Construction 2024 Comparisons

The main source of private law governing the construction market in the Netherlands is the Dutch Civil Code, or DCC (Burgerlijk Wetboek), in particular Books 3, 5, 6 and 7. Specifically, Title 12 of Book 7 DCC contains statutory provisions regarding construction (aanneming van werk). Title 12 of Book 7 DCC was amended by the Quality Assurance Construction Act (Wet kwaliteitsborging voor het bouwen) on 1 January 2024. These can be found at the website here.

Public laws which govern the construction market are:

• the Environmental Permitting General Provision (Wet algemene bepalingen omgevingsrecht) and;
• the Environment Act (Omgevingswet).

The Procurement Statute (Aanbestedingswet) regulates procurement proceedings.

Generally, four sets of standard conditions are used for contracts relating to construction works – namely:

• UAV 2012, for a traditional construction contract;
• UAV-GC 2005, for a design-and-build contract (with the additional option of maintenance);
• DNR 2011, for a design/consultancy contract; and
• FIDIC, whose contracts cover most building organisation methods.

In traditional contracts, the responsibility for the design rests with the employer and the responsibility for the execution of the construction process rests with the contractor. In integrated contracts (geïntegreerde contracten) the design responsibility is also part of the contractor’s responsibility, and its extent depends on the contract. The most common contractual conditions are discussed below.

UAV 2012

These conditions are commonly used for an employer-contractor contractual relationship. They are typically used in traditional construction contracts, in which the employer is responsible for the design and specifications of the works, and the contractor is responsible for the execution of the works in conformity with the specifications.

The text of the UAV 2012 was agreed upon by representatives of employers and contractors jointly; the UAV 2012’s conditions were therefore drafted with equal representation (paritaire voorwaarden).

UAV-GC 2005

These conditions are commonly used for an employer-contractor contractual relationship in a design-and-build project. They are used in integrated contracts. The degree to which the contractor is responsible for the design of the works can vary from partly to almost fully, and is optional for the parties.

The text of the UAV-GC was also drafted by representatives of employers and contractors jointly.

DNR 2011

These conditions are commonly used in contractor-designer/consultant or employer-designer/consultant contractual relationships. Most architects, engineers and consultants in the Netherlands work within the DNR 2011’s conditions. These conditions govern the responsibility and liability of designers/consultants.

FIDIC

These conditions are commonly used in an employer-contractor contractual relationship. There are different types of FIDIC contracts, and the choice of specific contract will depend on the scope of the work and the risk allocation in the project:

• the FIDIC Red Book can be used in works in which the employer carries out the design and the contractor carries out the works;
• the FIDIC Yellow Book can be used where the contractor designs and executes the works; and
• the FIDIC silver book can be used for so-called turnkey contracts.

In the Netherlands, the use of these standard contracts is very common, and is mandatory for public authorities, with the UAV 2012 and UAV-GC 2005 having been jointly drafted by representatives of employers and contractors (paritaire voorwaarden).

In construction projects, the employer is typically either a public authority or a private company. The general rights and obligations of the employer in construction contracts depend strongly on the contract between the parties. In traditional contracts (under the UAV 2012’s conditions), the employer is responsible for the design, the permits and the soil. In general, the employer arranges the financing of the project. Alternatively, the contractor is sometimes tasked with arranging the financing of the project (see 2.2 The Contractor).

The contractor is responsible for the construction of the works. In integrated contracts, the contractor is also responsible for the construction and for (part of) the design. The contractor can also be responsible for the maintenance of the works after delivery. In some cases, the contractor may be tasked with arranging finance for the project – in this case, general project finance will be used, where the contractor attracts financing from lenders on a limited or non-recourse basis. Generally, the contractor corresponds with and co-ordinates the subcontractors. The contractor also corresponds with and reports to the employer.

In large construction projects in the Netherlands, the contractor is typically one of the large national private construction companies (Koninklijke BAM Groep, Volkerwessels, Koninklijke Boskalis, Strukton, TBI Holdings or Dura Vermeer) or international private companies (Denys, Fluor, Besix and Strabag). To distribute risks, these construction companies (or their subsidiaries) can form a consortium and create a special purpose vehicle (SPV) to carry out a project.

