• Briefing Part 2: Modifications of Dutch Rules on Conservatory Attachments
  • October 12, 2011
  • Law Firm: Norton Rose Canada LLP - Montreal Office
  • Introduction

    On 1 July 2011, a new version of the syllabus on conservatory attachment (conservatoir beslag) in the Netherlands (beslagsyllabus) (the Syllabus) entered into force. The latest modifications to the Syllabus were driven by the outcome of a research on conservatory attachments in the Netherlands, which research was ordered by the Council for the Administration of Justice (Raad voor de Rechtspraak). The most important conclusion of the abovementioned research was that the system of conservatory attachments had become unbalanced, because - briefly said - the position of the creditor had been strengthened, as a consequence of which the debtor was limited in its possibilities to successfully object to the laying of a conservatory attachment on its assets.

    The Dutch district courts apply the recommendations and guidelines laid down in the Syllabus when deciding on petitions for leave (beslagrekesten), which petitions must be filed by creditors to the judge presiding over interlocutory proceedings (voorzieningenrechter) in order to obtain leave to lay a conservatory attachment. The Syllabus does not serve as compulsory judicial policy, but should instead be viewed as “best practice guidelines” from which the competent judge is free to deviate where this is deemed appropriate. The Syllabus introduces new requirements for the contents of the petition for leave and a few other noteworthy modifications, which will be discussed in this briefing.


    New requirements on the petition for leave

    Article 700 subsection 2 of the Dutch Code of Civil Procedure (the DCCP) states that the petition for leave should mention the nature of the attachment and of the underlying claim and, in case it concerns a monetary claim, the (maximum) amount of such claim. Section A3 (new) of the Syllabus states that, when describing the nature of the claim, the petition for leave should mention whether the claim concerns:

    1. a claim arising out of contract - unpaid invoices;
    2. a claim arising out of contract - other;
    3. a claim arising out of tort or another basis.

    Depending on which of the above applies, the creditor should provide further information on the (factual) background to the claim, the defences made by the debtor and other relevant evidence in support of its petition for leave (e.g. a contract and written notice of default (ingebrekestelling) in case of a claim arising out of contract).

    Another significant new requirement of the petition for leave laid down in section A4 (new) of the Syllabus, is that the creditor must motivate in the petition for leave why the attachment is necessary, why it chose to lay an attachment on the relevant goods for which leave is requested and why it is not possible to lay an attachment on less burdensome goods (e.g. real estate instead of a bank account).

    Section B of the Syllabus now mentions that the competent judge must involve the abovementioned new requirements in its decision on the petition for leave.


    Implications of the new requirements on the petition for leave for laying a conservatory attachment

    As a result of the new requirements for the petition for leave, it will become somewhat more difficult, costly and time-consuming for a creditor to lay a conservatory attachment on the assets of its debtor. Furthermore, the new requirements on the petition for leave will most probably result in a more in-depth examination of the envisaged conservatory attachment by the judge presiding over interlocutory proceedings, since the judge must involve the new requirements in its decision on the petition for leave. Some authors have argued that this seems to be difficult to reconcile with article 700 subsection 2 of the DCCP, which states that the competent judge decides on the petition for leave after a brief examination (summier onderzoek). Other authors have argued however, that the judicial review remains restricted to the test whether or not the request of the creditor “seems unjust” and is therefore still reconcilable with article 700 subsection 2 of the DCCP. The competent judge can still suffice with a brief examination, whilst establishing whether the petition for leave complies with the new requirements as included in the Syllabus.

    The new requirements in the Syllabus are positive for the position of the debtor. In the former system of conservatory attachments, it was quite easy for a creditor to obtain leave from the judge presiding over interlocutory proceedings to lay a conservatory attachment, which resulted in a difficult position for the debtor, especially with regard to his possibilities to successfully object to a conservatory measure. Under the new requirements of the Syllabus, a creditor is required to provide more information and background to the case, before it will be able to obtain leave from the competent judge to lay a conservatory arrest.


    Other noteworthy modifications in the Syllabus

    Pursuant to article 700 subsection 3 of the DCCP, unless substantive proceedings have already been initiated at the time of the petition for leave, the competent judge will grant the leave under the condition that substantive proceedings must be initiated within a specific term after the attachment has been made, which term will be determined by that judge. Such term should be at least eight days and is usually determined at fourteen days. In case substantive proceedings are initiated outside of the Netherlands or if the parties have agreed on arbitration, now a longer term may be granted.

    Article 700 subsection 3 of the DCCP also states that the competent judge presiding over interlocutory proceedings may extend the term within substantive proceedings must be initiated, if the creditor requests this before the initial term has lapsed. Section C of the Syllabus now provides further guidelines on the granting of such extension. A distinction is made between two situations:

    1. If the requested extension is solely in the interest of the creditor, in principle a one-off extension of fourteen days is allowed for (in special circumstances an extension of one month as a maximum);
    2. If the requested extension serves to facilitate ongoing negotiations between the parties, it is assumed that an extension is in the interest of both parties and in principle a first request for an extension of up to fourteen days is allowed for. If a longer extension is requested or it concerns a second or subsequent request for extension, this is in principle only allowed for if it is apparent from a written document that the debtor agrees to an extension.

    The Syllabus now mentions that the initial position when deciding on an extension of the term should be that the initiation of substantive proceedings may not be unnecessarily delayed and that circumstances such as the complexity of the dispute and the burdensomeness of the conservatory attachment should be considered. The competent judge is therefore free to decide whether to grant an extension of such term or not and may also summon the parties to a hearing before deciding on an extension.


    Summary

    A new version of the Syllabus entered into force on 1 July 2011, pursuant to which a creditor has to provide more information in the petition for leave than before and it also has to submit evidence in support of its petition for leave. Furthermore, it is also required from a creditor that it motivates the necessity and proportionality of the conservatory attachment.

    The modified guidelines on conservatory attachment will result in a better position for the debtor, because it will become somewhat more difficult, costly and time-consuming for a creditor to lay a conservatory attachment on assets. Authors seem to be divided on whether or not the modified guidelines are still reconcilable with the existing rule in the DCCP that the competent judge decides on the petition for leave after a brief examination of the case.

    Other noteworthy modifications in the Syllabus include that it is now also specifically mentioned that in case substantive proceedings are initiated outside the Netherlands or if the parties have agreed on arbitration, a longer term for initiating substantive proceedings may be granted and that further guidelines are provided on the granting of extensions of such term.