Uitspraak
judgment
AMSTERDAM DISTRICT COURT
Netherlands Commercial Court
NCC District Court - Court in Summary Proceedings
Case reference number: C/13/745174
Judgment
20 March 2024
In the matter of:
1. the private company with limited liability,
KAYUMARS HOLDING B.V.,
having its corporate seat and office in Amsterdam, the Netherlands,
2. the private company with limited liability,
KUROSH HOLDING B.V.,
having its corporate seat and office in Amsterdam, the Netherlands,
3. the private company with limited liability,
TACHYON HOLDING B.V.,
having its corporate seat in Amsterdam and its office in The Hague, the Netherlands,
4. the private company with limited liability,
GLOBAL ACCELERATOR YEAR 4 B.V.,
having its corporate seat and office in Amsterdam, the Netherlands,
5.
THE (FORMER) DEPOSITARY RECEIPT HOLDERS IN UNDEVELOPED B.V.,
THE (FORMER) DEPOSITARY RECEIPT HOLDERS IN UNDEVELOPED B.V.,
as formerly represented by Stichting Administratiekantoor Undeveloped,
having its corporate seat and office in Amsterdam, the Netherlands,
6. the private company with limited liability,
AXIVATE TECHNOSTARTER FUND 1 B.V.,
having its corporate seat and office in Amsterdam, the Netherlands,
7. the company incorporated and validly existing under the laws of Austria,
EVOLUTION MEDIA e.U.,
having its corporate seat and office in Egg bei Hermagor, Austria,
8. the Dutch cooperative,
AIRBRIDGE EQUITY PARTNERS COÖPERATIEF U.A.,
having its corporate seat and office in Amsterdam, the Netherlands,
claimants,
lawyers: C. Jeloschek and W. Peters,
versus
the company organised and existing under the laws of England and Wales,
GO DADDY EUROPE LIMITED,
having its registered office in Hayes, United Kingdom,
defendant,
lawyers: F.M. Peters and S.W. Vissink.
The claimants are referred to below as the "Sellers" and the defendant as "GoDaddy".
1.Procedural history
1.1.
The hearing was held on 27 February 2024. The Sellers stated their claim as detailed in the writ of summons with 40 exhibits. GoDaddy contested the claim as detailed in its statement of defence with 14 exhibits. All parties spoke at the hearing and provided pleading notes to the judge. The following individuals attended the hearing:
In person:
- Mr [Seller's Representative] , former shareholder and the Sellers’ Representative,
- Mr M. [Seller's tax advisors] , [Seller's tax advisor] tax advisors,
- Ms [name 1] , KVdL, partner involved in negotiating the SPA
- Mr C. Jeloschek and Mr W. Peters, lawyers, representing the Sellers,
- Mr F.M. Peters and Mr S.W. Vissink, lawyers, representing GoDaddy,
- Ms N. Nilwik, bureau Brandeis.
Via videoconference:
- Ms [name 2] , VP, Legal – Global Litigation, Marketing and Intellectual Property, GoDaddy (first part of the hearing),
- [name 3] (second part of the hearing).
1.2.
On 26 February 2024, GoDaddy submitted a memorandum from KPMG US called “ [website] - Dutch and UK VAT analysis“, dated 21 February 2024 (“KPMG US Memo 21 February 2024”). At the hearing, the Sellers objected to this submission. Although this Memo was submitted at a late stage, the Court allows the submission as GoDaddy submitted it 24 hours before the hearing and the content of the Memo (the actual tax analysis) is not decisive for the claims to be assessed in these summary proceedings.
1.3.
In their turn, the Sellers were allowed to submit legible versions of the ‘time-stamps’ from KPMG documentation, as presented to the Court at the hearing. The Sellers submitted these time-stamps on 29 February 2024. GoDaddy submitted its response in a post-hearing brief on 1 March 2024. On 7 March 2024, the Sellers filed their response to the post-hearing brief submitted by GoDaddy. On 8 March 2024, GoDaddy submitted a further brief.
1.4.
The date for judgment was set for today.
2.The facts
2.1.
Undeveloped B.V. ("Undeveloped") is a private company with limited liability, established in Amsterdam, that operates a website called [website] . [website] develops tools primarily for domain portfolio holders to manage and sell their unused domains.
2.2.
The shares in Undeveloped were held by the Sellers.
2.3.
GoDaddy is behind the world’s largest cloud platform for small, independent businesses.
2.4.
On 25 June 2022, the Sellers and GoDaddy entered into a Share Purchase Agreement (the "SPA"). The consideration paid by GoDaddy to the Sellers for their respective shares was equal to USD 70,000,000.00 in total. USD 7,800,000.00 of the purchase price was paid into the escrow account of the notary at [the notary] Notarissen N.V. in Utrecht (the “Notary”). Pursuant to article 19.2 of the SPA, [Seller's Representative] (" [Seller's Representative] ") was appointed as representative of the Sellers (the "Sellers’ Representative"). The relevant provisions of the SPA are set out below:
"(…)
Payment of the Collateral Amount
3.7
In accordance with the terms of the Notary Letter and this Agreement, the Notary shall transfer part of the total Purchase Price in the amount of USD 7,800,000 to the Escrow Account, which shall serve as collateral for the payment by the respective Sellers, if any, of any amount due to the Purchaser under this Agreement (the
Collateral Amount), (…)
Collateral Amount), (…)
(…)
5
Escrow
Escrow
(…)
5.3
With respect to the Escrow Agreement the Parties agree that:
a. the Collateral Amount will be released (i) upon joint instruction by the Purchaser and the Sellers’ Representative, (ii) upon delivery of an enforceable judgment (voor tenuitvoerlegging vatbaar vonnis) of a competent court or, with respect to a Leakage Amount, final determination in accordance with clause 4 but ultimately (iii) the date which is eighteen (18) months after the Closing Date (unless a Claim has been made by the Purchaser against the Sellers under and in accordance with this Agreement which has not yet been fully resolved, it being understood that in such event only such claimed amount may be withheld in escrow) upon joint written instruction to the Escrow Agent by the Parties. On the date that is 12 months after the Closing Date, 50% of the Collateral Amount shall be released to the Sellers upon joint written instruction to the Escrow Agent by the Parties (unless a Claim has been made by the Purchaser against the Sellers under and in accordance with this Agreement which has not yet been full resolved, it being understood that in such event only such claimed amount may be withheld from the portion being released);
(…)
Parties’ awareness of Claims
11.7
The Purchaser confirms that on the Signing Date, except with respect to any Tax Indemnity or Specific Indemnity, it is not aware of (a) any Warranty Breach, (b) any facts, matters or circumstances giving rise to a Warranty Breach or (c) any facts, matters or circumstances giving rise to a Claim.
