Arbitration clause in franchise agreement sometimes inconvenient
On 20 July 2016, the District Court of Gelderland, ECLI:NL:RBGEL:2016:4868, ruled on the validity of an agreement in a franchise agreement, whereby disputes would be settled by means of arbitration instead of by the “ordinary” court. This ruling shows that when opting for an arbitration clause in a franchise agreement, there are sometimes negative practical consequences that may not have been thought through in advance.
A franchisee has sued a franchisor for breach of obligations under the franchise agreement. In addition to the franchisor, the direct director and the indirect director of the franchisor have also been summoned. They are charged with liability on the basis of an independent unlawful act, or directors’ liability.
The franchisor opposes the jurisdiction of the ordinary court and points out that the franchise agreement stipulates that disputes are settled by means of arbitration. The court considers that the franchise agreement contains an arbitration clause and that the franchisor is therefore only bound by the arbitration clause with regard to those disputes. There is no arbitration clause with regard to the liability of the direct and indirect director. The main rule applies to this. This, despite the fact that the arbitration clause pertains to disputes “as a result of” the franchise agreement.
The conclusion is that with regard to the dispute against the franchisor, the court has no jurisdiction and the court can rule with regard to the direct and indirect director. This may lead to the unforeseen event that the disputes are, as it were, split and the factual bases may be the same, but the judgment of the court and the judgment of the arbitrator may differ.
When drawing up an arbitration clause, it is worth taking into account any related or analogous disputes that could not be brought before the same arbitral tribunal at the same time. In the present case, the court ruled that the arbitration clause cannot be broken, because splitting the case would lead to inefficient litigation.
mr. AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
![232court-min](https://www.ludwigvandam.nl/wp-content/uploads/2020/12/232court-min.jpg)
Other messages
Directors’ liability in the event of an incorrect forecast
On 4 February 2015, the Rotterdam District Court rendered a judgment on, among other things, the question of whether the director of a selling legal entity was liable.
C1000 loses appeal for inspection of C1000 deal
C1000 loses appeal for inspection of C1000 deal
Supermarket letter – 9
The C1000 Association loses appeal for inspection of the C1000 deal
Interim dissolution of the franchise agreement by the franchisee in the event of loss-making operation possible?
The Court of Appeal recently rendered a judgment in a matter that is very relevant to the franchise practice.
Those who are orienting themselves as a candidate franchisee can contact the association of franchisees, the BVFN.
Those who are orienting themselves as a candidate franchisee can contact the association of franchisees, the BVFN.
mr. Strong litigates for C1000 entrepreneur with wrong prognosis
mr. Strong litigates for C1000 entrepreneur with wrong prognosis