A non-disclosure agreement (NDA), in Dutch a geheimhoudingsovereenkomst, is a contract in which one or both parties promise to keep certain information confidential. Under Dutch law it is binding without any special form, but it only protects you in practice if it clearly defines the confidential information and contains an agreed penalty for a breach.
Without those two elements, you will often struggle to prove what a leak actually cost you. Below we explain what an NDA does under Dutch law, which type suits your situation, which clauses matter most and what you can do when the other party breaks its promise.
What is an NDA and why does it matter?
An NDA sets out which information is confidential and what the recipient may and may not do with it. It turns an informal expectation of discretion into an enforceable obligation.
Dutch contract law is based on freedom of contract. An NDA is an ordinary agreement under Book 6 of the Dutch Civil Code (Burgerlijk Wetboek, BW), so an email exchange or a signed PDF can be enough. A signed document is still wise, because you will have to prove what was agreed if a dispute arises.
An NDA also has a second function. Under the Trade Secrets Protection Act (Wet bescherming bedrijfsgeheimen, Wbb), information only counts as a trade secret if it is secret, has commercial value because it is secret, and the holder has taken reasonable measures to keep it secret. Confidentiality agreements are one of the clearest examples of such a measure. An NDA therefore strengthens your position under the Wbb as well as under contract law.
When do you need an NDA?
You need one whenever you have to share valuable information before a relationship is fully settled. Typical moments are:
- pitching a business plan or financial forecasts to investors;
- exploring a joint venture, merger or acquisition, where both sides review financial and commercial data;
- engaging freelancers, agencies or suppliers who need access to customer lists, source code or product designs;
- showing a prototype to a manufacturer or distributor;
- bringing new employees on board who will handle internal strategies and client information.
In each of these situations you give away control over information that competitors would value. The NDA does not prevent a leak, but it makes clear that a leak is a breach of contract with consequences.
What information can an NDA protect?
An NDA can cover any information that is not publicly known and that has value for your business. Examples are customer and supplier lists, pricing and margins, marketing and expansion plans, software code, formulas, technical drawings and financial data.
Information that is already public, or that the recipient demonstrably knew before signing, is normally excluded. A good NDA says so explicitly. For the statutory protection of trade secrets that exists alongside your contract, see our article on the Dutch law on the protection of trade secrets.
Which type of NDA do you need?
The right type follows the direction in which information flows. If only you share information, a one-way NDA is enough; if both parties share, you need a mutual one.
The unilateral NDA
In a unilateral (one-way) NDA, one party discloses and the other party receives. Only the recipient takes on confidentiality obligations. This is the most common form.
A start-up that presents its business model to a potential investor typically uses a unilateral NDA. The same applies when you engage a contractor who needs your project files, or show a prototype to a manufacturer. Be aware that professional investors often refuse to sign NDAs at an early stage. In that case, limit what you share to what is needed for the first conversation.
The bilateral NDA
In a bilateral (mutual) NDA, both parties disclose and both are bound by the same obligations. It is the usual choice when two companies explore a partnership, a joint venture or a merger.
In due diligence, both sides review each other’s financial records, contracts and customer data. A mutual NDA gives both parties the same protection and avoids a negotiation about whose information deserves more care.
The multilateral NDA
A multilateral NDA binds three or more parties in one document. It replaces a network of separate bilateral agreements.
It is useful for consortia, for example several companies that develop a product together and each bring their own technology. One agreement ensures that every participant is bound towards all the others on the same terms.
| NDA type | Information flow | Primary use | Example |
|---|---|---|---|
| Unilateral | One-way | Protecting your information when you share it with another party. | A start-up presenting its business plan to an investor. |
| Bilateral | Two-way (mutual) | Two parties exploring a partnership that requires disclosure on both sides. | Two companies discussing a merger or joint venture. |
| Multilateral | Multi-directional | Three or more parties working on one project. | A consortium of technology firms developing a new platform. |
Which clauses make an NDA enforceable?
Four clauses decide whether an NDA works in practice: the definition of confidential information, the obligations of the recipient, the duration and the consequences of a breach. Choice of law and the competent court complete the picture.
How should you define confidential information?
Define it by concrete categories, not as all information of any kind. A court can only enforce what it can identify.
A clause that covers everything the recipient ever hears from you is hard to police. A definition that refers to identifiable categories works better, for example:
- financial data such as turnover, margins and investor details;
- business strategies, product roadmaps and expansion plans;
- customer and supplier lists, including contract terms;
- software code, formulas, technical specifications and prototypes.