11.8
Each Seller confirms that on the Signing Date, except with respect to any Tax Indemnity or Specific Indemnity it is not aware of (a) any Warranty Breach, (b) any facts, matters or circumstances giving rise to a Warranty Breach or (c) any facts, matters or circumstances giving rise to a Claim.
(…)
15.Tax
15.1
The provisions of Schedule 5 (Tax) apply with respect to all Tax Claims and all Tax matters of the Group Companies (including the Tax Warranties).
(…)
Sellers’ Representative
The Sellers hereby appoint [Seller's Representative] as representative (
the Sellers’ Representative), who shall validly represent each of the Sellers as one party in connection with this clause 19 and the exercise and conduct of any and all rights and obligations of any Seller under this Agreement. The Purchaser may rely on any statement, act or omission by the Sellers’ Representative as being a statement, act or omission of each of the Sellers. (…)
the Sellers’ Representative), who shall validly represent each of the Sellers as one party in connection with this clause 19 and the exercise and conduct of any and all rights and obligations of any Seller under this Agreement. The Purchaser may rely on any statement, act or omission by the Sellers’ Representative as being a statement, act or omission of each of the Sellers. (…)
25.Governing Law and Jurisdiction
25.1
This Agreement and any contractual or non-contractual obligations arising out of, or in connection with it, are governed by the laws of the Netherlands.
25.2
Except as provided in clause 4 (Leakage), all disputes in connection with this Agreement (including disputes concerning the existence, validity or termination thereof) and any contractual or non-contractual obligations arising out of, or in connection with, it are to be exclusively by the competent court in Amsterdam, the Netherlands, in proceedings in English before the Chamber for International Commercial Matters (Netherlands Commercial Court). Any application for injunctive relief available under the laws of the 31 Netherlands will be brought before the Chamber for International Commercial Matters (Netherlands Commercial Court) in summary proceedings in English.
Schedule 5 (Tax)
(…)
1.6
Tax Claimmeans any claim under, or in connection with Tax which may result in a Claim against the Sellers under this Schedule 5 (Tax) which, for the avoidance of doubt, shall include any voluntary disclosure discussions with any Tax Authority in accordance with paragraph 12 of this Schedule 5 (Tax);
(…)
2.1
The Sellers shall indemnify (schadeloos stellen) and hold harmless (vrijwaren) the Purchaser from:
a. any Tax Liability of any Group Company in respect of any transaction, event, act or
omission occurring, or attributable to, the periode before the Effective Date or in respect of any income, gains or turnover earned, accrued or received before the Effective Date;
b. to the extent relating to the period before, up to and including Closing, any claim relating to the failure of any Group Company to comply with the Value Added Tax laws (or any comparable concept in any applicable jurisdiction) in all jurisdictions in which such obligations may arise;
(…)
11Conduct of Tax Claims
11.1
Upon becoming aware of any pending Action by any Tax Authority which gives or may give rise to any claim under the Tax Indemnity or any other Tax Claim for which the Sellers could be liable pursuant to this Agreement and which was not yet known to a Group Company at completion, the Purchase shall: (a) notify the Sellers’ Representative thereof; and (b) promptly provide the Sellers' Representative with such information as is available to the Purchaser's Group, to enable the Sellers' Representative to (i) assess the merits of such Tax Claim and (ii) preserve evidence, and shall include in any case reasonable detail of the events or facts giving rise to the (possible) Tax Claim and, to the extent possible, indicate the amount of Damages involved.
(…)
11.3
The Purchaser shall have the right to employ counsel and to conduct the defense of, settle and compromise any Tax Claim, provided that the Purchaser shall (a) consult with the Sellers on all material steps to be taken, including with respect to the conduct of any dispute, defense, compromise or appeal of the Tax Claim, (b) take into account the Sellers’ reasonable (commercial) interest and comments to keep the amount of the Tax Claim as low as reasonably practicable, including but not limited to in accordance with clause 12.11 (Obligation to mitigate) in conducting the Tax Claim and (c) not and shall cause the Group Companies not to make any admission of liability, agreement, settlement or compromise with any third party in relation to a Tax Claim without the Sellers’ prior written consent, which consent shall not be unreasonably withheld or delayed.
11.4
Further, the Purchaser shall (a) keep the Sellers’ Representative timely informed to the extent reasonably practicable on the status and progress of such Tax Claim and (b) promptly provide the Sellers’ Representative with copies of reasonable details (if not in writing) of any material communications concerning such Tax Claim an all information reasonably requested by the Sellers’ Representative as permitted by applicable law.
12.VAT-related Tax Claims
12.1
Prior to any voluntary disclosure discussions or other proposed resolution of any VAT-related Tax Claim with any Tax Authority (a
VAT Tax Claim), the Purchaser and its Representatives, on the one hand, and the Sellers’ Representative and its Representatives, on the other hand, shall confer and consult with each other, consider each other’s positions with respect to such VAT Tax Claim (including the Sellers’ positions set forth in the position paper included as Document 3.16 in the Data Room), and negotiate in good faith to resolve any disagreements with respect to the treatment of such VAT Tax Claim within 30 days after the commencement of such negotiations (the
Resolution Period). If the disagreements with respect to the treatment of such VAT Tax Claim are so resolved within the Resolution Period, the Purchaser and the Sellers agree that the initial presentation of such VAT Tax Claim to the applicable Tax Authority shall be as agreed between the parties.
VAT Tax Claim), the Purchaser and its Representatives, on the one hand, and the Sellers’ Representative and its Representatives, on the other hand, shall confer and consult with each other, consider each other’s positions with respect to such VAT Tax Claim (including the Sellers’ positions set forth in the position paper included as Document 3.16 in the Data Room), and negotiate in good faith to resolve any disagreements with respect to the treatment of such VAT Tax Claim within 30 days after the commencement of such negotiations (the
Resolution Period). If the disagreements with respect to the treatment of such VAT Tax Claim are so resolved within the Resolution Period, the Purchaser and the Sellers agree that the initial presentation of such VAT Tax Claim to the applicable Tax Authority shall be as agreed between the parties.
12.2
If the Sellers’ Representative and the Purchaser fail to reach an agreement with respect to the initial presentation of the VAT Tax Claim before expiration of the Resolution Period, then such disagreement (a
VAT Dispute) shall be submitted for resolution to the office of Deloitte LLP or, if Deloitte LLP is unable to serve, the Purchaser and the Sellers’ Representative shall appoint by mutual agreement the office of an impartial internationally recognized tax advisory firm (not limited to the Big 4) with specific knowledge of the global VAT rules, including specific knowledge of the EU VAT rules, other than the Group’s Representatives or the Purchaser’s Representatives (the
Independent Tax Advisor) who, acting as experts and not arbitrators, shall resolve the VAT Dispute.
