The Hybrid Notary in a Split between

Office and Enterprise

By: Prof Dr Leon Verstappen1

1. Introduction

In the nineties of the previous century, former governments started a development

towards greater market effect, also in the professional service sector. The operation,
in which many professional and industry sectors were fundamentally restructured,
was named Market Effect, Deregulation and Quality of Legislation (MDW,
Marktwerking, Deregulering en Wetgevingskwaliteit). The philosophy behind this
policy is that the market provides better services for more favourable prices,
necessitating less regulatory intervention from the State. 2 The pursuit of the public
interest is increasingly left to private actors. The government and society also expect
private actors, along a broad range of societal fields and in an ever-increasing
degree, to promote public interests. Consequently, public and private interests have
become increasingly intertwined.3

Old government-based institutions serving certain public interests have been

replaced by market authorities appointed by the government, who generally present
themselves as a new kind of police to the general public. 4 The institutionalisation of

1
Professor of Private Law, in particular Notarial Law, University of Groningen, Academic
Director Groningen Centre for Law and Governance.
2
See Frits Bolkenstein’s ardent plea in the newspaper NRC Handelsblad of 22 November 2011
in the NRC series of articles on the question of whether the free market actually works.
3
See about the relationships between market, state and society the report: Public Interests in a
Market Based Society (Publieke zaken in de marktsamenleving), of the Scientific Advisory
Counsel for the Government (Wetenschappelijke Raad voor het Regeringsbeleid, hereinafter
also referred to as: WRR ) The Hague, 2012, as well as the report concerning the
public/private balance, dealing with the question of privatization (Het borgen van publieke
belangen), WRR, The Hague, 2000, Report 56.
4
The Dutch Competition Authority (Nederlandse Mededingingsautoriteit, NMa), the

Electronic copy available at: http://ssrn.com/abstract=2368035

this new line of business from the government has been accompanied by a large
quantity of new legislation. The Dutch office of notary is a good example of this
development.
The Latin office of notary has been a textbook example of the interweaving of
public and private roles for centuries, as it is a functionary responsible for both
public and private interests. The aforementioned MDW operation has brought the
notary office more market effect and has created a different organisational structure.
This contribution discusses the effects of these developments on the position of the
notaries in the Netherlands. First and foremost, the difficult position of the notary
office in legal interactions and on the market of legal services are discussed. I deal
especially with the question whether market effect within the profession of the
notaries is possible to a full extent. Related to this is the issue of regulation of the
profession of the notaries, also in light of European rules. With this the difficult
position of the Dutch Notarial Organisation (hereinafter referred to as ‘KNB’,
Koninklijke Notariële Beroepsorganisatie) is taken up. Relevant developments are
explained on the basis of changes in legislation.

2. The Notary as a Civil Servant and an Entrepreneur

The notary is a special civil servant, appointed by Royal Decree, who exercises
public authority (which is not the same as exercising public authority in terms of
Article 51 TFEU (ex- Article 45 of the EC Treaty)5), and at the same time an
entrepreneur, because for his income, he is dependent on his clients and not on the
government.

Independent Post and Telecommunication Authority (Onafhankelijke Post en

Telecommunicatie Autoriteit, OPTA), the Direction Regulation Energy and Transportation
(Directie Regulering Energie en Vervoer, DREV), the Authority Financial Markets (Autoriteit
Financiële Markten, AFM), the Dutch Healthcare Authority (Nederlandse Zorgautoriteit,
NZa), the Consumer Authority (Consumentenautoriteit, CA), etc.
5
The Dutch notary exercises governmental authority as stated in the Notaries Act. The concept
of public authority is not to be confused with exercising public authority as stated in Article
51 TFEU of the EC Treaty in its interpretation by the European Court of Justice. The
European Court ruled that notarial activities, as currently defined in the Member States, are
not connected with the exercise of public authority within the meaning of the first Paragraph
of Article 51 TFEU (ex-Article 45 TEC). Judgment of the Court (Grand Chamber) from 24
May 2011 – European Commission/Belgium, France, Luxemburg, Austria, Germany and
Greece (judgments in the Cases C-47/08, C-50/08, C-51/08, C-53/08, C-54/08, C-61/08 and
C-52/08, where the Court has ruled on 24 May 2011 and for the Netherlands Case, C-157/09,
LJN BU7491, ruling on 1 December 2011).

Electronic copy available at: http://ssrn.com/abstract=2368035

One must not confuse the Dutch notary with the Anglo-Saxon notary. For
approximately 80 juridical acts under private law, the Dutch citizen is required to
visit a notary. Without a notarial act, these acts cannot be validly performed. These
acts vary from real estate transactions to the preparation of wills, prenuptial
agreements and the establishment of legal entities. The thought behind this
requirement is that the government, for several reasons, believes that these
transactions should be guided by experts and not be left to the citizens themselves.
Another contributing factor is the need of a certain degree of standardisation of
information, in view of the registration of such juridical acts in public registers.
Above all, the purpose is to reach a level of legal certainty for citizens and the State
because an expert informs, advises and documents the juridical act fully and
correctly in a deed with special evidential value. In this regard, the Dutch notary
fulfils the role of independent and impartial provider of legal services not only for
all parties to the legal act, but also for the State.
The notary serves the public interest when he performs official acts. He also works
in the private interest of his clients whilst performing these official acts as well as in
his other, non-official activities. Notarial deeds are property of the State, but the
notary’s files are covered by confidentiality. The notarial profession is one of the
most legislatively regulated professions, but the notary as an entrepreneur is also
exposed to the economic laws of the market. In short, he is a functionary whose
professional ‘genes’ are of both public and private nature. He is used to dealing with
the dilemmas arising from his hybrid position.6 Because of the very far-reaching
implementation of market effect in the Dutch profession of notaries, this stands apart
from other European notaries.

3. The Notary in the Market

The challenges in the professional work of the notary, in this day and age, mainly
arise from the fact that, on the one hand, the government has put the notary in the
market even further by abolishing the tariffs and the limited number of notaries
(numerus clausus), and, on the other hand, his liabilities, obligations and
responsibilities have substantially been increased by new legislation and case law.
Even more so than before, the notary is expected to serve the public interest. He is
increasingly seen as an extension of the State, e.g. in the fight against crime, whilst

6
For a detailed description of the profession of notary in the Netherlands, see B.C.M. Waaijer,
De notariswet, Deventer, Kluwer, 2012.

3
his position in the market has deteriorated rather than improved.7 Monitoring,
supervision and enforcement have been significantly expanded.8 It has been said that
the notary increasingly finds himself in a split between office and enterprise. 9

3.1. Position of the Notary in Legal Transactions10

The position of the notary in the market is a difficult one. Notaries are lagging
behind twice as much: they must often be called in during the implementation phase
of transactions and are then unable to perform their role properly as provider of
information and advice, as the agreement has already been concluded. Banks, real
estate agents, insurance intermediaries, accountants and tax advisors operate all at
the beginning of the production line. The notary, however, comes into play at the
end of that line. The notarial advice, therefore, often comes too late. Moreover,
banks, real estate agents, insurance intermediaries, accountants and tax advisors are
more frequently in contact with the client, and thus enjoy more customer loyalty
than the notary.
In our system the added value of notarial intervention would be realized much better
if the obligatory/pre-contractual phase would also be supervised by a notary.
Considering the role in legal transactions assigned to the notary by the legislator, it
would, for example, have been a logical step to require the contract of sale of
immovable property to also be drafted by the notary. 11 However, there is no political

