Rotterdam District Court on Provisional Measures in Relation to Property Rights

In a judgment of 20 February 2024, the Rotterdam District Court awarded a provisional measure in relation to the transfer of property rights regarding a property situated in Spain on condition that proceedings on the merits would be initiated by the claimant before the competent Spanish court.

Facts

A person identified in the case as [person01] entered into a sale-purchase agreement with a Dutch company, Intercare B.V., regarding an apartment and a parking place situated in Marbella, Spain. The agreement established that the transfer of the property to the purchaser should be carried out by 30 June 2022. The apartment had not been handed over to the purchaser until the date of the trial, although substantial payments were made towards the defendant, Intercare B.V. It is not clear from the judgment how much of the purchase price had still to be paid or whether payments were made by [person01] on invoices towards some bankrupt entities the claimant owned.

At a point [person01] became suspicious that Intercare B.V. wanted to sell the apartment to its director, [person02], or to a third party. [person01] considered initiating court proceedings to prevent this. The contract concluded by the parties contained a choice of court clause for a Spanish court in accordance with Article 25 Brussels I bis. However, the claimant, [persono1], did not lodge a claim with the chosen Spanish court for fear that the procedure would have taken too long and would put the claimant’s property rights at risk. Instead, [person01] brought a claim before the Rotterdam District Court requesting a provisional judgment (vonnis in kort geding). The provisional measure sought was to prohibit Intercare B.V. from undertaking any action that would lead to the transfer of the ownership of the apartment to any other person than [person01] or to establish any limited property right in relation to the apartment, subject to monetary penalty.

The defendant, Intercare B.V., argued that the Rotterdam District Court did not have jurisdiction to deal with this request for a provisional judgment. The decision does not provide specific details on the grounds Intercare B.V. relied on for this point of defense. Alternatively, Intercare B.V. argued that if the court found itself to have jurisdiction, the sale-purchase agreement was actually terminated according to Spanish law at the expiration of the date set for transferring the property rights.

What is interesting for the present analysis is not the situation of the contract, but the analysis of the Dutch court in relation to its jurisdiction for ordering provisional and protective measures concerning property rights.

The Judgment

The Rotterdam District Court retained to have jurisdiction to deal with [person01]’s request based on Article 35 Brussels I bis regarding provisional and protective measures.

The judge appreciated that even though the claim “formulated in the summons by [person01], read in isolation, does not constitute a provisional or protective measure”, the “demand, in view of the rest of the summons, cannot reasonably be interpreted in any other way than being intended to provisionally prevent the apartment from being transferred to a third party or burdened with limited property rights”. Hence, the court issued a provisional judgment in accordance with the claimant’s request.

The provisional measure was conditional upon [person01] filing a claim on the merits with the competent Spanish court within a period of six weeks from the date of the provisional judgment. If [person01] would not file a claim on the merits with the competent Spanish court within the set timeframe, the requested provisional measure would lapse. At the same time, if Intercare B.V. would undertake any action to transfer the ownership of the apartment to any other person than [person01] or to establish any limited property right in relation to the concerned apartment, or both, it would have to pay a penalty of €50,000.00 to [person01].

Assessment

The judgment of the Rotterdam District Court is interesting in my opinion for two aspects, having provisional or protective measures issued in relation to property rights for immovable property situated in another Member State and the reasoning the court used to assess whether it had to deal with a request that qualified as a provisional or protective measure.

The Rotterdam District Court did not have jurisdiction with regard to the main claim regarding the immovable property in Spain or the contract the parties concluded in relation to this property. The parties had made a choice of court. This is an element that the Dutch judge addresses from the beginning. However, based on Article 35 Brussels I bis the judge retains itself competent to consider and order provisional or protective measure based on Dutch law. For this, the judge assesses the two requirements that have to be fulfilled in order for the Dutch court to proceed on the basis of Article 35: the measure ordered aims to prevent future problems of enforcement of a final decision and the measures sought are meant to be enforced in a jurisdiction other than the one that is competent to decide on the merit. The compliance with these requirement is to be tested on a case by case basis, and these requirements were considered to be fulfilled by the court.

