The Asset Tracing and Recovery Review: Netherlands
Over the past couple of years, the government has been stepping up its game in the fight against fraud. In doing so, it has implemented various measures and regulations that deal with fraud committed with public funds and with fraud committed against citizens and the business sector.2 Therefore, it has become increasingly important for Dutch companies to implement a sophisticated compliance programme to adequately prevent fraud from occurring.
In the Netherlands, if victims of fraud or dishonesty want to take action to recover their assets, they have to rely on general actions to privately trace and recover any assets or the proceeds of fraud. No specific civil legislation has been enacted in relation to asset tracing and recovery, including the gathering of evidence to support claims arising out of fraud or dishonesty.
A current trend in asset tracing and recovery is to hire private investigative companies to gather evidence and attempt to trace funds. The Public Prosecution Service has developed certain initiatives, including the establishment of an Asset Recovery Office, to further enhance its asset tracing and recovery capabilities. At the same time, law firms in the Netherlands have developed sophisticated investigation practices to help fraud victims with their asset tracing efforts. Because of the increasing cooperation between the Public Prosecution Service and private entities such as the investigation practices of law firms, victims of fraud in the Netherlands have an increasing number of options available to effectively trace and recover their assets or the proceeds of fraud.
Legal rights and remedies
Unlike certain other jurisdictions, there is no civil legislation enacted in the Netherlands that specifically deals with asset tracing and asset recovery. Therefore, a victim of fraud must rely on general actions to trace and recover any assets or the proceeds of fraud. This gives rise to a number of issues, which will be discussed below.
The difference between the Netherlands and most common law jurisdictions is that any legal dispute about funds is resolved through the law of obligations instead of property law. This further affects the remedies available in relation to asset tracing and recovery. A victim of fraud in the Netherlands only has recourse to – at best – a personal action (action in personam), and not a real action (action in rem). This means that, for example, he or she cannot act as a secured creditor in the event of bankruptcy. Furthermore, a victim cannot trace money into the hands of another person or entity, as money under Dutch law is a fungible item and as such cannot be individualised.
An action of a victim of fraud, theft or misappropriation of funds can be based on an unlawful act.3 In addition, a victim of fraud can base a claim on undue payment,4 as usually there is no (proper) legal basis for, for example, an unlawful transfer of money. The doctrine of unjust enrichment offers another cause of action.5
Apart from these civil actions, a victim can join any criminal proceedings against the fraudster as a third-party applicant for a compensation order for damages.6
i Civil and criminal remedies
A victim of fraud can base its claim on the following actions against the person who committed the fraud:
- Unlawful act: the basic conditions for liability on the basis of an unlawful act are an unlawful act, attribution of the unlawful act to the wrongdoer, damage and causality between the unlawful act and the damage. A fifth condition is the relativity requirement: the damage suffered by the claimant must be of the type envisaged by the standard or norm that was violated and that the law intended to protect.7 A successful action on the basis of an unlawful act will result in compensation of the victim for damage suffered.
- Undue payment: a victim can demand the restitution of an asset from the recipient if that asset has been provided to the recipient without any legal basis. In the case of a transfer of money, the payer has a claim against the recipient for restitution of that sum of money. As such, the action for an undue payment is concerned with restoration and not with a claim for damages.
- Unjust enrichment: the elements necessary for the constitution of a valid enrichment claim are:
- enrichment of the defendant;
- impoverishment of the claimant;
- a connection between the enrichment and the impoverishment; and
- an absence of justification or cause for retention of the enrichment.
While a claim fitting the requirements of undue payment could also be raised as an enrichment claim (i.e., there is no legal basis), usually it will be raised as an undue payment claim, as this obviates the need to prove any enrichment in the hands of the recipient. A successful action on the basis of unjust enrichment will result in compensation of the victim for damage suffered, up to the amount of the enrichment of the defendant.
The average length of contentious proceedings in the district court is just over 12 months, and much less for small claims dealt with by the cantonal division of the district court.8 However, large or complex cases in the district court may take significantly longer, not least because of the ability of courts to give interim judgments (e.g., ordering additional evidence after the parties have argued their case).9 Appeals proceedings before the Dutch courts may take longer than in other jurisdictions, as they consist of a full review on the merits (as regards both facts and law) of a case, and the Court of Appeal may order new evidence through witness hearings or expert reports, rather than restrict itself to the evidence forwarded in the proceedings at first instance.