7
For example his duties under the Law against money laundering and financing terrorism.
8
See e.g. the Law of 29 September 2011, State Journal, 2011, 470.
9
See the report by the Commission Hammerstein, Commission Evaluation Notaries Act
(Commissie Evaluatie Wet op het notarisambt), Het beste van twee werelden, Den Haag,
2005. Also compare G.J.C. Lekkerker et. al, Handel en Publieke taak. Gedachten over het
notariaat als ambt en onderneming, Werkgroep ‘ambt en onderneming’ van de Koninklijke
Notariële Beroepsorganisatie, April 2004; Z.D. Laclé, B. Krop & N.J.H. Huls,
Balansverschuiving? Notarissen over ontwikkelingen in de notariële beroepsethiek na vijf
jaar Wet op het Notarisambt 1999, November 2005; Z.D. Laclé, ‘Notariaat, ethiek en
marktwerking’, Justitiële Verkenningen, 2005, p. 49-63; L.C.A. Verstappen, ‘Meer
marktwerking in het notariaat? Een heilloze weg!’, WPNR 2005/6645; M.J. ter Voert & F.
Zwenk, Kwaliteit in zware tijd, Marktwerking, vraaguitval en notariële dienstverlening,
rapport 296, WODC, Den Haag, 2011.
10
See L.C.A. Verstappen, ‘Meer marktwerking in het notariaat? Een heilloze weg!’, WPNR
2005/6645; L.C.A. Verstappen, ‘Het notariaat in een spagaat: over instroom en de toekomst
van het notariaat’, WPNR 2004/6591.
11
See on this issue A.L.M. Keirse, et al. ‘Wet koop onroerende zaken: de evaluatie’, WODC,
2009, as well as the parliamentary discussions, published in the Parliamentary files under
Dossier No.32 320.

4
will to change this 12, due to pressure from several lobby groups, mainly
organisations of real estate agents and consumers.13 The question arises if this is in
the best interest of the consumer and society.
The same applies to services relating to financial products leading to notarial acts,
for example mortgage services. Is the client aware of the risks? Who warns the
clients about these risks? Interested banks? ‘Independent’ mortgage advisors? Of
this last group we now know that they were not as independent as claimed, as until
recently they were receiving commission payments from banks and were de facto
working more in the interest of the banks than of the consumer. The consumer was
led to believe that he received the best and appropriate advice ‘for free’. Nothing
could have been further from the truth. Also here, an independent notary could have
realized his societal added value.

3.2. The Choice of the Notary as Seen by the Client: Lack of Transparency14

The average client often blindly relies on what the notary tells him. Like lawyers,
medical specialists and other similar service providers, notaries exercise a profession
based upon confidence in his work. Apart from a few professional clients, it is
difficult for clients to judge the quality of the notary’s services. The client is able to
assess whether there is good parking, whether he is given a good cup of coffee,
whether the notary is a friendly woman or man and whether the client’s name is
spelt correctly in the deed. However, the client is not able to judge whether he has
received the correct information or whether the chosen construction in the juridical
act is the most appropriate option for the client’s situation. The choice of the client
will more often be based upon the price of the notarial product than on the quality of
the notarial work.
The market in notarial services fails in this respect. Notaries often can de facto only
compete on price. This has the inevitable consequence that the qualitative aspects
will become less and less relevant. It is a downward spiral. This is an economic

12
See the letter of the Minister for Security and Justice, Parliamentary year 2011-2012, Dossier
32 320 No. 2. ‘Evaluatie van de Wet’ aanvulling van titel 7.1 (Koop en ruil) van het nieuwe
Burgerlijk Wetboek met bepalingen inzake de koop van onroerende zaken alsmede
vaststelling en invoering van titel 7.12 (Aanneming van werk)).
13
See e.g. the website <http://www.nvm.nl/Over_NVM/standpunten/W.aspx>, as well as:
<http://www.eigenhuis.nl/actueel/nieuws/2012/koopakte-niet-verplicht-bij-notaris/>.
14
See L.C.A. Verstappen, ‘Meer marktwerking in het notariaat? Een heilloze weg!’, WPNR
2005/6645; L.C.A. Verstappen, ‘Het notariaat in een spagaat: over instroom en de toekomst
van het notariaat’, WPNR 2004/6591.

5
mechanism that also economists cannot deny, as can be read in the quotation from a
SEO report below15:

If the quality does not rise above a (later to be determined) level of

transparency, it is unwise to liberalize the tariffs of the legislatively
regulated notarial activities. In that case the danger of quality deterioration
arises – as a consequence of adverse selection (see Paragraph 2.1) – and
prices increase – as a consequence of the fact that quality is not visible and
the client is not able to choose on the basis of the best value for money.
Without the required transparency with regard to the quality of the service,
the tariffs should be determined by public regulation.16
There is no transparency as to the quality of the notarial services, and it is
questionable whether a sufficient level of transparency can ever be realized.17

3.3. Dependence on Suppliers: Return Commission

In the second place the notary, as a consequence of the previously described role in
legal transactions, is also mostly dependent of a number of suppliers of notarial
work, like banks, estate agents, tax advisors and accountants. The increased
exposure to market forces makes notaries often function more as subcontractors than
as surveyors. Certainly, in a free market situation, the notary has been made
dependent in an unhealthy way. 18 The most curious thing about the far-reaching
market forces in the notary office is perhaps the fact that notaries are themselves
bound by numerous regulations that conflict with the principles of the free market.
These regulations include several liquidity and solvability requirements as well as
rules of professional conduct, but also reach as far as the staple which binds the
pages of a deed. There is nothing wrong with these regulations from the viewpoint
of quality assurance and maintaining professional standards. On the contrary, they
are absolutely necessary to realise the added value of the notary when people
perform juridical acts. But the government should not undermine these quality

15
B. Baarsma, J. Mulder & C. Teulings, Rechtszekerheid als publiek belang , Amsterdam,
Stichting voor Economisch Onderzoek (SEO), 2004, p. 73 (translation L.C.A. Verstappen).
16
Also compare P.J. Plug et al. Mededinging versus Domeinmonopolie en ministerieplicht,
Over de gevolgen van marktwerking in het notariaat, No. 665, 2003 (17 April), Den Haag,
SEO, p. 90 et seq.
17
The same problem also occurs in e.g. the medical sector, where the government also tries to
promote market effect.
18
Also compare the Case Makelaarsland and Actus notaries, Hof Amsterdam 30 June 2009, LJN
BJ1678.

6
assurances by breaking the monopoly and by admitting other service providers to
the market, who are not subjected to these regulations. The free market is controlled
by necessary regulations for good reasons. The government should not question
these regulations just because they do not fit the mantra of the free market.
I will now provide an example that can illustrate that the free market does not work
for the notary. It is prohibited for the notary to give suppliers of notarial work a
return commission.19 This prohibition has to do with the independence and
impartiality of the notary laid down in Article 17 of the Notaries Act (‘Wet op het
notarisambt’): the notary practises his profession independently and he takes care of
the interests of all parties involved in the legal act impartially and with the utmost
care (Paragraph 1). Besides this, the notary is not permitted to practice his
profession in employment or any other relation, which could influence his
independence or impartiality (Paragraph 2). One might wonder what it would lead to
if the government were to lift this prohibition and to permit return commissions. The
ones who view the prohibition of return commissions as an unacceptable obstacle to
the market effect should be inclined to agree that, if it should be possible to ask
notaries for return commissions, it should also be permitted that notaries functioning
in rare cases as supplier ask for return commissions. From this perspective, there is
nothing wrong with notaries asking for return commission from charities, if by the
notaries’ intervention, assets have been bequeathed to a charitable organisation.
Why would third parties be permitted to ask return commission from notaries, but
notaries not from third parties?

3.4. Consequences of Market Forces

Both elements (lack of transparency and dependence on other suppliers earlier in the
chain) cause the application of the principles of the free market to the notary office
to be problematic. Because of the fact that it is nearly impossible for an average
client to judge the quality of notarial work, it is not possible for the notary to
compete on quality but only on price. This effect is reinforced by the power of the
service providers who act as a supplier for the notary office: banks, real estate
agents, tax advisors and accountants. This did not, however, stand in the way of the
broad introduction of competition and market forces within the notary office in
1999.
It is apparent that this must at some stage lead to loss of quality within a profession
that derives its existence from the trust that citizens should rightly place in the high

19
See the decision, n. 12, supra.

7
level of quality of services provided by a notary, without exception, to every client.
These services include, for example, cancellations of mortgages in public registers
that are not applied, control of the title of transfers that is left unperformed
(sometimes notaries suffice with inserting the sentence that the seller of immovable
property ‘inherited the property’), incorrectly performed authentications, illegal
return commissions, permitting abuse at public auctions, insolvency of notaries and
so on. These are all indications that there is something fundamentally wrong. The
question is whether this is of a temporary nature or whether the notary office is
structurally deteriorating. The problem here is that structural problems due to loss of
quality have a tendency to reveal themselves only to their full extent after a longer
period of time. This feared loss of quality of the notarial services will undoubtedly
be accompanied by a reduced loyalty from the notarial profession towards the
government.

