De dwangsom in het burgerlijk recht (BPP nr. V) 2006/:Abstract: Civil Judicial Penalty Payments under Dutch Law

De dwangsom in het burgerlijk recht (BPP nr. V) 2006/

Abstract: Civil Judicial Penalty Payments under Dutch Law

Documentgegevens:

Mr. M.B. Beekhoven van den Boezem, datum 19-12-2006

Datum: 19-12-2006
Auteur: Mr. M.B. Beekhoven van den Boezem
JCDI: JCDI:ADS379165:1
Vakgebied(en): Burgerlijk procesrecht (V)

This thesis explores the rules and regulations governing civil judicial penalty payments (dwangsom) under Dutch law, as laid down in Articles 611a-i Rv (the Dutch Code of Civil Procedure; Wetboek van Burgerlijke Rechtsvordering). A civil judicial penalty payment under Dutch law can best be described as a conditional penalty payment imposed by a civil court at the request of an interested party in order to compel the opposing party to comply with the judgment on the merits. The Dutch regulations on penalty payments find their origin in the Benelux Treaty containing a Uniform Law on Penalty Payments (Benelux-Overeenkomst houdende Eenvormige Wet betreffende de dwangsom). As a result of this Benelux Treaty, identical statutory regulations on penalty payments have been adopted under Belgian, Luxembourg and Dutch law. For purposes of this summary, I will call these rules and regulations as incorporated into Dutch law the 'penalty payment regulations'.

My research is structured based on the three main characteristics of the penalty payment regulations, successively treating its (1) preventative, (2) definitive, and (3) accessory nature. I examine how the penalty payment regulations have been incorporated into the existing structure of Dutch law, and I look at the problems that may be encountered when applying the penalty payment regulations in Dutch legal practice. It should be noted that my analysis of the penalty payment regulations is primarily from a Dutch perspective.

The analysis of the penalty payment regulations and their application in Dutch legal practice raises several separate issues that cannot easily be captured in an encompassing question or topic. I therefore end the discussion of each of the three main characteristics with separate conclusions. However, based on these conclusions, I seek to answer two questions of a more general nature identified at the start of my research. The first question is if the penalty payment regulations need to be modified or supplemented from the perspective of Dutch law or Dutch legal practice. The second question similarly asks if it is necessary to modify or supplement other rules of Dutch civil law in connection with the application of the penalty payment regulations, and, if so, how.

Although I discuss relevant literature and case law from the other Benelux countries where I deem it to be helpful, a comprehensive analysis of the place of the penalty payment under Belgian and Luxembourg law must fall outside the concerns of this thesis. I nonetheless expect some of my findings to be applicable to Belgium and Luxembourg. This will particularly be the case when I discuss any interpretation given by the Benelux Court of Justice, which is in principle independent of national laws, and when I discuss the need to modify the Benelux Uniform Law on Penalty Payments in connection with the nature of the penalty payment or the structure of the penalty payment regulations. In any case, this thesis may help fuel the discussion on penalty payments within the other Benelux countries. A more comprehensive comparative study must be saved for future research. I hope this thesis - insofar as it concerns Dutch law - provides a solid foundation.

Part I The Preventative Character of Penalty Payments

The study into the preventative nature of civil judicial penalty payments begins by addressing the wider context of how penalty payments operate. It continues by focusing on (i) the notion of 'prevention', and what factors are essential for the penalty payment to achieve its preventative objective and (ii) the fact that the penalty payment's preventative objective is played out at different levels (3.1). The particular nature of the penalty payment further raises the question if merely aiming to prevent a party from failing to comply with a judicial order can be qualified as the enforcement of such judgment (3.2). This discussion takes a closer look at the notion of indirect enforcement (indirecte executie), followed by a comparison with committal (lijfsdwang), the only other indirect enforcement measure available under Dutch civil law. In connection therewith, I examine if and to what extent penalty payments and committal have a deterring or preventative effect, or operate as a measure of enforcement (3.3 and 3.4). In addition, it is discussed to what extent penalty payments and committal have a final or definitive character (3.5). Although it is commonly assumed that the primary characteristic of penalty payments is its preventative nature, this part of the study further examines to what extent this enforcement measure also has punitative and compensatory characteristics. With respect to such punitative nature, a closer look is taken at arguments contending that civil judicial penalty payments are in fact a penal sanction (4). With respect to the compensatory nature of penalty payments, the study includes an analysis of the extent to which the historical links between penalty payments and damages (schadevergoeding) are still taken into account today when imposing an order for penalty payments, and to what extent the current penalty payment system still aims to compensate the prevailing party for sustained damages (5).

