What is an escrow arrangement under Dutch law?

Dutch term: Escrow | Legal basis: Freedom of contract + notarial practice

An escrow arrangement under Dutch law involves a third party (the escrow agent) holding funds, documents or other assets on behalf of the contracting parties, releasing them when specified conditions are met. Escrow is not a specific statutory contract type under Dutch law; it is structured through the general rules on mandate (opdracht, article 7:400 BW) or bailment (bewaarneming, article 7:600 BW).

Common uses include purchase price escrow in M&A transactions, source code escrow for software licensing, earnout escrow, and construction retention escrow. Dutch civil-law notaries frequently serve as escrow agents for transactional funds, providing a regulated and trusted holding structure. The escrow agreement should clearly define the release conditions, the parties' rights, the agent's duties and fees, and the consequences of disputes about release.

Why it matters for international businesses

For cross-border transactions involving Dutch parties, a notarial escrow provides a high level of security because the notary is professionally regulated and insured.