3.5. Market Forces and Deregulation are Mutually Exclusive: Who Will
Sweep the Notarial Court Clean?

Market effect and deregulation are mutually exclusive. With this I would like to
state that when market forces are released into a profession like that of the notary,
the professional conduct is put under pressure which ‒ partly because of the
previously mentioned special characteristics of this market ‒ will reduce the average
quality of the service provided by notaries even more. Self-regulation stops
functioning because sometimes self-restraint and quality-enhancing measures, even
in an aggressive market, do not lead to a better position in that market. The market
instead stimulates actors to explore the limits of professionalism. This counts even
more, when other service providers are admitted to the work of a notary.
Additionally, third parties, mainly suppliers, do not take into account any of the
regulations to which the notary as a professional is bound.
I was dumbfounded when, during a roundtable at the Dutch Lower Chamber of our
Parliament, a representative of www.degoedkoopstenotaris.nl
(www.thecheapestnotary.nl) openly admitted that they ask notaries return
commissions for work that they get through this website. I would think that whoever
consciously entices a civil servant, like a notary, to contravene the legally binding
rules of professional conduct and practice, is committing an unlawful act.
More market forces have already led to the drafting of more regulations for the
performance of notarial duties and this growth only seems to be continuing. This
raises the question as to who drafts the rules. The ´royal´ way is that the KNB drafts
them, because the law assigns this task to the KNB. But it depends on whether the

8
KNB as a professional organisation is sufficiently capable of establishing clear and
binding regulations, considering the legal allocation of competence to establish
regulations on the one hand and the different interests and forces within the KNB on
the other hand. A striking example is the discussion on the mandatory collective
professional liability insurance for notaries, culminating in a firm decision by the
Dutch Council of State on this matter, where the KNB was reprimanded. 20
Regulation by the KNB raises the big question whether the drafted rules will be
acceptable. The KNB has become a public body since the new law on the notary
profession came into force in 1999. On the one hand, this has meant a strengthening
of her position, as the KNB has regulatory powers and every (candidate) notary is a
compulsory member. On the other hand, the position of the KNB is weaker, as its
mission is described by law as more limited than when the KNB was still a private
association and because its regulatory powers have been rigorously restricted by the
law.
The limited task of the KNB is apparent in the parliamentary debate of the new
Dutch Notaries Act. During the parliamentary debate, the advocacy of the common
interests of its members as a separate task of the KNB was dropped by amendment
De Koning c.s.21 The tasks of the KNB as a public professional organisation have
been limited to ‘those subjects that involve the public interest. Promoting common
interests of notaries, in particular economic interests, are as such not considered part
of its tasks’, according to the explanation of the amendment. The KNB is not
allowed to pursue a policy on the appointment of new notaries,22 and it may also
certainly not interfere with market effect, for example by advising on tariffs.
However, the amendment has in no way clarified which criteria should be put into
place to assess whether certain activities aim to promote common interests of the
notaries and whether these activities also serve the public interest. Such a
subdivision is actually too difficult to make, as the Minister for Justice already
indicated in the Explanatory Memorandum: in many cases the common professional
interests will coincide with the public interests. See in more detail Paragraph 5.2
hereafter.
This is what the dual character of the notary, on the one hand civil servant and
entrepreneur on the other, entails. Should the KNB not only refrain from activities in
the field of the promotion of common interests of the notary, but also from activities
with a mixed character, where both general public interests and common private

20
Cf. Netherlands Council of State 15 May 2013, Dec. 201113474/1/A3.
21
Lower House, year 1997-1998, 23 706, No. 23.
22
EM, Lower House, year 1993-1994, 23 706, No. 3, p. 11 and 50.

9
interests of notaries come into play? 23 I do not think this can be concluded from the
legislative history, but if that were the case, it would completely render the KNB
powerless.
This restriction of the tasks is also related to the limitation of the rulemaking
competence of the KNB. This competence mainly concerns organisational issues,
but it can also concern subjects that affect the performance of duties in the new
market order remotely or even directly. An example of this can be found in the
competence to establish rules of professional conduct and practice and rules for
interdisciplinary cooperation.24 The Ministry of Security and Justice has to approve
every regulation in advance.
The Explanatory Memorandum initially indicated that the Ministry’s assessment of
the proposed regulation by the KNB should be marginal; a proposed regulation does
not have to be positively approved by the Minister, but should be deemed
‘acceptable’.25 No approval was required in the original draft of the new Notaries
Act. At a later stage, mandatory approval was introduced, in view of the consistency
with rules established in accordance with the requirements in the General
Administrative Law Act. 26 The question remains whether that amendment entails an
alteration of the supervision; more specifically, whether marginal review has
suddenly become full review. 27 Initially, the only grounds for review were violation

23
Cf. EM, Lower House, year 1993-1994, 23 706, No. 3, p. 11-12: “The task description
monitors, as noted previously, first of all the public interests of this profession, but with this
should be noted that in many cases the common professional interests will collide with the
public interests. A clear distinction cannot be made. The chosen description of the task will
not stand in the way of the fellowship’s defence of common interests of its members,
indirectly linked to the public interest.”, and: “With that the character of the profession
undergoes a change and protection of the common interest, expressly stated in Art. 57 (now
Art. 61, LV), which must then be placed in the broader framework of the protection of the
general interest of the social system, within which the profession functions and fulfils the task
as defined by law for the conservation of the civil legal order.”
24
Art. 18 (2) and 61 (2) Notaries Act.
25
Cf. EM, Lower House, year 1993-1994, 23 706, No. 3, p. 57: It would be a breach of the trust
in the KNB as a public body, when a discussion between the Minister and the KNB would
arise about the question if a Statute/Regulation could be improved in its design and effect.
26
Letter of Amendment, Lower House 1995-1996, 23 706, No. 7, p. 20.
27
See the amendment following the report, Lower House, year 1995-1996, 23 706, No. 6, p. 26:
In the amendment following the report, the government asks, after a question posed by the
Christian Democrats (CDA), if the KNB feels it has sufficient freedom to act. The Minister
for Justice notices that generally, the KNB is free to draft regulations to their own discretion,
with the restriction that ‘the current views on the way regulation is supposed to take place by
public professional organisations should entail a more stringent assessment than has been the
case in the past’.

