13.5 The actual investigation

Once the Enterprise Chamber has ordered an investigation, it is the investigators’ turn to take action. In Chapter 5, I discuss their tasks. The regular tasks are to establish the facts necessary to answer the questions following from the investigative order, to assess the policy pursued by the legal entity and the conduct of its business, and to draw up an investigation report. In fulfilling their first task, establishing the necessary facts, the investigators are bound by the investigative order. They must establish those facts based on which the Enterprise Chamber can determine in any second-phase proceedings whether mismanagement occurred. The investigators are not bound by what parties stated in the first-phase proceedings, or by the facts established by the Enterprise Chamber in the decision ordering the investigation. The reason for this is that the Enterprise Chamber comes to that decision after a brief procedure and the Enterprise Chamber’s substantive judgment is provisional. The second thing the investigators must do is to provide their opinion on the legal entity’s policy and conduct of business, as evidenced by the facts. The investigators must assess whether the legal entity’s policy was sound based on a normative framework. This framework consists not only of current law, but also of soft law, such as the Dutch Corporate Governance Code. In addition, the investigators must make their assessment against the ‘good business practice’ standard, particularly where they assess the policy pursued by the legal entity. In my view, what the investigators should not do is to legally characterise the legal entity’s policy. They should therefore refrain from giving an opinion on whether the policy that they regard as improper or the conduct of business that they regard as unsatisfactory is serious enough to warrant being characterised as ‘mismanagement’, since that is the Enterprise Chamber’s prerogative. Another reason why investigators should refrain from characterising the policy pursued by the legal entity is that in many cases, matters do not reach the stage of second-phase proceedings, so that the Enterprise Chamber does not get the opportunity to express its view on the matter. The last of the investigators’ regular tasks to be mentioned is drawing up an investigation report.

In addition to these regular tasks, investigators have a number of other tasks that may sometimes arise. One of these other tasks is to consider whether an out-of-court settlement can be reached between the parties. On the one hand, this is desirable, as an out-of-court settlement can put matters in order, which is one of the main objectives of inquiry proceedings. At the same time, a disadvantage is that if no outof-court settlement can be realised, the investigator can probably no longer conduct the investigation in an objective manner. For that reason, it is preferable for the Enterprise Chamber to issue an injunction appointing a managing or supervisory director to mediate between the parties, rather than the investigator. However, if this immediate order is not issued, for example because there are insufficient funds to appoint an extra Enterprise Chamber official, it is acceptable practice to issue this order to the investigator.

To be able to conduct the investigation, investigators have various formal powers. For example, they have a right to inspect the legal entity’s books and records and ask former or current managing directors, supervisory directors and employees to provide them with information. In Chapter 6, I discuss the formal powers of investigators and the restrictions that they must observe in exercising those powers.

The actual investigation is discussed in Chapter 7. This chapter consists of two parts. In the first part, I identify the principles of good investigative practice that investigators must observe. These principles apply to any investigation, but the extent to which investigators must follow the principles may depend on the type of inquiry and the other circumstances of the case. I derived these principles of good investigative practice from the procedural rules, soft law, unwritten law, and rules governing professional ethics and conduct. The provisions of Article 6(1) of the European Convention on Human Rights (ECHR) do not apply directly to investigations. However, because the investigation forms part of the inquiry proceedings and those proceedings as a whole do have to meet the requirements of Article 6(1) of the ECHR, the provisions of the ECHR are indirectly relevant to the investigation. In order to establish what the principles of good investigative practice are, I analysed how the civil courts assess court-ordered expert examinations and how the Enterprise Chamber assesses investigations in second-phase proceedings. I also analysed how the Enterprise Chamber deals with criticism of how the investigation is conducted.

The second part of Chapter 7 is of a more practical nature. In that chapter, I describe how investigators can organise an investigation and how they should conduct it. By setting up an investigative protocol, investigators can provide the parties involved in the investigation with an insight into the investigators’ working methods and create transparency about the parties’ rights and obligations. I have drawn up a template for an investigative protocol that investigators can use as a source of inspiration. Except in smaller, curative investigations, it is also advisable for investigators to draw up an action plan in which they develop their working order in terms of specific investigative questions and state how they wish to conduct the investigation. Investigators should not finalise their action plan until they have submitted a draft of this to the parties. If the parties do not agree to the action plan, they can ask the examining judge to instruct the investigators to adjust the action plan. I have also attached a template for an action plan as an annex.