VAT Dispute) shall be submitted for resolution to the office of Deloitte LLP or, if Deloitte LLP is unable to serve, the Purchaser and the Sellers’ Representative shall appoint by mutual agreement the office of an impartial internationally recognized tax advisory firm (not limited to the Big 4) with specific knowledge of the global VAT rules, including specific knowledge of the EU VAT rules, other than the Group’s Representatives or the Purchaser’s Representatives (the
Independent Tax Advisor) who, acting as experts and not arbitrators, shall resolve the VAT Dispute.
(…)
12.5
Upon determination of the initial presentation of the VAT Dispute in accordance herewith (but subject to the last sentence of clause 12.1 or clause 12.4 of this Schedule 5 (Tax), as applicable), clause 11 of this Schedule 5 (Tax) shall apply with respect to the conduct of the applicable VAT Tax Claim.
Schedule 11 (Definitions and Interpretations)
(...)
Claimmeans any claim against the Sellers under, or in connection with, this Agreement, including any Warranty Claim or an Indemnity Claim;
(…).”
2.5.
Before the signing of the SPA, GoDaddy’s tax advisor KMPG US identified a potential VAT risk. To this end, on 31 May 2022, the Sellers suggested including the following paragraph 12 in the Tax Schedule to the SPA:
“12 VAT ISSUE
12
The Parties have a different view on the VAT position of [website] relating to the VAT treatment of its activities.
12.1
The Sellers will prepare a position paper that will provide the facts and circumstances of the business and services provided to customers and substantiate the VAT treatment in that respect and provide such to the Purchaser [prior to the Closing Date / on the Signing date] (the “Position Paper”).
12.2
If a tax Authority has any questions in relation to the activities of [website] then the Position Paper will form the basis for the facts and circumstances and any discussions with such Tax Authority. If the Position Paper is provided to a Tax Authority then the Purchases or a member of Purchaser’s Group will inform Seller’s Representative immediately thereof in writing.”
Furthermore, on 8 June 2022, the tax advisor of the Sellers, [Seller's tax advisor] , prepared its (draft) ‘position paper’, a 10-page memorandum (with two appendices), in which it summarised this potential risk as follows:
“(…)
The US tax team of KPMG triggered this discussion whereas they seem to argue that (
VAT issue 1) [website] is liable to account for VAT on all sales generated by the external domain sellers on the [website] platforms. Additionally, there seems to be doubt whether [website] has correctly treated its actual commission-revenue correctly for VAT purposes, whereas the KMPG team seem to argue that (
VAT issue 2) the commission revenue generated by [website] should be treated as an electronically supplied service as opposed to an intermediation service.
VAT issue 1) [website] is liable to account for VAT on all sales generated by the external domain sellers on the [website] platforms. Additionally, there seems to be doubt whether [website] has correctly treated its actual commission-revenue correctly for VAT purposes, whereas the KMPG team seem to argue that (
VAT issue 2) the commission revenue generated by [website] should be treated as an electronically supplied service as opposed to an intermediation service.
(…)
First of all, it appears that there is a general lack of detailed understanding of the [website] business model and accompanied way of working, at least in terms of VAT determination of those activities. With this memo we will provide further background on the actual business model and accompanied way of working throughout the relevant transactions. This should provide a clear basis for parties to hopefully end the current debate on (the materiality of) the potential VAT issue. We will use an explanation of the business model together with a tax technical analysis1 to demonstrate that [website] has indeed in our view correctly dealt with VAT in its business model/ supply chain, correctly applied the VAT ruling with the Dutch tax authorities and therefore has not underpaid VAT.
(…).”
2.6.
Also on 8 June 2022, the parties held a conference call to discuss the VAT treatment of Undeveloped. During this call, Go Daddy shared a few slides with a plan on how to jointly assess the probability of the potential VAT risk. To that end, GoDaddy proposed several post-closing actions, which entailed the following:
“(…)
To be completed post-closing
Step 3: Complete detailed analysis of marketplace rules on a country-by-country basis. GD and Kendo will work together, with KPMG as technical advisor. See Sun June 5 2022 draft SPA Schedule 5, Sections 11.3 & 11.4 for how parties will work together & next slide for potential remediation strategies.
Step 4: Based on Step 3 analysis, conclude where voluntary disclosure/registration is necessary.
Step 5: Complete voluntary disclosure/registration in jurisdictions identified in Step 4.
Working together: Strategies to mitigate exposure
GD intends to complete post-closing steps via a collaborative approach with Kendo throughout the resolution process; Kendo’s cooperation will be appreciated to facilitate this analysis.
Potential mitigation strategies before concluding where voluntary disclosure/registration is necessary:
• Review jurisdictional implementation of marketplace rules. Consider whether Kendo falls outside marketplace rules in certain non-EU jurisdictions.
• Perform a detailed review to verify the VAT IDs of the sellers and the buyers or additional evidence that establishes that the buyer and the seller are both businesses to maximize B2B transactions.
• Consider potential to rely on the Dutch VAT ruling in the Netherlands to further reduce local exposure (ruling is not binding no scope outside of the Netherlands).
• Consider arguments that the sellers remitted tax on the underlying transaction in the appropriate country and transactions should not be subject to double taxation.
• Consider statute of limitations in countries where applicable.
• Consider materiality when concluding where to file voluntary disclosures and registration.
• Review interaction between commission-based and marketplace VAT rules.
(…).”
2.7.
On 13 June 2022, GoDaddy included the current paragraph 12 in the Tax Schedule (see above under 2.4).
2.8.
Pursuant to clause 9 of the SPA, the shares in Undeveloped were transferred to GoDaddy on 13 July 2022 (the Closing Date). On 13 July 2022, GoDaddy and the Sellers also signed an escrow agreement, the relevant provisions of which are set out below:
“(…)
4.1
The Escrow Amount will be released:
(…)
d. Taking into account article 4.2 ultimately the date which is eighteen (18) months after the Closing Date (as defined in the SPA), provided [the notary] has not received before that date a written notification from the Purchaser which shall in any case include a copy of the Notice (as defined) in the SPA that is has sent to the Sellers’ Representative that is has made one or more Claims (as defined in the SPA) against Sellers under and in accordance with the SPA which has not yet been fully resolved, (it being understood that in such event only (the total of) such claimed amount(s) may be withheld in escrow and the remaining amounts will be automatically released to the Sellers and after such is/are resolved, the outstanding amount of the Escrow Amount will be automatically released to the Sellers).
4.2
On the date that is twelve (12) months after the Closing Date (as defined in the SPA), fifty percent (50%) of the Escrow Amount will be released to the Sellers, unless one or more Claims (as defined in the SPA) have been made by the Purchaser against the Sellers under and in accordance with the SPA which has not yet been fully resolved, it being understood that in such event only (the total of) such claimed amount may be withheld from the portion to be released and the remaining amounts will be automatically released to the Sellers and after such Claim(s) is/are resolved, the outstanding amount of the Escrow Amount will be automatically released to the Sellers.