10
of the law or the common interest (Article 91.1). But Paragraph 2 of Article 89, also
introduced by amendment, moreover determines that regulations cannot contain
obligations or conditions that are not ‘strictly necessary’ for the realisation of the
purpose for which the regulation is intended or that unnecessarily hinder the
functioning of the market (proportionality and subsidiarity test). According to the
explanation, the amendment at this point intends to convey further conditions which
the regulations should comply with, to prevent any disputes over competences.28 But
the actual reason was that the Dutch Lower House of Parliament was afraid the
KNB, by their already too extensive regulatory powers, would again pursue
notaries’ interests.29 The proposers also intended synchronize with the evaluation
criteria that the working group Cohen formulated for the regulatory authority of the
Netherlands Bar Association (hereinafter referred to as NOvA, Nederlandse Orde
van Advocaten).
The most important objection directed against this criterion of ‘strict necessity’,
which was elevated to law, is that the tasks allocated to the KNB (the promotion of
good professional conduct, the advancement of professional skills, and safeguarding
the honour and regard for the profession), cannot be fully exercised if the regulatory
powers of the KNB are thus limited. This criterion also does not leave a lot, perhaps
no room at all, for the marginal assessment of the proposed regulations by the
Minister for Security and Justice.
Rules of professional conduct and practice mainly relate to the way in which a
notary should conduct themselves in the market, to maintain the honour and regard
for the profession. Do the words ‘strictly necessary’ in Article 89.2 now imply that
the KNB can only provide regulations if the practice indicates abuse? But is that not
far too late? And is the KNB allowed to impose procedural rules for certain,
frequent notarial proceedings? The Minister for Justice apparently thinks so. 30 As
long as such procedural rules apply to all notaries, I cannot see why these rules
would unnecessarily limit free competition. Some procedural rules, like the rules for
land transfer and registration, are undoubtedly strictly necessary, whereas others do
not have to be. Fortunately, the Remedial Law of

28
“Playing field and rules should, to prevent any competence disputes and possible legal
procedures as a consequence, be in advance clearly documented by the law.”, according to the
explanation.
29
Report on a legislative consultation, Lower House, year 1997-1998, 23 706, No. 32, p. 20,
also see p. 24.
30
Report on written debate Lower House, 1997-1998, 23 706, nr. 16, p. 6, where the Minister
for Justice shows himself to be an advocate of the system of quality assurance.

11
1 August 200431 has introduced the possibility to set rules, by regulation, on the
quality of exercising the profession (Article 61.2 second sentence Notaries Act). As
the market forces grow, the need for more regulations and enforcement will grow as
well.
I believe that the restriction inherent to Article 89.2 of the Notaries Act, that
regulations should not include obligations or precepts that are not ‘strictly
necessary’ for the realisation of the intended purpose of the regulations, should be
cancelled. It is a measure that is too strict for reviewing regulations. Furthermore, it
is unnecessary and does not comply with the criteria set by the working group
Cohen for the regulations of the NOvA, even apart from the question if those criteria
can just be transposed to the notaries. Even the Minister for Justice has
spontaneously remarked, during the legislative consultation, that the restriction in
the formulations of the amendment is perhaps too far-fetched.32 It renders the KNB
powerless. That this is already the case seems to become apparent in the fact that it
is easiest and fastest for the KNB to forward any cases of undesirable behaviour in
the notarial profession to the Court of Appeal in Amsterdam (the highest
disciplinary tribunal for notaries) instead if issue new regulations. A decision of the
Court of Appeal in Amsterdam has almost the same effect as a new regulation.
Lately, this has been the case several times. Professional liability insurers also play a
role, as they are now permitted to set insurability standards for the professional
practice, that are de facto at least as binding as the regulations of the KNB.
It is contradictory that the government, on the one hand, gives the KNB important
tasks such as the promotion of good professional conduct, the advancement of
professional skills, and safeguarding the honour and regard for the profession, whilst
on the other hand, deprives the KNB of its most important means to achieve its
purpose, the authority to issue regulations, by the strict assessment standards. It is as
if someone is commanded to clean a courtyard with a toothbrush.

3.6. More Exposure to Market Forces: The Economic Perspective

Reorganising the profession on the basis of the free market has had its effects, even
though not always as the government intended. Costs of family-law transactions
(e.g. prenuptial agreement and wills) have more than doubled after the first five

31
State Journal 2004, 213.
32
Legislative Consultation, Lower House, year 1997-1998, 23 706, No. 32, p. 37, where the
Minister for Justice observes: ”It would mean that the professional group also cannot make
demands with respect to professionalism etc. and that is probably not the intention of Mrs De
Koning.”

12
years after the introduction of the new Notaries Act in 1999, and they are still rising.
Meanwhile real estate transaction costs have decreased, although the fees for
transactions with higher value have decreased more than real estate transactions with
lower value. Cross-subsidisation concealed within the tariffs system has
disappeared. In addition, more generally, due to the economic crisis, turnovers have
decreased considerably from 2008 onwards. There has been hardly any significant
increase of the number of notaries. See the graphics below.

Average tariffs family law related deeds (2003-2006):

130

120
Index

110

100

90
2003 2004 2005 2006

declaration of succession
2 last wills, 2 children
2 last wills, 1 child
partnership contract, 2 last wills
marriage contract, 2 last wills
partnership contract

13
Average tariffs real estate related deeds for households (2003-2006):

110

100
Index

90

80

70
2003 2004 2005 2006

Mortgage €54.568
Mortgage renewal €218.272
Transfer real estate and mortgage €218.272
Mortgage €218.272
Transfer real estate and mortgage €436.543
Transfer real estate and mortgage €654.815

14
Average tariffs commercial real estate and company law related deeds (2003-2006):

110

100
Index

90

80

70
2003 2004 2005 2006
Establishment of an association
Establishment of a foundation
Amendment of the articles of association
Transfer of shares
Establishment of a limited liability company with transfer of goods
Establishment of a limited liability company
Mortgage €218.272
Transfer real estate and mortgage €654.815
Transfer real estate and mortgage €2.182.716

15
Average tariffs notaries (2003-2006):

120
index

110
x

100

90
2003 2004 2005 2006

Family practice
Company practice
Notary total
Real estate practice

16
Total number male and female notaries (candidate-notaries excluded)
1998-2006:

1.400 13% 14%

12%
12% 11%
1.200 12%
10%
9%
1.000 10%
8%
800 8%
6%
6%
600 6%

400 4%

189
176
166

162
148
129

9
111

6
6

2
83

8
73

9
3
3

200 2%
1.193

1.235

1.240

1.248

1.276

1.269

1.262

1.244

1.240
3

0
0 0%
1998 1999 2000 2001 2002 2003 2004 2005 2006

Male Female % females

Source for all graphics: Trendrapportage Notariaat 2006, Z.D. Laclé and M.J. ter
Voert.

Despite all these developments that are deemed positive from the perspective of the
consumer, the government still plays with the idea of liberalising the profession of
the notaries even more. Kalbfleisch, the cartel watchdog of previous years, has
already announced to go after the service providers, in particular notaries. The
Ministry of Economic Affairs is overzealously producing reports on this line of
business. Notaries’ monopolies are questioned. And all this is not happening quietly.
The free market is the credo and everything else must give way. For example, in the
SEO report33, I read under Paragraph 3.1.4, in the conclusion:

33
B. Baarsma, J. Mulder & C. Teulings, Rechtszekerheid als publiek belang, Amsterdam,
SEO, 2004 (translation L.C.A. Verstappen).

17
 A very remarkable finding is that we were only able to answer question 2
(Why did the legislator intend to position this activity under the domain
monopoly?) very sporadically on the basis of legislative texts and the
corresponding Explanatory Memorandum. We could deduce from this that
the legislator apparently did not have a purpose in mind when positioning
a specific activity under the domain monopoly. It is highly recommended
that the legislator does formulate these purposes, as only then is it possible
to determine the effectiveness of the domain monopoly.

It is genuinely shocking to see how these economists lack the knowledge of the
relevant legislation (and legislative history), literature and case law on the work of a
notary, his social position and his function in law in practice. 34
Another quotation from the SEO report35:

The government can, however, also ensure accessibility to the family

practice without monopolies. The accessibility is first of all enhanced
because other legal service providers will engage themselves in family
practice. Who these other legal service providers are, does not have to be
determined beforehand. The free market should be allowed to push
forward new and innovative legal service providers not currently visible to
us.

The presumption that all other legal service providers could perform the tasks of a
notary completely ignores the demands of professionalism, financial reliability and
personal suitability to exercise this confidential profession. The interchangeability of
legal service providers without additional guarantees is, of course, ludicrous.
Otherwise, I would be fooling students during their 4 years at University and during
3 years of their professional training thereafter, because any lawyer or accountant
could also do it, right? Yes, why not. From now onwards, notaries check annual
financial statements, dentists perform heart surgery and the shoemaker builds a brick
wall at my house. Civil servants seem to pursue the principle of ‘job rotating’ to a
level of absurdity. Some time ago, the Cabinet decided (very much against the will
of the former Minister of Foreign Affairs, Bernard Bot) that high functionaries of

34
I could mention a lot of references here but I will suffice mentioning the Evaluation Report of
the so called Commission ´Hammerstein´, Evaluation of the Law on Notaries, The best of
both worlds. (Evaluatie Wet op het notarisambt; Het beste van twee werelden), The Hague,
WODC, 2005.
35
Baarsma 2004, p. 44 (translation L.C.A. Verstappen).

