Freezing Assets in the Netherlands and the EU (2): Basic principles
Mededinging & Regulering
08 mei 2017
In the Netherlands, it is relatively easy for creditors to seize assets. If you feel you have a legitimate claim, and you can locate assets in the Netherlands or the EU, it may be worthwhile to ask Dutch courts permission to seize or freeze these assets. You will put pressure on your debtor – and make sure in the end, your claim is paid.
This is the 2nd in a series on how to seize assets in the Netherlands and the EU. Other contributions will be published shortly.
As explained in our previous blog, the Netherlands allows creditors to seize various types of assets through a pre-trial freezing order or conservatory order. Depending on the type of asset seized, different legal rules may apply. However, in general, the Dutch jurisdiction makes the freezing of assets quick, cheap and very straightforward. Underpinning the legal rules that apply to the specific types of seizures, there are a number of basic principles and general requirements applicable to each category of asset.
A number of general conditions has to be met, in order to obtain a freezing injunction from a Dutch judge. Please bear in mind that in practice, many assets can be seized; the procedure is normally ex parte, meaning the debtor is unaware his assets might be frozen; and the success rate is generally high. Certainly in an international perspective, Dutch judges appear relatively willing to grant requests for freezing injunctions, as long as they are properly substantiated.
The creditor must present a plausible contractual or non-contractual claim. There is no need to put forward all the arguments of a certain case. However, the creditor must present the facts and a summary overview of the arguments back and fro. The plaintiff must explain why the seizure is necessary to secure the claim. Urgency is, however, not a requirement.
You will require a Dutch lawyer to file a written request with a Dutch court. This can normally be done within 1 day. The application contains an ex parte request to the Dutch judge to allow the creditor to unilaterally freeze the debtor’s assets. It will include inter alia: (i) details identifying the applicant; (ii) details identifying the debtor; (iii) the nature of the freezing injunction; and (iv) the legal rules invoked by the applicant.
Statement of reasons and evidence
The creditor must present an accurate description of the claim and its legal basis, or a brief description of the goods supplied or services provided by him, for which the claim exists. In addition to that, some kind of evidence for the claim has to be submitted. In the case of a contractual claim, this evidence can for example consist of the actual contract and the default notice, or the list of unpaid invoices and the demand of payment. For non-contractual claims this could be any other relevant piece of evidence and the notice of liability. Also, an indication of the debtors defence against the claim and its legal basis has to be given.
Since the judge must have all information that can possibly be relevant to assess the application, the applicant is obliged to provide information about all the current and past procedures that are relevant for a proper assessment of the case. This for example includes previously submitted seizure applications.
Termination of a seizure
The judge who has granted the pre-trial conservatory order in a preliminary relief proceeding may terminate the seizure at the request of any interested party. In order to lift the seizure, the interested party must demonstrate that the claim is insufficiently substantiated or even false. This may be the case when the claim does not exist or has expired. Another way to terminate a seizure is to secure the claim for the creditor by offering sufficient collateral instead of the assets seized (e.g. a bank guarantee).
If it turns out that the creditor froze assets unlawfully, he can be held liable for damages caused. Freezing assets is a relatively quick and cheap way of putting pressure on an opposing party, as well as securing assets for future execution, but if used unlawfully, the creditor will have to compensate the debtor (risk liability).