‘Letterbox companies abuse Dutch trade treaties’

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Dutch investment treaties with other countries are widely abused by companies that have a letterbox company in our country. This is the conclusion of research by knowledge center SOMO. The Netherlands has concluded dozens of bilateral trade agreements of this kind all over the world. ‘The system has completely broken down,’ says Bart-Jaap Verbeek, SOMO researcher.

Bilateral trade agreements protect companies against arbitrary actions by governments. According to SOMO, these treaties make it difficult for those countries to make changes to laws in the field of the environment, labor rights and public health. Sixty years ago, the Netherlands concluded such a treaty for the first time, with Tunisia.

‘Blackmail’

‘These investment treaties were drawn up with the idea of ​​protecting companies against the arbitrariness of the authorities and against expropriations,’ says Verbeek. ‘These were also real risks for companies at the time.’ But companies are now also submitting claims for damages on the basis of the treaties against various types of regulations that have a public interest, write SOMO researchers. SOMO’s knowledge center speaks of ‘legal blackmail’.

Illegal oil refineries in Nigeria.  Dutch investment treaties with other countries are widely abused by companies that have a letterbox company in our country.  These treaties make it difficult for countries to make changes to laws in the field of the environment, labor rights and public health
Illegal oil refineries in Nigeria. Dutch investment treaties with other countries are widely abused by companies that have a letterbox company in our country. These treaties make it difficult for countries to make changes to laws in the field of the environment, labor rights and public health (ANP / ANP)

‘The Netherlands facilitates companies to submit these kinds of claims and thus puts great pressure on governments worldwide,’ says Verbeek. Over the years, these treaties have hardly been adjusted, if at all, despite the fact that it was agreed in 2019 to draw up a new model. “There are definitely improvements there. However, not a single existing treaty has yet been amended or replaced.’

‘Three quarters of the damage claims are submitted by non-Dutch companies’

Bart-Jaap Verbeek, SOMO researcher

The companies that benefit from this are generally foreign companies with a branch in the Netherlands. ‘That is a known problem,’ says Verbeek. ‘Three quarters of the damage claims are submitted by non-Dutch companies. More than 70 percent of the cases concern letterbox companies, empty companies without employees and without any substantial business activities in the Netherlands.’

This makes the Netherlands an important pivot in this system, he says. ‘Worldwide there are 3000 such treaties. After the United States, the Netherlands is the most popular country from which these kinds of claims are submitted.’


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