A Penalty from a Dutch regulatory authority – what’s the procedure?

Dutch regulatory authorities enforce regulation through their inspections, such as the KSA, DNB and AFM. When an offence is established, an administrative penalty is usually imposed in the Netherlands by the regulatory authority. The regulatory authority can also issue a penalty or administrative coercion. A Dutch administrative lawyer can lodge an objection against a decision by a regulatory authority to issue a fine, periodic penalty payment or administrative coercion. A Dutch lawyer may also be present during the inspection of the regulatory authority. Furthermore, if a regulatory authority has signaled that it is going to investigate, a lawyer can advise what authorizations the authority has, how far the obligation to cooperate extends and explain the right to remain silent and when this right can be invoked during the investigation.

Investigation of violation followed by a penalty

A company receives a fine when the regulatory authority finds one or more violations. The supervisor will then draw up a penalty report which includes, among other things, the violation(s) committed by the company. The regulatory authority can also include a statement from employees in the report. The penalty report is sent to the inspection with the supporting documents. The offending company is also entitled to the penalty report. It is important for you and your lawyer to check for any inaccuracies in the report, as the report is the basis for the fines imposed by the regulatory authority. The amount of the fine is not discussed by the regulatory authority. The amount of the fine is legally determined or in line with the standard amount for fines.

Company raids by the Dutch regulatory authority

A company can get a request or visit from a Dutch inspection. Do contact your Dutch administrative lawyer, as you are entitled to your lawyers presence during the inspection. Furthermore, a raid on your company is a distinct possibility. A lawyer in the Netherlands can advise when to invoke your right to remain silent (art. 5:10(a) Awb) and when you have an obligation to cooperate (art. 5:20 Awb). An administrative lawyer is able to advise companies on issues arising from inspections or raids by regulatory authorities. There are a number of authorities that have the competence to inspect or raid a company, including the SWZ, ILT, the Fiod, KSA, the ACM, AFM or the Dutch Customs Authority.

Right to remain silent when a regulatory authority is conducting an investigation

• If you are heard as a suspect, you can invoke your right to remain silent and call your lawyer. If you are heard as a witness you must invoke your duty of confidentiality (by virtue of your professional rules) and refuse to answer the questions posed.
• If you are questioned alone, you must invoke your right to remain silent/or invoke your duty of confidentiality and state that the office directive or company protocol is that such a confrontation must always be made in the presence of another colleague/ or you must invoke your right to have your lawyer present.
• The inspection/ supervisor can only require cooperation if this is reasonably necessary for the investigation. In principle, it is for the authority to decide which information is necessary.

Right to remain silent during an inspection and warning that answering is not mandatory (caution)

• Art. 5:10a of the Awb provides an obligation to provide the suspect with a caution before the interrogation, as the suspect has a right to remain silent as soon as he is being interrogated ‘with a view of imposing a punitive sanction on him’.
• Whether there is a duty to cooperate under art. 5:20(1) of the Awb depends on the facts and the circumstances of the case. A request for cooperation must be met on first demand.

Request from the inspection to provide details and documents

• The obligation to provide ‘cooperation such as which the supervisor can reasonably demand’ also includes the obligation to retain certain information concerning the possibility to exercise the powers given under art. 5:16 Awb and art. 5:17 Awb.
• What material can/ should you provide to the inspection? This issue can be very complex (and sensitive); consult your lawyer on this issue. Art 5:20 Awb is limited by the right not to incriminate oneself. Case law has indicated a distinction between independent material and will-dependent material. The starting point is that the right not to incriminate oneself does not apply to independent material. Consideration must also be given to the nature of the material (is it dependent on the will of the person?), not on whether the material can be procured without the involvement of the person concerned.

Announcement by the Dutch authority of a fine or penalty payment

• Before enforcing the decision, the intention to impose a fine, penalty payment or administrative order must be made known to the offender. He has the right to submit his own opinion against the intention to take a decision. It is advisable to do that and instruct a Dutch lawyer to give the opinion in writing. In practice, the regulatory authority also issues an informal warning, where the regulatory authority indicates whether it will impose a fine, penalty payment or administrative order if the violation is not terminated.

