Opportunities And Risks Resulting From Differences Between German And Dutch Civil And Procedural Law

The Dutch "Beslag" and the German "Eigentumsvorbehalt"

The Netherlands and Germany possess a common border which is merging to form a connecting link. A typical examine is a retirement home project built partly on Dutch territory and partly on German territory.

Also with regard to the law, increasing conformity is emerging as nowadays law is legislated based on European directives. Irrespective thereof, there are still considerable differences which are largely unknown. This has the serious effect that the opportunities created by cross-border business are not realized and the risks not noticed.

Below are two examples:

1. The German Extended Reservation Of Title (Eigentumsvorbehalt)

   In Germany, it is common practice that suppliers use the so-called extended reservation of title in order to secure payment of the purchase price. Extended reservation of title means that they do not only reserve their ownership with regard to the goods just delivered until full payment is made (so-calIed "reservation of title"). In point of fact, they agree with their customer, that he assigns to the supplier his outstanding claims against his customers resulting from resale of the goods. Hence, while in the case of resale or machining of the goods the reservation of title ceases to exist - and in most cases the goods have been delivered for resale with or without prior machining - the extended reservation of title grants to the supplier access to its client's claims against his customers. This of course will not lead to the supplier, claiming the purchase price directly from the end customer. During the course of a normal business relationship, this extended retention of title has the same consequences as the normal retention of title, in other words none. The extended reservation of title comes in useful should the buyer become insolvent. In this case, the insolvency practitioner shall realize the claims against the debtor's customer, but, instead of dividing the proceeds among the collective group of all insolvency creditors, will forward these proceeds to the supplier who had agreed upon the extended reservation of title with the debtor. Where there are several suppliers and the amount due to each of them cannot be clearly determined, those suppliers who delivered under extended reservation of title often form a pool. The pool realizes the assigned claims and allocates them among the pool members respectively.

   Dutch law does not provide for such construct...