Country Q&A The Netherlands
Secured Lending 2007/08
The Netherlands
Stefan van Rossum and Roel Botter, Van Doorne NV
www.practicallaw.com/1-212-5007
Security by way of a financial security agreement can only
be created if:
Immovable property
1. What are the most common forms of security that can be
granted over immovable property?
A right of mortgage (hypotheek) is the only form of security that
can be granted over immovable property (that is, land, buildings
and ground leases), registered ships and aircraft. A mortgage creates a security interest in favour of the lender. The lender can sell
the secured assets if the borrower defaults in the performance
of its obligations under the mortgage and use the proceeds in
satisfaction of the debt.
2. Can security over immovable property be granted to foreign
lenders? If not, are there any ways to circumvent this?
Mortgages can be granted to foreign lenders.


one of the parties is a regulated financial institution,
a government authority, central bank or supra-national
financial institution;
none of the parties to the financial security agreement
is a private person acting in the conduct of his business or profession.
4. Can security over movable property be granted to foreign
lenders? If not, are there any ways to circumvent this?
Pledges can be granted to foreign lenders.
Perfecting security
3. What are the most common forms of security that can be
granted over movable property?

The following security interests can be granted over assets other
than immovable property, registered ships and aircraft:
Right of pledge (pandrecht). This is the most common form
of security that can be granted over assets other than immovable property, registered ships and aircraft. A pledge is
created differently to a right of mortgage, but its characteristics are the same.

Financial security agreement. The Netherlands has recently
implemented Directive 2002/47/EC on financial collateral
arrangements. As a result, security can be granted by way
of a financial security agreement (financiëlezekerheidsovereenkomst) over financial collateral.

A financial security agreement can create a security interest
in the form of a pledge or an assignment. The characteristics are different from a right of pledge or right of mortgage.
The financial security agreement can provide that the
security holder can dispose of the secured assets and also
enforce the security by setting off the value of the secured
assets against the secured claim and appropriating the
secured assets.

Legal formalities (for example, must the security be in
writing, signed in any particular way, for example, as a deed
and/or notarised?).
Perfection requirements (for example, must the security-taker
or security-giver give notice or register the security at a public
office to obtain the intended benefits of the security?).
The formalities required for creating a right of mortgage or pledge
depend on the type of assets being secured. Rights of mortgage
and pledge only come into existence after all formalities for their
creation and perfection are fulfilled.
Mortgage
To create a mortgage over immovable property, registered ships
and aircraft:



A deed must be executed before a civil law notary.
The deed must be registered in the public registers of the
Kadaster (The Netherlands land registry).
The maximum amount of obligations secured by the mortgage
must be stated in the deed. A mark-up (usually 40%) over the
principal amount is included to cover interest and costs.
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Country Q&A
Movable property
5. What conditions must be satisfied to make the security valid
and enforceable? Please answer for each form of security
identified in Questions 1 and 3 above and consider both:
Country Q&A The Netherlands
Secured Lending 2007/08
The deed of mortgage usually includes a right of pledge with respect to the movable assets that are attached to, and serve on a
long-term basis, the immovable property, ship or aircraft.

Receivables. A right of pledge over receivables can either be:

Pledge
The formalities to be fulfilled differ according to the type of asset
being pledged:

Movable assets. A pledge over movable assets can either be:


privately executed instrument that is subsequently registered with the tax inspectorate. The
register is non-public and registration is for date
stamping purposes only.

