Interest rate derivatives and the duty to disclose.

HR 22 May 2026, ECLI:NL:HR:2026:793

The Dutch Supreme Court (Hoge Raad) issued a significant ruling on 22 May 2026 on the question of whether a bank advising on and entering into an interest rate derivative is obliged to share its own interest rate outlook with its counterparty. The judgment clarifies the scope of the duty to disclose in the context of error (dwaling, Section 6:228 of the Dutch Civil Code) and the special duty of care incumbent on professional financial institutions, and sharpens the distinction between the two.

Background

Two hospitality entrepreneurs had banked with Deutsche Bank since the early 1990s and in 2005 entered into two interest rate swaps to hedge the interest rate risk on their substantial roll-over credit facilities. In early 2008 they terminated those swaps — on the bank's advice, as they later claimed — and received a positive market value of just over €900,000. A few months later, in June 2008, they entered into two new swaps with Deutsche Bank, each with a ten-year tenor and fixed rates of 4.89% and 4.92% respectively.

What is crucial is what happened in the intervening weeks. Deutsche Bank's Economic Research department had on 2 June 2008 published an interest rate outlook predicting a declining Euribor — from 4.7% in Q1 2008 to 3.8% by end-2009. That outlook was not shared with the entrepreneurs. On 27 June 2008 they signed the new swaps. What followed is predictable: rates fell sharply, and the swaps proved deeply adverse.

The legal claims

The entrepreneurs sought annulment of the 2008 swap on grounds of error, and in the alternative claimed damages for breach of the bank's duty of care. Both the District Court and the Amsterdam Court of Appeal dismissed the claims. The Court of Appeal held that interest rate outlooks are inherently of "limited value" and that a bank entering into a swap for hedging purposes is not "as a matter of principle" obliged to share its rate outlook. It added that Deutsche Bank had in any event revised its 2 June 2008 view only fourteen days later.

The Supreme Court's analysis

The Supreme Court quashes the Court of Appeal's judgment on several grounds.

• Error — Section 6:228(1)(a) of the Dutch Civil Code. The Court of Appeal had failed entirely to address a central allegation: that Deutsche Bank had positively represented to the entrepreneurs, prior to entering into the new swap, that interest rates were going to rise and that it was therefore advisable to hedge again. This concerns a claim under art. 6:228(1)(a) DCC — error induced by an incorrect or incomplete statement made by the counterparty itself — which the Supreme Court carefully distinguishes from the spontaneous duty to disclose under art. 6:228(1)(b) of the Dutch Civil Code. Leaving that allegation unaddressed without reasons is, the Court holds, incomprehensible.

• Duty to disclose — Section 6:228(1)(b) of the Dutch Civil Code. The Supreme Court confirms the general rule: a bank offering an interest rate derivative is not as such obliged to share its internal rate expectations. The duty to disclose is directed at enabling the counterparty to "obtain timely insight into the essential characteristics and risks" of the product — such as the risk that the derivative may develop a substantial negative value payable upon early termination. A bank's proprietary rate view does not automatically fall within that scope.

  That said, the Supreme Court makes clear that the circumstances of a particular case may well give rise to precisely such an obligation. The Court of Appeal had fallen short by dismissing the specific configuration of this case — termination of the 2005 swaps followed, a few months later, by advice to enter into new ones — with the bare observation that rate outlooks are of limited value. That reasoning, the Supreme Court holds, is insufficiently motivated.

• Duty of care. The Supreme Court emphasises that the warning obligation flowing from the special duty of care of a professional financial institution is an autonomous norm. It serves to protect the counterparty "against the risks of its own recklessness or lack of understanding" and is rooted in the institutional function and expertise of the provider. Its scope depends on the counterparty's expertise and experience, the complexity of the product, and the associated risks. The Court of Appeal therefore could not satisfy itself by cross-referencing its analysis of the disclosure obligation under the dwaling framework; the duty-of-care question required separate, independent assessment.

• The offer of proof. Finally, the entrepreneurs had offered to prove both that Deutsche Bank had told them rates would rise and that, absent that representation — or with full disclosure of the rate outlook — they would not have entered into the new swap. Disregarding that offer of proof on the ground that the allegations were insufficiently substantiated was, in light of the foregoing, incomprehensible.

The case is referred to the Court of Appeal in The Hague.

Implications for practice

This judgment adds an important qualification to the existing body of Dutch interest rate derivatives case law, particularly the Supreme Court's landmark rulings of 28 June 2019 and 4 October 2019. The baseline rule stands: a bank need not disclose its rate outlook as a matter of course. But this judgment makes clear that the surrounding circumstances may shift that conclusion — most acutely where the bank has played an active advisory role in a sequence of transactions: first advising termination of an existing hedge, then advising re-entry into a new one.

Three points merit attention for practice.

• First, the claim under art. 6:228(1)(a) of the Dutch Civil Code — error induced by a positive misrepresentation — must be kept analytically distinct from the claim under (1)(b), which concerns a failure to volunteer information. The Court of Appeal conflated the two; the Court of Appeal in The Hague will now have to assess the (a)-limb on its own terms.

• Second, the Supreme Court confirms that the bank's duty of care cannot be disposed of by reference to the absence of a duty to disclose. Both bases of liability have their own normative framework and require independent analysis.

• Third, the judgment underscores the importance of a carefully formulated offer of proof. Parties relying on an incorrect or incomplete bank communication must articulate what they offer to prove and connect it explicitly to the legal consequences they pursue.

Interest rate derivative disputes from the 2005–2015 period are far from exhausted. This judgment shows the Supreme Court holding lower courts firmly to account for reasoning gaps — and demonstrating that the specific advisory timeline and the details of the relationship between bank and client remain determinative.

This update is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created thereby .