A victim of fraud can, alongside his or her own asset-tracing activities, involve the police. The police may investigate a fraud case under the responsibility of the Public Prosecution Service. The main advantage of involving the police is that a victim, as a victim of fraud, becomes part of the police investigation. This means that the victim is entitled to certain rights, including the right to gain access to any documents that are part of the criminal investigation file (see Section III) and the right to join the criminal proceedings as the aggrieved party. However, because of the principle of discretionary prosecution, the victim cannot force the Public Prosecution Service to expend resources on prosecuting or investigating a crime.10
Joining the criminal proceedings as the aggrieved party and claiming damages is a relatively easy way to obtain compensation for a victim, but a claim for damages will only be reviewed summarily during the criminal proceedings. In view of this, only claims for damages that do not result in a disproportionate burden on the criminal proceedings and that are directly related to the indictment are admissible in criminal proceedings.11 If a criminal court rules that the claim for damages results in a disproportionate burden on the criminal proceedings, the claim will be dismissed and the victim will have to make his or her claim for damages before a civil court. This is often the case when victims of, for instance, sophisticated fraud schemes claim extensive or complex damages in criminal proceedings.
A judgment of the Amsterdam Court of Appeal illustrates how victims can obtain compensation by joining a criminal proceeding. The Court of Appeal not only convicted the suspect for fraud, but also required him to pay damages of more than €385,000 to the victim of the fraud.12 Another judgment of the Dutch Supreme Court confirms that the requirement of the victim or aggrieved party having suffered damage or losses as a direct consequence of the criminal act is being applied less stringently than before.13 This shows that this procedure can be an alternative to civil remedies, even in cases involving larger amounts. However, despite fraud being an area of focus of criminal authorities, these authorities are regularly not inclined to investigate allegations of fraud, particularly if they regard the allegations as part of a commercial dispute (e.g., alleged accounting fraud in the context of an M&A transaction) and deem the victim to be able to investigate the fraud itself and claim damages through civil proceedings.14
Pursuant to EU Council Decision 2007/845/JBZ, EU countries were to establish special contact points for the recovery of criminal assets, in particular to exchange police information and best practice more effectively. In the Netherlands, the Criminal Assets Deprivation Bureau has been designated as a contact point, and an Asset Recovery Office (ARO) was established for the purpose of asset tracing and the execution of freezing and confiscation orders. Police requests for mutual legal assistance can be submitted to the ARO, and advice can be given on international aspects of cases. The ARO also executes incoming requests for the confiscation and recovery of criminal proceeds.
ii Defences to fraud claims
Civil claims, such as those above (see Section II.i), are subject to time limitations. Time limitation periods for civil claims can be extended rather easily. This can be achieved by either initiating proceedings or sending a written notice in which the claimant unequivocally reserves the right to pursue a claim.15 The effect of an extension is that the time limitation period starts anew. If an expiration date passes, the option to pursue the claim expires.
The limitation period for bringing a damages claim based on an unlawful act or unjust enrichment in the civil courts is five years from the day following that on which the claimant becomes aware of the claim and the identity of the person liable for it.16
A claim on the basis of undue payment is also barred after five years.17 The limitation period for bringing a claim based on undue payment starts the day following that on which the claimant becomes aware of the claim and the identity of the recipient of the assets.
The limitation period for all these claims is capped at 20 years from the date of the event that caused the damage or, in the case of undue payment, on which the claim arose.
Seizure and evidence
i Securing assets and proceeds
In the Netherlands, it is possible to provisionally attach any assets or the proceeds of fraud pending the outcome of a damages claim against a fraudster. A full overview of the possibilities and requirements to provisionally attach all different types of assets can be found in the Attachment Syllabus.18 A distinction can be made between a provisional attachment of specific goods (not including funds) for the purpose of surrender or delivery of the goods, and a (third-party) provisional attachment for the purpose of recovery of a financial claim through sale of the goods or collection of the receivables.19 The latter form of provisional attachment is the most common one and is frequently used in the asset-tracing process to attach the proceeds of fraud.20 With a third-party attachment, the creditor attaches all amounts and goods due by the third party (often a bank) to the debtor (such as the fraudster). A common third-party attachment is that by which funds in the bank accounts of the debtor are attached. The amount attached is equal to the funds in the bank account on the date of the attachment, irrespective of the amount of the creditor's claim. Credit facilities of the debtor are, however, not subject to attachment. Amounts credited to a bank account after the attachment are not covered. To freeze these amounts, a new attachment will be necessary. Third-party attachments under banks are a relatively easy way to secure the proceeds of fraud (provided the proceeds are still in the fraudster's bank account at the time of attachment and were not used to set off the fraudster's debt).
