Dutch Supreme Court provides clarification on the transfer of receivables from a bank to a non-bank

On 10 July 2020, the Dutch Supreme Court delivered two judgments in which it answered prejudicial questions from the court of Amsterdam which are of great importance for the financing practice.

The prejudicial questions were raised in two similar proceedings. In both proceedings, a bank assigned receivables resulting from commercial real estate loans to a non-bank. The borrowers disputed the assignment and took the view that the receivables could not be assigned in view of the personal relationship they had with the bank.

The court of Amsterdam referred four questions to the Supreme Court for a prejudicial ruling. The first question concerns whether the nature of a bank's receivable from a customer precludes this receivable being transferred to a non-bank and that it is considered non-transferable within the meaning of Section 3:83 (1) of the Dutch Civil Code. According to the Dutch Supreme Court, the nature of a receivable of a bank from a customer arising from a loan agreement does not prevent this receivable from being transferred by a bank to a non-bank. This applies also if the client is a consumer.

In the second prejudicial question the Supreme Court is requested to rule on whether the non-bank to which a receivable arising from a loan agreement has been assigned by a bank is subject to a duty of care and, if so, how that duty of care relates to the rules of public law applicable to a bank and the duty of care incumbent on a bank. The Dutch Supreme Court has ruled in this respect that a bank's duty of care does not rest as such on the non-bank as a result of the assignment. If a duty of care on the part of a bank limits the content of the receivable, the receivable can only be assigned with the same limited content. In addition, the borrower can invoke the defences against the non-bank that he would have against the bank. After the assignment, the legal relationship existing between the non-bank and the borrower is governed by the principles of reasonableness and fairness.

The third prejudicial question asks whether, for the purpose of answering the first two prejudicial questions, it matters whether the customer has (fully) fulfilled the loan agreement and whether the bank has terminated the banking relationship. According to the Supreme Court, this is not relevant for answering the first two prejudicial questions.

In the fourth prejudicial question the Supreme Court is asked to address which rights the customer can exercise vis-à-vis the assigning bank if the actions of the non-bank to which receivables have been assigned deviate from what could be expected from a bank on the basis of the rules of public law applicable to a bank and the duty of care incumbent upon a bank. Since the answer to this question was not necessary to decide on the claims in the present proceedings, the Dutch Supreme Court did not answer this question.