Shares. A distinction should be made between registered
shares (aandelen op naam) in a limited liability company
(either a besloten vennootschap met beperkte aansprakelijkheid (BV) or a naamloze vennootschap (NV)) and bearer
shares (toonder aandelen).
A right of pledge over registered shares in a BV or NV is created by the execution of a deed before a Dutch civil law notary
and the acknowledgement of the right of pledge by the company that has issued the shares. Normally, the relevant company
is a party to the deed for the purpose of acknowledgement.
The articles of association can prohibit the pledge of the
shares, in which case the articles will have to be amended
before a right of pledge over the shares can be created. The
right of pledge over the shares extends to dividend distributions. Unless prohibited under the articles of association,
the deed of pledge can provide that the voting rights relating to the shares vest in the lender. It is common practice
to provide that until the occurrence of a certain event (for
example, an event of default) the shareholder remains entitled to receive dividends and exercise the voting rights.
A right of pledge over bearer shares is created in the same
manner as a right of pledge over movable assets. This principle
applies to bearer shares held or deposited in The Netherlands,
regardless of whether the shares relate to Dutch companies
or foreign companies. Whether the right of pledge needs to
be registered in the shareholders register or the register of
members of the company depends on whether this is required
under the laws of incorporation of the relevant company.
A right of pledge over securities that are transferable by
means of book entries in accordance with the Act on the
Securities Giro System (Wet giraal effentenverkeer) must be
created by means of a book entry in the name of the lender
by the custodian bank responsible for the books.
164
deed executed before a Dutch civil notary;
privately executed instrument, which is then registered with the Dutch tax inspectorate (for date
stamping purposes only).
Undisclosed pledges can only be created over existing
receivables or over future receivables that directly derive
from a legal relationship existing at the time of the execution of the pledge. In view of this, the deed by which an
undisclosed right of pledge is created usually contains an
obligation on the borrower to pledge future receivables on a
regular basis. This is done by the execution and registration
of short form supplemental pledge instruments.
deed executed before a Dutch civil law notary;
Future movable assets can be pledged if they are sufficiently identified in the deed of pledge (see Question 11).
Country Q&A
–
Non-possessory (bezitloos pandrecht). This is created
either by way of a:
–
An undisclosed pledge. This is created either by a:
–
Possessory (vuistpand). Such pledges are rarely created, as they require the pledgee to take possession of
the pledged asset;
–


A disclosed pledge. This is created by way of a privately executed instrument and notice of the creation
of the right of pledge to the debtor(s) of the pledged
receivables;

Bank accounts. A pledge over monies held in bank accounts
is created as a pledge over receivables due by the relevant
bank to the account holder. This pledge is created by way of
a disclosed pledge, so that notice of the pledge is given to
the bank with which the bank account is maintained. Usually
the lender authorises the borrower in the deed of pledge to
continue to give payment instructions and dispose of the
monies in the bank account until an event of default occurs.
Intellectual property rights. A right of pledge over intellectual property rights (IPRs) is created either by:


execution of a deed before a Dutch civil law notary;
a privately executed instrument which is then registered with the Dutch tax inspectorate (for date stamping purposes only).
To create a valid security interest over registered IPRs, it is
not necessary to register the right of pledge. However, the
right of pledge can be registered with the following:



Dutch Bureau for Industrial Property (Bureau voor de
Industriële Eigendom).
Benelux Trademark Register (Benelux Merkenbureau).
Benelux Office for Designs and Models (Benelux Bureau voor Tekeningen en Modellen).
Although not required, without such registration, the right
of pledge cannot be invoked against third parties who have
relied in good faith on the information registered with the
relevant public register.
Financial security agreement
A security interest under a financial security agreement is created by
an agreement (written or oral) and by bringing the financial collateral
under the control of the security holder. In practice, the financial security agreement is evidenced by a privately executed instrument.
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Country Q&A The Netherlands
Secured Lending 2007/08
For an overview of assets and related security regulations, see
table, Taking security over assets in The Netherlands.
6. Do the different types of security in your jurisdiction have to
be documented separately or does your jurisdiction allow for
a global charging document?
The concept of a global charging document that creates blanket
security (comparable to an English law debenture) is unknown in
The Netherlands.
As the formalities required for creating rights of mortgage and
pledge vary for different types of assets, security over the various
types of assets are documented separately.

Unsecured creditors rank equally in a bankruptcy or moratorium
unless the creditor has been accorded preferential rights by law.
Preferential rights are accorded to:

Claims of creditors with retention rights (see Question 10).

Claims of creditors that can exercise rights of set-off.

Claims of creditors that can benefit from retention of title.

Priority of creditors
7. For each type of security considered in Question 5, please list
the order in which creditors, including the secured creditor,
will be paid on the insolvency of the borrower, assuming:
All the required formalities for the secured creditor’s security have been complied with.

The required formalities have not been complied with.

There are two insolvency procedures in The Netherlands:
With respect to receivables: creditors of the pledged
receivables can set-off their claims on the borrower of the
receivables, if the claims arise from the same legal relationship as the pledged receivables or arose and became due
and payable before the creation of the pledge.