Drawing on findings in Chapters 4 and 5, it emerges that the connections between civil judicial penalty payments and penal sanctions, and between civil judicial penalty payments and damages, are not sufficient to substantively justify the payment obligation arising on forfeiture of penalty payments. Justification for such payment obligation can only be found in substantive procedural law: in the function of the penalty payment as an enforcement measure. For that reason it is essential that the court optimises the preventative function of the penalty payment by taking into account all circumstances of each specific case. To achieve this goal, courts should have a wide array of judicial powers at their disposal when imposing an order for penalty payments. The discussion of such judicial freedom is inevitably preceded by the discussion of a number of preliminary issues. In that context I take a close look at (i) the requirement that it must be possible to comply with the judgment on the merits, (ii) the requirement that the obligation on the merits claimant wishes to impose and enforce is not a general obligation, but an obligation specifically vis-à-vis claimant, (iii) cases where the nature of the judgment on the merits is incompatible with an order for penalty payments, and (iv) the requirement that penalty payments can only be awarded when claimed by the interested party (6). When examining the question in which cases the nature of the judgment on the merits is incompatible with an order for penalty payments, I pay particular attention to the exception laid down in Article 611a Rv, which states that penalty payments cannot be imposed with respect to monetary claims. This rule has great practical implications, while I believe that there are significant objections against maintaining this exception (6.4.4). I also extensively discuss the requirement mentioned under (iv) above that penalty payments can only be awarded when claimed by the interested party, particularly in light of the Pact that Article 611a Rv and Article 162 par. 3 Rv contain conflicting provisions on this subject (7).

I conclude the first part of my thesis with an analysis of judicial freedom with respect to awarding and determining penalty payments (8), and a discussion of important factors to be taken into account when imposing an order for penalty payments (9).

Part II The Definitive Character of Penalty Payments

The second part of this thesis is dedicated to the definitive character of civil judicial penalty payments. As emerged from Part I, the definitive character of penalty payments guarantees its preventative function. Part II now discusses how on the other hand maintenance of the penalty payments' preventative character requires limits to its definitive nature. The various ways in which the definitive character is restricted under current law are addressed. After first describing the main aspects of the definitive character of penalty payments (11), the various limitations are explored, distinguished by the origin of such limits: pure Dutch laws of civil procedure, and the Benelux Treaty.

When discussing limitations under Dutch rules of civil procedure, I successively examine the consequences of a stay of execution (schorsing) (12), reversal of the judgment (vernietiging) (13), replacement of an interlocutory judgment (terzijdestelling) (14), as well as the role played by certain general concepts under Dutch law, such as abuse of power (misbruik van bevoegdheid), forfeiture of rights (rechtsverwerking), and, more in general, the principles of reasonableness and fairness (redelijkheid en billijkheid) (15). When discussing limitations under the penalty payment regulations, I discuss the rules that govern when the party against whom the penalty payment order is imposed is unable to comply with the judgment on the merits, as laid down in Article 611d Rv (16), becomes insolvent (Article 611e Rv) or deceases (Article 611f Rv) (17).

Finally, I explore the extent to which the definitive character of the penalty payment is limited by prescription (verjaring) once penalty payments are forfeited. On this subject the penalty payment regulations contain specific rules, as laid down in Article 611g Rv, but general national rules governing prescription are also applicable, in particular those governing interruption (stuiting) and extension (verlenging) (or suspension (schorsing)) of the prescription period. From this research emerges that these general rules under Dutch law are not always tailored to prescription of claims for penalty payments (18).

Part III The Accessory Character of Penalty Payments

The third and last part of the thesis examines the accessory character of civil judicial penalty payments. For this characteristic, a distinction must be drawn between the order imposing the penalty payment and the claim for payment of the penalty. The accessory nature of the order imposing penalty payments has to a great extent already been covered in Parts I and II, in the discussion of the preventative nature of the penalty payment and its (limited) definitive character. Nevertheless, two particularities are discussed in connection with the question to what extent the order imposing penalty payments is accessory to the judgment on the merits (20).