Opinion against intention to take a decision

• Your Dutch lawyer should preferably submit the opinion against the intention to take a decision in writing. An administrative lawyer will be able to draw up the opinion. It is important to properly portray all the facts and circumstances to the regulatory authority. It can, for example, be explained that there was a justification for the infringement. It is also possible it is not the accused, but another person who was responsible for the committed offence. This can lead to uncertainty regarding who the perpetrator was. In response to the opinion, the regulatory authority can decide to take another measure or drop the investigation altogether. The opinion can also be used as the basis for a notice of objection if the

Right to submit an opinion in case of a penalty payment, administrative decision and administrative fine

• The offender has a right to submit an opinion as soon as the regulatory authority has indicated that it will pursue enforcement. The intention to impose a penalty payment, administrative decision or administrative fine must be sufficiently motivated by the facts and circumstances of the case. Before imposing an administrative fine, the regulatory authority must send the offender a report. It is important for the offender to carefully study the penalty report and check the facts and circumstances. The regulatory authority must give a reasonable term for the offender to give his opinion. If the deadline is deemed too short, your lawyer may request a postponement. The opinion by the offender can also be made orally, if there is a need for it. The regulatory authority can only eliminate the possibility of review in urgent cases.

Proof of violation under Dutch law and penalty report

• The supervisory body assesses the penalty report and determines whether the violation has been proven. The supervisory authority calculates the fine based on the standard penalty rates. The offender then receives a written notification of the regulatory authorities intention to impose a penalty. You should submit your reaction within two weeks of receiving the notification. It is often useful for an administrative lawyer to draw up the opinion. The supervisory body will then asses the opinion in light of the intention to impose a penalty, whereafter you will receive a letter stating whether or not you have received a fine and how high this fine is. This is the decision to impose a fine. The offender will then receive an acceptgiro from the Centraal Justitieel Incasso Bureau (CJIB).

Submitting an appeal against a decision to impose a fine by the Dutch supervisory body

• You can object against the decision to impose a fine within six weeks of the decision. The notice of objection must meet a number of statutory requirements. A administrative lawyer can write a motivated appeal, if you choose to challenge the decision. You can also use your right to be heard by the supervisory body, though that is not mandatory. It is often useful to do this with your lawyer, however, to explain your position well and give the supervisory body the opportunity to ask questions. The decision following the notice of objection usually takes place within 12 weeks of the last day that you could have filed the notice of objection. If a hearing has taken place, the report of the hearing will be attached to the decision. If a lawyer has objected on behalf of the company, the decision will be sent to this authorized representative.

Appeal to Dutch court following rejection of notice of objection

• If the notice of objection is rejected by the Dutch regulator you can lodge an appeal with the Dutch administrative court. One of our administrative lawyers can handle this for you. Only at this stage can the judge pass judgment and shine a different light on the case. The court at which you can lodge the appeal is indicated at the bottom of the rejection. The appeal must be lodged within 6 weeks from the day in which the decision of the rejection was made known (the term starts on the day after the rejection was sent). Court fees will have to be paid when appealing to a court. Your lawyer can also pro forma appeal on further grounds. In the appeal proceedings against the supervisory body, an oral hearing also takes place at the administrative court. You should be present at the hearing with your lawyer so that the judge can ask you questions.

Statement of objection or appeal procedure does not suspend payment obligation for the fine

• The starting point is that the company always has to pay the fine imposed by the Dutch regulatory authority within the prescribed period, even if an appeal has been lodged. If it turns out that the fine was wrongly imposed, your penalty plus statutory interest will be reimbursed. However, there is an opportunity for your lawyer to try to suspend the penalty decision, for example by submitting a request for provisional ruling to the administrative court. There must be a substantial interest in obtaining suspension or deferment of the administrative fine. Furthermore, under certain circumstances a payment arrangement is possible.

Complaint against the Dutch supervisor

• The Dutch supervisor carries out tasks in the field of licensing and enforcement. You can contact the complaints committee if you have a genuine complaint about the conduct of the inspection, the inspector or the conduct of one of the employees of the supervisory body. The complaint commission will assess the complaint and inform the complainant about it.
• It is our experience that assistance from a Dutch lawyer at an early stage can prevent problems with the Dutch regulators.

Please don’t hesitate to contact one of Blenheim’s lawyers on regulatory compliance or law enforcement.