To effect a provisional attachment, the claimant must file a petition with the president of the district court (the preliminary relief judge). An attachment can only be made with this permission. The petition should, inter alia, indicate the grounds for the claim, and should also identify the assets on which the claimant wishes to effect an attachment. If the claim is monetary, the claimant must estimate the claim. For specific kinds of attachment the claimant must prove fear of embezzlement of the assets. In past years, the practice in the Netherlands regarding provisional attachment has increasingly been criticised, especially when compared with the practice in neighbouring countries. Recent case law suggests that, following this criticism, judges may be more reluctant than previously to grant leave to the requesting party to provisionally attach certain assets.21
A petition for attachment usually relates to assets that are located in the Netherlands (and, in cases of third-party attachment, the third party (often a bank) is usually domiciled in the Netherlands, or has its offices or at least a branch in the Netherlands), although there are scenarios in which a Dutch court is competent to grant leave for an attachment abroad.22
In international fraud cases, a European account preservation order (EAPO) may prove an important tool for victims of fraud, as it grants the power to request information on the bank details of a debtor and to levy attachments on the debtor's bank account or accounts in other EU Member States. Since coming into force in 2017, courts in the Netherlands have granted an EAPO in a number of cases.
The petition in the majority of cases is decided ex parte, usually within one or two days of the filing of the petition. If the judge has reasonable doubts as to whether the claim is founded, he or she may decide to grant a preliminary leave for attachment, and only give a final decision once he or she has heard both parties. The judge can also grant leave for attachment on the condition that collateral is provided for potential damage caused by the attachment.23
In the case of a third-party attachment, the third party must declare within four weeks of the attachment what he or she owes to the debtor. In practice, this requirement is detrimental to the asset-tracing process. During this period, the victim will not know whether the third-party attachment did attach any assets. This means that a victim will have to wait a month before it becomes clear whether the trace has been successful (i.e., the assets were attached), or whether he or she needs to continue the asset-tracing process.
Unless main proceedings are already pending at the time of the order granting the permission for provisional attachment, the approval for the pre-judgment attachment is given under the condition that the main proceedings relating to the underlying claim are instituted within a certain period. This time period cannot be less than eight days24 and is usually set at 14 days. Generally, the fact that the proceedings will be started abroad is a sound reason to obtain a longer term, for example 30 days. Following a legitimate request, and depending on the reason for the request, the time period can be extended. Previously, courts frequently extended the time period for initiating main proceedings pending any fraud investigations. In the past few years, courts have become somewhat stricter in their approach to extension requests. However, in practice, courts still tend to grant extension requests easily, provided that there is a legitimate reason for the request. If the main proceedings are not instituted within the period set by the court, the attachment automatically lapses.25
An attachment will be lifted upon request of the debtor if it was made without taking formal requirements into account, if the claim for which the attachment was made is prima facie without merit or if the attachment is considered disproportionate. The attachment must also be lifted if the debtor provides sufficient collateral (e.g., a bank guarantee) for the underlying claim.26 In practice, it is not easy to convince the courts that a claim is prima facie without merit, and, therefore, it is difficult to oppose the attachment, even if the attachment debtor is a bona fide company with good reasons to contest the alleged claim.27 The Netherlands is, therefore, in comparison with many other countries, an attachment-friendly country, which is certainly useful during the asset-tracing process.
If the underlying claim in the main proceedings is fully denied, the party that made the provisional attachment is strictly liable to the party against which the attachment was made for all damage resulting from the attachment.
ii Obtaining evidence
There is no specific action available under Dutch law that can be used to obtain evidence in cases of fraud. As such, victims of fraud will have to rely on general actions to obtain information to support their claim during proceedings (or, in some cases, before initiating proceedings).
The concept of document discovery or disclosure as it exists under US or UK law does not exist under Dutch law. The court may always order parties to submit documents relevant to the proceedings.28 Furthermore, on the basis of the CCP, parties can submit a request for document disclosure (including data such as computer files).29
Pursuant to Article 843a of the CCP, the requesting party must meet30 the following conditions:
- it should have a legitimate interest in disclosure. The requesting party must make clear that the documents constitute relevant evidence for it, while its interests will have to be balanced against all the other interests at stake;
- the requesting party must specify the relevant documents. This condition is designed to prevent fishing expeditions. As a rule of thumb it can be said that documents requested should be described in as much detail as possible. In any event, the description of the documents must be concrete enough to be able to determine which documents are meant and whether the requesting party has a legitimate interest in obtaining them; and
- the documents must relate to a legal relationship to which it is a party or to which its legal predecessor was a party. The existence of the alleged legal relationship to which the request relates must be sufficiently plausible.31 A legal relationship can be of a contractual or non-contractual nature (including, among other things, an unlawful act). In general, this condition is interpreted broadly, meaning that documents must be of significance to the legal relationship. For example, a due diligence report made by a financial adviser to the buyer of a company has been held to relate to the legal relationship between the buyer and the seller laid down in the share purchase agreement, and a copy of such a report could thus successfully be claimed by the seller from the buyer or from his or her adviser 32
Dutch courts have also accepted the possibility of ex parte relief for the attachment of evidence on the basis of Article 843a of the CCP. This practice was confirmed by the Supreme Court, which ruled that granting ex parte relief for the attachment of evidence is possible, provided that the requirements for disclosure on the basis of Article 843a of the CCP are fulfilled; the requesting party does not have less intrusive alternatives for gathering the evidence, given the circumstances of the case and the interests of both parties;33 it is clear that the attachment only preserves the evidence for a future court procedure and the requesting party does not gain access to the evidence through the attachment (e.g., because it is sealed and placed in storage with a third party); and adequate safeguards are in place to preserve the confidentiality of any data gathered.34 An example of such safeguards is that the judge granting the relief is present when the evidence is being gathered.