Claims of creditors with claims resulting from legal acts performed by the receiver in bankruptcy and the costs incurred
by the receiver in bankruptcy.
Tax claims and claims for the payment of social security
premiums.
The tax authorities have special preferential rights to take recourse on assets owned by third parties that are located on the
debtor’s premises and used for the operation of its business, such
as machinery, equipment and furniture, but not trading stock.
This does not affect the rights of third parties with real ownership, however. Generally, ownership rights under an operational
lease arrangement qualify as real ownership and ownership rights
under a financial lease arrangement do not.
Suspension of payment (surséance van betaling).
Non-compliance

Bankruptcy (faillissement).
No security interest exists unless all the required formalities have
been fulfilled before the bankruptcy or suspension of payments
(see Question 5).
The enforceability of rights of mortgage and pledge is in principle not affected by a suspension of payment or bankruptcy
of the mortgagor/pledgor. The court can, however, order a cooling-off period, during which all lenders (including mortgagees
and pledgees) are prevented from taking any action against the
relevant company. A cooling-off period can be ordered for two
months, with one possible extension of a further two months.
Security interests created by a financial security agreement are
exempt from the effect of a cooling-off period.
Compliance
Generally, claims secured by a mortgage or pledge take priority in
respect of the proceeds of the relevant secured assets. However,
certain claims may take priority over these right holders, most
importantly:
With respect to movable assets: certain tax claims, including value added tax (VAT), wage tax and social security
premiums, take priority in the proceeds of movable assets
that are located on the borrower’s premises and are used for
the operation of the borrower’s business, such as machinery,
equipment and furniture, but not trading stock.

With respect to movable assets, immovable property, registered ships and aircraft: claims of creditors with retention
rights (see Question 10).

8. Is subordination of debt possible? If so, to what extent and
what are the mechanisms for achieving subordination?
Subordination of debt is possible in The Netherlands and is effected by agreement. The concept of subordination does not have
a fixed meaning under Dutch law, so the effect and meaning of
the subordination will depend on the terms of the agreement.
There are two types of subordination:


General subordination where the junior creditor subordinates
its claims against the debtor to all claims of all other creditors.
Subordination where a creditor agrees that its claims rank
junior to certain specified claims of certain specified creditors. This is most commonly used in banking transactions. The
subordination agreement will generally provide the following:


an order of ranking and priority of claims for payment
of the junior and senior debt;
a prohibition against the debtor making payments on
the junior debt or the junior creditor receiving payments of the junior debt until the senior debt has been
satisfied in full;
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Country Q&A

Country Q&A The Netherlands
Secured Lending 2007/08
Taking security over assets in the netherlands
Asset type
What form(s) of security
can be granted?
What conditions must be satisfied to make the security valid
and enforceable?
Can security
be granted to a
foreign lender?
Real estate (and
registered ships and
aircraft)
Mortgage.
Notarial deed of mortgage and registration with the Kadaster.
Yes.
Registered
intellectual property
rights
Pledge.
Notarial or private deed of pledge. If created by private deed,
registration with tax inspectorate is required (for date
stamping only). To be able to invoke against third parties,
registration with IP register is required.
Yes.
Unregistered
intellectual property
rights
Pledge.
Notarial or private deed of pledge. If created by private deed,
registration with tax inspectorate is required (for date
stamping only).
Yes.
Plant and
machinery
Possessory pledge.
Deed of pledge and possession of the lender.
Yes.
Non-possessory pledge.
Notarial or private deed of pledge. If created by private deed,
registration with tax inspectorate is required (for date
stamping only).
Yes.
Possessory pledge.
See above.
Yes.
Non-possessory pledge.
See above.
Yes.
Possessory pledge.
Deed of pledge and possession of the pledgee.
Yes.
Non-possessory pledge.
See above.
Yes.
Financial
instruments
Pledge.
If in bearer form, as per movable property (see above).
For shares, see below.
Yes.
Choses in action
(such as debts or
rights under
contracts)
Disclosed pledge.
Deed of pledge and notification to debtor.
Yes.
Undisclosed pledge.
Notarial or private deed of pledge. If created by private deed,
registration with tax inspectorate is required (for date
stamping only).
Yes.
Bank accounts
Disclosed pledge.
Deed of pledge and notification to the account bank(s).
Yes.
Registered shares in
Dutch NV or BV
Pledge.
Notarial deed of pledge.
Yes.
Bearer shares in
Dutch NV
Pledge (possessory or
non-possessory).
As per movable property (see above).
Yes.
Book entry
securities admitted
to the Dutch
securities giro
system
Pledge.
Book entry in the name of lender in administration of
custodian.
Yes.
Financial collateral
(monies credited to
a bank account and
securities that can
be readily traded on
the capital markets)
Financial security
agreement to pledge or to
assign by way of security.
Agreement (written or oral) and secured assets to be brought
under the control of the security holder.
Yes.
Trading stock
Country Q&A
Other movable
property

