Curaçao

1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?

Yes. The Curaçao Code of Civil Procedure (Burgerlijke Rechtsvordering) provides the possibility for the applicant to seize and freeze assets of the defendant to ensure that the defendant’s assets remain available while awaiting a final Court judgment. This legal remedy is referred to as a prejudgment attachment (conservatoir beslag) and restrains the defendant from dealing with the frozen assets until a specified time (for example, a further hearing, judgment or payment) or further order of the Court. Freezing orders are, in principle, only available and enforceable in the Dutch Kingdom. The availability and enforceability outside of the Dutch Kingdom depends on whether there is a treaty or a domestic law that expressly provides for it and its enforcement.

2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?

No. Orders to disclose assets are not commonly made in conjunction with a prejudgment attachment order. Assets, such as immovable property are registered in a public registry and may therefore be inspected by any third party.

Besides this, Curaçao has the so called “attachment for the purpose of preserving evidence” which is a form of attachment, comparable to the attachment on a house or a bank account. It is a precautionary measure, meaning that the evidence is secured so that the respondent cannot lose or hide it. It may be used to inquire about any assets aside from immovable property. The applicant may not inspect the evidence immediately after the attachment, but needs to seek the leave of the other party or from a judge.

3. Briefly what is the relevant legal test?

The applicant must show that:

(i) the underlying substantive claim is justified on a prima facie basis;

(ii) the applicant reasonably expects that the immovable assets/goods to be attached will be withdrawn from the recovery scope of the applicant (for example, for the purposes of frustrating or impeding the satisfaction of a judgment or award) (vrees voor verduistering); and

(iii) the defendant has assets in Curaçao and this is substantiated.

4. Briefly what is the process for obtaining a freezing (or equivalent) order?

The applicant submits a petition to the Court to obtain a prejudgment attachment order to freeze the assets. The Court will assess whether the petition meets the relevant legal test on a prima facie basis (without a comprehensive, substantive review of the matter).

5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?

Yes. If it is determined by the Court that an applicant has wrongfully seized the assets of the defendant, the applicant may be held liable for the loss suffered by the defendant as a result of the wrongful attachment. A prejudgment attachment may be considered wrongful when the prejudgment attachment is later determined to be unfounded or where the claim on which the attachment is based is inadmissible.

6. Can it be sought against third parties?

Yes. A prejudgment attachment can be sought against a third party which is not involved in the dispute between the applicant and the defendant where the third party holds assets on behalf of or due to the defendant. This is referred to as third party attachment. The third party is obliged to follow the instructions from the applicant/bailiff:

(a) the third party must provide information to the bailiff;

(b) the third party has to withhold money (or tangibles) and, in the event of a post judgment attachment, transfer/deliver the same to the bailiff;

(i) the sum or the movable assets held by the third party and due to the defendant;

(ii) which security rights exist in respect of the attached claims or assets (if any and known to the third party); and

(iii) the name of the person entitled thereto.

A third party is, in principle, only bound when subject to a third party attachment. However, a bank which is on notice of a prejudgment attachment will usually need to comply with the terms of the order as it will owe a duty of care to the applicant as a third party with interest in the funds held by the bank.

7. What assets are covered by a freezing (or equivalent) order?

According to Curaçao law, the assets and the income of the defendant within the jurisdiction can be seized. Attachments can be placed on:

(i) wages or allowances;

(ii) cars, household effects, stock and machinery;

(iii) bank balances, securities, and the contents of a bank vault; and

(iv) immovable goods including properties, houses and business premises.

Certain assets which are required for ordinary personal use such as beds, bedding, clothing, food and tools that the defendant uses to generate income may not be attached/seized.

8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?

Yes. This is possible if the applicant can show on a prima facie basis that the defendant’s assets are situated in Curaçao and there is a real risk of unjustified disposal or alienation of those assets by the defendant before the judgment in the substantive proceedings abroad is obtained. Prejudgment attachment orders can be requested before substantive proceedings abroad have been commenced, but an attachment will not necessarily establish jurisdiction before the Curaçao Courts.