If the conditions for application of Article 843a of the CCP are fulfilled and none of the grounds for refusal apply, the party to whom the request is directed will have to submit all the requested documents and data it has at its disposal.
A request for submission of documents can be made by a motion during the proceedings on the merits or in separate (e.g., preliminary relief) proceedings, if necessary on pain of forfeiture of a penalty. A request for submission of documents can also be made against third parties (such as banks not involved in the proceedings). A claimant may also file a request for documents that he or she would like to use for proceedings pending outside the Netherlands, provided there is jurisdiction for the request.35
iii Criminal proceedings
As briefly set out above (see Section II.i), a victim of fraud, as the aggrieved party in criminal proceedings, is entitled to copies of documents that are added to the criminal investigation file, insofar as the victim has a legitimate interest in receiving the copies.36 The criminal investigation file contains all the information relevant to the criminal investigation and the criminal charges against the fraudster. In a fraud investigation, this file usually includes financial records, bank statements and reports of any searches (i.e., documents that are relevant to the asset-tracing and recovery process).
The victim is often refused access to this information until the criminal investigation, or an important part thereof, has been concluded. If the victim requires this information on short notice to continue the asset-tracing efforts, he or she can try to base a request for this information on the Instruction for Confiscation of the Proceeds of Crime.37 This instruction provides that, if a victim of fraud claims damages in civil proceedings, the Public Prosecution Service should share the information obtained during the criminal investigation to support the victim's civil damages claim.
Victims of offences increasingly hire private investigators to conduct an investigation to gather evidence to substantiate their claims. When conducting research, private investigation agencies must respect the principles of proportionality and subsidiarity, must adhere to the privacy code that applies to their sector and must comply with the Data Protection Regulation.38 The Dutch Data Protection Authority checks whether private detective agencies process personal data correctly.39
Fraud in specific contexts
i Banking and money laundering
The Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) regulates obliged entities that are subject to anti-money laundering legislation, such as banks, attorneys admitted to the Dutch Bar and external auditors. The Wwft was amended in 2018 to (partly) implement the Fourth EU Anti-Money Laundering Directive in Dutch national law, and also contains various Netherlands-specific requirements.40 The provisions in the Fourth EU Anti-Money Laundering Directive particularly impact the registration of ultimate beneficial owners, for which the Netherlands enacted a separate Act in 2020 (see Section VI.ii).
The Wwft adopts a risk-based approach; this means that obliged entities must perform their own appraisal of the risks posed by clients or products so that they adapt their compliance efforts to those risks. In accordance with the Wwft, obliged entities must notify any unusual transactions of their clients to the Financial Intelligence Unit (FIU).41 Additionally, a bank can have a duty of care in relation to third parties (i.e., potential victims) if one of its clients commits fraud, although the duty of care only applies under exceptional circumstances, and successful claims against banks on this basis are very rare.42
The fight against bankruptcy fraud is a priority for the government as it seeks to maintain a safe business climate for national and international enterprises in the Netherlands. Fraudsters in the Netherlands often get off relatively unharmed if the court-appointed receiver uncovers an estate with no worth. In such cases, the business assets have usually been siphoned off in advance of the bankruptcy, and an accurate administration has not been maintained. This makes asset tracing and recovery incredibly difficult. Nevertheless, in December 2017, the Bankruptcy Act was amended to strengthen the position of receivers. Article 68(2) of the Bankruptcy Act now obliges a receiver to assess if there have been any irregularities that have caused or contributed to a bankruptcy, hampered the liquidation of assets or increased the shortfall in assets. If the receiver discovers such irregularities, the supervisory judge must be informed (on a confidential basis) and, if necessary, the irregularities must be notified or reported to the relevant governmental authorities.
The government is undertaking a legislative review programme of the Bankruptcy Act that aims to modernise Dutch bankruptcy law. As part of this programme, previous updates included an expansion of the criminal law options available in cases of bankruptcy fraud and an alignment with the EU Regulation on Insolvency Proceedings.43
Criminal enforcement of the obligation to provide information and the requirement to keep records are an important part of the revisions to the Bankruptcy Act. In the event of a bankruptcy, a court-appointed receiver needs to be able to receive the full cooperation of the bankrupt party. In addition, the revisions to the Bankruptcy Act also introduced the possibility of criminal prosecution in the event that a director or supervisory director acts objectionably and exacerbates the company's problems. The downfall of the company and prejudice to creditors are not requirements for criminal liability; therefore, criminal enforcement can also take place when the company has not (yet) been declared bankrupt.
