What is an NDA?
A non-disclosure agreement (NDA; Dutch: geheimhoudingsovereenkomst) is binding under Dutch law once the parties agree on it by offer and acceptance (Article 6:217 Dutch Civil Code). It sets out which information is confidential, how it may be used and for how long. A penalty clause is allowed, but a court can reduce the penalty (Article 6:94). Trade secrets also have statutory protection.
Our Dutch contract attorney explains the most important aspects of an NDA under Dutch law: what it should contain, how penalty clauses work, how trade secrets are protected and how you enforce an NDA.
An NDA is used when one party shares confidential information with another: during negotiations, a joint venture, an investment, the sale of a business or in an employment relationship. “Non-disclosure agreement” and “confidentiality agreement” mean the same thing. In Dutch, a geheimhoudingsovereenkomst is usually signed by both parties; a geheimhoudingsverklaring is often signed by the receiving party only. Unless the law provides otherwise, Dutch law does not require a specific form (Article 3:37(1) DCC), but a written and signed NDA makes it much easier to prove what was agreed.
Why is an NDA important under Dutch law?
Under Dutch contract law, an NDA binds the parties to what they agreed. A fixed penalty for a breach only applies if the NDA contains a penalty clause (boetebeding, Article 6:91 DCC). An NDA also helps to show that you took reasonable measures to keep information secret, which is one of the conditions for protection as a trade secret (Article 1 Trade Secrets Protection Act).
It allows parties to share valuable information with less risk of it reaching competitors or the public. If a breach occurs, the other party can ask the court to order the breaching party to stop (Article 3:296 DCC), and can claim damages for an attributable failure (Article 6:74 DCC) or the agreed penalty.
How can you ensure your NDA is enforceable under Dutch law?
To maximize its enforceability under Dutch contract law, an NDA should be clearly written and suited to the specific circumstances of the parties and the information it intends to protect.
Key elements include a precise definition of what is deemed confidential, the scope of the confidentiality obligation, and any exclusions from such obligations. It is essential to balance the legal rigor required to protect interests with the need for clarity, so all parties understand their obligations and rights under the agreement. For best practices, consulting with a legal expert specializing in Dutch law is highly advisable.
What should an NDA under Dutch law contain?
Dutch law does not prescribe a fixed content for an NDA. The parties are largely free to agree what they want, within the limits of mandatory law and reasonableness and fairness (Article 6:248 DCC). The points below are drafting recommendations, not statutory requirements.
In practice, a good NDA defines what counts as confidential information, identifies the parties bound by it and specifies how the information may be used. It also states how long confidentiality must be maintained; this may extend beyond the end of the cooperation. The most important points:
1. Partner Considerations
In practice, consider carefully who the counterparty is: identify the formal contracting party, define to whom the information may be passed on, and consider including liability provisions.
2. Clarifying Objectives
Defining the purpose of the NDA sets the stage for its enforceability. It is essential to spell out the scope of information exchange and restrict its use to specific objectives, safeguarding against misuse or unauthorized disclosure.
3. Reciprocity in Obligations in an NDA under Dutch law
Many NDAs are one-way: only one party discloses information. If both parties share information, a mutual NDA with the same obligations for both parties is usually more appropriate.
4. Definition of Confidentiality
Precise delineation of what constitutes confidential information is vital. Clear definitions minimize ambiguity, averting disputes over information classification and unauthorized disclosures.
5. Duration and Termination Policies
Dutch law does not set a fixed term for an NDA, so agree on one. A common approach is a fixed number of years for ordinary confidential information and, for trade secrets, an obligation that lasts as long as the information remains a trade secret. Also agree what happens to the information when the cooperation ends, such as return or destruction.
6. Inclusion of Penalty Provisions
A penalty clause (boetebeding) obliges the party that fails to perform to pay a sum of money or to render another performance, whether as compensation or merely as an incentive to perform (Article 6:91 DCC). It is useful because loss caused by a leak is often hard to prove. Unless the NDA provides otherwise, the penalty replaces statutory damages (Article 6:92(2)), and it cannot be claimed if the failure is not attributable to the breaching party (Article 6:92(3)). At the debtor’s request, the court can reduce the penalty if fairness clearly requires it, but not below the statutory damages (Article 6:94(1)); a clause that deviates from this is void (Article 6:94(3)). Conversely, at the creditor’s request, the court can award additional damages alongside a penalty that is meant to replace statutory damages, if fairness clearly requires it (Article 6:94(2)). According to the Supreme Court, this is only possible if applying the clause leads to an excessive and therefore unacceptable result; the court looks not only at the ratio between the actual loss and the penalty, but also at the nature of the contract, the content and purpose of the clause and the circumstances in which it is invoked (Supreme Court (Hoge Raad) 27 April 2007, ECLI:NL:HR:2007:AZ6638, para. 5.3). Stricter rules apply to penalties in employment contracts (Article 7:650 DCC).
7. Jurisdictional Clarity
Agree in the NDA which law applies and which court (or arbitral tribunal) has jurisdiction. This reduces the risk of a dispute about the applicable law and the competent court if the NDA is breached.
How does Dutch law protect trade secrets alongside an NDA?