an undertaking of the junior creditor to hand over to
the senior creditor any payments received in satisfaction of the junior debt before the senior debt has been
satisfied in full.
In addition, it is not unusual for a senior creditor to require that
the junior creditor pledge its junior claims in favour of the senior
creditor.
166
Generally, the senior creditor, junior creditor and the debtor are
all party to the subordination agreement to ensure that all parties
are bound by it. Alternatively, the subordination agreement can
be executed between the junior creditor and the debtor with a
third party stipulation included in favour of the senior creditor. In
principle however, the grantor can revoke a third party stipulation
until it is accepted.
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Country Q&A The Netherlands
Secured Lending 2007/08
9. Are there security rankings or other systems for determining
creditor priority?
The ranking of rights of mortgage over registered property (immovable property, aircraft and ships) is determined by the date
and time of registration of the rights of mortgage in the public
registers of the Kadaster. This register is available for public inspection. It is possible for holders of a right of mortgage over
the same asset to change their respective rank by execution of a
notarial deed and subsequent registration with the land registry.
There are no public registers in The Netherlands where security
interests can be registered with respect to assets other than registered property referred to above. The ranking of rights of pledge
over such assets is determined by the time when the respective formalities for creating the right of pledge were fulfilled (see
Question 5). It is not possible for holders of a right of pledge over
the same asset to change their respective rank by mutual agreement. A change of rank requires the release of the senior ranking
pledge, which is then recreated after all the formalities for perfection of the other right of pledge have been fulfilled.
It is possible to contractually subordinate debts (see Question 8).
There are, however, no public registries or other systems on the
basis of which third parties can determine creditor priority.
Commercial security
10 What types of “commercial security” or “quasi-security” (that
is, legal structures that are used as an alternative to taking
security) are common in your jurisdiction? In particular, consider the following and give brief details:
Sale and leaseback.

Factoring.

Hire purchase.

Retention of title.

Other structures.


Risk areas when granting security
11.Are there any types of assets over which security cannot be
granted or is difficult to grant? In particular, consider the following and give brief details:

Future assets.

Intangible assets.


Commercial security is an umbrella term referring to the various
ways a creditor can try to obtain a better position on the debtor’s insolvency, without taking legal security. All of the following
methods can be used in The Netherlands:
Sale and leaseback.

Factoring.

Hire purchase.

Retention of title.

Set-off.

Right of retention.
The debtor was entitled to enter into the agreement that
created the creditor’s claim, or the creditor had no reason to
question the authority of the debtor to enter the agreement.
It is advisable for lenders to provide in the loan documents that
the relevant debtor is prohibited from subsequently creating legal
and commercial security in favour of other creditors (negative
pledge). However, in principle, a negative pledge does not affect
the validity or enforceability of security created in breach of it.
Under certain circumstances, the beneficiary of a negative pledge
can hold a creditor that receives security in breach of the negative pledge liable for damages in tort, if that creditor had actual
knowledge of the negative pledge.


The creditor’s claim has arisen and the assets were in the
creditor’s possession before the creation of the right of
mortgage or pledge.

Fungible assets (that is, a pool of assets the constituents of
which change over time).
Other assets.
Future assets. Future immovable property, registered ships
and aircraft cannot be mortgaged. Present and future
movable assets can be pledged. A disclosed pledge over
receivables can extend to all present and future receivables.
An undisclosed pledge over receivables can only extend
to existing receivables or future receivables resulting from
a legal relationship existing at the time of the pledge. It
has been argued that future registered shares in an NV or
BV can be pledged in advance, but this view has not been
confirmed by case law. Future IPRs can in principle be
pledged.
Intangible assets and fungible assets. Security interests
cannot be created over goodwill. In addition, blanket security cannot be taken (for example, a floating charge over the
entire business of a borrower).
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Country Q&A

A right of retention gives a creditor that has assets of the debtor
in its possession a statutory right to retain possession of these assets until its claims have been paid. Such a creditor takes priority
over mortgagees and pledgees on the debtor’s insolvency as long
as either:
Country Q&A The Netherlands
Secured Lending 2007/08
12.Are there any company law rules which impact on the granting of security? In particular:
13.Is the trust concept recognised in your jurisdiction? If not:





