NETHERLANDS Trends and Developments Contributed by: Sebastiaan Bennink, Daniel Webb, Carlijn Raijmakers and Matilde Muriotto, Bennink Dunin-Wasowicz
landscape that requires speed, adaptability and the restoration of compliance. In its present form, how - ever, the bill has not translated that policy choice into a workable enforcement architecture. As drafted, the system risks combining the disadvantages of both models: procedural complexity, institutional overlap, and uncertainty for the regulated parties. If the dual- track model is to deliver more effective and efficient enforcement, these points will need to be resolved before the act is adopted. Intervention powers without a clear escalation ladder If the debate on enforcement architecture concerns the distribution of powers between authorities, the bill’s special intervention mechanism raises a different question: how far the State may, or should, intervene in the internal governance of a private undertaking in order to secure compliance with economic sanctions. As noted above, where an undertaking is involved in a serious sanctions violation, where there is a risk of circumvention, or where the undertaking facilitates circumvention by others, the act would empower the Minister of Economic Affairs and Climate to appoint an administrator to replace its board or directors. This goes well beyond ordinary supervision or the other forms of administrative enforcement in the bill: it allows the State to assume direct control of the gov - ernance and operation of a private company. The measure is not unprecedented, but the principal criticism of it is the absence of any graduated enforce - ment framework. Comparable tools in other regulatory sectors usually treat these measures as a last resort, deployed only when all other options have failed. The International Sanctions Act, by contrast, does not articulate an escalation ladder, the conditions under which the power becomes available, or why lesser measures would not suffice in a given case. The result is a real risk that the power will be exercised dispro - portionately. A second, practical objection concerns the com - mercial consequences for the undertaking itself. The appointment of an external administrator may disturb financing arrangements, trigger contractual change- of-control clauses, unsettle suppliers and counter - parties, and damage market confidence. In complex group structures and cross-border ownership chains,
those effects may spill over well beyond the intended target. If the objective is to secure compliance while preserving the value of the business, the power will need to be accompanied by safeguards that prevent it from damaging what it is intended to protect. One final and central issue with this special interven - tion power is the proposal’s limited guidance on the qualifications, independence and availability of admin - istrators. An administrator appointed for this purpose would need not only governance experience but also a working command of sanctions law, compliance operations, corporate finance and stakeholder man - agement. The bill provides no basis for their selec - tion, and no indication that a pool of suitably qualified candidates exists, nor does it say much about how administrators would be supervised or remunerated. None of this defeats the case for the power, but it does suggest that the bill has yet to justify either its scope or its design. The legal profession , confidentiality and legal protection The third area of criticism concerns the extension of sanctions-related reporting and supervisory obliga - tions to lawyers and notaries, and the consequences for the role of the legal adviser. The tension between reporting obligations and confidentiality is not peculiar to Dutch law; it arises under EU sanctions law as well. In relation to the reinforced reporting obligations intro - duced in Article 8 of Regulation (EU) 269/2014, the Commission has expressly recognised that, in princi - ple, these duties do not extend to information received as part of legal representation in court proceedings, subject to the rights to effective remedy and defence. The International Sanctions Act proposal attempts a similar distinction between reportable information and protected communications, but defines neither with sufficient precision. The difficulty is most acute in hybrid mandates, where a single firm advises on a transaction, provides compliance advice and acts in related proceedings. In those circumstances, it may be far from obvious which information remains pro - tected and which must be reported. The current draft offers no criteria for drawing that line, which invites both inadvertent breaches of confidentiality and fail - ures to report.
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