The Trade Secrets Protection Act (Wet bescherming bedrijfsgeheimen) protects information that is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with that kind of information; that has commercial value because it is secret; and that has been subject to reasonable steps under the circumstances, by the person lawfully in control of it, to keep it secret (Article 1). Using or disclosing a trade secret without the holder’s consent is unlawful if the person doing so acquired it unlawfully, breaches a confidentiality agreement or another duty not to disclose it, or a contractual or other duty to limit its use (Article 2(2)).
Acquiring a trade secret by independent discovery or creation is not unlawful acquisition. Neither is acquisition by observation, study, disassembly or testing of a product or object that has been made available to the public or that is lawfully in the possession of the person acquiring the information, provided that person is not bound by a valid duty to limit acquisition of the trade secret (Article 3(1)). An NDA can create such a duty, for example for a prototype. The court rejects a claim or request for measures under the Act if the trade secret was acquired, used or disclosed in certain protected cases, such as exercising the right to freedom of expression and information, or revealing misconduct, wrongdoing or illegal activity, provided the alleged infringer acted to protect the general public interest (Article 4).
The holder of a trade secret can ask the preliminary relief judge for provisional measures such as a ban on use or disclosure (Article 5), and the court can order measures such as a ban, a recall or the destruction of documents (Article 6). Damages can be claimed from an infringer who knew or should have known that it acted unlawfully (Article 8). A claim under Articles 5, 6 and 9 of the Act becomes time-barred five years from the start of the day following the day on which the holder became aware of the infringement, and in any case twenty years after the infringement began (Article 3:310d DCC). In proceedings concerning the unlawful acquisition, use or disclosure of a trade secret, the court can, at the request of a party, designate (alleged) trade secrets as confidential. Parties and other participants may then not use or disclose them, also after the proceedings, unless a final judgment establishes that the information is not a trade secret or it becomes generally known or readily accessible (Article 1019ib Code of Civil Procedure).
How do you enforce an NDA in the Netherlands?
If an NDA is breached, you can claim an order to stop the breach (Article 3:296 DCC), the agreed penalty (Articles 6:91-6:94) or, without a penalty clause, damages (Article 6:74). Before claiming the penalty, a demand or other prior statement is needed in the same cases in which it is required for claiming statutory damages (Article 6:93). At the request of a party, the court can attach a penalty payment (dwangsom) to an order to stop, for the case that the order is not complied with (Article 611a Code of Civil Procedure).
In urgent cases, you can ask the preliminary relief judge (voorzieningenrechter) in summary proceedings (kort geding) for an immediate provisional measure (Article 254 Code of Civil Procedure). Check the choice of law and the choice of court clause in the NDA before you start proceedings.
Can an employer use an NDA with employees?
Yes. A confidentiality clause is often part of the employment contract itself. If an employee discloses details about the employer’s business that he should have kept secret, this can be an urgent reason for summary dismissal (Article 7:678(2)(i) DCC). A penalty for breach is only valid if, among other things, the provision and the amount of the penalty are stated in the written employment contract (Article 7:650 DCC). Agree expressly whether, and for how long, confidentiality continues after the employment ends. Trade secrets remain protected under the Trade Secrets Protection Act.
Frequently asked questions about NDAs under Dutch law
Is an NDA legally binding in the Netherlands?
Yes. An NDA is a contract that comes into existence by offer and acceptance (Article 6:217 Dutch Civil Code). Between businesses, no specific form is required, although a signed document makes proof much easier. The court can order a party to comply with it (Article 3:296).
What is the difference between an NDA and a confidentiality agreement?
There is no legal difference: both terms refer to a contract in which the recipient of information undertakes to keep it confidential and to use it only for the agreed purpose. In Dutch, the terms geheimhoudingsovereenkomst and geheimhoudingsverklaring are used; the latter is often signed by the receiving party only.
Can a Dutch court reduce the penalty in an NDA?
Yes, at the request of the breaching party, if fairness clearly requires it, but not below the statutory damages (Article 6:94(1)). According to the Supreme Court, this requires that applying the clause leads to an excessive and therefore unacceptable result (HR 27 April 2007, ECLI:NL:HR:2007:AZ6638).
How long does an NDA last under Dutch law?
As long as the parties agree: Dutch law sets no fixed term. Protection under the Trade Secrets Protection Act depends on the information still meeting the conditions of a trade secret (Article 1), not on the term of the NDA.
What happens if someone breaches an NDA in the Netherlands?
You can claim an order to stop the breach, if necessary with a penalty payment (Article 611a Code of Civil Procedure), and the agreed penalty or damages (Articles 6:74 and 6:91 Dutch Civil Code). If a trade secret is involved, the measures of the Trade Secrets Protection Act are also available (Articles 5, 6 and 8). In urgent cases, summary proceedings (kort geding) are possible.
Primary sources
- Dutch Civil Code (Burgerlijk Wetboek): Articles 3:37, 3:296, 3:310d, 6:74, 6:91, 6:92, 6:93, 6:94, 6:217, 6:248, 7:650 and 7:678
- Trade Secrets Protection Act (Wet bescherming bedrijfsgeheimen): Articles 1, 2, 3, 4, 5, 6 and 8
- Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering): Articles 254, 611a and 1019ib
- Supreme Court (Hoge Raad) 27 April 2007, ECLI:NL:HR:2007:AZ6638 (reduction of a penalty, Article 6:94 DCC)