Contractors specialised in a particular discipline often act as subcontractors in construction projects. Normally, the general contractor is responsible for co-ordination between the subcontractors and their respective scopes of work. Obligations of the general contractor are generally passed on to the subcontractors on a “back-to-back” basis.

If external financing for construction projects is provided, this is typically done by national banks (such as ABN Amro, ING and Rabobank) or international banks. It is also possible for other lenders, such as pension funds, to act as financiers. In the event of project finance, the lenders perform due diligence on the project and on all contracts and permits regarding the project. A specific facility will be formed for the project on the basis of non-recourse or limited recourse financing.

The responsibility for the execution of the design can be executed by the employer themselves, but will generally be placed by a designer. The previously mentioned DNR are generally used in this regard. 

The scope of work is generally laid out in a programme of requirements (programma van eisen). If the design has been completed by the employer and the scope of the construction contract is only the execution of the works, the scope of work is laid out in specifications (bestek), containing the technical requirements. These documents are generally an annex to the construction contract.

In general, both the employer and the contractor have the right to instigate variations in a request for change (verzoek tot wijziging, or vtw). The scope and price of the variations is subject to negotiation between the employer and the contractor, whereby the parties often agree beforehand on unit rates that will be applicable in the event of variations.

The contractor always bears responsibility for the construction of the works; alternatively, the contractor can also bear responsibility for the design. In traditional contracts, the employer is responsible for the design and the contractor is only responsible for the execution of the works (the execution often also includes detailed technical engineering). In integrated construction contracts, the contractor also bears responsibility to a varying extent for the design works. 

In general, the contractor is responsible for the execution of the works. It is possible for the contractor to instruct subcontractors regarding parts of the works – in that case, the contractor remains responsible for the works of these subcontractors vis-à-vis the employer and generally also for the co-ordination of the subcontractors.

In general, the employer is responsible for the site and access to the site. Responsibility for the soil and the soil conditions, including underground obstacles and pollution, is generally also borne by the contractor. It is possible, however, for the parties to agree otherwise in the contract.

For most activities regarding building, renovation, demolition, construction, the environment, nature and open spaces, an “all-in-one permit for physical aspects” (omgevingsvergunning) is required. This permit needs to be adhered to by all parties. The employer or the contractor can apply for this permit. In general, the employer is contractually responsible for the permit for the works. The contractor can be responsible for the permit for aspects specifically regarding the actual execution of the works.

In general, the employer is responsible for maintaining the works after delivery. However, maintenance contracts for certain parts of the works can also be concluded between the parties involved in the construction process.

Besides the construction function, it is possible for the design function, the maintenance function, and the operation or finance function to be assigned to the contractor. It is also possible for only some of these functions to be assigned to the contractor.

As generally required in installation contracts, it is the contractor who usually bears responsibility for testing. Tests are carried out shortly before, and possibly after, completion.

In general, the contractor notifies the employer of the moment in time when the works will be completed and can be inspected for completion and delivery. If the employer then approves the works, delivery and taking over of the works takes place, and the risks associated with the work transfer from the contractor to the employer.

Normally, the employer cannot withhold approval of the works if there are only minor defects that do not prevent the employer from using the works and that can be remedied within a reasonable time. These minor defects will be put on a “punch list”. It is possible that after takeover the contractor will remain liable for (hidden) defects. An alternative process for delivery and/or for the respective responsibilities may be laid down in the construction contract.

The risks and responsibility for the works are generally transferred from the contractor to the employer after takeover. Minor defects after completion/takeover can be noted on the punch list and remedied by the contractor after delivery or takeover. Hidden defects that appear some time after takeover are generally to be remedied by the contractor, if the employer can prove that the contractor is liable for these defects. If parties agree on a defects liability period after completion, the contractor is responsible for remedying all defects, unless the contractor can prove that they are not liable for these defects. The scope of obligations of the contractor during the defects liability period can vary.

The contract price is subject to negotiation between the parties or to a tender procedure. Usually, the contract price can be a lump sum; alternatively, the parties can agree on a unit rate contract, a reimbursable contract or a cost-plus contract.