Would the granting of security by a company to secure debt
used to purchase its own shares (or the shares of a subsidiary) constitute the giving of unlawful financial assistance?
Would a parent company granting security in respect of
a loan to its subsidiary breach any “corporate benefit” rules?
Other rules?
Unlawful financial assistance. A Dutch company is not
permitted to give security or a guarantee to allow third parties to subscribe to, or acquire shares in, its capital. This
prohibition is strict and there are no whitewash procedures
in The Netherlands. Guarantees and securities that have
been granted in violation of this prohibition may be held
void or subject to avoidance.
The prohibition on financial assistance extends to all Dutch
and foreign subsidiaries of the relevant Dutch company.
However, according to prevailing academic opinion, the
prohibition does not extend to the acquisition of shares
in a foreign parent company of a Dutch company. On the
basis of this view, Dutch subsidiaries should be permitted
to grant security or give a guarantee for credit facilities that
are used to finance the acquisition of shares in their foreign
parent. However this view is not supported by case law.
Country Q&A

Corporate benefit rules. The validity of a legal act performed by a company can be contested by the company
or the receiver in its bankruptcy if, as a result, its objects
are transgressed and the counterparty was aware of the
transgression or, without personal investigation, should have
been so aware. Generally, it is assumed that the company’s
objects are not transgressed if all of the following apply:



the objects clause in the articles of association of the
company allows this type of transaction;
the transaction is in the corporate interest of the
company;
the transaction will not jeopardise the further existence of the company.
A transaction is in the interest of the company if it derives
sufficient commercial benefit. This depends on the facts
and circumstances. Case law confirms that group interests
can be taken into account and on this basis it is assumed
that a Dutch company can in principle give upstream and
cross stream guarantees, as long as the other tests referred
to above are met.
168

Would a trust created under the law of another country be
recognised in your jurisdiction?
Could the security trustee enforce its rights in the courts in
your jurisdiction?
Recognition
The trust concept is not recognised in The Netherlands. However, trusts created under the laws of another jurisdiction may
be recognised under the Act on the law applicable to trusts (Wet
conflictenrecht trusts), which enacts the Hague Convention on
the Law Applicable to Trusts and on their Recognition 1985.
Enforcement
As the concept of trusts is not recognised, it is not possible to
grant rights of mortgage or pledge to a security trustee. Under
Dutch law security can only be granted to the creditor of the
secured claims. A number of solutions have been developed, so
that rights of mortgage and pledge can be granted to a security
trustee, including the:


Creation of a parallel debt owing to the security trustee
equal to the aggregate debt owing to the lenders.
Appointment of the security trustee as a joint creditor with
each of the lenders.
These structures allow the lenders to transfer their loan participations without affecting the rights of mortgage and pledge.
14.Is secured debt traded in your jurisdiction? If so, how is the
security associated with the transferred debt actually transferred?
Secured debt is traded in The Netherlands. As a general rule,
security interests are ancillary to the debt they secure. Consequently, security interests will, in principle, transfer to an assignee of the secured debt by operation of law.
If, however, security is granted for a credit facility rather than a
fixed debt, it is necessary to transfer the credit relationship in
order for the security interests to transfer to the transferee. Further, it is unlikely that a security interest granted for any and all
present and future claims of the pledgee/mortgagee deriving from
any present or future relationship will transfer to an assignee of a
debt secured by them.
Security interests for a syndicated facility are usually granted to
a security trustee using a parallel debt or joint creditor structure (see Question 13). If these structures are used the lender
can transfer its loan participations without affecting the rights of
mortgage and pledge granted in favour of the security trustee.
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Country Q&A The Netherlands
Secured Lending 2007/08
15.After new security has been granted, is it vulnerable to being set aside within certain time limits if the grantor subsequently becomes insolvent? If yes, what types of transactions
are potentially reviewable?
After new security has been granted by a company, it is vulnerable to being set aside on the basis that it is prejudicial to its
other creditors (actio pauliana). A legal act performed by a Dutch
company that is prejudicial to the interest of its creditors can be
contested by the creditors or the receiver in bankruptcy if all of
the following apply:
The transaction is entered into without a legal obligation to
do so.

The transaction is prejudicial to the interests of the other
creditors.