(…).”
2.9.
The Sellers’ Representative was employed by GoDaddy from 13 July 2022 to
17 May 2023.
2.10.
On 12 September 2022, KMPG shared a “draft fact pattern” with the Sellers’ Representative. In his accompanying e-mail, [Seller's Representative] from KMPG NL wrote the following to the Sellers’ Representative:
“Please find attached a draft of the fact pattern that we have prepared for the US team. Can you perhaps look at the document and add any input as a
commentin the sideline (no track changes). Also, could you look at the comments we have included that mention your name? We are aiming at sharing the document with the wider group tomorrow close of play. If you are not able to work on the memo tomorrow please let me know.
commentin the sideline (no track changes). Also, could you look at the comments we have included that mention your name? We are aiming at sharing the document with the wider group tomorrow close of play. If you are not able to work on the memo tomorrow please let me know.
Please treat the document as confidential KPMG and GoDaddy only.”
The document attached was marked “”.
2.11.
On 14 September 2022, the Sellers’ Representative replied to [Seller's Representative] (KMPG NL) as follows:
“(…)
Final feedback document:
1: However, Contractor may advise on domain name pricing through [Seller's Representative] , based on data from the domain names market.
Bovenstaande klopt niet, [Seller's Representative] levert ook geen advies omtrend pricing aan.
2: To to advise on domain name pricing/negotiation based on crunching data from the domain names market;
[Seller's Representative] doet het bovenstaande (nog) niet.
De rest ziet er goed uit. Dank!
(…).”
2.12.
On the same date, the Sellers’ Representative also had a call with [Seller's Representative] . Further to that call, [Seller's Representative] wrote the following to representatives of KPMG and GoDaddy (among whom the Sellers’ Representative):
“Dear all,
Further to our update call today we had a follow up call with [Seller's Representative] to discuss the remaining open items. [Seller's Representative] [Sellers’ Representative] also kindly shared additional information that enabled us to finalize this first draft for further validation / dialog in this group.
Please let us know how you would like to take this further. We remain available for follow up conversations.
(…).”
2.13.
On 27 June 2023, GoDaddy wrote to the Sellers’ Representative as follows:
“(…)
Hope this email finds you well! Thanks for reaching out to Paul about the upcoming initial escrow release – I have an update on the VAT tax issue that I want to share so will ask my assistant Holly (copied) to help find us time later this week or early next to connect. Looking forward to catching up.
(…).”
2.14.
On 29 June 2023, GoDaddy informed the Sellers’ Representative by e-mail of KMPG’s findings regarding the VAT claim as follows:
“(…) This is an update to the VAT tax issue (failure to withhold and remit VAT) that we identified presigning – our Tax team has done further analysis with KPMG and discussed the analysis with local tax advisors and our conclusion remains that VAT should have been collected and remitted by [website] in multiple countries prior to closing. You may remember that we negotiated your and your shareholders’ rights to be kept informed about and provide input on this claim in Schedule 5 of the purchase agreement. Below is a summary of the steps we have completed to date, our findings and our proposed next steps for your review. I have attached a copy of the purchase agreement, the statement of facts and a memorandum setting forth the tax analysis for your reference. We will be making an escrow claim prior to the upcoming escrow release to hold funds back in reserve until the VDAs are finalized and accepted by the applicable jurisdictions and the pre-closing tax liabilities have been resolved. (…).”
2.15.
On the same date, GoDaddy also shared a document called “Statement of Facts – [website] Dutch VAT analysis (the “Statement of Facts”), dated 1 May 2023, and a further memorandum, also dated 1 May 2023, called “ [website] - Dutch VAT analysis business models“, the purpose of which is “to document a Dutch VAT analysis of the [website] business up to mid-2022 (…)” and “is not a position paper nor a formal opinion, and as such does not determine a probability or likelihood for a position”. .
2.16.
Again on the same date, the Sellers’ Representative responded to GoDaddy as follows:
“(…)
Thanks for reaching out, I'm not aware or informed about any VAT tax issues so before we hop on a call without additional legal counsel can you please elaborate on what this is about? And specifically which VAT tax issue there is?
(…).”
2.17.
By e-mail dated 3 July 2023, the Sellers’ Representative wrote the following to GoDaddy:
“(…)
I have not at all been involved in developing the statement of facts and neither in any communication with tax agencies as agreed to in the SPA. Please share more information about my involvement in that process that you have since you make the claim that I have been involved.
In early September 2022, I've been asked to describe [website] in a meeting with [Seller's Representative] from KPMG which [name 4] also joined. After that, a call was organized a week later where KPMG had no new questions or findings the call was ended within 5 minutes and the two calls after that call had the same conclusion leading to the third call being canceled and no new calls being organized after that call.
The conclusion of that meeting with KPMG also was that [website] operated correctly and that the exposure of any VAT issues or claims would be minimal. I've shown them our invoices and how we calculate VAT which was all in line with what is expected from a platform that operates like [website] prior the transaction. After the transaction, to book revenue twice and overpopulate revenue, Godaddy implemented what it calls LWP and in that model you buy the domain from the seller and sell it then to the buyer which has it's own VAT implications but we didn't operate in that manner.
To conclude, I haven't been involved or informed about anything since end of September 2022 and definitely do not stand behind the information I read in the first memorandum.
(…).”
2.18.
On 6 July 2023, GoDaddy sent a letter, titled “Escrow Claim Notice”, to the Escrow Agent (the Notary). This Escrow Claim Notice reads, to the extent relevant, as follows:
“(…)
All capitalized terms used but not defined in this claim notice (the “Escrow Claim Notice”) shall have the meanings given to such terms in the SPA and the Escrow Agreement (…).
(…) the Parties (…) agreed that 50% of the Collateral Amount (…) was scheduled to be released (…) on the date that is 12 months after the Closing Date (…)
unlessa Claim was made by the Purchaser against the Sellers in accordance with the SPA which had not yet been fully resolved. This Escrow Claim Notice is hereby sent to [the notary] (…) as written notification to inform [the notary] that a Claim has been made by the Purchaser against the Sellers and such Claim has not yet been fully resolved as of the date hereof. (…)
unlessa Claim was made by the Purchaser against the Sellers in accordance with the SPA which had not yet been fully resolved. This Escrow Claim Notice is hereby sent to [the notary] (…) as written notification to inform [the notary] that a Claim has been made by the Purchaser against the Sellers and such Claim has not yet been fully resolved as of the date hereof. (…)
The Claim relates to a VAT tax issue that was identified prior to executing the SPA and documented in Schedule 5 of the SPA. Based on subsequent analysis from our tax advisors, the Purchaser believes the current estimated exposure is USD$4,000,000, inclusive of interest, penalties, and fees, and may potentially necessitate the filing of voluntary disclosure agreements or other corrective action, subject to further analysis and discussions with the Sellers’ Representative.
