Right of Retention
Written by:
Hein Kernkamp
Right of retention
Under Netherlands law, a right of retention is the right of a creditor, granted to him in situations specified by law, to withhold the performance of his obligation to return a movable or immovable thing which is in the creditor's possession until his debt-claim has been fully satisfied (Article 3:290 of the Dutch Civil Code).
The right of retention, also referred to as a possessory lien, is a combination of a means of coercion and a right of security. If the garage owner uses the right of retention, the invoice must first be settled and only then will the customer get the car back.
Actual possession required
The person exercising the right of retention must have actual possession. In the example of the garage owner, he received the keys to the car from the owner and placed the car in his garage for repair. If the owner comes to collect the car, the garage owner hands over the car and the keys. If a right of retention is exercised, he refuses to do that.
No possession?
It is sometimes unclear whether actual possession is exercised, in particular in cases where the other party has taken back the good in his possession. This may indicate that there was no actual possession and therefore no right of retention. But it may also be that the good has been unlawfully withdrawn from the right of retention or possessory lien. If the latter is the case, the retentor can reclaim the good, for example in summary proceedings.
The way in which the right of retention is exercised therefore makes quite a difference.
Sufficient coherence
Another requirement set by law is that there is sufficient coherence between the claim and the obligation to issue to justify suspension. If the garage owner still gets € 100.00 because he has won a football bet, there is no such connection.
New owner
The law stipulates that the creditor can also invoke the right of retention against third parties who have acquired a right to the good after his claim has arisen and the good has come under his control. So suppose someone sells his car repaired by the garage while it is still in the garage, then the new owner cannot take the car with him, as long as the bill is not paid.
Old owner
This time the son of the owner went for a ride and he hits a pole. What if the son brings the car to the garage for repair? Can the garage owner also suspend delivery to the father, who owns it?
Yes, that's possible. Article 3: 291 of the Dutch Civil Code provides that in that case he can also invoke the right of retention if:
- his claim relates to an agreement that the debtor was authorized to enter into with regard to the good, or
- he had no reason to doubt the debtor's authority.
VGC Storage & Transport v. GE Seaco
In 2004 the Supreme Court in the case VGC Storage & Transport v. GE Seaco provided a further explanation of the rule laid down in Section 3: 291 of the Dutch Civil Code. The case was as follows.
GE Seaco had rented containers to Norasia Lines, a shipping company that ran into financial problems. Because Norasia failed to meet its payment obligations, GE Seaco has reclaimed the containers.
Thirteen containers were on the VGC site. VGC refused to hand over these containers and invoked a right of retention due to the outstanding claim against Norasia for storage and repair of containers.
Norasia not only rented from GE Seaco but also from other container rental companies and also had its own containers. All those containers, if they were not used for transport, were stored at depot holders such as VGC and, if necessary, offered for repair there.
The question that arose was whether GE Seaco could only get its own containers back after all those costs, which had nothing to do with GE Seaco's containers, had been paid.
The Supreme Court decides as follows. In this case, where a (framework) agreement has been entered into with regard to types of property that belong to a number of (legal) persons, the right of retention vis-à-vis third parties with an older right can only be exercised insofar as it concerns:
- matters to which the claim relates and
- not on other matters that fall under the agreement.
The owners of these latter items need not take into account that their items will be used for the recovery of claims relating to other stored or repaired items. The person who receives goods from others for storage or repair can be expected to take into account that these goods may belong to others than his contractual counterparty and that he keeps a proper record of the work carried out, so he is able to specify which costs relate to that property.
Similar cases
Similar cases occur with some regularity. They are resolved along the same lines, whether or not with the intervention of the judge.
Further information
If you would like to talk to a lawyer about whether and to what extent a right of retention or possessory lien can be exercised in the Netherlands, you can of course contact us to consult with us. We are there to assist you with solving situations with liens and retention rights. Contact us today for a complementary phone call. It is not without reason that our motto is "Your problem, our concern."
More information?
Hein Kernkamp will gladly help you further.
