On 25 April 2012 the Curacao Minister of Justice (’MofJ‘) Elmer ‘Kadè’ Wilsoe submitted an official request in a letter to the American Minister of Foreign Affairs Hillary Clinton to raise the attachment of the bank balances of lottery owner Dos Santos in the United States. Those attachments were made at the request of the Public Prosecutions Department (’PPD‘) in Curacao in connection with a current criminal investigation (the ‘Bientu investigation‘).

However, a Minister should not interfere in a criminal investigation. Strict rules apply to this. And once a criminal case has been filed in court, neither should he interfere in the course of the proceedings. A request as formulated in the letter dated 25 April 2012 by the MofJ, is at odds with the law. The Minister has completely different – dissenting – ideas about this as appears from the report of the MofJ to the States of Curacao (the parliament) dated 11 May 2012.

What is most striking is that the MofJ is fishing opportunistically and therefore selectively in a lucky dip of arguments. For instance on the one hand he relies on a judgment of the court to justify his actions (GEA 4 April 2012, unlawful attachment), and on the other hand he complains that as a democrat “on behalf of the people of Curacao” he needs the consent of the non-democratically elected court before giving directions to the PPD. He even thinks that the consensus Kingdom Act concerning the Public Prosecutions Department (’c-KA PPD‘) must – as the source of all evil – be amended, because the specific direction to be given by him to the PPD first has to be reviewed by the Joint Court of Appeal (Section 13 c-KA PPD).

Because his report to the States of Curacao concludes with the announcement that the legislation will have to be amended in that respect, he makes the issue with regard to Dos Santos a Kingdom problem and therefore he is heading for a direct collision with the Netherlands, which after all wants to supervise law enforcement in the Caribbean (from having quite a suspicious attitude with regard to politics here). Therefore the Netherlands will not soon agree to an amendment of a Kingdom Act in this respect (review by the court of ministerial direction).

Moreover, the MofJ is also mistaken in another area. Even without this Kingdom Act he will often need the intervention of the court. After all, in the conventions on mutual assistance (including with the US) the provision has invariably been included that the request for assistance must comply with the national legislation and this regularly prescribes authorization of the court in connection with the application of means of coercion in the other country. This is even explicitly provided for in the Agreement between the Kingdom and the US with regard to seizures and confiscation of (in short) criminal proceeds (1992; see Section 2 subsection 2 and Section 3). So sometimes the MofJ will be faced twice with a review by the court: in connection with the review with regard to a political direction, and in connection with the review with regard to the prosecution demand of the Public Prosecutor.

The MofJ is correct in saying that as MofJ he has been appointed as the competent authority in mutual assistance matters (with the US). But he is not correct if from this he draws the conclusion that the power of prosecution of the PPD, which must be executed in the other country, belongs to “a personal authority or competence of” the MofJ, in other words that the MofJ himself would have authority and would therefore have his own legal title to request attachment (etc.) in the other country. This constitutes absorption of a PPD power (with authorization by the court).

The only authority the MofJ has – and this only has he delegated to the Procurator General – is the power to pass on (in the past: via diplomatic mail) the request of the PPD (or another judicial authority within the sense of the convention) to the requested country. This is also evident from a diplomatic memo to the US Embassy in The Hague (1983) in which Article 14 of the Mutual Assistance Convention is further explained with regard to the concept of ‘competent authority’: the requests for assistance submitted in accordance with national legislation, usually originate from the PPD or the court but will be “passed on” by the MofJ.

This does not alter the fact that the MofJ is and remains politically responsible for mutual assistance matters. This responsibility entails that he can give ‘general‘ directions about the manner in which the international contacts must be conducted. The MofJ can even give a ‘specific‘ direction, but he should first have this direction reviewed by the Joint Court of Appeal as to whether this direction is in accordance with ‘the law’, according to Section 13 subsection 2 of c-KA PPD.

Any other intervention by the Minister of Justice which prevents the Procurator General from executing legal provisions with regard to international mutual assistance matters is prohibited by criminal law (Section 2:344 Curacao Penal Code).

The objection of the MofJ against this ‘undemocratic’ judicial review is based on the argument that this review does not exist in the Netherlands (and in Aruba). That too is not correct, at any rate not completely correct. If the MofJ gives a specific direction in the Netherlands – which until now only happened once (in a euthanasia case) – it must be included in the criminal file so that the court is able to take note of it. If this is a direction not to prosecute, parliament must be informed of it (Section 128, subsections 5 and 6, of the Dutch Judiciary Organization Act).

