THE BOTTOM LINE
- Higher Bar for Security: Offering a standard bank guarantee that only pays out after all appeals are exhausted may no longer be sufficient to lift a pre-judgment asset freeze (conservatoir beslag) in the Netherlands.
- Immediate Payout Required: A Dutch court has ruled that for a guarantee to be considered “sufficient security,” it must be callable as soon as a first-instance court rules in the creditor’s favor and declares the judgment provisionally enforceable.
- Creditors Strengthened: This decision significantly strengthens a creditor’s negotiating position, limiting a debtor’s ability to use lengthy appeal processes as a tactic to delay payment.
THE DETAILS
In a recent summary proceeding, the Amsterdam District Court tackled a critical issue for any business involved in a payment dispute: what constitutes “sufficient security” to lift a pre-judgment asset freeze? The case involved a Dutch supplier that had frozen the assets of its German client over approximately €400,000 in unpaid invoices. To get the freeze lifted, the German company offered a common form of security: a bank guarantee based on a standard Dutch banking model (the NVB model). The supplier, however, rejected it, arguing the terms were inadequate, which led the parties back to court.
The core of the dispute hinged on a single, crucial condition. The guarantee offered by the debtor would only pay out after a court judgment became final and non-appealable (“in kracht van gewijsde”). The debtor argued this was standard practice and cited previous case law supporting this position. The creditor, however, countered that this arrangement fundamentally weakened its position. An asset freeze can be enforced as soon as a court issues a provisionally enforceable judgment (“uitvoerbaar bij voorraad”), which is standard in first-instance rulings. Forcing the creditor to wait through potentially years of appeals before being able to call the guarantee was, they argued, not an equivalent form of security.
In a decision that signals a potential shift in Dutch commercial litigation, the court sided decisively with the creditor. The judge found the arguments put forth by prominent legal scholars—that a replacement guarantee must mirror the enforcement power of the asset freeze—to be “convincing.” The court ruled that requiring the guarantee to be callable only after a final, non-appealable judgment would create a perverse incentive for debtors to delay proceedings simply to postpone payment. The ruling emphasized that the security offered must place the creditor in a position comparable to the one they held with the asset freeze. Consequently, the court refused to lift the asset freeze, deeming the proposed bank guarantee insufficient.
SOURCE
Source: Rechtbank Amsterdam