18
other Ministries should also be allowed to become an ambassador in a foreign
country. Minister Bot cleverly remarked that this decision could also be reversed: an
ambassador would also be allowed to become an army general. Or not?
Finally a passage36 I would not want to keep from you:

The accessibility could be further increased by applying more

standardisation, e.g. by developing ‘filters’ for family practice.
Standardisation as second option. Standardisation is a means to limit the
workings of the domain monopoly. To create the possibility to do (less
lucrative and less interesting) business more efficiently, it would be
desirable to form more cost-effective procedures to deal with legal
problems of civilians, offering good value for money. Notaries could offer
standardised wills and cohabitation contracts, e.g. using information
technology. Just like other legal experts the notary has many standardized
contracts in his word processor that could form the basis of the final tailor-
made act.

In itself no one can object to the innovative new approaches using information and
communication technology providing notarial services at a higher quality level and
at the same time at lower costs. But the question raised here is whether a ready-
made model fitting the case, for which the consumer only has to fill out the personal
data, would work. In such a new, innovative system a lot is expected of the financial
and legal literacy of the average consumer, where the consumer is first put through
an electronic filter, to receive a model at the end, which only needs the consumer’s
personal data. Of course this is not how it works in practice. The notary is the person
fulfilling the filtering role, similar to a family doctor who assesses whether a patient
should be referred to a specialist. It seems that the consumer should still settle for a
low-cost model, even though the case might be much more complicated. Here, the
model is not fitted to the consumer’s case, but the other way around. He who doesn’t
fit the form – or better: ‘format’ – falls outside the model and is referred to a more
expensive window. This could be seen as the McDonaldization of society. However,
one should consider the times that we live in, in which forms of (family)
relationships have become much more varied and with that much more complicated
as well. One only has to take note of the developments that have taken place in the
last decades in Book 1 of the Dutch Civil Code. A similar tendency is visible in all

36
Baarsma 2004, p. 46 (translation L.C.A. Verstappen).

19
areas of notarial law. Experiments with the creation of ‘online’ acts by the consumer
themself have, to my knowledge, for those very reasons not yet been successful.
The governments’ initiatives on the market of notaries services fit well in the era of
liberalisation and promotion of the free market to further the competitive force of
our economy. Many service providers experience the whippings of the free market,
which in itself can be quite beneficial. But there are sectors in which more
liberalisation would have an adverse effect, where the intended purposes (better
services against lower prices) would not be achieved. When the free market was
introduced in the taxi industry, it was to bring about cheaper taxis and better service,
but the exact opposite result materialized. And there are more industries, where
similar scenarios have taken place; for example, the notary office. The question thus
remains if introducing the free market is not putting the cart before the horse.
The relations are now on edge, as the notarial monopolies in different fields are
being questioned. Among others, these fields are the mandatory involvement of a
notary when establishing a simple private company (BV), the intention of
involvement of a notary for the appointment of guardianship, the withdrawal of the
proposal for legal partnerships (where the notary plays an important role), as well as
the withdrawal of the proposal for the divorce notary. Not even to speak about the
discussion around the sales contract of immovable property.
Now the question which arises is how the potential release of the monopolies would
relate to strict regulation of the notary profession. When other, less regulated
professionals are allowed to handle these transactions, will they then also be
subjected to similar regulation? Or will the notary office be released from all
regulation? In the first case the notary will be reinvented, in the second the notary
will be abolished. In any case the government will have to show its colours.

4. Further Introduction of the Free Market is Accompanied by More

Regulations

That the further introduction of the free market necessarily leads to more regulations
in the market and to more supervision has already become apparent for the Dutch
notaries, with the introduction of the new legislation on account of the report
Hammerstein. Earlier, a duty of disclosure for the data concerning the notarial third
party account had already been introduced. The change made to the Notaries Act 37

37
See e.g. the Law of 29 September 2011, State Journal, 2011, 470.

20
on account of the report from the Hammerstein Committee involves more regulation
for the notary:

21
- The introduction of a personal assessment of suitability to become a notary.
- Extending the supervision by the Financial Supervision Office to general
supervision.
- Tightening up the obligation of conscientious objection under certain
circumstances.
- Limitation of the professional privilege and confidentiality.

How does the notary find the balance between the public representation of interests
supposed by the legislator on the one hand and the commercial pressure of the
competition with colleagues on the market on the other hand? Does the market
function as it should when the client has no idea as to the quality of the notarial
services, but only focuses on the price? Illustrative of this fact is that the only
comparative website for notarial services is www.degoedkoopstenotaris.nl
(translated into English: www.thecheapestnotary.nl).
Many notaries find themselves in an untenable split between office and enterprise,
especially in times of an economic crisis. It is becoming more and more difficult for
this hybrid service provider to find the right balance between public and private.

5. The Position of the Royal Netherlands Notarial Organisation:

Should it Promote Members' Interests?

5.1. From a Private Law Association to a Public Order: The Difficult

Relationship with the Members

Not so long ago a true revolution took place within the community of notaries. On 6
March 2012 the Board of the KNB was dismissed by its Member Council. On 11
April 2012 a new Board was appointed. These were very radical events. But what
were the more profound causes?
Until 1 October 1999, the notary office was organized as a private organisation, an
association, under the law valid from 1 of October 1999 on. With a degree of
organisation of almost 100% (apart from a few straying notaries), it was an example
of consensus and harmony. Even candidate notaries joined, knowing that
membership of the KNB would be essential to their appointment and that the KNB
was almost the only entity within the community of notaries that was de facto giving
the orders. The government had left this profession uncontrolled and as long as
everything was all right, there was no need to intervene. The KNB could even

22
determine the tariffs up to 1999, even though the government formally possessed the
authority to do so.
This relatively harmonious and very comfortable situation came to an abrupt, but not
unexpected, end because of the introduction of the new Notaries Act in 1999. In the
legislative process, the notaries made their own organisation, the KNB, as a private
association of professionals, available for transformation into a governmental body,
probably without fully realising what the consequences would be. The factors which
traditionally had the strongest influence in keeping the members connected within
the association (determination of tariffs, influence on the appointment of notaries
and the promotion of their interests) no longer played a role. In the eyes of the
government, this disposed the class-based organisation of its guild character. It does
not come as a surprise that (candidate) notaries cannot register as voluntary
members of a private association, but have to register as compulsory members (‘by
operation of law’) of a State organization. This quite fundamentally changed the
attitude of the (candidate) notaries towards the KNB and vice versa. No longer
based on voluntary and intrinsic involvement as a club (as indicated: as a guild), but
compulsory submission to a new government body that – certainly in the early years
– kept up appearances as if nothing had changed. But quite the opposite turned out
to be true.
By the introduction of the free market for notaries (leaving the limited market policy
and releasing the tariffs), relations between notaries radically changed as well: More
competition and less collegiality, from professional brothers and sisters to
competing colleagues in the market. More competition also brought about more
regulation. The ‘deregulation’ in the MDW operation has ultimately had little to no
effect. The number of regulations, professional rules and rules of conduct,
guidelines and policy regulations has increased every year.
More competition has also led to more diversity and heterogeneity. Notarial firms
are looking for the limits of what is possible. This has created a community of
notaries which is set up more diversely and which is more difficult to align.
Consequently, highly specialized notary firms were established in addition to firms
that mainly organized their standard work efficiently and cost-effectively. Notaries
united on the basis of their specialism, whilst a group of notaries referring to
themselves as Grote Kantoren Overleg (GKO: Large Firms Counsel) possess a
different consultation structure. Besides the increased mechanisms of the market, the
attention of (candidate) notaries today is also commanded by all sorts of notarial
clubs, such as specialist associations (e.g. Estate Planners in het Notariaat,
Registergoed specialisten in het Notariaat) and collaborations of notaries (e.g.

