Opportunities for foreign creditors
The Netherlands is well known for its liberal social policies. Less well known, perhaps, is the liberal approach of the Dutch courts to granting pre-judgment attachments on assets – something which may benefit foreign creditors even if the debtor is not Dutch.
Pre-judgment attachments are usually made to ensure recourse for claims once an enforceable judgment has been obtained by the creditor; however, they can also serve to put pressure on a debtor to enter into a settlement agreement. Pre-judgment attachments may be obtained on a wide variety of assets, including bank balances, receivables, shares, moveable goods and real estate.
In order to secure a pre-judgment attachment of assets, the creditor must obtain permission from a preliminary relief judge. This procedure is relatively simple, fast and inexpensive, and typically does not involve hearing the debtor (which would defeat the purpose, since it would give the debtor an opportunity to dispose of the assets that are to be attached).
The petition must be made by a Dutch lawyer and include the following:
- the details of the claimant;
- the amount of the claim;
- the grounds and evidence for the claim;
- the assets to be attached;
- any reasons why the debtor has not paid; and
- the proportionality of the requested attachments.
The judge typically awards the petition based solely on its contents, without hearing the claimant or defendant. Hence, the award may be granted almost immediately after filing. However, if a pre-judgment attachment is made for a non-existent claim, the claimant may be held liable for damages resulting from such attachment. The permission granted by the judge is conditional on the commencement of legal proceedings on the merits, which should result in an enforceable judgment.
The debtor whose assets are attached may request the preliminary relief judge to have the attachments lifted by:
- providing alternative recourse for the creditor's claim (eg, a bank guarantee); or
- demonstrating that the creditor has no legitimate claim against it or insufficient interest in maintaining the attachments.
Opportunities for foreign creditors
Requests for pre-judgment attachments of assets located in the Netherlands may also be made on behalf of foreign creditors. The Dutch courts have jurisdiction if:
- the debtor resides in the Netherlands (eg, if the debtor has its statutory seat there); or
- the claim is based on an agreement that is to be executed in the Netherlands or a tort committed in the Netherlands.
The Dutch courts also have jurisdiction to grant permission for pre-judgment attachments on assets located in the Netherlands in cases where they have no jurisdiction in the proceedings on the merits (eg, because the debtor is a foreigner and the agreement on which the claim is based has no connection with the Netherlands).
If the judgment rendered in the proceedings on the merits can be executed in the Netherlands, a pre-judgment attachment will be converted into an enforceable attachment. A foreign judgment or arbitral award may be executed in the Netherlands based on a treaty such as the Brussels Regime (for enforcement of awards from EU member states, Iceland, Norway and Switzerland) or the New York Convention (for arbitral awards).
If enforcement cannot be based on a treaty, permission must be obtained from the Dutch courts. This will normally be granted if the foreign proceedings meet generally accepted standards without judging the merits of the case. If a foreign judgment is not enforceable in the Netherlands due to the absence of an applicable enforcement treaty, a pre-judgment attachment on the assets of a foreign debtor in the Netherlands can create jurisdiction for the Dutch courts to rule on the merits, unless the parties have agreed on the exclusive jurisdiction of a foreign court.
A creditor whose debtor has assets in the Netherlands may find it worthwhile to obtain a pre-judgment attachment on those assets. The preliminary relief judge has jurisdiction to grant an attachment, even if the debtor is a foreigner and the Dutch courts do not have jurisdiction in the proceedings on the merits. On obtaining a foreign judgment or arbitral award, the attached assets can be executed in the Netherlands.
In certain cases, the creation of a pre-judgment attachment on assets can even create jurisdiction for the Dutch courts in the proceedings on the merits, in order to obtain a title for execution of the attached assets. In comparison with the regimes in other countries, the Dutch legal system for pre-judgment attachments is simple, fast, inexpensive and effective.
For further information on this topic please contact Marc Goethals at AKD by telephone (+31 88 253 5000) or email ([email protected]). The AKD website can be accessed at www.akd.nl.
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