A Service Level Agreement (SLA) is a contractual provision that establishes measurable performance levels for service provision. In our practice, we see SLAs that are too vague, do not contain measurable KPIs, or do not link consequences to disappointing service. A well-drafted SLA prevents disputes and provides control over foreign suppliers. Under applicable Dutch and EU law, clarity, measurement method, and service credits are particularly decisive.
What is the legal problem?
An SLA forms the heart of a service contract. Lack of clarity regarding measurement method, reporting, and consequences for underperformance leads to endless disputes. With international parties, additional bottlenecks arise due to language, time zones, and the interpretation of concepts such as availability and uptime. Without clear definitions, you are in a weak position in a dispute.
What does the law say?
SLAs are contractual; There is no specific legislation. Under Dutch law, SLA provisions are part of the contract for services (Article 7:400 BW) or the service contract. For digital services, the Digital Content and Services Directive (EU 2019/770) applies, as well as its elaboration in Article 7:50aa et seq. BW. For cybersecurity in essential sectors, the NIS2 Directive (EU 2022/2555) applies.
For SaaS to business customers, general contractual principles apply. International standards such as ITIL and ISO/IEC 20000-1 provide useful definitions and best practices for uptime, response time, and escalation.
What risks do companies face?
Without clear KPIs, you will receive no compensation for underperformance. Non-measurable provisions lead to disputes. Unilateral SLAs often contain indemnities that undermine your rights. Insufficient reporting renders underperformance invisible. With international service providers, escalation is difficult without clear procedures. Under Article 6:265 of the Dutch Civil Code, a structural breach can constitute grounds for dissolution — provided it is demonstrable.
Practical example from our practice
We advised a Dutch client with a SaaS contract from an American supplier. The SLA guaranteed 99.9 percent uptime but lacked a measurement method, credits, or exclusions. In the event of a major outage, the supplier refused compensation due to the lack of a definition of downtime. The client lost €145,000 in production losses. Upon renegotiation, we incorporated: a clear definition of uptime, monthly measurement via an independent monitor, tiered service credits rising to 25 percent of the monthly compensation, and an exit right in the event of underperformance for two consecutive quarters. The next outage resulted in an automatic credit within 30 days.
What can you do?
Define KPIs (availability, response time, resolution time) clearly and measurably. Agree on the measurement method, exclusions, and burden of proof. Link clear service credits to underperformance. Arrange for reporting and escalation. Provide for exit rights in the event of a structural violation under Article 6:265 of the Dutch Civil Code. Align with applicable law. See also our article on IT contracts with foreign customers.