23
Formaat Notaries and Netwerk Notarisen). However, in this new situation with
much more competition between notaries, it would have been at least as difficult for
the old, private association to close up the ranks.
The new structure has also brought about an indirect democracy, which seats the
delegates of the local notaries chambers within a Member Council. This has
distanced the members from the decision-making process even more. With a Board
that changes annually, a chairman with a term of office of only two years and board
members that often run a busy practice besides their honorary position, one cannot
expect a lot of initiatives in the sphere of policy development and policy execution
from them. The only constant factor is the office of the KNB. It is thus not
surprising that this office prepares policies and develops those initiatives further. It
is also not surprising that, within the new structure, the office as the actual policy
executor behaves more like a government body than an advocate of the interests of
the notaries. The intrinsic danger lies in the fact that the office takes the chair of the
board and as such will de facto determine the content of policy. Knowledge
advantage of the office on the one hand and dependency of the board for policy
development and execution on the other will create the situation that the office will
play a more influential role in determining policy of the KNB than one would
initially have thought.
The discussion between the Board and the members should take place in the
Member Council. But does the Member Council truly represent the feelings of the
members? Do the members of this council really see it as their mission to represent
notaries, and not to make autonomous decisions? I dare to question this aspect,
however well intended and with conviction they act in their position. The fact that
the Member Council did not sufficiently recognize the enormous dissatisfaction of
their members before the previously discussed revolution of March/April 2012,
speaks volumes. In this respect there is enough reason for the Member Council to
reflect on its own functioning.
Question marks can also be placed when it comes to the way in which the members
themselves participate in the decision-making process. Exactly because the attention
of the members is demanded by all sorts of other clubs and because the changing
role of the KNB has de facto created a loss of ‘club feeling’. Local notaries´
chamber meetings and other KNB activities have not been well visited for years,
despite of the education credits that can often be obtained because of an invited
speaker.
All of this has brought about a kind of remoteness between the KNB as an
organisation and its members. That disconnection between organisation and its

24
members can continue for a while, but if circumstances occur that lead to tensions,
then there is a danger that the situation will explode. These circumstances are not
only the introduction of the free market as previously described, but undeniably also
the worsened economic circumstances notary firms suffer from due to their strong
dependency on transactions of immovables. To these circumstances, we can add the
implicit and explicit government policy for further liberalisation of the notarial
profession and the, at least in the eyes of the members, far too passive attitude of the
KNB in several cases, and we come close to finding the explanation for the
revolution in the community of notaries.
I outlined in the previous Paragraph what, in my opinion, the deeper causes of this
revolution are. In the next Paragraph I will discuss the legal framework in which the
position of the KNB should be seen, also in light of the position of another legal
class organisation: the Netherlands Bar Association (NOvA).

5.2. The Principle of Legality and Representation: The Difference

between the NOvA and the KNB

The KNB is, just as the NOvA, a public body in the sense of Article 134 of the
Dutch Constitution. For government bodies like the KNB the so-called principle of
legality applies. In private law the principle applies, that citizens should generally be
free to act as they want. One could sum this up by saying: citizens are allowed to do
everything, unless it is prohibited by law. In administrative law almost the opposite
applies. The action of any administrative authority should be based on a statutory
duty or provision. This so-called legality principle also applies to the KNB since 1
October 1999. Therefore the first question is which duties the KNB is responsible
for.
Article 61 Notaries Act contains the statutory task description of the KNB:

1. The duty of the KNB is the promotion of good professional

conduct and skills among its members. Its duty also includes
the care for the honour and regard for the notary profession.

2. By regulation professional rules and rules of conduct of its

members are determined by the KNB. By regulation rules can
also be determined regarding the promotion of professional

25
 skills of its members and regarding the quality of professional
conduct.38

This description is somewhat limited and does not include the promotion of interests
of (candidate) notaries. This limited responsibility is clearly stated during the
parliamentary discussion of the new Notaries. Article 57 (which later became
Article 61) of the original draft law reads:

1. The fellowship has the duty to promote good professional

conduct and skills among its members, and also to promote
their common interest. Its duty also includes the care for the
honour and regard for the notary profession.

2. By regulation professional rules and rules of conduct of the

members of the fellowship are determined.39

During the parliamentary discussion the regulation of the common interests of its
members by amendment De Koning c.s. 40 as a separate duty of the KNB, has fallen.
The text of this amendment speaks volumes:

No. 23
AMENDMENT OF MEMBER DE KONING ET AL

Received 7 April 1998

The signatories suggest the following amendment:

In Article 57, first Paragraph the phrase “[…] and also to promote their
common interest”, should not be included.

Explanation

This amendment intends to clarify the description of the duty of the KNB
as public body. Therefore the duty of the KNB is restricted to the subjects
that relate to the public interest. The promotion of common interests, in
particular the economic interests of notaries as such, are not included.

38
Translation L.C.A. Verstappen.
39
Translation L.C.A. Verstappen (emphasis added).
40
Lower House, year 1997-1998, 23 706, No. 23.

26
 De Koning, B. M. de Vries, Swildens-Rozendaal, Rouvoet41

This amendment has been accepted to ensure there is no doubt whatsoever that the
KNB is permitted to promote the “common interests, in particular the economic
interests of notaries as such”. In the eyes of the legislator this means that the KNB is
not allowed to pursue policy on the appointment of new notaries 42 and is certainly
not allowed to influence the functioning of the free market, e.g. by providing advice
on tariffs.
The amendment has, however, in no way clarified which criteria should be applied
to assess if certain activities pursue the common interest of notaries and whether by
these activities the public interest is (also) served. Such a subdivision is very
difficult to make, which the Minister for Justice at the time (before the amendment
De Koning) had already indicated in the Explanatory Memorandum: in many cases
the common professional interests will coincide with the public interest:

The task description overlooks first and foremost, as noted previously, the
public interests of this profession, but it should be observed that in many
cases the common professional interests will coincide with the public
interests. A clear distinction cannot be made. The chosen description does
not block the association promoting, if necessary, common interests of the
notaries that also are related to public interests,
and:
With that the character of the profession undergoes a change and the
promotion of the common interest, as expressly mentioned in Article 57
(now Article 61, LV), should then also be placed in a wider framework of
the representation of the common interest of the social system in which the
profession functions and in which it fulfils a statutory duty for the
maintenance of the civil legal order.43

These words left a certain scope for the promotion of common interests of notaries,
but after the acceptance of the amendment De Koning, such space was unfortunately
lost completely. This state of affairs established that the KNB is not allowed to
partake in pure promotion of interests of notaries. But as previously stated: this does
not clarify what the KNB is (still) allowed to do. This lack of clarity about which

41
Translation L.C.A. Verstappen.
42
EM, Lower House, year 1993-1994, 23 706, No. 3, p. 11 and 50.
43
Cf. EM, Lower House, year 1993-1994, 23 706, No. 3, p. 11-12.

27
criteria should be applied to assess if certain activities promote the common interest
and if by that the public interest is served, creates space for different points of view.
This discussion has resulted – as has become apparent in the last couple of years ‒ in
the KNB holding back in their actions in several cases. It has had a paralysing effect
on the KNB policy. ‘Not possible’ or ‘not permitted’ have been heard many times.
However, no one can deny a profession or a branch of industry the right of
promoting its interests in politics or in public administration. The KNB was
traditionally a private organisation that became a public body in 1999, without
having been replaced by an organisation to promote the interests of the notaries.
With this, the government has been presented with a completely new government
apparatus. In hindsight, this is a serious flaw in the system, which could (and
should) be mended.

