Streamlined Disclosure in Post-M&A Litigation: Insights from the NCC's Enforcement of Contractual Disclosure Clauses

The Netherlands Commercial Court (NCC) has set a precedent in a post-merger and acquisition (M&A) dispute by enforcing a contractual disclosure clause, thereby granting the seller extensive rights to documents and interviews with key executives. This decision underscores the NCC's commitment to uphold disclosure agreements within contracts and its readiness to facilitate comprehensive evidence disclosure in complex commercial cases.

Key Aspects of the NCC Ruling

In the dispute, the seller invoked a clause from the share purchase agreement (SPA), compelling the buyer to provide all pertinent information and documents related to its claim. The buyer's resistance, citing concerns over breadth, vagueness, and potential GDPR violations, was overruled by the NCC. The NCC mandated the buyer to disclose various documents, which included sensitive documents such as financial and tax due diligence reports. Moreover, the NCC rejected the purchaser's appeal on legal privilege by ruling that the communication between the lawyers of the purchaser and Deloitte (advisor to purchaser) were not privileged since the communication was regarded as an instruction for a report for litigation, which was submitted in this litigation.

Implications of the Decision

The NCC's ruling is pivotal for several reasons:

• It affirms the enforceability of contractual disclosure clauses alongside Dutch law, particularly Article 843a of the Dutch Code of Civil Procedure, which allows for document access related to a legal relationship.
• It emphasizes the importance of precise drafting in such clauses, with the NCC interpreting terms like 'books and records' and 'relevant to the claim' within the contractual context.
• The decision showcases the NCC's readiness to facilitate extensive evidence disclosure in intricate commercial litigation, aligning with the GDPR's proportionality and data minimization principles.
• The NCC clarified the scope of legal privilege, ruling that communications with Deloitte, an advisor to the purchaser, were not privileged and thus subject to disclosure.

Significance of Article 843a

The NCC's ruling is particularly significant in relation to Article 843a of the Dutch Code of Civil Procedure, which allows a party with a legitimate interest to request access to specific documents pertinent to a legal relationship. The court's decision illustrates that contractual clauses can effectively complement this statutory right, enhancing a party's ability to obtain necessary evidence.

Conclusion

The NCC's decision in enforcing a disclosure clause within a post-M&A context is instructive for its clear stance on contractual rights to evidence and the boundaries of legal privilege. It serves as a valuable reference for parties and legal practitioners in international commercial transactions and disputes, emphasizing the importance of detailed contractual provisions and the potential reach of disclosure in litigation. If you have any questions or need any assistance with post-M&A disputes or commercial litigation, please do not hesitate to contact us.