Director not liable for unpaid litigation costs: access to justice weighs heavily
On 14 October 2026, the Amsterdam District Court ruled that a director is not personally liable for his company's unpaid order to pay litigation costs. The fact that, when the proceedings began, the director had to take into account the risk that the company would be unable to pay a possible costs order does not amount to a serious personal reproach (ECLI:NL:RBAMS:2026:10071).
The case
After a cooperation ended, a project company had brought arbitration proceedings against its former principals. All claims were dismissed and the company was ordered to pay EUR 80,000 in legal costs. It had negative equity and did not pay. The creditors then held the director (a legal entity) and that entity's own director personally liable in tort (Article 6:162 of the Dutch Civil Code), in combination with Article 2:11 of the Dutch Civil Code.
The assessment framework
The court applied the established case law of the Dutch Supreme Court. The starting point is that only the company is liable. A director is also liable only if he can be personally and seriously blamed. That is the case, for example, if he knew or ought to have understood when entering into an obligation that the company would be unable to perform and would offer no recourse, or if he caused or allowed the company not to perform its obligations while knowing or having to understand that this would lead to unrecoverable damage. This high threshold is justified partly to prevent directors from being guided to an undesirable extent by defensive considerations.
No duty to secure cover for costs in advance
According to the court, there is no general rule that a party must have sufficient funds available before (arbitration) proceedings to cover a possible costs order. Such a requirement would unjustifiably restrict the right of access to a court (Article 6 ECHR). The fact that an opposing party cannot recover its costs is an acceptable societal risk. Nor was the director obliged to provide additional financing after the arbitral award. Payments to the tax authorities as a preferential creditor, the company's lawyer and its accountant were not prohibited selective payments either. Abuse of procedural law had not been alleged.
Practical tips
As a director, record why starting proceedings is in the company's interest.
In case of a shortfall, do not give priority to payments to yourself or related parties when liquidation or bankruptcy is in sight.
As a creditor, substantiate any reproach with concrete evidence, such as annual accounts; a reference to LinkedIn profiles was not enough here.
Read more about our corporate law services on our specializations page. Questions about director liability? Contact us; we are happy to help.
This blog provides general information and is not legal advice. For advice on a specific situation, please contact us.
