No discovery under Dutch civil law, alternatives available
There is no provision for so-called discovery proceedings under Dutch civil law. However, it is possible to rely on alternative legal grounds to obtain disclosure of certain types of documents and information.
One of the legal grounds for seeking discovery of the records of a designated party is article 843a Dutch Code of Civil Proceedings (“DCCP”). This article entitles a party to disclosure of the records of another party if:
- he has a legitimate interest (rechtmatig belang) in doing so;
- the records are clearly specified;
- there is a legal relationship to which the claimant is a party;
- the claim for disclosure is directed towards the party with the records in their possession.
It is important to note that article 843a DCCP also includes several grounds on which a party may refuse disclosure even if the abovementioned conditions are met.
Other legal grounds for obtaining information can be found in article 3:15j of the Dutch Civil Code (“DCC”) – although this is rarely used in practice. This article entitles certain categories of people to claim disclosure of the bookkeeping provided that they have a direct and sufficient interest (rechtstreeks en voldoende belang).
One of the categories includes parties with a claim against a bankrupt seeking disclosure of the bookkeeping of the estate.
Background of the case
This case concerns the sale of machines. The Seller sold machines to a Party A. Party A paid half of the purchase price and entered into a loan agreement with the Seller for the remainder of the purchase price. At that time, Party B was the sole director of Party A. Party C in turn was the sole director of Party B. Party A went bankrupt and a Trustee was appointed.
The Seller held Party C, as well as others, liable for the losses incurred as a consequence of Party A’s bankruptcy. In order to be able to substantiate his claim concerning Party C, the Seller initially requested the judge in summary proceedings to order the Trustee to cooperate with an investigation by the Seller of the bookkeeping of Party A. The purpose of such investigation was to retrieve information to support the Seller’s claim against Party C and others.
The judge in the summary proceedings dismissed the Seller’s claim for lack of urgency (spoedeisend belang), which the Seller appealed. The Court of Appeal awarded the claim by the Seller on the grounds of article 3:15j DCC.
The Trustee disagreed with the Court of Appeal’s decision and appealed to the Supreme Court. According to the Trustee, the Court of Appeal failed to acknowledge that the Seller had no direct and sufficient interest as required under article 3:15j DCC.
Supreme Court’s decision dated 8 April 2016
The Supreme Court determined the scope of what is deemed a direct and sufficient interest according to article 3:15j DCC in the famous Jomed case I, and Jomed case II. In both cases the Supreme Court decided that the scope of article 3:15j DCC is limited to the period up to the date of bankruptcy only. Creditors are not entitled to disclosure of the subsequent bookkeeping by the Trustee.
This case concerned the disclosure of the bookkeeping by the bankrupt and not the subsequent bookkeeping by the Trustee. The Supreme Court therefore decided that the Seller’s claim for disclosure fell within the scope of article 3:15j DCC, although this did not automatically mean that the Seller had established a direct and sufficient interest which would entitle him to disclosure .
According to the Supreme Court, the Seller did not meet the requirement of a direct and sufficient interest because the purpose of the claim was to substantiate his claim against Party C and others. A direct and sufficient interest exists only where the creditor requests disclosure of the bookkeeping for the purpose of establishing its legal relationship with the bankrupt, for example with respect to the amount, the nature or the content of the claim. The Supreme Court thus dismissed the Seller’s claim for disclosure of the bookkeeping of Party A.
In a superfluous consideration, the Supreme Court drew the Seller’s attention to article 843a DCCP. In doing so, the Supreme Court not only highlighted that this article may contain more suitable grounds for disclosure in the given circumstances but it also clarified that “legitimate interest” under article 843a DCCP has a different and much wider meaning than “direct and sufficient interest” under article 3:15j DCC.
Creditors are not entitled to disclosure of the bookkeeping of a bankrupt under article 3:15j DCC where the purpose of such disclosure is to retrieve information to support their claim against a third party instead of a claim to the bankrupt itself.
If the basis for claiming disclosure of the bookkeeping of the bankrupt is to substantiate a claim to a third party, it is worth making a request for disclosure under article 843a DCCP instead (or as well).
The post “Right to disclosure of bookkeeping limited by purpose” is a post of www.stibbeblog.nl