Because the MofJ considers this obligation of judicial review inconvenient, he tries to circumvent this by describing his intervention invariably as a ‘general instruction‘ (for which no judicial review within the sense of the c-KA PPD is required). This play on words is very transparent. The MofJ can hardly claim that correcting an act of the PPD – in his opinion based on ignoring a judgment in a concrete case – can be considered equivalent to the ‘general instruction that the PPD must abide by the law‘. That appears to me the statement of the year.

It is also rather questionable whether the reference to the Curacao Code of Criminal Procedure corresponds with regard to the requirement of a ministerial authorization in assistance matters involving political and fiscal offences: the respective Section 560 of the Code of Criminal Procedure only relates to requests from another country. For that reason in any event the ‘illegality’ of the prosecution of ‘one single lottery holder’ cannot be justified.

In short, for the time being everything points to the fact that the MofJ is abusing his powers by actually appropriating a prosecution power of the PPD and thereby putting the Procurator General under heavy political pressure. Formally he is acting in an inappropriate manner legally – the way in which the PPD executes a judgment is a matter between the judicial authorities of both countries – and in addition contrary to the political custom (that a MofJ should refrain from becoming involved in an individual criminal case unless he has very strong arguments). He should in any event avoid the appearance of entanglement of personal or as the case may be party-political interests. Why is the MofJ so worried about that ‘one lottery holder’?

What would be wise in the deadlock now created? Formally the PPD could apply to the Joint Court of Appeal for a ‘judicial provision due to urgent necessity’ (Section 43 subsections 1 and 2 of the Curacao Code of Criminal Procedure). The application could entail that the MofJ – without very good reasons – should refrain from intervening in an individual case with regard to the law on mutual assistance in such a way that the international progress of prosecution procedures of the PPD are prejudiced by this. Because although the PPD is obliged to comply with the orders of the government, the PPD can indeed review such an order against the law. In a case in Aruba in 1996 the opposite situation occurred: the refusal of the Procurator General to prosecute in Aruba in accordance with a ministerial order; the Procurator General indeed could not refuse to submit a request for assistance to the US in order to obtain incriminating evidence against X. In the present Bientu case the MofJ is trying to achieve the opposite.

The PPD can obviously adopt a wait-and-see attitude and wait until the MofJ submits his intention to give a special direction for review to the Joint Court of Appeal. Both parties would then be able to put forward all their arguments to the Court of Appeal.

Karel Frielink
Attorney (Lawyer) / Partner

(16 May 2012)

Click here for the Dutch text of this posting

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The Court of First Instance of Curacao passed judgment on 23 January 2012 in the case of Selikor N.V. versus Drs. Ivar Asjes (JOR 2012, 105). This case is a follow-up to the judgment of the Joint Court of Appeal of the Netherlands Antilles and Aruba of 10 August 2010, JOR 2010, 296. In a nutshell the case boils down to Asjes being appointed as the managing director of waste processor Selikor N.V., but that this is an appointment pushed through politically without an open job application procedure. This deprived at least six of Selikor’s members of staff of the opportunity to apply themselves for the position of managing director. This purely political appointment has subsequently been reversed by the court.

In the case which led to the judgment of 23 January 2012 Selikor claimed that Asjes be ordered to refund the management fee paid to him because these payments were made undue. This claim has been awarded. Not only did the court annul the resolution for the appointment but also the resolution to enter into an employment contract with Asjes. Such an annulment has retrospective effect and thereby the basis for the payments by Selikor to Asjes had disappeared.

It is noted aside that it has been legally provided for in Curacao that the legal relationship between a managing director and the legal entity is not considered or not also considered as an employment contract (Section 2:8 subsection 5 of the Curacao Civil Code). Nevertheless, in practice agreements are often formed which are referred to by the parties as employment contracts. The parties in an agreement are free to declare applicable by analogy certain or all private law provisions with regard to employment contracts. Moreover, the provisions with regard to contracts for professional services can be relevant. When the parties have not arranged anything it speaks for itself that a court required to assess a case seeks a connection with those provisions. For that matter, a managing director can indeed be allowed to be employed by another legal entity, for instance a group company. Therefore, unless explicitly agreed otherwise, a managing director cannot invoke the dismissal protection inherent in labor law.