As this claimed amount exceeds the Interim Escrow Release Amount, the Purchaser hereby instructs [the notary] to withhold the full Interim Escrow Release Amount until such Claim is resolved, upon which the Purchaser and the Sellers’ Representative shall notify [the notary] in the form of joint written instructions.
(…).”
2.19.
By way of follow-up to the Escrow Claim Notice, counsel to the Sellers requested additional information regarding the VAT Tax claim and the Sellers’ tax advisors ( [Seller's tax advisor] ) pointed out that the Statement of Facts was flawed.
2.20.
By e-mail dated 21 July 2023, GoDaddy responded to the Sellers’ Representative (copy to
inter aliacounsel to the Sellers) as follows:
inter aliacounsel to the Sellers) as follows:
“(…)
In response to your queries, and in the interest of resolving our pending dispute, please find below the components of GoDaddy’s pending $4M escrow claim:
VAT tax exposure on marketplace transactions
& commission prior to closing: $3,218,056
Estimated interest and penalties on unpaid VAT tax exposure: $ 804,514
Total: $4,022,570
The VAT tax exposure was calculated based on transaction data provided by you during pre-signing diligence, rolled forward to include transactions occurring up to the closing on July 13, 2022. It does not include VAT tax exposure on any transactions occurring after closing. We have reserved this amount in our financial statements in accordance with applicable generally accepted accounting principles. Given your awareness of this issue from the extensive discussions that occurred during deal negotiations, we anticipated a thoughtful and efficient resolution and thus rounded the amount of our claim down to $4,000,000.
(…).”
2.21.
On 23 July 2023, [Seller's tax advisor] sent a marked-up version of the Statement of Facts to GoDaddy.
2.22.
On 1 August 2023, counsel to GoDaddy provided underlying input from the KPMG member firms (responses to a VAT questionnaire from KPMG US) and the exposure calculations to [Seller's tax advisor] (Annexes E and A to GoDaddy’s letter of 1 August 2023). GoDaddy also opted for a new version of the Statement of Facts that the parties could agree to. On 11 August 2023, GoDaddy provided an amended version of the Statement of Facts to the Sellers.
2.23.
On 17 August 2023, [Seller's tax advisor] replied to GoDaddy:
“(…)
We do not agree with the view that an engaged discussion which should have preceded and changed the statement of facts will not affect KPMG’s analysis of the VAT issue. For instance the statement of facts and the accompanied VAT analysis does not reflect in any way the human intervention involved in selling a domain name. (…)
(…)
The updated statement of facts does not include our feedback and comments. Also, it does not seem that KMPG EU is really involved and no indication on if and if so how this would effect the analysis is included. Overall this is not in line with the agreed approach and this cannot be accepted. It is disappointing that there is still a discussion on a statement of facts which was effectively already provided more than a year ago, during SPA negotiations. The “renewed” statement of facts does not take into account all readily available information as was already provided pre closing. (…)
(…)
We understand that the parties, for now, deviate from the procedure as included in 12.1 to the effect that the Resolution Period has in any case not commenced. (…).”
2.24.
Even after further discussion (
inter aliaduring a conference call on 13 September 2023), the parties did not reach agreement in respect of the Statement of Facts.
inter aliaduring a conference call on 13 September 2023), the parties did not reach agreement in respect of the Statement of Facts.
2.25.
On 6 December 2023, the Sellers summoned GoDaddy (i) to release the 50% under the Escrow Agreement no later than by 13 December 2023 and (ii) to confirm that it will also release the second 50% by 13 January 2024.
2.26.
The second part of the escrow amount was paid out (automatically) by the Notary in January 2024.
3.The claim
3.1.
In sum, the Sellers request the Court by judgment where appropriate enforceable notwithstanding appeal:
I. to order GoDaddy to provide its joint instruction to the Notary under article 4.1(a) of the Escrow Agreement, and to provide all reasonably required cooperation, to effect the release of the first 50% of the payment still held in escrow (or any other amount as determined by the Court in the proper administration of justice) with immediate effect upon rendering its decision;
II. to order that, if GoDaddy does not provide the joint instruction under I, its judgment will be in GoDaddy’s stead (and thus take the place of) the instruction to the Notary, or - in the alternative - to order GoDaddy to pay a judicial penalty of EUR 10,000.00 per day it fails to comply with the order under I, with a maximum of EUR 1 million;
III. to order GoDaddy to pay the interest over the amounts to be released under I in accordance with article 5(3)(b) of the SPA;
IV. to order GoDaddy to pay the costs of these proceedings, including the subsequent costs amounting to EUR 173.00 without service of EUR 271.00 in the event of service, respectively, if and to the extent that GoDaddy fails to comply with the decision to be rendered in this matter.
3.2.
The Sellers underline their claims by asserting that GoDaddy failed to substantiate its Escrow Claim Notice and is therefore not entitled to withhold release of the payment held in escrow. In this regard, the Sellers argue that GoDaddy failed to follow up properly on the perceived VAT issue it had raised shortly before the signing of the SPA. By raising an unsubstantiated VAT claim, GoDaddy now tries to extend the security granted under the Escrow Agreement for claims against the Sellers in general. The procedure regarding voluntary disclosure or other resolution of VAT tax claims in paragraph 12 of Schedule 5 (Tax) to the SPA requires an actual claim to be disclosed or resolved, and not a mere VAT risk. GoDaddy failed to substantiate that there is a concrete VAT claim that has to be presented to a tax authority by voluntary disclosure. The Sellers argue that GoDaddy has only based its VAT claim on two memoranda from KPMG NL dated 1 May 2023, one containing the Statement of Facts and the other a VAT analysis based on the Statement of Facts. The Sellers received these memos on 29 June 2023. According to the Sellers, GoDaddy only provided the underlying input from the KMPG member firms on 1 August 2023, after several requests. As GoDaddy had not involved the Sellers and their tax advisors in the process leading up to these two memos, the Sellers could only review these documents and provide input after GoDaddy had already filed its Escrow Claim Notice on 6 July 2023. It then turned out that these documents are seriously flawed and could therefore not serve as a basis for the VAT claim. According to the Sellers, GoDaddy kept ignoring the input provided by the Sellers at various stages and only selectively amended the Statement of Facts. Therefore, it cannot be expected from the Sellers to continue the discussions about the fact patterns which should have taken place before unilaterally raising the Escrow Claim. The Sellers argue that the lack of substantiation of the VAT claim cannot be remedied later to justify, or rather repair, the invalid Escrow Claim Notice. Also the third memo (KPMG US Memo 21 February 2024), which GoDaddy submitted one day before the hearing, is still flawed. As a result, at the moment the Escrow Claim Notice was filed, there was no VAT risk assessment based on actual facts related to the operation of [website] before Closing and, thus, no Claim. The discussions with regard to the Statement of Facts and the VAT risk assessment do not constitute a valid Tax Claim under the SPA, according to the Sellers.