28
This is why, on grounds of principle, the establishment of a body alongside the KNB
can and should be defended. This organisation will promote the interests of the
notaries, convey the added value of the notary in society and be able to place the
notary office in the public debate properly. The KNB would then be saved from an
impossible mission and the notaries would no longer be led to believe that the KNB
also promotes their interests.
Unlike the KNB the NOvA does have a wider task description. Compare Article 25
of the Counsel Act:

Article 25
The assembly of the Netherlands Bar Association deliberates on subjects,
relevant for lawyers and litigants.

Article 26
The General Council and the Supervisory Councils promote the proper
practice of the profession and are qualified to take measures that can
contribute thereto. They defend the rights and interests and supervise the
enforcement of the duties of lawyers and fulfil the duties that have been
assigned to them by regulation.

Article 27
The General Council represents the Dutch lawyers everywhere, when
there is just cause, even when it does not concern the interest of the
Netherlands Bar Association directly.44

This marks a clear distinction between the KNB and the NOvA, which is of
especially great significance for the application of competition law, as other
competition regulations apply to a government than to an association of
entrepreneurs. In the case of NOvA, the association in question is an association of
undertakings due to the Wouters ruling (see hereafter), which is not the case for the
KNB. That is why the KNB and the NOvA are not to be treated as equals.

44
Translation L.C.A. Verstappen (emphasis added).

29
What applies to lawyers,

The Bar Association should also watch over the continuation of its kind,
which also serves the public interest. With that comes the promotion of a
certain degree of economic prosperity. One cannot speak of good quality
45
legal service, if a certain subsistence level is not guaranteed,

does not apply to the KNB, especially not after the previously stated, unambiguous
parliamentary history, where the promotion of interests has been purposely deleted
in the original draft.
If the KNB wants to use this reasoning to defend the introduction of some form of
tariff regulation – which is a very valid measure from the argument that good quality
legal service requires a certain level of subsistence – it will almost certainly
encounter the Minister of Economic Affairs and the Minister of Security and Justice
on its path. The objection would be raised, that it is not the duty of the KNB to
represent these interests, despite the argument that the measure is desirable, because
a good service level requires a minimum subsistence level.
It speaks for itself that it is very important to know what kind of room for
manoeuvre the KNB has, and consequently, that clarity should be provided. The
then new interim chairman of the KNB asked the Minister for Justice to reveal his
position. The Minister formulated his position as follows:

This concerns the promotion of public interests that are involved in

notaries’ practices. It is a matter of public interest of a well-functioning
legal system, which is served by the profession. It does not concern the
interests of the group, i.e. exclusively or predominantly defending the
interests of the notary as such. This tension between the public and
collective interest is not a new development. This tension was felt less in
the old association structure, but is in a sense inherent to the structure of
public bodies with its accompanying regulatory powers. The promotion of
the common interest of the members of the profession has been cancelled
by amendment from the initial task description of the legislative proposal
that underlies the current Notaries Act (TK1997-1998, 23706, No. 23).
The idea behind this was that the public interest is not served with pure
(group) advocacy but first and foremost an economic interest, which
should not be defended by a public professional organisation. This

45
See the note of the delegates’ council: De Orde: Overheid in advocatenland, June, 2002.
(Translation L.C.A. Verstappen).

30
 limitation is especially important for the notarial office as the notary
exercises state authority. The public body should not exclusively or
mainly focus on its own interests, but first and foremost on the prevailing
public interest.

What is previously stated does not mean that the public interest and the
group interest could not conflict or coincide. In other words: serving the
prevailing public interest can also include serving the own common
interests. During the introductory interview I have indicated that I have no
objections to a firm input for the debate – also in the political forum – on
behalf of the notaries as they are an essential and expert link in our legal
system. A public body that promotes the quality and integrity of the
profession, acts like a guide for the profession and the public and acts as a
guardian of legal certainty should in my view also not avoid that vigorous
debate. As long as the public interest therein predominates, as it is the
46
raison d'être of a public body.

These healing words have distracted the profession temporarily from establishing a
separate entity to incorporate the promotion of their interests. But of course this does
not solve the problem. The Minister for Security and Justice (un)fortunately is not
able to change the law (or legal history) by letter. His interpretation is not valid
legislation. Therefore it still makes sense for the profession to have a plan B.

5.3. Restrictions on Powers of Regulation

The previously mentioned restriction of the statutory task description is also

connected with the restriction on powers of regulation of the KNB. Please see
Paragraph 3.5.
From these restrictions, it follows that the KNB should hold primacy over the
determination of professional rules and rules of conduct as a professional
organisation whose duty it is to ascertain and guard the quality of the professional
practice. The assumed high quality every notary ought to deliver is taken as a
starting point for the proportionality and subsidiarity test as laid down by law
(Article 89.2 Notaries Act). This test, as laid down by law, will have to be applied
primarily by the KNB as the regulatory initiative also lies with it. This test will
secondarily be applied by the Minister of Security and Justice for the evaluation of
the draft regulations that are submitted to him for approval. However, if the Minister

46
Translation L.C.A. Verstappen.

31
does not approve a regulation, he is also taking on a huge responsibility. Then the
matter will not have been addressed and the Minister does not have the power to
issue this kind of regulations.
In light of the previously stated legal history, I agree that the KNB policy should be
directed towards fully utilising its powers in the interest of the quality of the services
of the profession. Where to draw the line on what is still possible to be regulated
within the framework of servicing professional quality? This has for the time being
not been clarified by the legislator and will still depend on more detailed
considerations by the KNB and the Minister of Security and Justice involved, for
which the aforementioned proportionality and subsidiarity test will be guiding.
Also compare to this the wider powers of the NOvA:

Article 28
1. The Board of Representatives establishes regulations in the interest of good
professional practice. Furthermore the Board determines the necessary
regulations concerning the affairs and the organisation of the Netherlands
Bar Association.

2. Regulatory proposals are put to the Board by the General Council or by at

least five delegates. Previous to the submission of a draft regulation to the
Board, the General Council may decide to invite the Supervisory Councils
to make their views known.

3. After the regulations have been established, they are immediately

announced to the Minister of Security and Justice and published in the
Dutch Government Gazette (Nederlandse Staatscourant).47

From the differences between this legal stipulation of regulation powers and that of
the KNB, it becomes apparent that a different legal framework applies to the KNB
compared to the NOvA, mainly in view of the regulation powers as such. For the
NOvA there is no obligation to obtain approval. Comparison with the NOvA at this
point falls short.

5.4. European Dimension

The discussion surrounding the possibilities to promote notaries’ interests also has a
European dimension. Two judgments play an important role.

47
Translation L.C.A. Verstappen.

32
The Court of Justice for the European Union 48 has recently found that the activities
of notaries as currently defined in the Member States in question are not connected
with the exercise of official authority within the meaning of Article 51 of the TFEU.
Hence the authentication task of a notary cannot be seen as a direct or specific
exercise of public authority. The nationality requirement that is incorporated in the
legislations of these member states to gain access to the notarial profession
constitutes discrimination on the grounds of nationality as prohibited by the
Treaties.49 The Court expressly decided that the actions brought by the Commission
concern solely the nationality condition imposed by the national laws in question for
access to the profession of notary, and do not relate to the organisation of the
notarial profession as such. It might be supposed that the KNB may be considered as
‘organisation of the notarial profession’ in light of this decision and that the decision
thus does not affect the KNB in this sense. Bear in mind that ‘execution of public
authority’ should be understood in light of European law. In case of Dutch law, the
notary, without any doubt, is the executor of public authority.
Another, earlier decision by the European Court of Justice should be considered in
connection to what has been previously discussed as well: the Wouters judgment. 50