Part III is further dedicated to the question to what extent an accessory character must be imputed to the judgment creditor's claim for penalty payments and the judgment debtor's obligation to pay. In this respect I explore the extent to which the claim for penalty payments is accessory to the claim awarded on the merits, and the obligation to pay penalty payments is accessory to the obligation arising from the judgment on the merits. In addition, I examine to what extent penalty payment claims and obligations function as legally independent claims and obligations. With respect to existing claims for penalty payments, principles of insolvency (insolventie) and setoff (verrekening) are discussed (21). Thereafter, I discuss the possibilities for assignment (cessie) (22), attachment (beslag) and pledging (verpanding) (23), and acquittance (kwijtschelding) (24) of a claim for penalty payments, as well as delegation of an obligation to pay penalty payments (schuldoverneming) (25). In each case I distinguish between existing and future penalty payment claims, and existing and future penalty payment obligations.

Conclusions and Recommendations

The three concluding chapters to each part (10, 19 and 26) each contain a summarising conclusion and an overview of practical recommendations that can be distilled from the theoretical findings, as seen from the point of view of both judgment debtor and judgment creditor. Finally, I round off my thesis with the overall conclusion that it is advisable to modify or amend the penalty payment regulations, as well as certain other rules and regulations of Dutch law. I make several recommendations in this respect (27).

Concerning the penalty payment regulations, my recommendations are as follows:

-: The stipulation that penalty payments cannot be imposed with respect to monetary claims contained in Article 611a Rv should be abolished.
-: Article 611a Rv should allow a court to impose penalty payments in conjunction with an ex officio judgment, as provided in Article 162 par. 3 Rv.
-: Article 611b Rv should contain a provision obliging a court to set a maximum when determining penalty payments per infringement or per unit of time.
-: The impossibility criterion contained in Article 611d Rv should be replaced. It would be preferable if the court would assess modification based on the criterion 'if in the circumstances of the case the penalty payment is able to fulfil its role as a means of coercion'. In connection therewith it should particularly be stipulated that penalty payments are not deemed to function as means of coercion if the judgment on the merits does not lend itself for forced execution, or if in all reasonableness no more effort and due care can be required from the judgment debtor than has been observed.
-: If the impossibility criterion contained in Article 611d Rv is replaced as proposed above, the discretionary compentency of the court to maintain the order imposing penalty payments in spite of an impossibility to comply with the judgment on the merits should be abolished. If, on the other hand, the impossibility criterion contained in Article 611d Rv is not replaced as proposed above, the court's competency should be limited to cases where such impossibility is absolute and the penalty payment was determined as a one-off amount.
-: The competent court to deal with modifications of penalty payments under Article 611d Rv should be the court dealing with enforcement, and not the court imposing the penalty payment.
-: The half year prescription period laid down in Article 611g par. 1 Rv should only be applicable to orders imposing penalty payments per infringement or per unit of time.
-: The ground for suspension laid down in Article 611g par. 2 Rv should require 'any other impediment for enforcement of the penalty payment, by virtue of the law, judicial decision or agreement between the parties', instead of 'any other impediment for enforcement of the penalty payment by virtue of the law'.

Concerning other rules and regulations of Dutch law, my recommendations are as follows:

-: Article 162 par. 3 Rv should be abolished. If Article 611a Rv is modified as proposed in the second point above, Article 162 par. 3 Rv becomes superfluous. If, on the other hand, Article 611a Rv remains as is, Article 162 par. 3 Rv should be abolished because its provisions are conflicting with Article 611a Rv.
-: The rules on prescription contained in Book 3 BW (the Dutch Civil Code; Burgerlijk Wetboek) should be supplemented with rules and regulations specifically tailored to penalty payments insofar as it concerns interruption (stuiting) and extension (verlenging) of the prescription. In any case, penalty payments should not become prescribed during enforcement proceedings.
-: A twenty year prescription period comparable to the one laid down in Article 3:324 par. 1 BW should apply to claims for penalty payments of which the indebtedness and scope has been determined by judgment, irrespective if such judgment lends itself for enforcement.
-: The term 'penalty payments' should be deleted from Article 3:324 par. 4 BW.