3.3.
GoDaddy argues that it is at risk to pay substantial amounts of VAT for a company it acquired from the Sellers. KPMG US (Memo 21 February 2024) confirmed that “it is more likely than not” that already in two jurisdictions – the Netherlands and the UK – this is the case. But the Sellers were active in not two, but approximately 60 jurisdictions. Application of arcane VAT rules of 60 tax authorities to a complex set of automated transactions is inherently uncertain, according to GoDaddy. GoDaddy believes that it suffices to note that it cannot be excluded that a risk – a Claim – exists. In this regard, GoDaddy argues that a “Claim” in the sense of the SPA means any claim against the Sellers under, or in connection with the SPA. Furthermore, paragraph 1.6 of Schedule 5 to the SPA provides an even broader definition. In short, any claim under, or in connection with, Tax which may result in a Claim against the Sellers should be considered as a Tax Claim in the sense of the SPA. GoDaddy does not agree with the Sellers that a VAT Tax Claim requires an actual claim. The mere fact that paragraph 12.1 refers to voluntary disclosure discussion confirms that a VAT Tax Claim can exist even without an actual claim by a Tax Authority. Therefore, GoDaddy argues that it timely filed its Escrow Claim Notice. The risk remains real. The Escrow Amount must therefore remain in place until the agreed procedures have been completed. In this regard, paragraph 12.1 of Schedule 5 to the SPA stipulates what the parties must do in case there is cause to initiate voluntary disclosure discussions with a Tax Authority. GoDaddy and Sellers together started these proceedings after GoDaddy reported the Claim to the Sellers’ Representative on 29 June 2023. This is evident, for example, from [Seller's tax advisor] ’s letter dated 17 August 2023. Both GoDaddy and the Sellers agreed that they would follow the procedure in paragraph 12 of Schedule 5 (Tax) to the SPA, with the exception of the “Resolution Period” regarding GoDaddy’s Claim. According to GoDaddy, it is only allowed to start voluntary disclosure discussions with the Tax Authorities when (i) there is agreement on its initial presentation with the Sellers; or (ii) Deloitte LLP has determined the initial presentation in accordance with paragraph 12.2 of Schedule 5 (Tax), because the parties themselves failed to agree on the initial presentation. For Deloitte LLP to have any role, there must be a VAT Tax Claim. GoDaddy wants to resolve this matter within the agreed framework. Now that amicable talks have broken down, the 30-day period should start, with the matter being referred to Deloitte LLP, according to GoDaddy.
4.Discussion
Jurisdiction, applicable law and urgency
4.1.
In clause 25.2 of the SPA, the parties agreed that the competent court in Amsterdam, the Netherlands, in proceedings in English before the Chamber for International Commercial Matters (the Netherlands Commercial Court) shall have exclusive jurisdiction to determine any dispute arising in connection with the Agreement. The parties also agreed that any application for injunctive relief available under the laws of the Netherlands will be brought before the Chamber for International Commercial Matters (Netherlands Commercial Court) in summary proceedings in English. In addition, the choice of jurisdiction is confirmed by clause 10 of the Escrow Agreement. This means that the Amsterdam District Court has jurisdiction under Article 25(1) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast). All other requirements for the NCC Court in Summary Proceedings to have authority to deal with this case, as referred to the Dutch Code of Civil Procedure (DCCP) and in Articles 1.3.1 and 1.3.2 of the NCC Rules of Procedure (NCCR), are met.
4.2.
In clause 25.1 of the SPA, the parties agreed that Dutch law applies. This choice of applicable law is confirmed by clause 10 of the Escrow Agreement. Thus, the Court will apply Dutch law.
4.3.
The Court is persuaded that the Sellers have the required interest for relief in summary proceedings. The Court will go into a full consideration of this matter in more detail below.
Decisive framework
4.4.
In these summary proceedings, the Court will have to assess and decide whether the Sellers’ claims will be upheld and/or confirmed in proceedings on the merits on the subject matter of the dispute at hand. Only when the Court is sufficiently convinced that any claim will be upheld and/or confirmed in proceedings on the merits, can any interim measure, as requested in these proceedings, be awarded. The Court finds as follows.
On the merits
The situation prior to the signing of the SPA
4.5.
A few weeks prior to signing, GoDaddy (or rather KPMG on its behalf) raised concerns about the applied VAT treatment for the services provided by/through [website] . On 8 June 2022, [Seller's tax advisor] , the Sellers’ tax advisor, provided a memorandum to GoDaddy, with a detailed explanation of the Sellers’ view that there is no VAT risk in the Netherlands. In its memorandum, [Seller's tax advisor] also refers to a ruling of the Dutch Tax Authority. In this ruling it is confirmed that [website] provides a mediation/intermediary service, as stated by the Sellers. On the same date (8 June 2022), GoDaddy proposed a post-closing step-plan for resolution of the VAT issue to the Sellers. This step-plan entailed
inter aliaa complete detailed analysis of marketplace rules on a country-by-country basis, because [website] is active in many jurisdictions. To this end, GoDaddy proposed that and how the parties would have to work together (“Working together: strategies to mitigate exposure”). The current version of paragraph 12 of Schedule 5 (Tax) to the SPA, as proposed by GoDaddy, also reflects the idea that the parties will work together: “the Purchaser and its Representatives, on the one hand, and the Sellers’ Representative and its Representatives, on the other hand, shall confer and consult with each other, consider each other’s positions”.
inter aliaa complete detailed analysis of marketplace rules on a country-by-country basis, because [website] is active in many jurisdictions. To this end, GoDaddy proposed that and how the parties would have to work together (“Working together: strategies to mitigate exposure”). The current version of paragraph 12 of Schedule 5 (Tax) to the SPA, as proposed by GoDaddy, also reflects the idea that the parties will work together: “the Purchaser and its Representatives, on the one hand, and the Sellers’ Representative and its Representatives, on the other hand, shall confer and consult with each other, consider each other’s positions”.
The course of events after the closing of the SPA
4.6.
