During last Friday's opening of the symposium about corporate litigation hosted by the Van der Heijden Institute in Nijmegen (for links go here), Prof. Gerard van Solinge - who moderated the two day event - made some remarks about recent developments in this field. He touched upon the February 2008 report by the Social-Economic Council, that proposed some rather fundamental statutory changes to the right of inquiry. He also touched upon the very recent draft proposal by the Ministry of Justice, that aims to make some important but relatively modest statutory changes to the right of inquiry.
Van Solinge mentioned rather forcefully that most of the changes proposed by the SER did not make it into the draft proposal, including the suggestion to introduce a business judgment type of review model in the right of inquiry (not in the statute). He did not seem very bothered by that result (I'm focusing on the latter here), which is in line with the skeptical - but unsubstantiated - position taken by him and his co-author Marco Nieuwe Weme in the inquiry proceeding chapter (13) of their impressive 2009 treatise Asser 2-II. Was he correct? More to the point, did the draft proposal effectively cut-off the SER's suggestion to restyle the court's review model in the business realm? I'm not sure how Van Solinge reached his conclusion, but in my opinion it's not supported by a thorough reading of the text of the draft proposal itself. Let's recap.
What the SER proposed, was that the traditional nomenclature of the right of inquiry should remain the same (so basically 'well founded reasons to doubt the correctness of the company's policy' (gegronde redenen om aan een juist beleid van de vennootschap te twijfelen) and 'obvious mismanagement' (wanbeleid)), but that in the explanatory notes to the draft proposal the Ministry of Justice should make clear that the Enterprise Chamber should gear its review model towards the business judgment type of review, emphasizing that the business judgment rule - through its anatomy (e.g., in terms of (dis)interestedness, bona fides, informedness) - pretty much forces the court to explain more in-depth why it reaches the outcome it reaches. As highlighted by the explanatory notes to the draft proposal:
De SER merkt in dat verband op dat "De strerke kant van de business judgement [sic] rule is dat zij de rechter door verschillende soorten toetsen die in uiteenlopende gevallen gevolgd dienen te worden, dwingt om zijn oordeel dieper te motiveren. Dit lijkt in de Verenigde Staten tot een terughoudende beoordeling van het bestuurlijk gedrag te leiden" (p. 53).
So no statutory changes in this respect, but a clarification in the explanatory notes, focusing primarily on the importance of apparently sound reasoning by the court.
Now what do these notes say? Well, after:
- several pages discussing relevant Delaware case law point, starting at page 18 (all taken from my dissertation),
- noting at page 20 that the SER did not suggest to copy the Delaware business judgment rule 1-to-1, and
- emphasizing at page 21 (top) that as to finetuning the review model of director conduct as applied by the Enterprise Chamber - when analyzing whether well founded reasons or obvious mismanagement are present - without statutory amendments, the US system indeed could serve as a source of inspiration,
the relevant section concludes on page 21 (bottom) by stating that it is important for parties involved that the court adequately clarifies why it beliefs well founded reasons and/or obvious mismanagement exist, also in view of the consequences of such qualifications, and that the focus points applied in US case law in this respect can be helpful in the Dutch setting.
Voor de praktijk is van belang dat de rechter voldoende motiveert waarom hij meent dat er gegronde redenen zijn om aan een juist beleid te twijfelen danwel wanbeleid heeft plaatsgevonden. De vergaande gevolgen die een enquête c.q. het opleggen van voorzieningen voor de rechtspersoon en alle daarbij betrokken belanghebbenden hebben, rechtvaardigen de eis dat beschikkingen goed worden gemotiveerd. De aandachtspunten die uit de Amerikaanse jurisprudentie naar voren komen, kunnen daarbij ook in het Nederlandse kader behulpzaam zijn.
Although the notes do not embrace the business judgment doctrine as such with so many words, I find it hard to fathom how the notes could be interpreted in a realistic way to mean that the Enterprise Chamber is barred from finding inspiration for finetuning its review model in Delaware corporate case law (i.e., the business judgment rule). Granted, the wording of the notes could have been a bit 'sharper', but all in all I, an outspoken proponent of a Dutch business judgment rule, am not unhappy about the endresult. In fact, the notes are an important step forward. The quest continues!
Bottom line: false.
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