Because of its contractual nature, a fraud claim can only become the subject of arbitration when arising out of, or made in connection with, an agreement between two or more parties. Case examples in the Netherlands are claims made in arbitration proceedings arising out of share purchase agreements where the sellers committed accounting fraud and sold a company at an inflated price. Other examples are claims made before the Court of Arbitration for the Building Industry relating to fraudulent conduct regarding additional work in construction projects.
The main differences between fraud cases before a court and an arbitral tribunal relate to the rules regarding evidence and document disclosure. An arbitral tribunal is free to determine the rules regarding evidence, including its admissibility and its weight, unless the parties agree otherwise.44 In principle, the rules of evidence as laid down in the CCP, which are applicable to any civil proceedings before a Dutch court, are not applicable.
An arbitral tribunal has the power to order the parties to disclose documents unless the parties have agreed otherwise.45 It may do so on its own initiative or at the request of one of the parties. An order by the arbitral tribunal requiring the disclosure of certain documents cannot be enforced by a court. If a party refuses to disclose certain documents, the arbitral tribunal can in principle do no more than draw its own conclusions from such a refusal (e.g., that the relevant documents sustain the other party's position). The disclosure of documents in the hands of third parties can only be ordered by a court (see Section III.ii).
iv Fraud's effect on evidentiary rules and legal privilege
In the Netherlands, legal privilege may not apply to documents or communications between a client and a lawyer that facilitate fraud. A recent judgment of the Dutch Supreme Court in relation to this topic shows that documents such as emails and minutes relating to the devising of, or consultations regarding, criminal acts, or drafts of (false) agreements, can qualify as 'corpora or instrumenta delicta' that have facilitated the fraud, if the fraud has been committed with the help of or by means of those documents.46 In that case, the documents are not protected by legal privilege.
When performing certain services, a lawyer can furthermore be required to report an unusual transaction of its client to the FIU pursuant to the Wwft (see Section IV.i). However, a general exception to this obligation applies for lawyers who act and advise in the context of legal proceedings. If filing such a report is mandatory, this cannot result in any disciplinary actions against the lawyer for breaching client confidentiality.
In past years, there has been much debate in the Netherlands regarding the scope of legal privilege.47 To combat financial crimes more effectively, in particular fraud and money laundering, a procedure for courts to decide whether a claim regarding legal privilege has merit was enacted in November 2014.48 However, this procedure only has a limited scope and applicability, and does not solve many of the issues connected to the judicial review of a claim for privilege in a criminal investigation. In addition, this procedure is criticised as it would delay the criminal investigation. The Dutch Public Prosecutor's Office pleads for a simplified and more practical procedure of such claims.49 Furthermore, the Minister of Justice and Security has announced that he will propose further changes in the future.50 The aforementioned debate regarding the scope of legal privilege appears to have also resulted in an increase of challenges by the Public Prosecution Service and private parties of claims of legal privilege, resulting in several notable decisions in which courts have limited or denied claims of legal privilege.51
Dutch law does not provide any specific rules on evidence in relation to fraud. Evidence obtained by way of fraud is still admissible in civil proceedings, but a judge is free to weigh the evidence and consider the method by which it was obtained as part of the circumstances of the case.
i Conflict of law and choice of law in fraud claims
If a civil dispute is international, including an international fraud claim, a Dutch court will apply Dutch conflict of law rules on its own initiative. All procedural issues are governed by Dutch law as lex fori.52 For issues regarding the merits of the case, this will be different. If the conflict of law rules lead to the applicability of extraterritorial law, the parties must prove the contents and implications of that law and may use all evidentiary means to do this, including the submission of written legal opinions (by foreign scholars).53 In principle, the court also has a duty to investigate the contents of the foreign law on its own initiative, and it is not bound by the parties' explanation.54 Pursuant to the European Convention on Information on Foreign Law of 1968,55 which applies to almost all Member States of the Council of Europe, a court can request information on applicable foreign law directly from the competent authority in the country concerned.56
ii Collection of evidence in support of proceedings abroad
The Netherlands is a party to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters (Hague Evidence Convention).57 On the basis of the Hague Evidence Convention, the Dutch authorities may be requested to take evidence for the purpose of non-domestic proceedings. Witness hearings pursuant to a letter of request are held in accordance with Dutch procedural law, and the only documents and data a claimant can request to be produced are specific documents and data that fall under the disclosure duty of the CCP (see Section III).58 The Netherlands, like many other countries, will not execute letters of request issued for the purpose of obtaining pretrial discovery of documents as would be the case in some common law countries such as the United States, which may limit the scope for obtaining evidence in relation to fraud claims in these jurisdictions.59
Within the EU, the taking of evidence in international situations is governed by the EC Council Regulation on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters (EC Evidence Regulation).60 The EC Evidence Regulation applies to all EU Member States with the exception of Denmark. The content of the EC Evidence Regulation is very similar to that of the Hague Evidence Convention, with some clarifications and amendments to simplify and expedite the procedure for the taking of evidence.