A few months after the closing of the SPA, on 12 September 2022, a “draft fact pattern – for discussion purposes”, prepared by KPMG NL for KPMG US was shared with the Sellers’ Representative. The Sellers’ Representative provided his comments on this document on 14 September 2022. GoDaddy argues that it could rely on this feedback being full and final as the Sellers’ Representative commences his e-mail with the words “final feedback”. The Court does not follow GoDaddy’s position. The Sellers’ Representative was – ‘out of the blue’ – presented with this draft fact pattern, marked “for discussion purposes”, and requested to respond within one day. The Sellers’ Representative could reasonably assume that this document and his input concerned a precursor to the actual process – working together, conferring and consulting with each other – as envisaged by the parties. This is confirmed in KPMG’s e-mail of the same day: the Sellers’ Representatives’ input enabled KPMG to finalise the draft “for further validation / dialog” (see 2.12). Since this message, however, GoDaddy and KPMG apparently have set their own course.
4.7.
After 14 September 2022, for about 10 months, there was no contact between the parties on the potential VAT risk as identified by KPMG, until the Sellers’ Representative contacted GoDaddy about the upcoming initial escrow release. Reference is made to GoDaddy’s e-mail of 27 June 2023 (see 2.14). Only on 29 June 2023, did GoDaddy share: (i) the Statement of Facts dated 1 May 2023, and (ii) a Dutch VAT analysis carried out by KPMG NL. Only one week after the Sellers’ Representative received the memos on 29 June 2023 (and after the Sellers’ Representative had reminded GoDaddy of the upcoming initial escrow release), did GoDaddy come up with its ‘Escrow Claim Notice’.
4.8.
The question now is whether this ‘Escrow Claim Notice’ qualifies as a “a Claim made by the Purchaser against the Sellers under and in accordance with the SPA which had not yet been fully resolved”, as alluded to in the Escrow Agreement. The definition of ‘Claim’ in the SPA is not helpful: it simply states: “a Claim is a claim”. On the other hand: a claim is not a claim simply because one calls it a claim. According to its ‘Escrow Claim Notice’, GoDaddy argues that it has a VAT claim amounting to (at least) USD 4 million (a ‘VAT Tax Claim’ in the SPA). In the SPA a ‘Tax Claim’ is defined as “any claim under, or in connection with Tax which may result in a Claim against the Sellers under this Schedule 5 (Tax) which for the avoidance of doubt, shall include any voluntary disclosure discussions with any Tax Authority in accordance with paragraph 12 of this Schedule 5 (Tax)”. Hence, the Sellers’ argument that the Tax Indemnity for VAT Tax Claims requires a
pendingAction by a Tax Authority is flawed. GoDaddy in its turn relies on the phrase “shall include any voluntary disclosure discussions with any Tax Authority”. The mere fact that such voluntary disclosure discussions may have to take place (according to GoDaddy and its advisors) is, however, not sufficient to call something a ‘Claim’. The Court does not agree with GoDaddy that it suffices that it cannot be excluded that a risk exists. This is all the more true in this case where the (potential VAT) risk had already been identified prior to the signing of the SPA and where the parties have agreed a procedure to deal with this potential risk (set out in paragraph 12 of Schedule 5 (Tax)). The ‘Escrow Claim Notice’ itself does not substantiate the ‘Claim’ in any way. According to the Escrow Claim Notice, GoDaddy “
believesthe current estimated exposure is USD 4,000,000.00 (…) and
may potentiallynecessitate the filing of voluntary disclosure agreements”. The Statement of Facts dated 1 May 2023 and the Dutch VAT analysis carried out by KPMG cannot serve as a basis for this ’Claim’ of (potentially) USD 4 million.
pendingAction by a Tax Authority is flawed. GoDaddy in its turn relies on the phrase “shall include any voluntary disclosure discussions with any Tax Authority”. The mere fact that such voluntary disclosure discussions may have to take place (according to GoDaddy and its advisors) is, however, not sufficient to call something a ‘Claim’. The Court does not agree with GoDaddy that it suffices that it cannot be excluded that a risk exists. This is all the more true in this case where the (potential VAT) risk had already been identified prior to the signing of the SPA and where the parties have agreed a procedure to deal with this potential risk (set out in paragraph 12 of Schedule 5 (Tax)). The ‘Escrow Claim Notice’ itself does not substantiate the ‘Claim’ in any way. According to the Escrow Claim Notice, GoDaddy “
believesthe current estimated exposure is USD 4,000,000.00 (…) and
may potentiallynecessitate the filing of voluntary disclosure agreements”. The Statement of Facts dated 1 May 2023 and the Dutch VAT analysis carried out by KPMG cannot serve as a basis for this ’Claim’ of (potentially) USD 4 million.
It is undisputed that, prior to sending the ‘Escrow Claim Notice’, only these two memos were shared with the Sellers regarding the VAT tax issue. Although the ‘Escrow Claim Notice’ does not specify this, GoDaddy’s ‘belief’ (as mentioned in the Escrow Claim Notice) is apparently based (only) on the Dutch VAT analysis, dated 1 May 2023, which was carried out by KPMG NL. This memo only contains a Dutch VAT analysis of [website] and does not mention a (potential) VAT claim of USD 4 million. Moreover, this memo is not even “a position paper nor a formal opinion, and as such does not determine a probability or likelihood for a position”. Based on this memo, it is clear that KPMG (still) is (or at least was on 1 May 2023) of a different opinion than the Sellers’ tax advisers ( [Seller's tax advisor] ), as substantiated by its memorandum of 8 June 2022. It must be noted, however, that KPMG’s Dutch VAT analysis also runs counter to the VAT ruling obtained from the Dutch tax authority by the Sellers (who, at the time, were advised by yet another tax firm), in which the Dutch tax authority confirmed that there is no VAT due in the Netherlands because [website] provided a mediation/intermediary service. Hence, the situation on 6 July 2023, when GoDaddy served its ‘Escrow Claim Notice’ was not different from the situation on 25 June 2022 when the SPA was signed. GoDaddy has not made clear what further analysis KPMG has carried out in the meantime and it cannot be excluded that the analysis is (still) based on a flawed fact pattern. Also, at the hearing, GoDaddy admitted that KPMG US writes in its latest opinion, KPMG US Memo 21 February 2024, submitted one day before the hearing, “it may be that the Dutch tax ruling may be relied upon”. Lastly, it is imperative to recall that it is not in dispute between the parties that the underlying input from the KPMG member firms (the responses to the VAT questionnaire which was shared with KPMG offices in several countries) and the exposure calculations were only provided to the Sellers (after several requests) on 1 August 2023, hence after the Escrow Claim Notice, and therefore cannot serve as a basis for the Escrow Claim Notice. The same applies to the KPMG US Memo 21 February 2024. Therefore, the Court provisionally finds this ‘Claim’ is insufficiently substantiated to justify withholding the claimed amount from being released from Escrow.
4.9.