Both the company and the counterparty to the transaction
were aware or should have been aware that the transaction was prejudicial to the other creditors. With respect to
certain specified transactions (which include the granting
of security), this awareness is deemed to exist, subject to
evidence to the contrary, if the transaction was entered into
within a year of the date it is contested or, in the case of a
bankruptcy, before the date of the bankruptcy.

Enforcement by way of a private sale is only permitted with the
prior approval of the court. The creditor can also agree on a private sale with the grantor of the security, but the agreement can
only be validly entered into after the creditor has become entitled to enforce its security. The creditor cannot appropriate the
security assets without the prior approval of the court for a consideration determined by the court or by virtue of an agreement
between the creditor and the grantor of the security entered into
at the time of enforcement.
The grantor and the holder of the security interest can request the
court to approve a private sale. The court can order a different
method of sale if that is likely to lead to higher proceeds.
A pledge of receivables is usually enforced by collecting the receivables and taking recourse on the proceeds to satisfy the secured claims. In the case of an undisclosed pledge over receivables, the debtors must be notified of the pledge by the creditor
before enforcement in this manner can take place.
A financial security agreement can provide that:


The security holder can set off the claims secured under it
against the value of the secured assets.
The security holder is authorised to enforce a security interest over securities by:

Enforcement

16.In what circumstances can the secured creditor generally enforce its security?
Unlike pledges and mortgages, a financial security agreement
can provide that the security interests created under it can also
be enforced on the occurrence of events other than a payment
default.
17.Is enforcement limited to a public sale of the secured asset
through the courts? If not, what other types of enforcement
action can be taken?
In principle, a secured creditor should enforce its security interest
by way of a public sale. To proceed with such a public sale the
creditor does not need to obtain a court order or court permission.
A public sale of real property, registered ships or aircraft must take
place before a civil law notary. There are no statutory requirements
that apply to a public sale of other assets, other than that the sale
should be conducted in accordance with local customs.
appropriating the securities and setting-off the value
of the securities against the secured claims.
18. How will the secured creditor’s rights to enforce its security
be affected by the commencement of any:

Company rescue procedures in your jurisdiction?

Insolvency procedures in your jurisdiction?
The only insolvency procedures in The Netherlands are suspension of payments and bankruptcy (see Question 7). There are no
extrajudicial insolvency procedures (for example, administration
or administrative receivership).
A secured creditor can enforce its security interests during a moratorium of payments or bankruptcy as if there were no such moratorium or bankruptcy, provided that the court can order a cooling-off period of two months with a possible extension of another
two months, during which all creditors (including mortgagees and
pledgees) are prevented from taking any action. Security interests
created by a financial security agreement are exempt from the
effect of a cooling-off period.
19.Will the enforcement (or holding) of the security attract any
liability under environmental laws?
The government can claim reimbursement of costs from persons
who have been unjustly enriched (ongerechtvaardigd verrijkt) by
the decontamination of polluted property (section 75, Policy rule
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Country Q&A
Rights of mortgage and pledge can be enforced if the borrower
defaults (verzuim) in the performance of its secured payment obligations. A default under other obligations does not authorise the
secured creditor to enforce the pledge or mortgage, unless and
until it results in the acceleration of the debt and the borrower
is in default of its obligations to pay the debt. In principle, the
creditor must first issue a notice of default. However, this requirement can be excluded by a provision in the relevant security
document.
selling the securities on the capital markets; and
Country Q&A The Netherlands
Secured Lending 2007/08
Reimbursement of Costs, Act on Soil Protection (Beleidsregel Kostenverhaal, Wet bodembescherming)). A mortgagee of real property may be unjustly enriched if, as a result of decontamination,
the value of the collateral increases.
If unjust enrichment has been proved, the government can claim
reimbursement if:


The government has incurred costs as a result of the enrichment.
Reimbursement is justified. This is the case if, among
other reasons, the enriched party at the time it was granted
the right of mortgage knew or should have known that the
soil was polluted. This may impose an obligation on the
lender(s) to conduct a due diligence exercise when taking
security over real property.
20.Will a foreign choice of law clause in a security document be
recognised and applied by the courts in your jurisdiction?
Country Q&A
Security over assets that are located or registered in The Netherlands or that are governed by Dutch law (for example, registered
shares in a BV or NV) must be created in accordance with the
laws of The Netherlands. A foreign law security document that
purports to create security over such assets is unlikely to be recognised by the Dutch courts.
Foreign law security interests over assets located outside The
Netherlands or assets that are governed by foreign law are generally upheld and considered by the Dutch courts as valid with the
effect and priority of a right of pledge or a right of mortgage (as
the case may be) under Dutch law on the same type of assets, if
the security interests:

Are valid, binding and enforceable under foreign law.