For the purposes of obtaining documentary evidence in the Netherlands in support of proceedings abroad, the Dutch Supreme Court has held that a document-production request pursuant to Article 843a of the CCP cannot be dismissed on the grounds that the requested documents are (only) relevant in relation to foreign proceedings.61 As such, it is possible for a victim of fraud to collect documentary evidence in the Netherlands in support of foreign proceedings pursuant to Article 843a of the CCP.
iii Seizure of assets or proceeds of fraud in support of the victim of fraud
In principle, the attachment of assets in the Netherlands (see Section III) does not give jurisdiction to the Dutch courts to hear a claim on its merits. The competent court in the main proceedings should be established in accordance with the applicable jurisdiction rules, and could therefore be a non-Dutch court, or an arbitral tribunal.62
However, an attachment does give jurisdiction to the court that granted the attachment if the following conditions are met: the debtor is domiciled outside the Netherlands, the claimant cannot obtain a judgment in another country that is directly enforceable in the Netherlands and no other rule of law confers jurisdiction on a Dutch court.63
In a criminal investigation, if the Dutch police locate any assets in other jurisdictions, they can submit a request for legal assistance to their counterpart in that jurisdiction, usually on the basis of a convention on mutual assistance between the two jurisdictions. On the basis of this request, the assets can be attached by the local police. An advantage of involving the police like this is that any assets can be attached, while the victim can decide how and when to submit his or her claim. An additional advantage is that through this 'police attachment', assets can be attached in jurisdictions where it is generally not possible or very difficult to attach assets in civil proceedings. A disadvantage is that this procedure can be bureaucratic and therefore take a long time (which increases the risk that there are no assets left to attach).
iv Enforcement of judgments granted abroad in relation to fraud claims
In practice, foreign judgments will be recognised by a Dutch court if the following four conditions are met:
- the judgment must be a result of proceedings compatible with Dutch concepts of due process;
- the judgment should not contravene public policy;
- the non-domestic court must have assumed jurisdiction on grounds that are internationally accepted; and
- the judgment should not be incompatible with a judgment in proceedings between the same parties rendered by a Dutch court or an earlier judgment of a non-domestic court in proceedings between the same parties that regarded the same subject matter, insofar as the non-domestic judgment is recognisable in the Netherlands.64
There are no separate criteria for recognition in respect of fraud claims.
With respect to enforcement, judgments delivered outside the Netherlands can only be directly enforced within the Netherlands on the basis of an enforcement treaty or EU directive.65 Foreign judgments to which no such treaties apply must in principle be enforced by commencing new cause proceedings before the Dutch courts, but if the above-mentioned criteria for recognition are met, no litigation on the merits will be required.
i The Fifth EU Anti-Money Laundering Directive
On 9 July 2018, the Fifth EU Anti-Money Laundering Directive entered into force.66 The main changes to the Fourth EU Anti-Money Laundering Directive are:
- clarification of politically exposed persons;
- tighter controls relating to high-risk third countries;
- increasing transparency of beneficial ownership of corporates;
- application of certain obligations with respect to certain crypto service providers; and
- beneficial ownership of trusts.67
The Act implementing the Fifth EU Anti-Money Laundering Directive entered into force on 21 May 2020.68
ii Central Ultimate Beneficial Ownership Register and Central Shareholders' Register
Pursuant to the Fourth European Anti-Money Laundering Directive,69 the government was obliged to introduce a Central Register containing adequate, accurate and current information on the ultimate beneficial ownership (UBO) of Dutch legal entities by 26 June 2017. The government failed to meet this deadline. However, a new Act regarding the registration of the UBOs of companies and other legal entities will enter into force partly on 8 July 2020 and partly on 27 September 2020.70 Companies and other legal entities are obliged to register their UBOs in the Trade Register within 18 months as from 27 September 2020, provided that companies and other legal entities that are registered with the Trade Register for the first time after this date will have to register their UBOs immediately upon registration.71 The new Act does not yet contain the obligation to register the UBOs of trusts. This requirement from the Fourth European Anti-Money Laundering Directive will be implemented separately.72
On 19 January 2017, a draft bill for the introduction of a Central Shareholders' Register was presented.73 According to the draft bill, the Central Shareholders' Register would include details on the shares, shareholders and pledgees of shares or holders of a right of usufruct on shares in Dutch private and public limited liability companies (except for listed companies). As such, this Register would provide more detailed information than the Central UBO Register. Access to the Central Shareholders' Register would be available to certain governmental authorities (such as the Public Prosecution Service or the tax authority), the obliged entities mentioned in the Wwft and civil law notaries, each to the extent necessary for exercising its public duties. In September 2019, the State Secretary for Finance, the Minster for Legal Protection and the State Secretary for Economic Affairs and Climate Policy requested the Dutch House of Representatives to postpone the draft bill for the introduction of a Central Shareholders' Register, until more knowledge on, and experience with, the UBO Register has been acquired.74 It is therefore unlikely the bill will pass in the near future.