Many NDAs add that documents marked as confidential are covered, and that oral information is covered if you confirm it in writing within a short period. The clause should also list the usual exceptions: information that is already public, information the recipient already had, information received lawfully from a third party, and disclosures that the law or a court requires.
What must the receiving party do?
The recipient must keep the information secret and use it only for the agreed purpose. The second obligation is as important as the first.
A non-disclosure obligation alone does not stop a recipient from using your information itself, for example to build a competing product. The NDA should therefore state the permitted purpose, such as assessing a possible investment or cooperation, and prohibit any other use.
Good NDAs also regulate who may see the information within the recipient’s organisation (only people who need to know and who are bound by similar obligations), what security measures are expected, and what happens to the information when talks end. A standard clause obliges the recipient to return or destroy all documents and copies on request.
How long should the confidentiality obligation last?
The duration should match the period during which the information keeps its value. For commercial information a term of two to five years is common; for a genuine trade secret the obligation can last as long as the information remains secret.
Details of a product launch lose their value once the product is on the market. A production process or recipe can keep its value for decades. If the NDA says nothing about duration, a dispute may arise about whether the obligation has ended. Dutch courts then interpret the agreement in the light of reasonableness and fairness (redelijkheid en billijkheid, Article 6:248 BW), which makes the outcome less predictable. It is better to set the term yourself.
What happens after a breach: the penalty clause
An agreed penalty (boetebeding) is the most effective clause in an NDA. It gives you a fixed amount per breach without having to prove your loss.
After a leak it is often very difficult to show how much turnover or market position you lost as a result. Under Articles 6:91 to 6:94 BW, parties may agree that the breaching party pays a fixed sum. Unless the contract provides otherwise, the penalty replaces compensation for damages (Article 6:92 BW). If you want to be able to claim higher actual losses as well, the NDA must say so.
The court may reduce a penalty, but only if fairness clearly requires it (Article 6:94 BW). Courts apply this power with restraint, but an amount that is wholly out of proportion to the interest at stake runs a real risk of reduction. A penalty per breach, combined with a daily amount while the breach continues, is common. Make sure the clause states whether the penalty is due immediately, without prior notice of default.
Choice of law and jurisdiction
If you do business across borders, state that Dutch law applies and which court is competent. Otherwise you may have to enforce the NDA abroad, under rules you do not know.
Within the EU, parties are largely free to choose the applicable law and a competent court for commercial contracts. Some parties opt for arbitration, for example before the Netherlands Arbitration Institute, which keeps the dispute itself confidential.
NDAs with employees: what is different?
Employees already owe a duty of confidentiality, but a written clause makes it concrete. If you want a penalty clause in an employment contract, stricter rules apply.
Every employee must behave as a good employee (goed werknemer, Article 7:611 BW), which includes discretion about the employer’s business. Disclosing business details that an employee or former employee has undertaken to keep secret can also be a criminal offence under Article 273 of the Dutch Criminal Code (Wetboek van Strafrecht, Sr). Most employers still include an express confidentiality clause, because it removes discussion about what is confidential.
A penalty clause in an employment contract is only valid if it meets Article 7:650 BW. The clause must be agreed in writing, it must specify which obligations the penalty relates to and the amount of the penalty, and it must state what the penalty will be used for. For employees earning no more than the statutory minimum wage, the law limits the amount further. Collective labour agreements may contain their own rules.
An NDA is not a non-compete clause. It does not prevent a former employee from working for a competitor; it only prevents them from using or disclosing your confidential information. If you want to restrict future employment, you need a non-compete clause (concurrentiebeding) under Article 7:653 BW, which has its own requirements.
What can an NDA not do?
An NDA cannot stop someone from reporting wrongdoing to the authorities. It also cannot make information confidential that is already public.
The Wbb expressly allows disclosure of a trade secret to reveal misconduct or illegal activity in the public interest, and in the exercise of freedom of expression. Whistleblowers who report in line with the Whistleblowers Protection Act (Wet bescherming klokkenluiders) are protected against retaliation. A clause that tries to prevent such reports will not be enforced on that point.
An NDA also does not bind third parties who were not party to it. If information ends up with a third party, you may have a claim against that party under the Wbb, but not under the NDA itself.
Who should sign, and when?
Sign the NDA before any confidential information is shared, and make sure the person signing may bind the company. An NDA signed after the first meeting does not automatically cover what was said in that meeting.
For a Dutch private limited company (bv), check in the Commercial Register of the Chamber of Commerce (KvK) who is authorised to represent it, and whether that director may act alone. If an employee without authority signs, the company may later dispute that it is bound. Electronic signatures and signed scans are generally accepted as evidence, as long as you can show who signed and what version was agreed.
