> NAI Binding advice > What is binding advice

What is binding advice?

Binding advice is a procedure in which binding advisors determine what applies between the parties at law, in order to prevent any uncertainty or to end an existing or future dispute. The NAI offers fast and effective proceedings. Average NAI binding advice proceedings take approximately nine months. Binding advice replaces proceedings before the court.

The binding advice agreement

A binding advice agreement is required if one is to submit a dispute to binding advisors for settlement. This binding advice agreement may be included in a binding advice clause of a contract. In that clause, the parties agree to submit any future disputes or uncertainties to binding advice. The Netherlands Arbitration Institute has created a recommended clause for this purpose. Its wording has proven in practice to cause the least amount of difficulties. If a dispute arises and the parties have not yet arranged for binding advice, they may do so as yet. The binding advice agreement is then laid down in a submission agreement. As an independent foundation, the NAI administers binding advice proceedings for the parties. The NAI may only perform this task if the binding advice agreement refers to the NAI Binding Advice Rules.

Advantages

The key advantages resulting from inclusion of the NAI binding advice clause in an agreement are as follows:

• Binding advice has already been agreed before any uncertainty or dispute has arisen.
• Binding advice proceedings are conducted in a way that is clear and acceptable to all parties.
• The parties may make arrangements among themselves regarding the language of the binding advice, the number of binding advisors, the manner in which binding advisors will be appointed, and the time-limits involved.
• The binding advice clause can be included in both national and international agreements.
• Binding advice is given by expert, fully impartial and independent binding advisors.
• The administration of binding advice proceedings is handled by a solid and professional institute with over 65 years of experience.
• The Netherlands Arbitration Institute is impartial, independent and non-profit.
• The binding advice proceedings are conducted on a confidential basis and is not public.
• All binding advice proceedings are customised. The parties are given ample time to present their points of view, also at a hearing.
• Binding advice proceedings are often faster than proceedings before the court and less formal.
• Parties often go on doing business with each other even while the binding advice proceedings are taking place.

Administration / NAI's role

An important task of the Netherlands Arbitration Institute is to administer binding advice proceedings. The NAI monitors the binding advice proceedings from the moment that proceedings are commenced until the binding advice is given and sent to the parties. The NAI’s lawyers specialise in the fields of binding advice. Independence and confidentiality are important factors. For example, the NAI, as an independent administering body, would never discuss the content of a case. Binding advices given by NAI’s binding advisors are not made available to third parties for inspection, nor does the NAI provide third parties with information on binding advice proceedings that are or have been pending. Redacted binding advice is sometimes published in the Tijdschrift voor Arbitrage arbitration journal, provided that the parties do not object. The NAI is a non-profit foundation.

Costs

Since all proceedings are customised, it is not possible to provide a detailed cost estimate in advance. The total costs of binding advice proceedings comprise the following elements:

• Binding advisor fee: a variable amount based on the length of, financial interest in and complexity of the case, fixed at an hourly rate. This hourly rate is agreed by the Netherlands Arbitration Institute and the binding advisor upon confirmation of his appointment, pursuant to the guidelines set by the Executive Board. As a rule of thumb, if three binding advisors settle a dispute, this will roughly involve two and a half times the costs of having one binding advisor do so. The applicable hourly rates in binding advice proceedings commenced before 15 February 2022, can be found here.
• Other costs which the binding advisor deems necessary, like costs of witnesses.
• The costs of the binding advisor(s), which include the costs of a hearing room and travel expenses, the costs of a secretary, an expert and/or an interpreter.
• A deposit is requested to compensate the fees and disbursements of the binding advisor.
• The NAI’s administration costs: the amount due is calculated on the basis of the financial interest of the claim or counterclaim. Please refer to the cost calculator here to calculate the specific amount due.
• The costs of legal assistance: this may be applicable. However, legal representation is not compulsory in NAI binding advice proceedings.