Syllabus

Provisional attachment

Provisional attachment, sometimes referred to as 'arrest', is a remedy or protective measure that seizes property (including bank accounts and accounts receivable) to ensure satisfaction of a later judgment by the courts. Provisional attachment immobilizes or freezes the attached assets as the debtor is deprived of his right to dispose of or encumber the assets.

Provisional attachment is frequently used as leverage in civil conflicts. By attaching assets, a creditor clearly demonstrates his willingness to pursue his rights against the debtor, while leaving ample room for an amicable settlement. The attachment of assets such as bank accounts, receivables and stock effectively paralyzes a debtor company, thus forcing attention to outstanding claims of a creditor.

Typically the debtor only learns of the provisional attachments after the fact. The surprise of discovering that one's assets are frozen is often the most effective aspect of a provisional attachment. As a result, a creditor should not threaten to request such measures, lest a debtor would take action to hide assets.

Assets that can be attached

Some examples of assets that are subject to provisional attachment are:

• Moveable assets: products, materials, computers, chairs, trucks, airplanes, ships
• Immovable assets: homes, offices, factories, land, forests, plants
• Pecuniary rights: bank accounts, receivables, stocks and shares in companies, (credit) insurance claims

Almost anything that belongs to the debtor can be the subject of provisional attachment. However, it is not necessary for the assets to be in possession of the debtor. It is possible to attach assets that are held by a third party. For example, if the debtor has sold products to a customer and the customer owes money to the debtor, the debt can be attached. The effect is that this customer will not be able to pay off the debt until such time as the court has decided whether or not the creditor is entitled to collect the receivable instead.

How it works

The procedure to obtain permission for provisional attachment is straightforward, fast and generally dealt with ex-parte.

1. The petition to be submitted to the court includes a description of the dispute between the parties and the legal basis for the claim against the debtor. Copies of relevant documentation (i.e. invoices, e-mails, statements) in support of the claim should be added. It is important to note that if the documentation is in a language other than Dutch or English, the relevant portions of the document must be translated.
2. Before granting the request, the court must summarily review the petition and ascertain whether the claim seems well-founded. These decisions are normally rendered within 24 hours.
3. Upon receipt of the decision granting the provisional attachment, the lawyer will instruct a process server (bailiff), who will serve and execute the provisional attachment. The process server will record the attachment and describe the goods and notify any banks or third parties that receivables are effectively attached.

If the creditor is unaware of which bank is used by the debtor, where he has real estate or keeps goods, a preliminary investigation should be conducted to determine the nature and location of the debtor's assets.

Provisional attachment is a limited right and typically does not entail taking any goods into custody, as this would cause storage costs and risk of loss of the goods by the creditor. Additionally, goods or receivables that have been provisionally attached do not become immediately available for use by the creditor.

It is important to note that permission for provisional attachment is always subject to starting legal proceedings on the merits of the claim within 14 to 30 days of the attachment. Such proceedings typically take between 6 and 24 months. If at the end of such proceedings the creditor obtains a favorable judgment, the attached assets may be sold by the creditor to obtain payment for the debt.

Costs

The main costs and fees associated with provisional attachment in the Netherlands are:

• Court fees: € 626
• Process server (bailiff) who effects the provisional attachment: usually between € 165 and € 255 for attaching moveable assets and € 275 attaching assets or receivables that are held by third parties
• Fees of ABLD: A fixed fee of € 2,495 for preparing the petition for attachment, the court filing, coordination with the process server and communication with the client regarding the attachment, assuming ABLD will also handle subsequent proceedings on the merits of the case.

The above do not include possible other case specific expenses such as custodial fees (as custody is typically neither necessary nor desirable), document translations fees and costs to investigate the location and availability of assets that can be attached. In exceptional circumstances, a court may require a creditor from outside the European Union to post a bond confirming his financial fitness prior to granting permission for a provisional attachment.

Although the vast majority of petitions for provisional attachment are granted by the courts, the court does have discretion to withhold its approval. In such case no refunds will be made of expenses incurred (which will in any case include court fees and fees of ABLD).

Risks

The main risks associated with provisional attachment are:

• Summary proceedings on short notice initiated by the debtor: A debtor whose assets have been seized may attempt to get the provisional attachment suspended (wholly or partially) through summary proceedings. In order to do so, a debtor would have to convincingly show that the creditors' claim is without merit or facts have been misrepresented in the petition for provisional attachment presented ex-parte to the court.
• Liability for damages: If the court ultimately denies the creditors' claim, the creditor will be liable for damages caused by the provisional attachmentered by the debtor.
• Bankruptcy of the debtor: Provisional attachment does not provide bankruptcy protection. A decision on the merits of the case typically takes between 6 and 24 months to obtain. If during this period the debtor is declared bankrupt, all provisional attachments will be ineffective.