NETHERLANDS - The European Court of Justice has backed a decision by the Dutch lawyers' association (Algemene Raad van de Nederlandse Orde van Advocaten) to ban link ups between accountancy firms and the legal profession.
Bu the EC conceded that the measure would restrict competition in the country.
The decision stems from a play by ‘Big Five’ accountants Arthur Andersen and PricewaterhouseCoopers to establish ties with Dutch law firms JCJ Wouters and JW Savelberg.
The association based its rejection on a 1993 Dutch regulation on joint professional activity. The regulation does allow partnerships with certain professions including notaries, tax consultants and patent agents, but in order to guarantee the independence of the Bar it does not authorise them to enter into tie-ups with accountants.
An appeal was then put to the highest Dutch court, the Raad van State, which in turn sought the backing of the EC.
The EC said that the association acted reasonably adding that there may be a “degree of incompatibility” between the 'advisory' activities carried out by a lawyer and the 'supervisory' activities carried out by an accountant. Accountants in the Netherlands are not subject to the same secrecy bindings as Bar members.
“[The] rules affect trade between member states in that they apply to visiting lawyers enrolled at the Bar in another member state,” added the Commission.
“Nevertheless, having regard to the way in which the legal profession is envisaged in the Netherlands, the essential rules adopted for that purpose are considered to be the duty to avoid all risk of a conflict of interests and the duty to observe strict professional secrecy.
“That being so, it was reasonable for the Netherlands rules to impose binding measures, despite the effects entailed which are restrictive of competition, because those measures are necessary for the proper practice of the legal profession.”
By Madhu Kalia
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