The Dutch Supreme Court referred to its judgment of 11 March 2005 (ECLI:NL:HR:2005:AS2619, Rabobank/Stormpolder) in which it decided that a person who has attached a claim is entitled to benefit from security rights that are connected to the attached claim and benefit from the ranking of the security rights. The judgement of 18 December 2015 confirms the decision in Rabobank/Stormpolder and what has become established law in Dutch legal literature.
In order to further explain the judgment, the relevant facts of the case are set out below. Marell Beton- en Bekistingswerken B.V. (formerly Aannemersbedrijf Marell B.V.) (“Marell”) owed Pegas approximately EUR 750,000 (the Pegas Claim). As security for the repayment of the Pegas Claim, Marell granted an undisclosed right of pledge on the claims on all of its present and future debtors. Pegas entered into a financing arrangement with ABN AMRO (the ABN Claim). As security for the repayment of the ABN Claim, Pegas provided an undisclosed right of pledge on its claims on present and future debtors which included the Pegas Claim.
Pegas refused to repay ABN AMRO. ABN AMRO subsequently disclosed its pledge on the Pegas Claim to Marell. Before the disclosure of the right of pledge, only Pegas was entitled to collect the Pegas Claim. After the disclosure, ABN AMRO became entitled to collect the claim. As a consequence, Marell was entitled to repay the Pegas Claim to ABN AMRO only. When Marell did not pay, ABN AMRO – on behalf of Pegas – notified the debtors of Marell of the Pegas Pledge that they were only entitled to repay Marell by paying the amount due into the bank account of ABN AMRO.
The newly incorporated company Aannemersbedrijf Marell B.V. (“Marell New”) disputed the notification from ABN AMRO regarding the Pegas Pledge and initiated legal proceedings against ABN AMRO. Initially, Marell New argued that some of the debtors that were notified of the Pegas Pledge were debtors of Marell New instead of Marell and these claims were not pledged by the Pegas Pledge. According to the court, the statement that the claims belonged to Marell New instead of Marell was not supported by the facts. Marell New filed an appeal against this judgement. During the appeal proceedings, the Court of Appeal ruled that ABN AMRO was not entitled to notify the debtors of Marell because it was not entitled to execute the Pegas Pledge in the first place. According to the Court of Appeal, only was entitled to notify the debtors of Marell because only Pegas was entitled to execute the pledge.
ABN AMRO disagreed with the final decision by the Court of Appeal and filed an appeal with the Dutch Supreme Court. In the appeal, ABN AMRO argued that it was entitled to execute the Pegas Pledge because it is entitled to benefit from security rights that are connected to claims pledged in favour of ABN AMRO.
According to the Dutch Supreme Court, ABN AMRO was indeed authorized to notify the debtors of Marell about the Pegas Pledge and collect the outstanding amounts from the debtors and use these proceeds as payment under the ABN Claim. The right to benefit from the security rights that are attached to the Pegas Claim is limited the amount of the original claim. This means that ABN AMRO could only claim a maximum amount of EUR 750,000 from the debtors of Marell. In the event the debtors paid a higher amount, ABN AMRO would be obliged to pay the remainder to Marell.
In its judgement the Supreme Court thus confirmed that a person who has either pledged or attached a claim is entitled to benefit from security rights that are connected to the attached or pledged claim and to benefit from the ranking of the security rights as well.
The post Dutch Supreme Courts decides that pledgees are entitled to execute security rights that are connected to a pledged claim (confirmation of Rabobank/Stormpolder) is a post of www.stibbeblog.nl