An extract from The Asset Tracing and Recovery Review, 8th Edition
Seizure and evidencei 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. 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. 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. 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.
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.
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.
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 days 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.
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. 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. 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. Furthermore, on the basis of the CCP, parties can submit a request for document disclosure (including data such as computer files).
Pursuant to Article 843a of the CCP, the requesting party must meet 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. 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
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; 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. 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.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. 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. 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. The Dutch Data Protection Authority checks whether private detective agencies process personal data correctly.