Act on the abolishment of transfer and pledge restrictions approved
Act on the abolishment of transfer and pledge restrictions (Wet opheffing verpandingsverboden)
The draft act on the abolishment of transfer and pledge restrictions was approved by the Dutch House of Representatives (the Act) on 11 June 2024. After the Act comes into force, it will no longer be possible for certain contracting parties to enter into agreements limiting or excluding the transferability or pledgeability of certain commercial claims. Therefore, the Act will increase the possibilities for transferring or creating a pledge over commercial claims.
Pledge Restrictions
Pursuant to article 3:83 (1) of the Dutch Civil Code (Burgerlijk Wetboek) (DCC), ownership (eigendom), limited rights (beperkte rechten), and receivables (vorderingen op naam) are transferable unless the law or the nature of the right prohibits a transfer. Under article 3:83 (2) DCC, transferability can be excluded by a clause between a creditor and debtor. These principles also apply to the establishment, transfer, and waiver of a limited right, such as a right of pledge, through the mutatis mutandis provision (schakelbepaling) of article 3:98 DCC. Another way to restrict transferability or pledgeability is by, for example, imposing a penalty on a transfer or pledge.
Contracting parties regularly include a clause in their agreements (e.g., general terms and conditions) that restricts the transfer of or the creation of a right of pledge on a claim. Such (partial) restrictions, if correctly formulated, can have an in rem effect (goederenrechtelijkewerking). The Supreme Court ruled on 21 March 2014 (Coface/Intergamma) that it should be assumed that a (partial) transfer restriction has, in principle, only contractual effect between the parties, unless the wording of the clause explicitly indicates that an in rem effect has been agreed upon. Where no in rem effect is intended, the claim remains transferable, but the transfer constitutes a breach of contract.
Following the above, the Supreme Court ruled on 1 July 2022 (Rabobank/Ten Berge) that a (partial) transfer restriction with in rem effect also prevents the creation of a pledge on that claim.
A reason for (partially) restricting the transferability or pledgeability of a claim is that debtors want to avoid being confronted with new creditors and the associated administration regarding payment addresses. In the explanatory memorandum accompanying the Act, it is noted that contractual (partial) transferability or pledgeability restrictions effectively remove such claims from economic circulation. For example, such claims can no longer be used as collateral in financing agreements or be transferred to factoring companies. These restrictions can be particularly disadvantageous for small and medium-sized enterprises (SMEs), as outstanding claims may no longer serve as security in credit agreements.
Abolishment of the Pledge Restrictions
For these reasons, the Dutch House of Representatives has agreed to abolish (partial) transferability and pledgeability restrictions on commercial claims. The Act will entail changes to articles 3:83, 3:94, and 3:239 DCC.
With the Act (more specifically, the new article 3:83 (3) DCC), the freedom of contract underlying article 3:83 (1) DCC will be limited in such a way that (partial) transferability and pledgeability restrictions for receivables arising from the exercise of a business or profession (i.e., commercial claims) are no longer allowed. Any such clause between a creditor and debtor will be deemed null and void. The new article 3:83 (4) DCC contains exceptions to this restriction. Article 3:83 (4) DCC stipulates that the sanction, of provisions being null and void under the new article 3:83 (3) DCC, will not apply to claims:
a. resulting from a current or savings account;
b. resulting from a credit agreement involving multiple lenders (e.g., syndicated loans);
c. held by or against a clearing institution (clearing instelling), central counterparty (centrale tegenpartij), settlement agent (afwikkelende instantie), settlement agency (verrekeningsinstitutie), or central bank; or
d. relating to the payment of certain taxes via a g-account.
The exceptions under points a and c reflect the importance of maintaining an undisturbed payment and securities system. For example, banks must always know to whom credit amounts should be paid. Additionally, if clearing institutions are unable to restrict the transferability or pledgeability of claims, it may complicate record-keeping and disrupt financial transactions.
The exception under point b ensures that Dutch law aligns with international practices for syndicated loans. For example, Loan Market Association (LMA) documentation commonly provides that the debtor can restrict transfers or pledges unless prior consent is given. It would be undesirable if Dutch law deviated from this standard. This exception does not apply to bilateral loans (i.e., loans with a single lender). However, if the intention is to involve other lenders at a later stage (e.g., through crowdfunding), the exception will apply.
A fifth paragraph will be added to articles 3:94 and 3:239 DCC. Under the new articles 3:94 (5) and 3:239 (5) DCC, a disclosed transfer or disclosed right of pledge of commercial claims will only take effect after a written notification to the debtor. Due to the mutatis mutandis provision in article 3:236 (2) DCC, this written notification is also required for establishing a disclosed pledge on claims. This obligation does not apply to the exceptions under the new article 3:83 (4) DCC. Until written notice is provided, payments made by the debtor to the original creditor discharge the debtor’s obligations.
Transitory Law
In general, legal acts performed before the entry into force of new legislation are not invalid under that legislation. This would mean that provisions considered null and void under the new article 3:83 (3) DCC would not affect existing agreements.
However, article 85a of the New Dutch Civil Code Transition Act (Overgangswet Nieuw Burgerlijk Wetboek) stipulates that the new article 3:83 (3) DCC will also apply to existing agreements, provided that three months have passed after the Act comes into force. In other words, older clauses with (partial) transferability or pledgeability restrictions will become null and void after a transitional period of three months following the entry into force of the Act, if they conflict with the new provisions. However, it is still unknown when the Act will take effect.
Would you like to receive more information on the possible consequences and implications of the Act? Please feel free to contact the specialists at Meijburg Legal.