9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?

Yes. In the same way that a prejudgment attachment order can be made in support of substantive foreign Court proceedings, it can also be sought through the Court process to support arbitration proceedings or awards provided the test set out in the response to question 8 is satisfied.

10. At what stage of proceedings can a freezing (or equivalent) order be sought?

At any stage, including prior to commencing the claim, although the Court will expect the applicant to issue its claim promptly (usually within no more than 28 days of the attachment being levied).

11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?

Certain assets which are required for ordinary business/personal use such as beds, clothing, food and tools that the defendant uses to generate income may not be attached/seized according to Curaçao law. Further, when levying a prejudgment attachment in respect of wages and allowances, the applicant is required to abide by the protected earnings level (beslagvrije voet) to leave sufficient funds for the defendant to provide for himself. There is no prohibition for assets above a certain value. The prejudgment attachment order is made for up to a specified sum, usually equal to the claim to be submitted in the case on the merits, plus expenses and interest.

The Court can, in principle, grant leave for an additional 30% on the claim in respect of legal expenses when the claim is below Naf. 600.000, 20% when the claim is between Naf. 600.000 and Naf. 2.000.000, 15% when the claim is between Naf.1.000.000 and Naf. 5.000.000 and 10% when the claim is more than Naf. 10.000.000.

12. What happens after a freezing (or equivalent) order is granted?

The applicant must approach the bailiff to place the attachment and submit a claim on the merits within 28 days from the date the attachment was levied.

As the defendant will not usually be made aware of the petition regarding the prejudgment attachment before the Court renders its judgment (i.e. the petition is made without notice), once the prejudgment attachment has been made, the defendant will be notified. The defendant (then plaintiff) can then commence separate injunction proceedings to have the prejudgment attachment lifted. The Court will schedule a hearing in which the alleged debtor can set out its defense.

13. Who pays the costs of the application for a freezing (or equivalent) order?

Either the applicant or the defendant may be ordered to pay for the costs of obtaining the prejudgment attachment order which is usually decided at the final determination of the underlying litigation. The applicant however should advance the costs.

14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?

The third party is no longer legally obliged, for example, to pay its debt to the defendant for the duration of the attachment. A third party may also be entitled to rely on set-off where:

(a) the third party’s claim arises from the same legal relationship as the attached claim; and

(b) the claim was due and payable before the attachment was levied. The enforceability of a prejudgment order for third parties outside the Dutch Kingdom depends on whether there is a treaty or a domestic law that expressly provides for its enforcement.

15. What are the consequences of breach of a freezing (or equivalent) order?

Pursuant to article 204 of the Curaçao Criminal Code the withdrawal of goods from an attachment is a criminal offence, punishable with imprisonment up to four years or a fine of the fourth category (approximately US$14,000.00). This applies equally to third parties subject to a third party attachment.

16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?

Yes. As noted in the response to question 6 above, this is particularly relevant for banks who will owe a duty of care to the applicant.

17. Can a freezing (or equivalent) order be enforced abroad?

Prejudgment attachment orders can be enforced within the Dutch Kingdom. Outside of the Dutch Kingdom, this depends on whether there is a treaty or a domestic law that expressly provides for enforcement.

18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?

Prejudgment attachment orders issued within the Dutch Kingdom can be enforced in Curaçao. In the event of such orders having been issued elsewhere, one would in principle have to file a new request for a prejudgment attachment order with the Court in Curaçao.

Contacts

Misha Bemer Partner HBN Law & Tax Oranjestad, Aruba misha.bemer@hbnlawtax.com www.hbnlawtax.com Jonathan Steward Senior Associate HBN Law & Tax Oranjestad, Aruba jonathan.steward@hbnlawtax.com www.hbnlawtax.com

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