited. Under Dutch law it is possible to exclude or limit liability, apart from liability for intentional acts or gross negligence. As it is possible to exclude or limit liability, it is common practice to do so

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

In principle, parties must, by mutual consultation, cover the (financial) risks by means of guarantees, bank guarantees or certain security rights, etc. Such guarantees, and certain security rights, can be transferable. If, as implied in the question, the parties are not in a contractual relationship with one another, possible risks for them could be covered by the actual contractual party, or by transferring a certain guarantee or security rights that the actual contractual party might have against the contractor. Sub-contractors that supply certain materials to the contractor and assemble certain components of the works often do so providing a specific guarantee. As a rule, the contractor transfers this guarantee to the client on delivery of the works. A client can also transfer such a guarantee to the actual buyer.

In the case of bankruptcy, certain guarantee funds such as Stichting Waarborgfonds Koopwoningen (SWK) and Woningborg NV can take over the obligations of the contractor vis-à-vis private buyers. This fund can cover up to a maximum of 60% of the contract price.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

In the Netherlands, disputes arising from a construction contract can be brought before either a civil-law court or an arbitration board. All Dutch courts are competent to take on construction disputes. There are no specific ‘construction courts’. Parties can agree when entering into an agreement or when a dispute arises, to settle any disputes by means of arbitration. Arbitration may be preferred over proceedings before a civil-law court, because of the expertise that arbitrators have and the speed of the proceedings. Conversely, arbitration is usually more expensive than civil-law court proceedings.

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

In the Netherlands, disputes arising from a construction contract can be brought before either a civil-law court or an arbitration board. Parties can agree, when entering into an agreement or when a dispute arises, to settle any disputes by means of arbitration. In the Netherlands, construction-related disputes are often brought before a specialised board forming part of the Arbitration Board for the Building Industry (Raad van Arbitrage in bouwgeschillen (RvA)), or before the Netherlands Arbitration Institute (Nederlands Arbitrage Instituut).

Dispute resolution by means of arbitration must, however, be expressly agreed on by the parties in writing. Generally, incorporating general conditions in the relevant contract which provide for dispute resolution by means of arbitration, will suffice. Arbitration may be preferred over civil-law court proceedings because of the expertise that arbitrators have, because a procedure is not public and because of the speed of the proceedings. Conversely, arbitration is usually more expensive than civil-law court proceedings. In principle, an arbitration award cannot be appealed (but this does not apply to the Arbitration Board for the Building Industry).

Last modified 19 Jun 2024

During what period of time following execution of a construction contract may a party to that agreement bring a claim in the courts for breach of contract?

Alternative dispute resolution, for example in the form of mediation, is on the increase in the Netherlands, however it is still rare in construction-related disputes. Apart from mediation, disputes can also be resolved on the basis of binding advice, in which case the litigants jointly appoint an expert who will deliver a (binding) judgment on the issue at hand. In short, alternative dispute resolution is possible in the Netherlands, albeit that parties do not often avail themselves of this possibility.

Last modified 19 Jun 2024