Asjes invoked the closing sentence of Section 2:22 subsection 2 of the Curacao Civil Code. This Sections reads as follows: ‘If the resolution is a legal act of the legal entity which is aimed at a counterparty, or if it is a requirement for the validity of such a legal act, the nullity or annulment of the resolution cannot be held against that counterparty, if he did not know or if he did not have to know the defect attached to the resolution. Nevertheless, the nullity or annulment of a resolution to issue shares to the intended shareholder and a resolution to appoint a managing director or a supervisory director can be held against the appointed official; however, the legal entity must compensate the loss of the counterparty if he did not know or did not have to know the defect in the resolution.‘

By invoking the quoted subsection Asjes claimed compensation. Since a political appointment was involved and also considering the circumstances as described in the judgment (ground for decision 3.6 and 3.7) Asjes should have taken into account from then on that his appointment would be controversial and that it would be submitted for review by the court. Asjes has a point to the extent that the Court of First Instance held in another case that the court has not been charged with an independent duty to assess the unreasonableness or undesirability of the policy of the government as shareholder to appoint new managing directors and supervisory directors in government companies at each political change of the guard (see in this connection the annotation referred to above). It was actually inferred from that judgment that political appointments as such could withstand the test of legal criticism.

On the other hand it was only a judgment in first instance and there had already been serious criticism of this policy for a long time. It is also relevant that in 2005 the OECD issued the Guidelines on Corporate Governance of State-Owned Enterprises which are effective as an international benchmark and which for instance provide that the management board must be composed such that it can operate objectively and independently. Moreover, in this connection the interests of third parties played a role, namely of the members of staff who were deprived of the opportunity also to apply for the job. The shareholder of Selikor was not the Island Territory of Curacao but the Stichting Implementatie Privatisering (StIP) foundation. The establishment of StIP in 2000 was meant to prepare for the privatization of government companies. This form had been chosen in an effort to reduce the direct influence of politics on government companies.

Therefore contrary to what Asjes has suggested, the importance of good corporate governance was already acknowledged in the year 2000. Finally, it appears from the facts that Asjes’ appointment and in particular the formation of an employment contract with him had been pushed through quite hastily, also in order to avoid a judgment being passed one day later still being able to throw a spanner in the works. In ground for decision 3.6 this is expressed thus: ‘The outcome of that judgment was sensed and the apparent intention of signing the employment contract was to render that judgment toothless in advance‘. Therefore the Court has considered rightly that Asjes should have taken into account a defect in the resolution that could give rise to annulment. In other words: Asjes could not assume a lawful resolution passed in good faith and consciously accepted the risk that the resolution would be annulled. Therefore this risk should be at his expense and he cannot shift this onto the company.

According to the law of Curacao and of the Netherlands the resolution for the appointment can be annulled due to it being contrary to the principles of reasonableness and fairness. Selikor’s members of staff belong to a circle of persons as meant in Section 2:7 subsection 1 of the Curacao Civil Code (in the Netherlands Section 2:8 of the Dutch Civil Code). There is a provision in the Netherlands that is comparable to Section 2:22 subsection 2 of the Curacao Civil Code: Section 2:16 subsection 2 of the Dutch Civil Code.

Apart from the fact that the resolution for the appointment can be contrary to the provisions in the Articles of Association with regard to the appointment of managing directors, according to the law of the Netherlands as well as that of Curacao it is likewise imaginable that in the case at hand there could be a wrongful act by Selikor against the members of staff by depriving them of the opportunity to apply for the job and that Selikor could likewise have acted wrongfully against them by failing to dismiss the appointee (see Supreme Court 29 November 1996, JOR 1997, 28 in the case of Chipshol).

Karel Frielink
Attorney (Lawyer) / Partner

(12 May 2012)
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The Antilliaans Dagblad today published the letter sent by Minister of Justice, Elmer ‘Kadè’ Wilsoe (PS), to Hillary Rodham Clinton and Eric H. Holder on 25 April 2012. From this letter it follows that Wilsoe tried to interfere with the investigation by the Public Prosecutor (OM) into Robbie Dos Santos, Ponsford Overseas and Tula Finance (the ‘Bientu’ investigation).