The contract price generally entails:

• the direct costs for the execution of the works;
• site costs; and
• a surcharge for insurance, general costs, profit and risk.

Milestone payments are often used.

In construction contracts, a regime for indexation is generally laid down. This applies to the contract price and possibly other amounts.

In general, the contractor invoices payments due to the employer. Payments may relate to milestone payments or lump-sum payments; the first are due after completion of the milestone, and the latter are generally payable after completion. In the event of late payment, the employer is usually under the obligation to pay interest to the contractor. Very late or structural late payment can constitute a default or breach of contract, allowing the contractor to suspend the works and ultimately to terminate the contract. 

In general, the contractor sends invoices to the employer. These are usually payable after a period of approximately 30 days.

Parties generally agree upon a commencement date and a long stop date for completion. Sometimes, milestone dates are applied by which part of the works must have progressed to a specific stage, generally with a corresponding milestone payment being due and often with a corresponding milestone certificate. Alternatively, the time for completion of the works can be expressed in a number of “workable working days”, calendar days, weeks or months.

In general, the contractor is free to make the planning/time schedule for the execution of the works, as long as this time schedule adheres to the planning in the agreement. The time schedule is safeguarded by:

• monitoring the progress of the works;
• linking (interim) payments to progress achieved; and
• applying penalties in the event of late completion.

In the event of delays in the execution of the works, the parties can discuss and agree on the contractor taking acceleration measures. The costs of acceleration measures are usually borne by the party that is responsible for the delay. The law and the standard forms UAV 2012 and UAV-GC 2005 do not contain specific provisions on acceleration measures. A contractor that has caused delay can be forced in court to provide for a timely delivery of the works according to the contract. Generally, the contract contains penalties for the contractor for delays. These penalties are generally a fixed compensation for the delays.

In the event of delays of the works caused by the contractor, the remedies available to the employer usually include:

• penalties;
• the postponement of interim payments; and
• if it becomes apparent that the contractor will not deliver the works in time, dissolving of the contract.

The standard forms UAV 2012 and UAV-GC 2005 contain provisions regarding extensions of time for the contractor. The typical manner for the contractor to request an extension of time would be a written request to the employer, stating the cause for the delay and invoking the applicable contractual right to an extension of time.

Contracts generally contain a force majeure clause, stating that, in extraordinary events that are beyond the parties’ control, the contractor and the employer are not bound by the contract and/or are not liable for damages. The most common events mentioned in these clauses include war, rebellion, riot and natural catastrophes. In the case of force majeure events, the contractor is usually entitled to an extension of time.

Unforeseen circumstances are regulated by mandatory law. If circumstances occur and the parties have not provided for the occurrence of these circumstances in the contract, the law provides for the possibility that the contract can be amended or dissolved by the court (Article 6:258 DCC). Also, the standard forms UAV 2012, UAV-GC 2005 and DNR 2011 contain clauses relating to unforeseen circumstances.

Disruption not caused by the contractor can give the contractor grounds for extension of time and/or compensation. Standard forms UAV 2012, UAV-GC 2005 and DNR 2011 contain clauses that could provide the basis for a disruption claim. The burden to prove the cause of the disruption and its length lies with the contractor. The method for proving the cause/length of disruption varies from case to case; it typically involves comparing the predicted lead time with the actual lead time of a particular part of the works.

It is possible to exclude liability under Dutch law; however, the liability for wilful misconduct (opzet) and gross negligence (bewuste roekeloosheid) cannot be excluded. Furthermore, and as a general rule, an exclusion of liability cannot be invoked if under the given circumstances this would be unacceptable according to the standards of reasonableness and fairness.

Under Dutch law, the concepts of wilful misconduct and gross negligence exist. Liability for wilful misconduct (opzet) and gross negligence (bewuste roekeloosheid) cannot be contractually excluded under Dutch law.

Dutch law allows the parties to contractually limit their liability. However, standard form UAV 2012 does not contain any limitations of liability, except for a limitation in time for hidden defects. Standard form UAV-GC 2005 contains a limitation of liability for hidden defects of 10% of the contract price. If limitations of liability are agreed upon in a construction contract, these limitations often exclude the liability for indirect or consequential damages, and limit the contractor’s liability to a percentage of the contract sum.