If information was shared during talks before the NDA was signed, you can state in the NDA that it also applies to information disclosed from a specific earlier date. Keep a record of what you disclosed and when, for example by sending documents through a data room that logs access.
Which mistakes make an NDA weak?
Most problems arise from vague definitions, missing penalties and templates that do not fit the situation. These mistakes rarely show until you need to rely on the agreement.
The mistakes we come across most often are:
- a definition of confidential information that is so broad it covers everything, or so narrow that it misses what matters;
- no restriction on use, so the recipient may exploit the information as long as it does not pass it on;
- no term, or a term that ends before the information loses its value;
- no penalty clause, so that every breach turns into a difficult claim for damages;
- a template written for another legal system, with concepts that have no meaning under Dutch law and no choice of law or forum.
Templates are a useful starting point to see what an NDA looks like. They do not know what you are protecting, who the other party is or where a dispute would be heard. When the information is valuable, have the draft checked against your specific situation.
What can you do when an NDA is broken?
Start by securing evidence, then send a formal demand. If the other party does not stop, you can ask the court for an injunction and claim the penalty or damages.
Securing evidence and sending a demand
Before you act, establish what was disclosed, to whom and when. Keep emails, documents, screenshots and statements from people involved.
The next step is usually a letter demanding that the other party stop using and disclosing the information, return all copies and confirm this in writing within a short deadline. The letter also serves as a notice of default where that is required, and it announces that you will claim the agreed penalty. In many cases this letter is enough to end the breach.
Injunction in summary proceedings
If the breach continues, you can ask the preliminary relief judge (voorzieningenrechter) in summary proceedings (kort geding) for an order prohibiting further use or disclosure. Such an order can be obtained within weeks when there is urgency.
The court usually attaches a penalty payment (dwangsom) to the order, which becomes due for every day or every instance of non-compliance. Under the Wbb, the court can also order the recall or destruction of goods and documents that are based on a trade secret.
Claiming the penalty or damages
With a valid penalty clause you claim the agreed amount. Without one you must prove your actual loss and the causal link with the breach.
Damages can include lost profits and the costs of limiting the harm, but you have to substantiate them. In practice this is where many claims stall. For disputes that also involve patents, copyright or other intellectual property, read how to handle intellectual property disputes in the Netherlands.
An example from practice
A software company shares its source code with a development partner under a mutual NDA that restricts use to a joint project. After talks end, a similar product appears on the market. Because the NDA contains a clear definition, a purpose restriction and a penalty per breach, the company can obtain an injunction in summary proceedings and claim the penalty without having to calculate its lost turnover first. Without those clauses, the same case would be far harder to win.
In summary
- An NDA is an ordinary, binding contract under Dutch law; no special form is required, but a signed document makes proof easier.
- Choose a unilateral, bilateral or multilateral NDA depending on who shares information.
- Define confidential information in concrete categories, restrict use to a stated purpose and set a realistic term.
- Include a penalty clause (Articles 6:91 to 6:94 BW); for employees, Article 7:650 BW sets extra requirements.
- After a breach, secure evidence, send a demand and, if necessary, seek an injunction in summary proceedings.
More background can be found in the Trade Secrets Protection Act and in Book 6 of the Dutch Civil Code.
Frequently asked questions about NDAs
Are online NDA templates safe to use?
A template shows you what an NDA generally looks like, but it does not know what you are protecting. Many templates are written for another legal system and lack a penalty clause, a purpose restriction or a choice of Dutch law and a Dutch court.
When valuable information is at stake, have the agreement drafted or at least reviewed for your situation. That is the most reliable way to make sure it can be enforced.
How long should an NDA last?
The term should follow the period during which the information keeps its value. The key is that the term is reasonable and clearly stated.
- For information with a limited shelf life, such as an upcoming product launch, a term of two to five years is common.
- For a genuine trade secret, such as a production process or formula, the obligation can apply for as long as the information remains secret.
If the NDA says nothing about duration, the court will interpret it according to reasonableness and fairness, which makes the outcome less predictable.
Should I ask a potential employee to sign an NDA?
If you share sensitive information during the recruitment process, it is sensible to ask the candidate to sign an NDA first.
Once the candidate is hired, include a confidentiality clause in the employment contract. Employees already owe discretion as good employees under Article 7:611 BW, but a written clause makes clear what is confidential. A penalty clause in an employment contract must meet the requirements of Article 7:650 BW.
Law & More drafts and reviews NDAs for Dutch and international businesses and acts when confidential information is misused. Unsure where you stand? Tell us about your situation. We will let you know your options within one working day.
How Law & More can help you with this is explained on our corporate lawyer page.
