Litigating against a contracting party is often a far-reaching but sometimes necessary step for entrepreneurs. When a contracting party fails to fulfil agreements, this can lead to financial damage, uncertainty and disruption of business operations. In this article, you will read when litigating against a contracting party is worthwhile, which legal steps you can take and how to increase your chances.
When Is Litigating Against a Contracting Party Appropriate?
Litigating against a contracting party is appropriate when negotiations and out-of-court solutions do not yield results. This occurs, for example, in the case of:
- non-payment of invoices despite repeated reminders;
- structural breach of contract;
- refusal to deliver agreed-upon services;
- disputes about the 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 fails to fulfil its obligations may be liable for the resulting damage. For liability, the following is generally required:
- a valid agreement exists;
- the contracting party is in default;
- the default is attributable;
- damage has been suffered;
- there is a causal connection.
Litigating Against a Contracting Party: The Step-by-Step Plan
Step 1: Legal Analysis of the Contract
A successful procedure begins with a thorough analysis of the contract, the general terms and conditions and the factual circumstances. In litigating against a contracting party, this determines the strategy.
Step 2: Notice of Default
In many cases, a written notice of default is required. This gives the contracting party a final opportunity to still fulfil its obligations. This strengthens your position in litigating against a contracting party.
Step 3: Out-of-Court Phase
Prior to proceedings, an out-of-court phase may be initiated. This can lead to a settlement without court intervention and saves time and costs.
Step 4: Choice of Procedure
When litigating against a contracting party, various procedures can be chosen:
- Summary proceedings (kort geding) in case of urgent interest;
- Proceedings on the merits (bodemprocedure) for a definitive ruling;
- interlocutory proceedings (e.g. evidence or provisional measures).
Step 5: Judgment and Enforcement
After a favourable judgment, the ruling can be enforced. Think of attachment on bank accounts or assets. This makes litigating against a contracting party effective when voluntary compliance is not forthcoming.
Summary Proceedings or Proceedings on the Merits?
An important choice in litigating against a contracting party is whether summary proceedings suffice or whether proceedings on the merits are necessary. Summary proceedings are faster but lead to a provisional decision. Proceedings on the merits take longer but offer definitive legal certainty.
Evidentiary Position in Contract Disputes
The evidentiary position is crucial. In litigating against a contracting party, the following are important, among others:
- the written contract and annexes;
- correspondence (email, messages);
- invoices and payment receipts;
- proof of delivery or performance;
- witness statements.
When Does Litigation Not Make Sense?
Not every case is suitable for litigation. In practice, we find that litigating against a contracting party is less worthwhile when:
- the opposing party has no assets to recover from;
- the claim is nearly time-barred;
- the evidentiary position is weak;
- the costs do not outweigh the interest.
International Contract Disputes
Also in international contracts, litigating against a contracting party in the Netherlands may be possible, for example when the opposing party is established here or Dutch law applies.
General information about contractual disputes can be found at the Chamber of Commerce (KvK).
What Can Arslan Advocaten Do for You?
Arslan Advocaten assists entrepreneurs in litigating against a contracting party. We assess your legal position, determine the appropriate litigation strategy and represent you in proceedings, both nationally and internationally.
Read more about our expertise in business law, debt collection and payment disputes and international trade disputes.
Costs and Litigation Funding in Business Disputes
In business disputes, we work in principle not on a no cure, no pay basis. Business law proceedings require a careful legal and strategic approach.
However, this does not mean you have to bear the costs yourself. In many business disputes, it is possible to make use of litigation funding.
We work together with an independent litigation funder who — after a substantive assessment of your case — may decide to pay all litigation costs. This includes, among others:
- lawyer's fees;
- court fees;
- any expert costs;
- litigation 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 only receives a fee in the event of a positive result, for example from (part of) the proceeds of the case. For you, this means that litigation is possible without having to incur costs in advance or during the proceedings.
Litigation funding is particularly suitable for business disputes with:
- a clear legal case;
- sufficient financial magnitude;
- a realistic chance of recovery from the opposing party.
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 business 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?