What is binding advice (bindend advies) under Dutch law?

Dutch term: Bindend advies | Legal basis: Article 7:900 BW

Binding advice (bindend advies) is a form of alternative dispute resolution under Dutch law in which the parties agree to be bound by the decision of a third party who is not an arbitrator. The legal basis is the settlement agreement provisions of article 7:900 of the Dutch Civil Code.

Unlike arbitration, binding advice does not produce an enforceable award. If the losing party refuses to comply, the winning party must go to court to enforce it. However, the court will respect the binding advice unless it is manifestly unreasonable or violates public policy. Binding advice is faster and more informal than arbitration, and is commonly used in industry-specific dispute resolution schemes.

Why it matters for international businesses

For international businesses, binding advice can be a cost-effective alternative to formal arbitration for smaller or less complex disputes. The key trade-off is the lack of direct enforceability compared to an arbitral award under the New York Convention.