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    How to deal with prejudgement attachment on property

  • EN
  • Prejudgement attachments can cause serious damage to the debtor. Therefore, the present article creates an overview of the debtor's possibilities of dealing with the attachment.

    How does it come to a prejudgment attachment?

    In summary (we have another article dealing about that): A prejudgment attachment is granted without substantive review and solely on the basis of the creditor's petition without hearing the claimant or the defendant ("ex parte"). Should the court grant the leave to attach, then this ruling cannot be appealed (a dismissal can be appealed). The attachment remains in force until the proceeding on the merits of the creditor's claim ends with a final and binding decision. When the creditor's claim is awarded, the creditor can lay claim to the attached assets of the debtor.

    The debtor's options to deal with the attachment

    The debtor could seek relief from the prejudgement attachment (1) by providing an alternative recourse for the creditor's claim (e.g. bank guarantee); or (2) by initiating an interim proceeding that aims to lift the attachment.

    The prejudgement attachment additionally automatically lapses if (1) the creditor did not initiate the main proceeding in time; (2) the creditor's claim for which the attachment was granted was rejected; or (3) the debtor becomes insolvent. 

    Providing alternative security for the creditor's claim

    The prejudgment attachment must be lifted if the debtor provides an alternative security for the creditor's alleged claim. The most common form of such security is a standard bank guarantee but it could be also an escrow account.

    The terms and conditions of the bank guarantee are (largely) standard and they compel the financial institution to pay if a settlement agreement concluded between the parties or a final and binding judgment on the creditor's claim is presented. In practice, the amount for which the bank guarantee is offered is often subject to negotiation. If the parties do not agree, the debtor may apply to the competent court to determine the sufficiency of the offered security. 

    Initiating an interim proceeding to lift the attachment

    In order to lift the prejudgment attachment, the debtor could also initiate an interim proceeding in front of the court that granted the attachment. In practice, the proceeding takes 1-2 weeks, but in case of urgency the court could immediately render its decision.

    The preliminary relief proceeding starts with a writ of summons followed by the submission of evidence and a hearing where both parties plead their cases. The debtor only succeeds if he proves that (1) the claim underlying the attachment is prima facie without merit; (2) the attachment is unnecessary (e.g, because a sufficiently large bank guarantee is offered); or (3) there has been a procedural, formal error.

    In his submission the debtor for example could argue that (1) the creditor did not provide sufficient information about the circumstances of his claim; (2) the creditor did not demonstrate a "well-founded fear of embezzlement" (this is a requirement only for some types of preliminary attachments); or (3) the creditor was unable to substantiate his claim and provide calculation regarding the amount.

    As a result, the court has three options: (1) lift the attachment and prohibit granting further attachments for the same claim; (2) lift the attachment on condition that the debtor provides sufficient recourse for the amount determined by the court; or (3) refuse to lift the attachment. The court can also decide to reassess the claim in order to enable lifting the attachment by offering a bank guarantee for a lower amount. The decision of the court does not prejudice the result of the main proceeding. 

    Compensation for the loss arising from the prejudgment attachment

    Lifting the attachment does not provide an immediate remedy for all the damages that the debtor had to suffer as a result of the attachment.  The debtor will have to wait for the compensation at least until the proceeding on the merits of the creditor's claim ends.

    If the claim for which the attachment was made is rejected and therefore the attachment was made in the absence of a valid claim, a creditor is fully liable under Dutch law for any damages which the debtor under the attachment suffers as a result of the attachment. The creditor is  liable even if he acted with due care and diligence when requesting the attachment and regardless of the fact whether he had sound reasons to believe that he had a valid claim.