It follows from GoDaddy’s defence that it now wishes to start voluntary disclosure discussions with the Sellers in accordance with paragraph 12 of Schedule 5 (Tax). GoDaddy argues that the Sellers are frustrating this procedure. This argument is flawed. GoDaddy could and should have started discussions with the Sellers about voluntary disclosure first, in order for a VAT Tax Claim to come into existence. GoDaddy failed to do so without good reason. GoDaddy has not explained why, after the (limited) communication in the period from 12 to 14 September 2022 (see 2.10.-2.12.), no further ‘dialog’ (as envisaged by KPMG) has taken place and why the Sellers’ Representative was never contacted again about the VAT issue. The mere statement in the statement of defence that there was ongoing contact with the Sellers’ Representative “on the topics related to the underlying VAT issues” is not substantiated by GoDaddy, whereas the Sellers’ statement that there had not been any further contact on the issue is supported by the Sellers’ Representative’s e-mails of 29 June and 3 July 2023 (see 2.16 and 2.17). Furthermore, GoDaddy has given no explanation whatsoever why it took KPMG NL until 1 May 2023 to produce its memorandum (that is not even “a position paper nor a formal opinion, and as such does not determine a probability or likelihood for a position”), or why it took KPMG US such a long time to gather the information from its other offices around the world. In its statement of defence GoDaddy simply states that “[t]his analysis covered several countries, and it took KPMG and GoDaddy 9 months to complete it and the calculation of potential exposure to liability.” Furthermore, GoDaddy has not explained why KPMG’s Statement of Facts and the Dutch VAT analysis were not shared with the Sellers or the Sellers’ Representative) shortly after 1 May 2023, and why the input from KPMG offices in other countries was not shared with the Sellers when ready, while KMPG US already stressed the need to approach the tax authorities for voluntary disclosure discussions on 1 May 2023. Therefore, the Court rejects GoDaddy’s argument that it only recently found out about this potential ‘Claim’ and that only now the procedure set out in paragraph 12 of Schedule 5 (Tax) can be started. In the spirit of the SPA and in particular this paragraph 12, GoDaddy should have acted more expediently and should have kept the Sellers’ Representative in the loop after 14 September 2022. If it had done so and had acted in accordance with the (spirit of the) SPA, there would have been more clarity with regard to the VAT issue before the end of the release term of the Collateral Amount of 12 or 18 months after the Closing Date.
Required interest for relief in summary proceedings
4.10.
In sum, the Court finds that there is sufficient likelihood of success on the merits to support the Sellers' claim to release the 50% of the payment still held in escrow. This amount still held in escrow is part of the purchase price due by GoDaddy to the Sellers for their shares in Undeveloped. As there is no (sufficiently) substantiated Claim and therefore the ‘Escrow Claim Notice’ was sent to no avail, there is no reason why the remaining part of the purchase price should not be released. The claim of the Sellers is of an urgent nature. The Sellers are simply entitled to this money and the Sellers’ Representative explained at the hearing that especially the ‘small’ shareholders (former employees of Undeveloped) need the money for various reasons and – given that there was no sign of a ‘Claim’ of any nature whatsoever prior to 29 June 2022, one week before the release date – have counted on the remaining part of the purchase price to be paid on 6 July 2022. GoDaddy is entitled to commence the procedure set out in paragraph 12 of Schedule 5 (Tax) to the SPA, but, under the circumstances, it cannot be expected from the Sellers to wait for their money until this procedure is finished.
Conclusion
4.11.
The Court will rule in favour of the Sellers. The Sellers’ claim to order GoDaddy to provide a joint instruction to the Notary under article 4.1(a) of the Escrow Agreement and to provide all reasonably required cooperation to effect the release of the first 50% of the payment still held in escrow will be awarded. The Court will allow GoDaddy a period of five (5) working days from the date of this judgment to provide its instruction and cooperation. The Court will also order that, if GoDaddy does not provide the joint instruction mentioned above, this judgment will be in GoDaddy’s stead and thus take the place of the instruction to the Notary (in accordance with Article 3:300(1) of the Dutch Civil Code). Since the main claim in this regard is awarded, the alternative claim, a judicial penalty, will be left undiscussed. GoDaddy will also be ordered to pay interest over the amounts to be released, in accordance with clause 5.3(b) of the SPA, until payment is made in full.
Costs
4.12.
GoDaddy argues that the Sellers’ claim with regard to the costs of these proceedings has to be dismissed because the parties agreed in clause 7 of the Escrow Agreement that the parties are responsible for their own costs resulting from any dispute concerning the Escrow Agreement. The Court, however, agrees with the Sellers that the current dispute is not merely based on the Escrow Agreement, but also on the (Tax Schedule of the) SPA. The Sellers also argued that clause 7 of the Escrow Agreement only relates to out-of-court efforts, and GoDaddy did not challenge this. Therefore, GoDaddy, as the unsuccessful party, will be ordered to pay the costs. The cost order is based on the NCC rates to assess lawyers' fees (see Annex III to the NCC Rules) and the post-judgment costs as claimed by Sellers.
The costs on the part of the Sellers are set at:
- writ of summons (costs of service) EUR 112.37
- court fee EUR 9,143.00
- lawyers' fee EUR 5,000.00 (2.5 x EUR 2,000.00)
- post-judgment costs (
nakosten)
EUR 173.00(plus the subsequent costs, as stated
nakosten)
EUR 173.00(plus the subsequent costs, as stated
below)
total amount EUR 14,428.37.
5.Conclusion and order
THE COURT IN SUMMARY PROCEEDINGS
5.1.
orders GoDaddy to provide the joint instruction to the Notary under clause 4.1 (a) of the Escrow Agreement, and to provide all reasonably required cooperation, to effect the release of the first 50% of the payment still held in escrow, within five (5) working days after the date of this judgment,
5.2.
orders that, if GoDaddy does not provide the joint instruction under 5.1., this judgment will be in GoDaddy’s stead and thus take the place of the instruction to the Notary (within the meaning of Article 3:300(1) Dutch Civil Code),
5.3.
orders GoDaddy to pay to the Sellers the interest over the amounts to be released under 5.1. in accordance with clause 5.3(b) of the SPA, until payment is made in full,
5.4.
orders GoDaddy to pay to the Sellers the costs of these proceedings, set at
EUR 14,428.37, plus – if GoDaddy has not complied with the judgment within five (5) working days after the date hereof and subsequent service of the judgment was necessary – an amount of EUR 90.00 in lawyers' fees, plus the costs of service of the judgment,
5.5.
declares this judgment enforceable notwithstanding appeal,
5.6.
dismisses any other claim.
Done by R.A. Dudok van Heel, Judge, assisted by A. Hut, Clerk of the Court.
Issued in public on 20 March 2024.
APPROVED FOR DISTRIBUTION IN DT
SIGNATURE PAGE 1 OF 2
R.A. DUDOK VAN HEEL
(JUDGE)
SIGNATURE PAGE 2 OF 2
CLERK OF THE COURT