THE BOTTOM LINE
- Founder Liability Risk: This decision underscores that founders and key shareholders can be personally pulled into corporate legal battles, particularly when their actions are central to an alleged breach of contract.
- Litigation Efficiency: The Netherlands Commercial Court (NCC) shows a strong preference for procedural economy, allowing related claims against different parties—the company and its owners—to be combined into a single, streamlined case.
- Consent is Crucial: The founders’ voluntary acceptance of the NCC’s jurisdiction and the use of English was a key factor. For international disputes, securing consent can bypass complex jurisdictional challenges and accelerate proceedings.
THE DETAILS
The dispute began as a contractual conflict between a South Korean corporation, CJ Cheiljedang Corporation (CJ), and a Dutch company, Batavia Biopharma B.V. (BBP), concerning a Shareholders Agreement. During the proceedings, CJ filed a counterclaim against BBP and sought to expand the scope of the litigation. CJ filed a motion to add BBP’s individual founders as defendants, aiming to hold them personally liable for alleged breaches of the same agreement. This strategic move sought to target the individuals behind the corporate entity directly within the existing legal action.
The legal basis for CJ’s request was Article 118 of the Dutch Code of Civil Procedure, a provision that allows a party to summon a third party into ongoing proceedings. The core requirements for such a joinder are that the new claim is sufficiently related to the original dispute and that combining the cases serves procedural efficiency. The Amsterdam District Court, sitting as the Netherlands Commercial Court, found that CJ’s intended claim against the founders was based on the same or very similar grounds as its counterclaim against BBP, satisfying the legal test for relatedness.
Ultimately, the court’s decision was greatly simplified by the actions of the parties involved. While BBP initially objected to the motion, it later withdrew its opposition. Critically, the founders themselves provided written consent, explicitly accepting the jurisdiction of the Netherlands Commercial Court and agreeing that English would be the language of the proceedings. This removed any potential procedural roadblocks, allowing the court to grant the motion in the interest of resolving all connected aspects of the dispute in one forum.
SOURCE
Netherlands Commercial Court, Amsterdam District Court
