Not only foreign companies and foreign entrepreneurs, but also Embassies and Consulates have to deal with the Dutch when they represent their country in the Netherlands. Embassies and Consulates, however, enjoy a special status because they are considered to rule under their own flag and not under that of the country of residency. Nevertheless, on occasion they do have to deal with Dutch law, for example with regard to their locally hired personnel working in the Netherlands, when buying or selling property (residence, Embassy) or concluding any other commercial contract.
This article, the second in a series of three, will discuss four areas in which Dutch law may apply to Embassies and Consulates.
Immunity of jurisdiction with regard to employment law
Almost all employment law issues are considered as acta iure gestionis of the Embassy if the work is performed in the receiving state and the employee has the nationality of the receiving state. Therefore, in most employment matters, state immunity cannot be invoked. This might be different with regard to diplomatic staff or personnel employed directly with the Ambassador.
With regard to a state that is not a party to the ECSI, the court will apply international customary law, which considers the conclusion of an employment agreement an actus iure gestionis. Case law shows that the employing state cannot invoke its immunity if the employee has the nationality of the receiving state, if he has permanent residency in the receiving state, and/or if there are convincing connections between the employment and the receiving state.
Dutch employment law can therefore also apply to diplomatic missions. The exception with regard to the legal obligation of Dutch employers to obtain a UWV (Employee Insurance Agency) permit in case they want to dismiss an employee, has lapsed since 1 July 2015. Thus, in the event of dismissal of an employee, depending on the reason for the dismissal, either the UWV or the Subdistrict Court will have to be addressed.
Finally, a state can invoke immunity in legal proceedings with regard to the termination of a private (employment) contract if these proceedings interfere with state security.
Immunity of jurisdiction with regard to social security
Locally hired staff will not be exempt from national insurance and employee insurance, such as state pension (AOW), incapacity for work benefits (WIA), sickness benefits and unemployment benefits (WW). Social security is also compulsory for technical staff, administrative staff and operating staff staying permanently (for longer than ten years) in the Netherlands. Diplomatic staff and staff that don’t have the Dutch nationality and are already insured in the country of origin are exempt from the insurance requirement.
The social security requirement also includes the employer’s obligation to comply with the Dutch regulations regarding guidance and reintegration of sick employees. This includes regular contact with the occupational health and safety physician. Failing this, the paying institution, the UWV, may decide that the employer has acted inadequately and thus has to pay the wages of the sick employee not only during the first two years of sickness but also during the third year.
Immunity of jurisdiction with regard to commercial contracts
A state’s conclusion of a commercial contract is, in principle, an actus iure gestionis and therefore not subject to state immunity. Such contracts may be so closely linked to the interests of a state that they nevertheless fall under state immunity, which is not very common, however. Thus, for instance, an agreement for the supply of computer equipment for the Embassy will, in principle, not fall under state immunity. One exception is, in particular, state security, as a result of which immunity may indeed be applicable to a security software agreement.
Immunity of jurisdiction with regard to real estate
Embassies and the premises of Ambassadors are inviolable, even if they are not yet utilized. They are on Dutch territory however, and thus Dutch law is applicable to these premises, including real estate law. This is all the more so if the Embassy owns real estate which is not used for diplomatic services.
Therefore, it is important to verify in advance whether your intended use of the premises corresponds with the zoning plan (not all villas in Wassenaar may be used as an office) and whether municipal permits are required. Changes to the building that have an effect on the appearance of the premises (cleaning/painting the facade or changing single glazing into double glazing!) require a permit, especially if the premises are a registered monument or part of a conservation area, as is the case with most Embassies. Security measures for Embassies, such as alarms, cameras, fences and/or roll-down shutters, often require a permit. If premises are leased, the owner has to agree to changes before they can be made.
The same rules as to other commercial contracts apply to real estate contracts. Disputes with lessees, sellers, contractors and maintenance companies will be examined by a Dutch court according to Dutch law, unless specifically agreed otherwise.
Although Embassies and Consulates enjoy immunity in the Netherlands, there are several situations in which they have to deal with Dutch law. The scope of their immunity depends on the diplomatic nature of their work and the nationality of their employees. Dutch employees are more likely to be subject to Dutch law than foreigners. In the following and last article of this series we will focus on the personal immunity of diplomats.
This newsletter provides a brief insight into diplomatic immunity and the potential consequences for your Embassy. But the Embassy desk of our firm also focuses on:
Head of Embassy Desk