The provisional judgment is seeking to preserve a legal situation that would safeguard the claimant’s presumed property rights, without leading to a variation of those rights to be established by another court (Reichert and Kockler v. Dresdner Bank AG, Case C-261/90, para 31). Until a judgment on the merits is issued by the competent Spanish court deciding on Intercare B.V.’s duty to transfer the ownership, the kort geding is meant to prevent a transfer of the rights to a third party or any actions that would diminish the content of those rights with the creation of limited property rights. According to the Dutch judge, although both parties had “completely different stories” about why the transfer did not take place at the established date, both positions appeared reasonable. Therefore, ordering a provisional measure preserving the status quo of the legal situation until a decision on the merits with regard to [person01]’s property rights would be obtained would protect those rights from a later risk of enforcement difficulties. The urgency to act promptly in order to safeguard those rights is not a mandatory requirement, but it can be a relevant element of assessment used by the national judge (see on this also Thomas Garber, ‘Jurisdiction over provisional, including protective, measures’ in Ulrich Magnus and Peter Mankowski (eds.), European Commentaries on Private International Law. Brussels Ibis Regulation, 2^nd Revised Edition, p. 781-782). This appears to have had some weight in the judgment, although it is not an element that is expressly addressed in the analysis; otherwise, it would have been sufficient for the claimant to lodge a request with the chosen Spanish court.

Further, given the lack of clarity as to the situation of the sale-purchase agreement and of the payments made, the provisional measures were made conditional upon the claimant, [person01], initiating proceedings on the merits in Spain within a period of six weeks from the date of the Dutch judgment. This condition is meant to preserve the temporary character of the measures set in the kort geding.

The other requirement to be fulfilled is that the enforcement of the provisional measures has to take place in the Netherlands. Do the measures ordered have a ‘real connecting link’ (Van Uden Maritime BV, trading as Van Uden Africa Line and Kommanditgesellschaft in Firma Deco-Line and Another, Case C-391/95, para. 40) with the territory of the Netherlands? The judgment directly addresses this in the reasoning and links this to the fact the parties are both domiciled in the Netherlands. The provisional measures are in personam provisional measures resulting from a contractual relation and are ordered against a Dutch legal person present within the jurisdiction of the court that adopted the measures (see also Carlos Santaló Gorís, “Article 35” in Marta Requejo Isidro (ed.), Brussels I Bis. A Commentary on Regulation (EU) No 1215/2012, 2022, p. 535-536). On one side, a possible breach of the prohibition to transfer the property rights or to create limited property rights on a third party in relation to a Spanish immovable property would be difficult to enforce against Intercare B.V. in the Netherlands given the immovables are in Spain. On the other side,  the financial penalty the defendant would have to pay would most likely be related to Dutch assets or bank accounts. Thus, at least part of the provisional measures have a real link with the Netherlands. In terms of legal strategy, having a Dutch judgment to enforce a penalty would be faster than needing to obtain a protective measure in Spain and then having to enforce it in case of breach in the Netherlands.

The other interesting element of this provisional judgment is the way the court proceeds to assess whether the request qualifies as a provisional or protective measure, considering it is related to a duty to transfer property rights and not to establish limited property rights in relation to an immovable property. Such claims would normally lead to an expectation that an assessment on the merits is required rather than a provisional or protective measure. The wording used by the claimant in the summons appeared to request an assessment on the merits. However, the Dutch judge considered it had to look further than this immediate appearance of the claim. For this, the judge relied on criteria provided by the Dutch Supreme Court (Hoge Raad) in a recent judgment. In a judgment from 12 January 2024 (ECLI:NL:HR:2024:22), the Supreme court established that in order to interpret what a claimant is requesting from the court, the court should take into consideration not only the wording of the claimant’s request but also the content of the underlying claim, how the defendant understood or should have understood the claim, and the debate that took place between the parties in relation to the claim. Taking all these elements into account, the Rotterdam District Court judge considered that the claim could not be interpreted in any other way than a request for a provisional measure to prevent the property rights on an apartment to be transferred to a third party or to restrict the establishment of limited property rights. This national interpretation criteria explains why the Dutch judge proceeded to interpret the claimant’s request and could frame it as a request for a provisional or protective measure according to Article 35 Brussels I bis.

Personally, I find it would have been interesting to see also some parallel being made with the CJEU judgment in Solvay (Case C-616/10, para. 40-43) for the provisional measures analysis. Although in Solvay the discussion concerned intellectual property rights protected by Article 24(4) Brussels I bis and in the present case the dispute did not regard rights in rem according to Article 24(1) Brussels I bis, but personal rights resulting from what appears to be a breach of a contractual relation, the measures do have an effect on ownership rights in immovable property. This difference in legal grounds based on Brussels I-bis may explain why the reasoning in Solvay was not part of the assessment of the the Dutch court. The case is not an easy one for the characterisation of the rights concerned – in rem or in personam – and the possibility of granting protective measures in relation to rights that appear to be concerning rights in rem rather than in personam.