Short Reads

Dutch Supreme Court adopts general approach on legal consequences of noncompliance with procedural rule on enforcement of judgments on claims acquired through legal merger

Dutch Supreme Court adopts general approach on legal consequences of noncompliance with procedural rule on enforcement of judgments on claims acquired through legal merger

Dutch Supreme Court adopts general approach on legal consequences of noncompliance with procedural rule on enforcement of judgments on claims acquired through legal merger

11.03.2016 NL law

A company which has acquired claims through legal merger cannot instantly enforce judgments related to those claims. Pursuant to Section 431a Dutch Civil Code of Procedure (DCCP; Wetboek van Burgerlijke Rechtsvordering) the acquiring company can only start or continue such enforcement from the moment the bailiff has served notice of the transfer to the debtor.

 

This can be a great administrative and financial burden for the acquiring company, especially if large claim portfolios are involved. Therefore, the Amsterdam District Court, on the initiative of an acquiring company which was confronted with this issue, posed the following preliminary questions in this respect: (i) does Section 431a DCCP apply in the event of a legal merger, and (ii) if so, what are the legal consequences if this provision is not complied with. In its decision dated 30 October 2015 (ECLI:NL:HR:2015:3197) the Dutch Supreme Court answered these questions as follows.

The Dutch Supreme Court’s response to the first question is clear-cut: yes, it does. The rationale behind Section 431a DCCP is to provide legal certainty: it should be clear who the debtor has to make payments to in order to be released from the payment obligation or who he should approach for settlement negotiations. Section 431a DCCP complements the substantive rule laid down in Section 6:142 paragraph 1 Dutch Civil Code (DCC; Burgerlijk Wetboek) that upon the transfer of a claim the new creditor also acquires the accessory rights, such as the right to enforce the judgment awarding the claim. Following the legislative history of Section 431a DCCP and 6:142 DCC, these complementary rules apply to both transfer of claims by general title as well as by particular title. Legal merger is an example of transfer by general title. The Dutch Supreme Court decided there is no good reason to exempt transfer by general title from the applicability of Section 431a DCCP.

Regarding the second question, the Dutch Supreme Court first of all held that noncompliance with procedural rules regarding attachment or execution only results in the attachment or execution becoming invalid if the interests that the procedural rule intends to protect are actually impaired. With respect to procedural rules on writs this was already laid down in Section 66 DCCP. It is now clear that this flexible view on invalidity also applies to procedural rules on attachment or execution. This reflects an overall trend to take a less formal approach towards civil procedural law.

Consequently, the Dutch Supreme Court held that in general the interests protected by Section 431a DCCP will not be impaired, if (a) the acquiring company has notified the debtor in writing (including e-mail) of the transfer of the power to enforce the judgment and (b) the legal merger is published. Element (a) protects the debtor’s interest to know who he has to pay in order to be released from the payment obligation or who he should approach for settlement negotiations. Element (b) provides comfort to the debtor and third parties with respect to the validity of the transfer of the claim. Within the context of Section 431a DCCP this would be reviewed by the bailiff involved. Considering the safeguards included in the statutory procedure on legal merger, upon publication the merger has reached its final stage and the transfer of rights by legal merger can be regarded as valid. There is no (further) need for  the involvement of a bailiff. It should be noted, however, that the Dutch Supreme Court leaves room for a debtor and/or third parties to argue that their interests have been harmed, even though element (a) and (b) above have been fulfilled. Indeed, the underlying rule says that in the event of noncompliance the execution will only remain valid if the protected interests are not actually impaired.

Considering that claims next to legal merger can also be transferred through demerger or an asset deal, it is worth mentioning that the Advocate General suggested a general approach on the legal consequences of noncompliance with Section 431a DCCP. The Advocate General considered that the interests protected by this provision are generally sufficiently safeguarded if the original creditor (possibly together with the new creditor) notifies the debtor of the transfer of the right to levy execution. In other words: if element (a) is fulfilled, the relevant interests will generally not be impaired. Whether the Dutch Supreme Court would give up element (b) for the sake of a general approach remains unclear at the moment. It should be noted, however, that the approach adopted by the Dutch Supreme Court is not necessarily limited to legal merger cases. Given that the rules regarding demerger are largely similar to those regarding legal merger, it may be expected that the Dutch Supreme Court’s approach also applies to demerger cases. This cannot be said for an asset deal, however. Such transaction is not surrounded by formalities constituting element (b). For that reason in such cases the question whether noncompliance with Section 431a DCCP led to actual impairment of the relevant interests has to be answered on a case-by-case basis.

The post Dutch Supreme Court adopts general approach on legal consequences of noncompliance with procedural rule on enforcement of judgments on claims acquired through legal merger is a post of www.stibbeblog.nl

 

Related news

21.03.2019 EU law
Our TMT team examines the interaction between GDPR and other key legal domains during a seminar 'GDPR 360°'

Seminar - Erik Valgaeren, Partner TMT, and his team organize a seminar which focuses on the interaction between GDPR and litigation, corporate law, administrative law and employment law.

Read more

29.01.2019 NL law
How to remedy a default under Dutch law?

Short Reads - Under Dutch law, a debtor can remedy a default by offering to perform its obligations at a later date. Such an offer, however, has to include an offer to pay for damages and costs incurred as a result of the default (art. 6:86 DCC). If the creditor refuses to accept an offer that meets such criteria, the creditor will be in default.

Read more

15.02.2019 NL law
Commercial interest on overdue interest payments on a loan – uncertainty remains

Short Reads - If a person buys a car from a car dealer and fails to pay the purchase price on the agreed date, that person has to pay not only the purchase price but also statutory interest (Clause 6:119 DCC), unless otherwise agreed. If a car dealer buys the same car from an importer and fails to pay the purchase price on the agreed date, that car dealer has to pay commercial interest, which is a much higher rate, instead of the normal statutory interest (Clause 6:119a DCC).

Read more

29.01.2019 NL law
Inwerkingtreding Wet bescherming bedrijfsgeheimen

Short Reads - Op 23 oktober 2018 is de Wet bescherming bedrijfsgeheimen in werking getreden. Deze wet strekt tot implementatie van de Richtlijn bedrijfsgeheimen (2016/943/EU) en biedt houders van niet-openbaar gemaakte knowhow en bedrijfsinformatie (bedrijfsgeheimen) verschillende mogelijkheden om maatregelen te treffen tegen het onrechtmatig verkrijgen, gebruiken of openbaar maken van bedrijfsgeheimen.

Read more

11.02.2019 BE law
Raad van State versoepelt toegangsvereiste (actueel belang)

Articles - De algemene vergadering van de Raad van State heeft in zijn arrest van 15 januari 2019 de ontvankelijkheidsvoorwaarde van het actueel belang enigszins versoepeld. Dit is in navolging van de rechtspraak van het Europees Hof voor de Rechten van de Mens die de Raad van State reeds op dat punt terugfloot. In deze blog wordt een korte round-up gegeven van het belangvereiste en de recente ommezwaai in de rechtspraak hierover. Iedereen die ooit een beroep bij de Raad van State instelt, dient hiermee rekening te houden.

Read more

29.01.2019 NL law
Netherlands Commercial Court van start

Short Reads - Op 1 januari 2019 zijn op basis van de Wet Netherlands Commercial Court het Netherlands Commercial Court (NCC) en het Netherlands Commercial Court of Appeal (NCCA) van start gegaan. Bij het NCC kunnen internationale handelsgeschillen voor een gespecialiseerde overheidsrechter worden beslecht. Het NCC biedt procespartijen de mogelijkheid om in het Engels te procederen.

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy – en cookieverklaring