48
Arrests in the Cases C-47/08, C-50/08, C-51/08, C-53/08, C-54/08, C-61/08 and C-52/08,
where the Court has ruled on 24 May 2011 and for the Netherlands, the Case C-157/09, LJN
BU7491, ruling on 1 December 2011.
49
According to the European Commission these countries had violated EU law, because they
only allowed their own nationals to practice the profession of notary. The European
Commission considered this action contrary to the freedom of establishment. According to
the member states, the nationality requirement was justified because the notary exercises
public authority. For exercising public authority, an exception has been made on the freedom
of establishment in article 51 VWEU. The Court of Justice reviewed whether a notary
exercises public authority by looking at the tasks and powers of the notary. In all member
states, the most important role of the notary is the drafting of authentic acts, that can be used
or sometimes even have to be used as evidence. Besides this, some notaries save judges work,
e.g. by means of executing a seizure or forced sale. The Court does not however see any of
these proceedings as the execution of public authority since the notary is always dependent on
the will of other parties and the notary is under the control of the judge. A notary can,
therefore, not impose any decisions on others. Also in other characteristics of the notary
profession the Court of Justice sees differences with organisations executing public authority.
These differences are that there is competition between notaries. Also a notary is himself
liable for damages that arise when he makes a mistake during the execution of his profession.
The Court thus reached the conclusion that the professional proceedings of notaries in the
different member states cannot be considered as exercising public authority. By recording a
nationality requirement for notaries in their national laws, the six member states have violated
EU law.
50
Judgment of the Court of 19 February 2002 in Case 309/99, (J. C. J. Wouters, J. W.
Savelbergh & Price Waterhouse Belastingadviseurs BV v. Algemene Raad van de

33
This case dealt with the refusal of the Supervisory Council to allow a partnership of
two lawyers with accountancy firms. The Supervisory Council of the NOvA denied
their request on the basis of the self-established Collaboration Regulation 1993
regarding the cooperation between lawyers and other professions. According to this
regulation cooperation is allowed with certain professionals (notaries, tax advisors
and patent attorneys), but lawyers are not permitted to enter an integrated
partnership with accountants, so as to guarantee their independence. The Court
considers not letting the NOvA escape the application in Article 85 of the Treaty
because:
- Establishing regulations is not a social task based on the principle of solidarity
of the NOvA and with that it does not exercise powers which are typically those
of a public authority.
- The administrative bodies of the NOvA exclusively consist of lawyers.
- With the establishment of proceedings like the Collaboration Regulation 1993,
the NOvA should not take criteria of general interest into account.
- The Collaboration Regulation 1993 does not extend beyond the scope of
economic traffic because it exercises influence on the behaviour of members of
the NOvA on the market of legal services as a consequence of the prohibition of
certain multidisciplinary partnerships as included in the Collaboration
Regulation 1993.

The Court has moreover decided that it is of little interest that the NOvA is a public
body. The Court has thus judged:

A regulation concerning partnerships between members of the Bar and

other professionals, such as the Samenwerkingsverordening 1993 (1993
regulation on joint professional activity), adopted by a body such as the
Nederlandse Orde van Advocaten (the Bar of the Netherlands), is to be
treated as a decision adopted by an association of undertakings within the
meaning of Article 85(1) of the EC Treaty (now Article 101 TFEU).
and:
66. According to its very wording, Article 85 of the Treaty applies to
agreements between undertakings and decisions by associations of
undertakings. The legal framework within which such agreements are
concluded and such decisions taken, and the classification given to that
framework by the various national legal systems, are irrelevant as far as

Nederlandse Orde van Advocaten).

34
 the applicability of the Community rules on competition, and in particular
Article 85 of the Treaty, are concerned (Case 123/83 BNIC v Clair [1985]
ECR 391, Paragraph 17, and CNSD, Paragraph 40).

67. That interpretation of Article 85(1) of the Treaty does not entail any
breach of the principle of institutional autonomy as argued by the German
Government (see Paragraphs 54 and 55 above). On this point a distinction
must be drawn between two approaches.

68. The first is that a Member State, when it grants regulatory powers to a
professional association, is careful to define the public-interest criteria
and the essential principles with which its rules must comply and also
retains its power to adopt decisions in the last resort. In that case the rules
adopted by the professional association remain State measures and are
not covered by the Treaty rules applicable to undertakings.

69. The second approach is that the rules adopted by the professional
association are attributable to it alone. Certainly, in so far as Article
85(1) of the Treaty applies, the association must notify those rules to the
Commission. That obligation is not, however, such as unduly to paralyse
the regulatory activity of professional associations, as the German
Government submits, since it is always open to the Commission inter alia
to issue a block exemption regulation pursuant to Article 85(3) of the
Treaty.

70. The fact that the two systems described in Paragraphs 68 and 69 above
produce different results with respect to Community law in no way
circumscribes the freedom of the Member States to choose one in
preference to the other.51

71. In light of the foregoing considerations, the answer to be given to

Question 1(a) must be that a regulation concerning partnerships between
members of the Bar and other members of liberal professions, such as the
1993 Regulation, adopted by a body such as the Bar of the Netherlands,
must be regarded as a decision adopted by an association of undertakings
within the meaning of Article 85(1) of the Treaty.

51
(emphasis added).

35
Due to the different nature of the NOvA and the KNB (the NOvA pursues common
interests of lawyers and the KNB does not; both have regulatory power, but this
power has been shaped differently and more limited in the case of the KNB), the
question still remains as to what extent the Wouters decision applies to the KNB. In
other words: Can the KNB be considered as an association of undertakings in terms
of European competition law, just like the NOvA? If the KNB increasingly acts in
that fashion (which will happen if the KNB de facto promotes notaries’ interests), it
will be possible to consider it an association of undertakings and competition law
will be applicable to all decisions and proceedings of the KNB. When the KNB
strictly abides by its (limited) task description, this will not be the case.
Consequently, in that case, if KNB regulations breach competition law, the
Netherlands will be held accountable rather than the KNB.
A role is undoubtedly played by the so-called ‘effet utile’ or useful effect doctrine of
the Court of Justice of the European Union. According to this doctrine, Member
States are, on the basis of the duty of loyal cooperation, not allowed to undertake
any action that could deprive the cartel prohibition or the prohibition on the abuse of
economic power of its useful effect. Accordingly, Member States cannot impose any
restrictions on competitive acts between enterprises, nor can they facilitate or
reinforce acts inhibiting competition, and they are also not permitted to delegate
decisions on economic intervention to market parties.52
Following these decisions, the European Commission is likely to turn its attention
towards other aspects of the regulation of the profession of notary. Protective
measures are possible on the basis of European law and countries have a certain
amount of discretion in these matters as long as they bear the proportionality and
subsidiarity test.

6. Concluding Remarks

The notaries of today have difficulty in dealing with interweaving public and private
functions. Whereas in the past the notary office seemed to profit from the ‘best of
both worlds’, this has radically changed due to the implementation of the MDW-
operation (Market Effect, Deregulation and Quality of Legislation) within the
notarial office. The economic crisis has reinforced certain aspects. The question
arises whether the notary has ended up in an untenable split between office and
enterprise.

52
Art. 4 (3), TEU, read in conjunction with 101/102 TFEU.

36
Not in the least it has been very misleading to suppose, that the market in notarial
services has brought about deregulation. Quite the opposite is true. Where in society
trust has been exchanged for verifiability, supervision and enforcement, the need
will immediately arise to develop criteria for assessment of the actions of private
actors. Consequently, the amount of professional norms and standards, conduct rules
and guidelines, defined in different forms of hard and or soft law and the supervision
of notaries has grown substantially over the last decade and continues to grow. The
problem in determining such professional rules and rules of conduct is that
consensus about these rules has to be reached within the profession. As explained,
this is rather difficult for there is a kind of remoteness between the KNB as an
organisation and its members because the KNB has been turned into a governmental
body.
Subsequently, the professional rules and rules of conduct still have to be submitted
to the Ministry of Security and Justice in the form of a draft regulation, where these
rules will undergo an economic proportionality and subsidiarity test: do these rules
unnecessarily limit the market forces? It is unclear which rule prevails when
measures promoting quality also limit the market effect. Van den Haak has
poignantly described this problem during the Leiden National Notary Student
Conference as follows: “We are at a crossing without right-of-way rules. That will
lead to accidents.” Yes, indeed, what will come first: market effect or the quality of
the practice of the professional?

37