If it is necessary to institute court proceedings, it is good to know that in the Netherlands we have a broad range of possibilities for creditors to collect their debts.
Obtain a title to enforcement, either through ordinary proceedings, summary proceedings or an exequatur.
Effect a conservatory arrest (before judgement).
Filing a petition for bankruptcy.
Methods of enforcement.
1. Obtain a title to enforcement, either through ordinary proceedings, summary proceedings or an exequatur.
A party wishing to commence civil proceedings will in first instance start at the District Court (in Dutch: Rechtbank). These proceedings can take up to one year to conclude.
When the debtor has no reasonable grounds not to pay the debt, summary proceedings might be considered. The proceedings take place at a date and time determined by the President of the District Court after hearing the plaintiff. The defendant is summoned by a bailiff to attend the proceedings. On the day the proceedings take place the plaintiff (his lawyer) explains his case and his opponent pleads the defence. The President hears all parties, takes notice of the evidence presented and pronounces judgement within 1 or 2 weeks.
The party losing his case in summary proceedings has a duty to observe the summary judgement.
From this judgement an appeal may be taken to the Appeal Court. Furthermore, the party who lost the summary proceedings may take the issue that was litigated to the ordinary District Court.
Foreign judgements do not provide a title to enforcement in The Netherlands. An exequatur must be obtained from the Dutch District Court in accordance with the provisions of international agreements and those contained in possible statutes pursuant to a treaty, before any executory measure can be taken on a foreign judgement. An exequatur must be refused by the Court trusted with granting it, if they hold the proceedings, as they were conducted abroad, to be contrary to Dutch notions of fair trial.
2. Effect a conservatory arrest
A creditor, who is not entitled to execution as he lacks a title to enforcement, may nevertheless attach the assets of his debtor or garnish debtors assets under a third party.
There are general principles that apply to all types of conservatory arrest. Leave of the President of the District Court is needed to authorise one to effect a conservatory arrest. This leave is obtained through a simple petition to be filed by a Dutch lawyer. The creditor must show that his claim is prima facie a valid one. Usually it is adequate when he states that he has a claim against his debtor which has accrued due.
He does not have to prove anything about the claim being due at that stage. A creditor does not normally have to provide security beforehand in respect of costs, damages and interest that might be caused by the arrest. However, if the creditor is a foreign entity, the President of the District Court may decide otherwise.
The (lawyer of the) debtor has the possibility of obtaining a Court order lifting the arrest in summary proceedings. That is why obtaining leave to arrest is relatively easy. The President will always order lifting of the arrest where the debtor provides suitable security, i.e. a guarantee by a (first class) bank. The President shall also lift the arrest when, having heard the parties, he finds the claim to be invalid or the arrest needless.
A creditor who wrongfully arrests is liable for damages and costs. The party whose assets were wrongfully arrested, however, has to make a reasonable effort to limit losses, for instance by demanding lifting of arrest in summary proceedings. Similarly he may have to accept security.
A conservatory arrest must be followed by proceedings. It is essential that within a term set by the President of the District Court (which normally is 14 days), a writ is issued and served with regard to the claim secured by the arrest. As these proceedings are ordinary proceedings, it may take longer than a year before final judgement. In the meantime the property which is subject to attachment may not be sold, neither by the creditor, nor the debtor.
3. Filing a petition for bankruptcy.
A petition in bankruptcy is often used by attorneys in The Netherlands as a means to get unwilling debtors to pay their due. Insolvency can only be declared by a juridical decision of the District Court. Dutch law does not distinguish between bankruptcy proceedings taken against merchants or non¬merchants. A petition in bankruptcy by which such a decision is asked may be filed by any creditor (his advocate), regardless of whether he has obtained a title to enforcement or not.
The only prerequisite is that the debtor has reached the position of insolvency, whereas the creditor filing the petition must show summarily the validity of his claim. In addition, judicial practice requires that it’s to be shown that there is more than one creditor still claiming payment, before the District Court will consider the petition.
4. Methods of enforcement.
Once judgement has been entered, our lawyers will advise concerning the best method of enforcement according to the circumstances of the debtor. Options include securing the debt by a charge against property, arranging for payments to be deducted directly from the debtor’s salary and securing payment directly from the debtor’s bank account.
5. The costs of a lawsuit
The Dutch legal profession does not make use of fixed rates. It is customary in the legal profession to submit a declaration of expenses on the basis of an hourly rate.
In the Netherlands it is customary that, even if the action is won, a part of the costs for legal aid is charged to the client.
The costs of a lawsuit are determined by a judge on the basis of fixed tables. These costs are generally to be paid by the unsuccessful party. The remaining costs incurred by the client for legal aid are charged to the client.
In determining the hourly legal fee that Dutch lawyers apply in a lawsuit, the financial importance of the lawsuit, the lawyer’s specialization and experience and the urgency of the case are taken into consideration.
The legal charges have been decreed by law and are dependent on the amount of the claim.
In civil cases the services of a bailiff are called in. A bailiff serves the summons to the defendant and after the court case serves a writ upon the opposite party.