The Bottom Line
- High Bar for Director Liability: This ruling reinforces the high legal standard in the Netherlands for holding a supervisory director personally liable. A plaintiff must prove a “personally serious reproach”—a standard that goes far beyond simple negligence or disagreement with a board’s decisions.
- Process is Your Shield: The court found that the chairwoman’s diligent process—engaging with the complainant, questioning the executive board, and seeking separate legal advice for the supervisory board—was sufficient to meet her duty of oversight, protecting her from personal liability.
- Internal Policies Matter: The company’s internal whistleblower policy, which stipulated that complaints are not handled internally once a civil case begins, was a key factor. This underscores the importance for companies to have clear, robust, and legally sound internal procedures.
The Details
The case involved a former partner at Ernst & Young (EY) who sued the former chairwoman of the firm’s Supervisory Board in her personal capacity. The partner claimed he had made several whistleblower reports regarding alleged misconduct by another partner. He argued that these reports were mishandled, leading to unfair performance reviews, a reduction in his profit share, and ultimately the termination of his partnership. He contended that the supervisory chair failed in her oversight duties by not intervening to ensure a proper, independent investigation, and that this failure constituted a “personally serious reproach,” making her personally liable for his substantial financial damages.
The District Court of North Holland firmly rejected the claim, providing a clear reminder of the significant protection afforded to supervisory directors. The court reiterated that personal liability for a director or supervisor is not easily established. It requires proof that the individual’s conduct was so negligent that no other reasonably prudent director would have acted that way under the same circumstances. The burden of proof is high, and a simple failure to achieve a desired outcome for a third party is not enough to meet this standard.
The court’s decision hinged on the chairwoman’s actions. Evidence showed that upon receiving the complaint, she did not ignore it. Instead, she engaged in extensive correspondence with the former partner, held a meeting to hear his side of the story, and repeatedly discussed the matter with the executive board. Crucially, she sought advice from the Supervisory Board’s own legal counsel on the adequacy and independence of the internal investigation conducted by the firm. The court found that by taking these steps, she had diligently fulfilled her supervisory role. Her duty was to oversee and question the executive board, not to run the investigation herself or act as the former partner’s direct advocate. This diligent process demonstrated that no “personally serious reproach” could be made against her.
Source
Rechtbank Noord-Holland
