Damage compensation for unlawful attachment

Attaching property is still relatively simple in The Netherlands. The testing conducted prior to the attachment is minimal. However, an attachment can have serious consequences for the business operations of a company. If an attachment is unlawful, in some cases damage compensation can be claimed. Dutch debt collection lawyer Thomas van Vugt explains.



Submitting an attachment petition

If a creditor has a claim, he can levy a (prejudgment) attachment on his debtor’s assets The assets of a Dutch company reflect the value of all that the company possesses
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and his bank account through a lawyer, to ensure that his recovery options are secured. If an attachment is levied, the attaching party has to start proceedings at the court within a term to be determined by the court (usually four to six weeks). If the creditor fails to do so, the attachment is cancelled. Attachments can be levied by a lawyer submitting an attachment petition.

Testing for possible misuse of law

An attachment can be unlawful, if this has a disproportional negative impact on the interests of the debtor. When testing for this, the tangible circumstances during the attachment are taken into account, such as the amount of the claim to be recovered, the valued of the attached property and the possibly disproportional negative impact on the debtor if any of his property is attached. An attachment can also be unlawful because the attachment is maintained for too high an amount, frivolously or unnecessarily. To assess whether an attachment is unlawful, and therefore if the attaching party is liable, the criteria for abuse of power are used. In this case a separate power for attachment. This depends on the actual circumstances. The interest of the attaching party in establishing collateral for his claim is balanced against the debtor’s interest to freely dispose of his goods.

Damage compensation: usually a limited amount

If there is a misuse of law, the attaching party is liable for the loss suffered by the attached party from the attachment. To determine the amount of the loss, in jurisprudence this is usually linked to legal interest (not trade interest) for the amount creating the excess security. This is therefore the legal interest from the time of the attachment to the time of cancellation thereof. If an attached party claims higher damage compensation, there has to be a special legal stipulation to allow payment of an additional damage compensation. Although normally the damage compensation is limited, this should be taken into account when attaching property. This should not be done lightly.