Outsourcing to Asia under Dutch law: how to contract safely

Why the contract is the real risk

When Dutch business owners talk about outsourcing to India or elsewhere in Asia, the worries are familiar: will they understand what we need, will the quality be good, will they disappear halfway through? Most of those are management problems that a good process can handle.

The question that is much harder to fix afterwards is legal: if the supplier does not deliver, keeps your money or refuses to hand over the source code, what can you actually do? The answer depends almost entirely on how the contract is set up.

Option 1: contract the Asian supplier directly

This is the most common route. You sign the supplier’s proposal or terms, often in English, and pay to a bank account abroad.

Which law applies?

Within the EU, the Rome I Regulation lets businesses choose the law that governs their contract. You can ask a supplier in India to accept Dutch law, but many will propose their own law, or the contract says nothing at all. Even with Dutch law on paper, you still need a court or arbitrator to apply it.

Can you enforce a Dutch judgment?

This is where it gets difficult. India only directly enforces court judgments from a short list of “reciprocating territories”, and the Netherlands is not on it. In practice that means a judgment from a Dutch court against an Indian supplier usually has to be followed by new proceedings in India, which takes time and money most SMEs do not have.

Arbitration is the better route if you contract directly. India, Vietnam and the Philippines are parties to the New York Convention, so arbitral awards are generally easier to enforce than foreign court judgments. But international arbitration is not cheap either, and it only helps if the clause was drafted properly before the dispute started.

What about payment?

Many offshore suppliers ask for a deposit or monthly payment in advance. Once money has left for a foreign account, recovering it is slow and uncertain.

Option 2: contract through a Dutch or EU entity

The alternative is to sign with a company in the Netherlands (or elsewhere in the EU) that in turn contracts the Asian team. For you, the situation then looks like any domestic purchase:

• Dutch party, Dutch law, Dutch court. A judgment is directly enforceable against a company here.
• Normal invoice. You receive a Dutch invoice in euros with Dutch VAT, instead of a foreign invoice with reverse-charged VAT.
• One accountable party. If the team fails, it is the Dutch company’s problem to replace it, not yours.
• Payment control. Payment per milestone, so you only pay for work you have approved.

This is not the same as using a freelance marketplace. On most platforms you still contract the supplier yourself; the platform just facilitates payment. Check who your contracting party really is.

Personal data: the GDPR question

If the team will see customer data, employee data or anything else that identifies people, the GDPR applies. Transfers to a country outside the EU are only allowed with an adequacy decision or appropriate safeguards. Japan and South Korea have an EU adequacy decision; India, Vietnam and the Philippines do not. That means you need, at minimum:

• a data processing agreement with whoever processes the data;
• the EU Standard Contractual Clauses for the transfer, plus an assessment of the risks in that country;
• technical measures, for example keeping data on EU servers and giving the team remote access only.

When you contract through an EU entity, that entity can arrange the clauses with the delivery team, but you remain responsible for your own customers’ data, so ask to see the paperwork.

Intellectual property: make sure you own what you pay for

Under Dutch copyright law, the maker of software owns the copyright unless the rights are transferred by a written deed. Paying an invoice is not enough. Your contract should state that all rights in the work results transfer to you, ideally on payment of each milestone, and that source code, documentation and access credentials are handed over along the way. If you contract through an intermediary, check that its contract with the delivery team contains the same transfer, so the rights can actually flow through to you.

Checklist: what every offshoring contract needs

1. Exactly who the parties are, with registration numbers.
2. Scope, deliverables and acceptance criteria per milestone.
3. Payment per accepted milestone, preferably via escrow; no large upfront payments.
4. Transfer of all intellectual property in writing, plus source code and documentation handover.
5. Confidentiality and a data processing agreement; Standard Contractual Clauses where data leaves the EU.
6. Liability, and proof of professional liability and cyber insurance.
7. Replacement and exit: what happens if the team underperforms, and how you take over the work.
8. Governing law and dispute resolution that you can realistically use.

How Needspan sets this up

At Needspan you always sign with a local legal entity in the Netherlands, under Dutch law. We contract the delivery partner in Asia separately, with the IP transfer, confidentiality, data protection clauses and replacement obligations that let us keep our promises to you. Your payments are staged per milestone to ensure expected delivery, and if a team does not deliver, we replace it at our cost. See all eight commitments.