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News

Litigation- Netherlands

On February 21 2007 the Hague Court of First Instance rendered a judgment on third-party attachment on foreign claims.

 

Facts

Tulip Computers International BV sells and delivers computers to the state of Bangladesh. Bangladesh failed to fulfil its payment obligations and Tulip initiated legal proceedings in which Bangladesh was ordered to pay ˆ4.2 million. However, Bangladesh failed to comply with the judgment. Bangladesh owned no property in the Netherlands against which Tulip could attach its claim. However, Tulip found out that Shell, a Dutch company based in The Hague, owed Bangladesh a certain amount of money; Tulip thus made an attachment on all the monies that Shell owed or would owe to Bangladesh.

 

Legal Issue

The issue was whether such attachment is allowed under Dutch law.

 

The principle of territoriality provides that a Dutch court has no jurisdiction over assets that are not based in the Netherlands. It is questionable whether a Dutch court has jurisdiction over a claim that must be paid by a Dutch party to a foreign party. Arguably, such a claim cannot be qualified as an asset based in the Netherlands.

 

A judgment rendered by the Supreme Court in 1954 provides guidance in this respect. In this judgment the court held that a Dutch court can allow an attachment on all the monies that a Dutch party owes or will owe to a foreign party, provided that such attachment is recognized under the laws of the country in which the foreign party is based. If the laws of that country do not recognize the attachment as such, the Dutch party is obliged to pay the foreign party notwithstanding the attachment. Therefore, the Dutch party must make double payment, since it must also pay the party that made the attachment. To prevent double payment, attachment on the monies owed by a Dutch party to a foreign party is allowed only where the laws of the country in which the foreign party is based recognize such attachment.

 

Therefore, a party that wants to levy an attachment on monies which a Dutch company owes or will owe to a foreign company must prove that such attachment is recognized by the laws of the country in which the foreign company is based.

 

Decision

In the Tulip Case Tulip did not state that the attachment was recognized under the laws of Bangladesh. Therefore, the court ruled that Tulip did not fulfil the requirements necessary to levy an attachment on the monies that Shell owed or would owe to Bangladesh.

 

Comment

The decision shows that the 1954 Supreme Court judgment is still relevant. It enables a party with a claim against a party based in a foreign country in which the possibilities to recover the claim are limited to levy an attachment on the monies owed by a Dutch party to the foreign party. The limitations of the laws of the foreign country may thus be circumvented.

 

"International Law Office"