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The Dutch law Non-Disclosure Agreement (NDA)

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confidentiality agreement

The Dutch law Non-Disclosure Agreement (NDA)

We get this question regularly from our clients: “Do you have a template for a Dutch law Non-Disclosure Agreement?” And of course we do and we will share it gladly. Here you find an example of a Non-Disclosure Agreement (NDA) that is drafted according to the laws of the Netherlands.

The NDA (non-disclosure agreement) is also often referred to as a confidentiality agreement. It is an agreements that we draft and review very often, perhaps as much as 3 to 4 times per week on average. Somehow they are all different, from one pagers to U.S. style of 10 pages. Regardless of length and complexity, we always check on well-established risks and pitfalls.

What to look for in a Dutch law NDA?

You would use a non-disclosure agreement if you want to discuss something or exchange information in confidence with another party. Think of a merger, company takeover, the development of a platform, product, software or collaboration. We describe the most important parts of the NDA according to Dutch law, which you can also see in the example NDA on our website.

Counterparty to the NDA

When entering into an NDA (or: confidentiality agreement), think carefully about whom you are entering into the agreement with. Which person or legal entity is the formal contracting party that will have access to the information and who can be addressed if something would go wrong? Can the other party share the information with its employees and advisers? Who do I want to be able to hold liable if the information does end up on the street? Make sure that you can also hold your contracting party liable if its employee or adviser appears to have leaked the information.

Purpose of the NDA

It is important to include in the NDA what the purpose of the exchange of information is. One goal could be, for example: “to investigate whether parties can come to a joint business plan for the development of a software platform”. This description of the purpose is important, as the NDA should stipulate that other party may only use the information received for that specific purpose. And therefore not for something else, such as for copying the product or platform of the other party.

Mutual NDA

A non-disclosure agreement is often drawn up in such a way that one party provides information to the other party. But the practice is often different, namely that both parties exchange confidential information back and forth. It is therefore advisable to make the NDA reciprocal so that both parties commit to the same set of obligations.

Confidential Information to be defined in the NDA

Tip: clearly define what is confidential information and what is not. One wants to avoid a discussions about whether something was confidential or not. On the other hand, also you do not want to be accused of acting unlawfully when you share information with third parties that you received from the other party during the conversations, whilst such information was for instance already (publicly) known.

Duration of the NDA

Do not forget to include in the NDA how long the confidentiality obligations last. It is often agreed that the conversations and the exchange of information may be terminated at any time. The duty of confidentiality must -of course- continue long after that. In addition, it is often agreed that information exchanged must be returned or destroyed / deleted.

Penalty in an NDA

What happens if your counterparty does not comply with the agreements in the Dutch law Non-Disclosure Agreement as a result of which your confidential information ends up on the street? The basic rule under Dutch law is that you can then claim damages. However, the point is that in most cases it is impossible to prove how much damage you have actually suffered as a result of the information leak. And if you can’t prove the damage, you won’t be awarded the damage either. That is why an NDA often includes a penalty provision, which states that either instead or in addition to the damages, you are also entitled to a penalty if the other party does not comply with the NDA. The function of a penalty, thus, is a deterrent for non-compliance as well as to make a discussion about the amount of damages easier.

Choice of law in the NDA

If the contracting parties of the NDA come from the Netherlands and a different country, there is always the matter which country’s law applies to the Non-Disclosure Agreement. The best way to sort this is to make a choice of law already in the contract and also stipulate which court has exclusive jurisdiction to rule on disputes. If you do not do this , especially in the case of a mutual NDA, then in a conflict about the NDA you are guaranteed to get into a messy discussion about which law applies and which court in which country has jurisdiction to rule on the dispute.

If you would like to receive more information about the Non-Disclosure Agreement under Dutch law, please contact Lukas Witsenburg or Hans Klaver.

Law firm Penrose in Amsterdam, the Netherlands.