In the Netherlands, indemnities are generally used to limit risk, and it is common for one party to indemnify another against claims resulting from a breach of contract by the first party. If the employer is responsible for the design, it is common for the employer to indemnify the contractor for claims arising from the design. It is also common for the employer to indemnify the contractor against claims resulting from the contractor’s compliance with the employer’s requirements. It is common for the contractor to indemnify the employer against claims resulting from the execution of the works or negligence. 

It is common for the contractor to guarantee the performance of parts of the works or the complete works during a certain period of time. It is also common to agree on a defects liability period during which the contractor is obliged to remedy all defects in the works.

The contractor is usually obliged to insure the works completely with a construction all-risk (CAR) insurance. Usually, the party responsible for the design also takes out a professional indemnity (PI) insurance for design errors/flaws.

The parties are generally entitled to terminate the contract in the event of insolvency of the other party.

Joint responsibility for certain risks can be set out in a construction contract. This is the case in partnering and alliancing contracts. These types of contracts are used, but in exceptional cases.

In general, the employer’s and the contractor’s personnel are described in the construction contract. Key personnel on both sides (if any) are selected, and changes need to be informed about or consented to. Specific obligations and instructions can be assigned to the personnel.

The right to subcontract can be regulated or limited in a construction contract. In general, subcontracting is permitted.

Intellectual property, patents, copyrights, trade marks and industrial properties are generally regulated in the sense that the parties determine which party holds these rights. It is possible for one party to indemnify another party against a third-party claim alleging infringement of one of these rights.

In the event of a default under the construction contract by the employer, the contractor is generally entitled to:

• claim performance of the contract;
• claim damages (alternative compensation);
• invoke on a right of suspension;
• invoke on a right of retention; and
• terminate the contract.

In the event of a default under the contract by the contractor, the employer is generally entitled to:

• claim performance of the contract;
• claim damages (alternative compensation);
• invoke on a right of suspension; and
• terminate the contract.

These rights and remedies can be altered in the contract. The party concerned is generally required to send a notice of default before claiming damages and/or terminating the contract.

Retention rights are frequently limited in construction contracts. It is also possible to contractually limit suspension rights and the right to terminate the agreement. 

Except for offshore and industry construction contracts, sole remedy clauses are not typically used in construction contracts.

The liability of parties and specifically the contractor is generally limited in construction contracts. According to the DCC, damages that are attributable to breach of contract are eligible for reimbursement. Sometimes, specific forms of damages such as indirect and consequential damages are excluded. These terms are not defined in the DCC. Indirect damages are generally contractually excluded.

Retention and suspension rights can be excluded. Sometimes, retention rights are excluded to the extent that the employer has not paid the undisputed invoices.

Typically, two types of termination of construction contracts are agreed on between parties:

• termination for cause (ontbinding); and
• termination for convenience (opzegging).

The DCC (Burgerlijk Wetboek) and the UAV 2012, UAV-GC 2005 and DNR 2011 contain articles that regulate these two types of termination.

In termination for cause, the contractor would normally be paid the price of the work that has been performed.

In termination for convenience, the contractor would normally, in accordance with the regulatory rules of the DCC, be compensated for the entire work and construction, reduced by the costs and expenses which the contractor has saved as a result of the termination. In practice, the sum to be paid by the employer would generally be the price of the part that has been realised, increased by any demobilisation costs, cancellation costs, and loss of unabsorbed overhead and profit.

The district courts have jurisdiction in construction cases. The courts in the Netherlands have three tiers, as follows:

• 11 district courts;
• four appeal courts; and
• the Supreme Court.

An important alternative means of dispute resolution is arbitration before the Netherlands Arbitration Institute (Nederlands Arbitrage Instituut) or the Board of Arbitration in Construction Disputes (Raad van Arbitrage in Bouwgeschillen). An agreement for arbitration is necessary. Furthermore, parties can agree on dispute resolution by means of binding or non-binding advice or mediation.