Benefit from Dutch conservatory attachment in international disputes.

Recently, a foreign client approached me with an international dispute. He had a claim arising out of breach of contract on a Chinese company. For obvious reasons his enthousiasm for litigating in China was not great. Consequently, he was looking for an alternative way to resolve this issue.

We found out that this Chinese company had a stand at a major exhibition in Amsterdam, which brought them into the jurisdiction of the Netherlands. We acted quickly and within one day we obtained permission from the court and levied a conservatory attachment and sequestrated the goods.

Within 5 days after contacting me my client was paid in full!

Conservatory attachment 

Dutch law provides for the possibility of conservatory attachment (conservatoir beslag) by which property of a debtor can be attached in anticipation of a judgment. The possibilities for conservatory attachment in the Netherlands are much more extensive than in other countries. Before a conservatory attachment can be levied, permission from the court must be obtained. A Dutch lawyer will file a petition with the Court where the debtor is domiciled, or when the debtor is not domiciled in the Netherlands, where the assets are located.

A Dutch court will grant permission to levy a conservatory attachment on the other party’s assets, when a party can summarily substantiate his claim. In principle the purpose of a conservatory attachment is to protect the possibility of recovery. However, it is generally accepted that a conservatory attachment may also be used to put pressure on the other party.

Within one day we obtained approval from the court to place the conservatory attachment on Chinese assets. In order to put maximum pressure on the Chinese debtor, we also requested and obtained leave from the court to sequestrate the goods. For this purpose the goods were taken by the bailiff and subsequently brought to a warehouse.

Lifting the attachment

Dutch law provides for the possibility to have the conservatory attachment lifted by a Court order in summary proceedings. Once confronted with a conservatory attachment the debtor can demand the lifting of the attachment in summary proceedings before the President of the District Court.

The court will lift the attachment when he finds the claim to be invalid or the seized assets are not the property of the debtor. A conservatory attachment will always be lifted when the debtor provides adequate surity, i.e. in the form of a bank guarantee.

Obligations creditor after levying conservatory attachment

Under Dutch law a conservatory attachment lapses by law unless the creditor has filed a writ for the main proceedings within a period specified by the court. This period is not shorter than 8 days (usually between 2-5 weeks) Therefore, when the creditor does not issue a writ within this timeframe set by the court, the conservatory attachment no longer exists and the debtor can dispose of the arrested goods.

These main proceedings do not necessarily have to be in the Netherlands. Therefore, the main proceedings can be instituted with a non-Dutch court or an arbitral tribunal. However, mediation does not qualify as “main proceeding”.

Wrongful attachment

Dutch law allows for some protection for the debtor. When a conservatory attachment was levied for a non-existing claim, the attachment is considered wrongfull. Consequentially, the creditor is then in principle liable for damages and costs.

Conclusion

In the Netherlands a conservatory attachment can be levied quite easily. A debtor confronted by a conservatory attachment can have it lifted in summary proceedings or by providing surity in the form of a bank guarantee.

The creditor must file main proceedings within a period specified by the court after the conservatory attachment has been levied.

In this case, however, it never came to any proceedings: the Chinese debtor urgently required the goods as they needed these for another exibition elsewhere. Therefore, the Chinese debtor immediately paid the full amount due, after which the goods were released. No need to say that my client was very pleased with the result!

I have broad experience with assisting clients in international disputes and have effected many conservatory attachments. If you have any questions on conservatory attachments, please feel free to contact me.contact