1 Neyah van der Aa is a senior associate and Thijs Geesink, Gijs Kerstjens and Rose Fernando are associates at Allen & Overy LLP.
2 TK, 2013–2014, 17 050, No. 450.
3 Article 6:162 of the Dutch Civil Code (DCC).
4 Article 6:203 of the DCC.
5 Article 6:212 of the DCC.
6 Article 51f of the Code of Criminal Procedure (CCRP).
7 Article 6:163 of the DCC.
8 Wetenschappelijk onderzoeks- en documentatiecentrum, Tabellen Rechtspleging Civiel en Bestuur 2018, https://www.wodc.nl/binaries/2019-rechtspleging-civiel-bestuur-2018-webupdate-tabellen-h04-def_tcm28-93505.xlsx. Figures are for 2018.
10 However, anyone with a direct interest in the prosecution of a crime can file a complaint against a decision of the Public Prosecution Service not to prosecute or investigate a case further (Article 12 of the CCRP).
11 Article 361(3) of the CCRP. The Supreme Court (Supreme Court 28 May 2019, ECLI:NL:HR:2019:793) has recently confirmed a ruling of the Supreme Court from 2006 (Supreme Court 15 September 2006, ECLI:NL:HR:2006:AV2654) in which the importance of the ability for both parties to adequately argue, or oppose, a claim for damages was emphasised. In this context, the Supreme Court referred to Article 361(3) of the CCRP and Article 6(1) of the European Convention on Human Rights on the right to a fair trial.
12 Court of Appeal Amsterdam, 16 June 2015, ECLI:NL:GHAMS:2015:2280.
13 See the informative conclusion of the advocate general under Supreme Court 22 November 2016, ECLI:NL:HR:2016:2659.
14 See also the 'Security Agenda 2015–2018', TK 28684, No. 412, particularly pp. 6–7.
15 Articles 3:316 and 3:317 of the DCC.
16 Article 3:310 of the DCC.
17 Article 3:309 of the DCC.
18 Attachment Syllabus, version February 2020, https://www.rechtspraak.nl/SiteCollectionDocuments/Beslagsyllabus.pdf.
19 Marieke van Hooijdonk and Peter Eijsvoogel, Litigation in the Netherlands (Kluwer Law International, 2012), p. 113.
20 Article 718 et seq. of the Code of Civil Procedure (CCP).
21 District Court Noord-Holland 7 February 2018, ECLI:NL:RBNHO:2018:910, par. 3.1.
22 Attachment Syllabus, version February 2020, https://www.rechtspraak.nl/SiteCollectionDocuments/Beslagsyllabus.pdf, p. 26 and p. 50 and further.
23 Article 701 of the CCP.
24 Article 700(3) of the CCP.
25 Article 700(3) of the CCP.
26 Article 705(2) of the CCP.
27 Van Hooijdonk and Eijsvoogel, footnote 19, at p. 118.
28 Article 22 of the CCP. If a party fails to comply with an order, the court may draw the conclusion it sees fit.
29 Article 843a of the CCP.
30 Van Hooijdonk and Eijsvoogel, footnote 19, at p. 31.
31 Supreme Court 10 July 2020, ECLI:NL:HR:2020:1251.
32 Court of Appeal 's-Hertogenbosch 28 September 2004, JOR 2005, 23(*BVR/Ho-Cla); District Court Amsterdam 13 April 2005, JOR 2005, 142 (*Verder Holding/Hagemeyer); District Court Utrecht 12 September 2007, JOR 2007, 265, ECLI:NL:RBUTR:2007:BB3722 (*OPG/Quigley cs and MMG/Quigley cs).
33 Supreme Court 29 September 2017, ECLI:NL:HR:2017:2518.
34 Supreme Court 13 September 2013, ECLI:NL:HR:2018:1775, JOR 2013, 330.
35 Supreme Court 8 June 2012, RvdW 2012, 824, ECLI:NL:HR:2012:BV8510 (Abu Dhabi Islamic Bank/ABN AMRO).
36 Article 51b of the CCRP.
37 Stcrt 2013, 35782 (2013A021).
38 Stb 2018, 144.
39 TK, 2017–2018, Appendix No. 2329 (response by Mr Grapperhaus dated 6 June 2018).
40 Stb 2018, 239. The implementation period of the Directive had previously expired on 26 June 2017.
41 A list of indicators of unusual transactions is included in a schedule to the Decree to implement the Anti-Money and Anti-Terrorist Financing Act, 15 July 2008.
