Process costs: certainty

If you litigate against a foreign party, it can sometimes become difficult to collect the legal costs. In some cases you can demand security for the legal costs from the other party. In this blog I explain in which cases this is and is not possible.

Security for litigation costs

Article 224 DCCP of the Code of Civil Procedure contains a regulation that provides security for legal costs. Paragraph 1 of it is somewhat cryptic who can use this:

“All persons without domicile or habitual residence in the Netherlands who file a claim with a Dutch court or join or intervene in proceedings here are obliged to provide security at the request of the other party for the costs of the proceedings and the compensation for payment of which they could be sentenced. turn into."

In understandable Dutch it says: the defendant can obtain security in the event that the court rejects the foreign claimant's claim.

This regulation therefore does not apply to the claimant who wants security for the legal costs of a defendant residing/established abroad.

Target

The purpose of this regulation is to prevent a defendant from having to incur high costs to collect the order to pay the costs of the proceedings.

Claim

The court may not decide on its own that the claimant must provide security. The defendant must therefore claim this. This can be done by summons (new procedure) or by filing an incidental claim in the current procedure. The latter is the most practical.

No link with the Netherlands

A condition for granting the claim to provide security is that the center of the foreign claimant's social and economic activities must be located outside the Netherlands. [1]

The claim to provide security for legal costs will therefore not succeed if the foreign claimant also has an establishment in the Netherlands. The claim is also rejected if the foreign claimant does not have a Dutch establishment, but does have its registered office in the Netherlands. [2]

It happens that a claimant changes address regularly and that the Dutch address where he is registered is not always his actual place of residence. It is conceivable that this will cause problems when collecting the legal costs. However, this is not a reason to oblige this claimant to provide security:

“For the applicability of Article 224 DCCP, it is therefore insufficient that the person from whom security is demanded resides in the Netherlands, but his place of residence is not (always) known and/or does not correspond with the address at which he is registered in the municipal database. Now that [respondent] has not argued, nor has it become apparent, that [appellant] has his domicile or habitual residence in a country other than the Netherlands, the cross-appeal of [respondent] must be dismissed.” [3]

No link, but still no certainty

Although there is no link with the Netherlands, the foreign claimant does not have to provide security for legal costs if [4] :

• it is plausible that recovery of the legal costs is possible in the Netherlands;
• the judgment (with the order to pay costs), can be enforced in the country where the foreign claimant resides or is established;
• a treaty or EC regulation stipulates that no security has to be given;
• providing security means that the foreign claimant cannot turn to the court (lack of money).

verdict

If the judge grants the claim, the judge will determine in the judgment the amount for which the plaintiff must provide security. In addition, the court will determine – if requested – within which period the foreign claimant must comply with the judgment. The security usually consists of a bank guarantee.

Still not paying?

If the foreign claimant refuses to provide security, you can have the judgment served and give the claimant a period within which to comply with the judgment. If the foreign claimant continues to refuse, the court will declare him inadmissible. This means that the proceedings initiated by the foreign claimant will end without any substantive treatment. [5]

Appeal and cassation

Security for legal costs can also be demanded on appeal and in cassation. This is only possible from the original claimant (the foreign claimant from the first proceedings). You cannot therefore claim this from the original defendant or defendant. [6]