Do not conflict with Dutch public policy.

Fit into the Dutch system of security interests.
A foreign law security interest over receivables governed by Dutch
law is, in principle, recognised by the Dutch courts, subject to
Article 12(2) of the Rome Convention on the law applicable to
contractual obligations (1980/934/EEC) (Rome Convention). The
Rome Convention provides that the law governing the rights and
claims (as opposed to the law governing the security document)
determines:




21.Are there any exchange controls in force that could prevent
any repatriation of realisation proceeds or other payments to
a foreign lender under the security document or loan agreement?
There are no exchange controls in force that could prevent the
repatriation of proceeds realised in The Netherlands through the
enforcement of security or other payments to a foreign lender
under the security document or loan agreement.
22.Will a judgment obtained in a foreign court (for example, ordering that a lender can sell the secured asset and retain the
proceeds of sale) be enforceable in your jurisdiction without
the need for a re-trial of the case?
Enforcement of foreign judgments in the Dutch courts depends
on the country in which the judgment was handed down. Countries can be split into two categories:
EU member states and signatories to the Lugano Convention
1988
Judgments delivered by a court of any EU member state (except
Denmark) can be enforced in any other EU member state, without any need for a re-trial or other reassessment of the merits
of the case (Regulation (EC) No. 44/2001 on jurisdiction and
the recognition and enforcement of judgments in civil and commercial matters). The same principles apply to the enforcement
of judgments given by courts in Norway, Iceland and Switzerland
(EFTA Convention on Jurisdiction and Enforcement of Judgments
in Civil and Commercial Matters (Lugano Convention) 1988).
Other countries
A judgment by a court of another country is not automatically
enforceable in The Netherlands and a rehearing is necessary. A
final judgment obtained in the courts of certain jurisdictions (including the US and Japan) are generally upheld and regarded by
a Dutch court of competent jurisdiction as conclusive evidence
when asked to give a judgment in accordance with that judgment,
without substantive re-examination or re-litigation on the merits
of the subject matter. This requires, however, that the following
conditions be met:


The assignability (and pledgeability) of the rights and
claims.

The relationship between the assignee and the debtor.

The conditions under which the assignment can be invoked
against the debtor.

The relevant judgment is not given by default.
The judgment is not subject to appeal or other means of
challenge.
The judgment is enforceable in the foreign country.
The judgment is given by a court of competent jurisdiction
according to the principles of natural justice.
The content and enforcement of the judgment do not conflict with Dutch public policy.
Whether the debtor’s obligations have been discharged.

170
The judgment has not been given in proceedings of a penal
or revenue or other public law nature.
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Country Q&A The Netherlands
Secured Lending 2007/08
Tax
23.Are any documentary taxes (for example, stamp duty), registration fees or notaries’ fees payable in connection with the
granting or taking of security, or its enforcement?
No stamp duty or other documentary taxes are payable in connection with the granting or taking of security or its enforcement,
except for:
Registration costs for the registration of the security documents with the tax inspectorate and the Kadaster (to the
extent relevant). These are generally small.

Court fees payable in connection with the enforcement of
the security documents in the Dutch courts.

Notaries’ fees in the event of enforcement of a mortgage by
way of a public sale.

24.Where such taxes and fees make the granting or taking of
security prohibitively expensive, are any strategies available
to minimise costs?
Notaries’ fees in connection with the execution of a deed of mortgage can sometimes be reduced by limiting the amount of the
debt secured under it to the value of the relevant asset.
Reform
25.Please summarise any proposals for major reform in the area
of taking security and state whether they are likely to come
into force and, if so, when.
At the moment there are no specific proposed laws or regulations
in the area of taking security.
Notaries’ fees are payable if the security is granted by the execution of a notarial deed. That is required for the creation of a right
of mortgage and for a pledge of registered shares in a Dutch NV
or BV. The notaries’ fees involved with a pledge of shares are usually fairly limited (about EUR1,000 (about US$1,320) exclusive
of VAT). Notaries’ fees in connection with a deed of mortgage
may partly depend on the amount of the debt owed and can be
substantial.
Country Q&A
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On firm ground
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