42 See Supreme Court 27 November 2015, ECLI:NL:HR:2015:3399 and Court of Appeal Amsterdam 18 November 2015, ECLI:NL:RBAMS:2015:9493.
43 EU Regulation on Insolvency Proceedings (2015/848).
44 Article 1039(1) of the CCP. For instance, the parties can agree to the application of the IBA Rules on the Taking of Evidence in International Commercial Arbitration, published at www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx.
45 Article 1040(2) of the CCP.
46 Supreme Court 26 January 2016, ECLI:NL:HR:2016:110.
47 See, inter alia, Tatania Scheltema, 'Het gevecht om verschoningsrecht', Advocatenblad 2017/4, pp. 33–6; Petra van Kampen, 'Rupsje Nooitgenoeg op dieet', 12 June 2019 and Daan Doorenbos, 'Een advocaat in de cc, is daar iets mis mee?', 27 June 2019, www.njb.nl/blog/ and Bas van Zelst, 'De (on)ethische advocaat, over balans tussen cliënt en maatschappij', NJB 2020/964. The Netherlands Bar has also sent a letter to the House of Representatives addressing the (debate on) legal privilege, 3 September 2019, https://www.advocatenorde.nl/document/kamerbrief-nova-verschoningsrecht-3-september-2019.
48 Article 98 and Article 218 CCRP; TK, 2012–2013, 33685, No. 3.
50 TK, 2015–2016, 29 279, No. 289. No new legislation has been enacted yet. However, it is expected that the provisions regarding the Dutch legal privilege will be addressed in the general reform of the Dutch Criminal Code of Procedure (TK 2018-19, 29 279, No. 459).
51 See, for example, District Court The Hague 14 January 2015, ECLI:NL:RBDHA:2015:248 and District Court Rotterdam (examining magistrate's office) 7 October 2019, ECLI:NL:RBROT:2019:7856.
52 Article 10:3 of the DCC.
53 Van Hooijdonk and Eijsvoogel, footnote 19, at p. 36.
54 Article 10:2 of the DCC.
55 European Convention on Information on Foreign Law of 7 June 1968, Trb 1968, 142.
56 Article 67 of the CCP.
57 Hague Convention on Civil Procedure of 1 March 1954, Trb 1954, 40 and Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, Trb 1975, 38. All Hague Conventions can be found on the website of the Hague Convention: www.hcch.net.
58 Van Hooijdonk and Eijsvoogel, footnote 19, at p. 34.
59 Article 23 of the Hague Evidence Convention: 'A Contracting State may at the time of signature, ratification or accession, declare that it will not execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents as known in Common Law countries.' In its subsequent declaration, the Netherlands has stated: 'For the purposes of Article 23 of the Convention, “Letters of Request issued for the purpose of obtaining pre-trial discovery of documents as known in common law countries”, which the Netherlands will not execute, are defined by the Government of the Kingdom of the Netherlands as being any Letters of Request, which require a person: (a) to state which of the documents which are of relevance to the proceedings to which the Letter of Request relates have been in his possession, custody or power; or (b) to produce any document other than particular documents specified in the Letter of Request as being documents which the court which is conducting the proceedings believes to be in his possession, custody or power.'
60 EC Council Regulation of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, No. 1206/2001, OJ EUR COMM (No. L 174) 1 (2001). The Regulation entered into force on 1 January 2004.
61 Supreme Court 8 June 2012, ECLI:NL:HR:2012:BV8510 (*Abu Dhabi Islamic Bank/ABN AMRO Bank NV ).
62 Van Hooijdonk and Eijsvoogel, footnote 19, at p. 117.
63 Article 767 of the CCP.
64 Supreme Court 26 September 2014, ECLI:NL:HR:2014:2838.
65 Article 431 of the CCP. Under Article 40 of the Act on the Kingdom of the Netherlands, as revised, Stb 2010, 775, judgments of Curaçao, St Maarten, Aruba and the Netherlands can be directly enforced in the Kingdom of the Netherlands as a whole.
66 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU.
68 Stb 2020, 146 and Stb 2020, 148.
69 Directive (EU) 2015/849 of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No. 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC.
70 Stb 2020, 232.
71 Stb 2020, 231.
72 TK 2019-2020, 35179, No. 3.
73 TK, 2016–2017, 34 661, No. 2.
74 TK, 2018-2019, 34 661, No. 13.