In an unrelated matter, Wilsoe stated in the Amigoe (7 July 2011): “The law offers me the possibility to give general instructions to the Attorney General in connection with investigations or prosecution of criminal cases. As indicated from the beginning, I do not believe in class justice. All are equal irrespective of one’s position. I will let the investigation [into several Ministers -KF] take its course and not participate with speculations or insinuations in this matter.”

Asked about the letter regarding the ‘Bientu’ investigation mentioned above, only a few days ago Wilsoe stated that he has no authority whatsoever to interfere with any criminal investigation and that he had not interfered in any way. Today it became clear that the Minister has been economical with the truth.

Why did he write the letter in the first place? Who asked him to write this letter? Why did Wilsoe decide to interfere? Who actually drafted the “US attorney-style” letter?

Karel Frielink

(8 May 2012)

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There is a large legal community in the Dutch Caribbean. Until 2007 there was no website with news and general information about the legal system of the Dutch Caribbean, its institutions and its practitioners. Dutch Caribbean Legal Portal aims to fill this void and strives to be the complete database of Legal News, Contacts and Documents for the Dutch Caribbean.

The DC Legal Portal has a wide variety of members and contacts within the legal and financial areas of the Dutch Caribbean. It has a database of more than 400 legal organizations, lawyers and associations, trusts and other legal & financial institutions in the Dutch Caribbean. On the Portal under “Law firms and services” you will find addresses, phone numbers, e-mail addresses, and sometimes additional information of these organizations.

The Portal also provide the latest news, background information, a databank with laws and ordinances and the agenda of the Court of Justice. The Portal continuously tries to expand the different fields on which information is offered and keep all the information duly updated.

Obviously, this website is distinguishing, because it is the only website offering this type of information. In addition, the Portal continuously tries to expand the different fields on which information is offered and keep all the information duly updated. The main purpose is to provide information to the visitors about the legal system of the Dutch Caribbean and the organizations that are working with this system.

The site is aimed at national and international organizations and individuals. In order to give access to a broad audience, the language of the site is English. However it may occur that some of the laws and documents you find on the site are in Dutch, since this is the official language of Curacao.

The website is owned by profit and non profit legal organizations on Curacao. The editors and webmaster act independently.

Source: DCLP

(7 May 2012)

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On 30 March 2012 the first petition for an inquiry procedure under the new law was dealt with by the Joint Court of Justice of Aruba, Curacao and St. Maarten, and of Bonaire, St. Eustatius and Saba. Karel Frielink and Dinesh Mishre of Spigthoff had the honor of acting as lawyers for the defense … and with success! This decision is very important for the companies in Curacao and especially for the local trust offices.

As of 1 January 2012 the amended Corporate Code (Book 2 Civil Code) of Curacao entered into force. The new legislation introduces a so-called inquiry procedure for, amongst others, limited liability companies and foundations. The inquiry procedure (a.k.a. investigation proceedings) can result in a court order for an investigation into the affairs of a corporation.

Shareholders of limited liability companies may file a petition with the Joint Court if they hold at least 10% of the equity and/or voting rights. As far as foundations are concerned, any person with a special interest can file a petition, if prior to the petition, an enterprise has belonged to the foundation. There has been some uncertainty as to what a ‘foundation to which an enterprise has belonged’ means. An enterprise is, in short, ‘an organization of labor and equity with the aim to make profit’.

In this matter, the plaintiff, a financier of a Curacao (limited liability) company, requested financial information regarding said company from the defendant, a foundation that held all shares in the company for administrative purposes. The plaintiff was of the opinion that as that the foundation (the sole shareholder) and the company were managed by the same trust company, the shareholder in fact managed the company and should provide the requested information.

The foundation had denied the request and defended itself in court stating that a financier was not an interested party that could request inquiry proceedings and even if it was entitled to such request, there were no valid legal grounds for the court to allow an investigation into the foundation. The foundation was merely an administrative body holding the shares for which certificates had been issued and it did not determine or interfere with the business of the company.

Interestingly, the case was initiated under the old Book 2 Civil Code in October 2011 and the Court of First Instance of Curacao denied the requests of the plaintiff for an investigation in its decision of 15 December 2011. In appeal the Joint Court determined that considering the fact that the new inquiry procedure legislation was effective as of 1 January 2012, the case would be treated as (1) an appeal of the initial procedure and (2) a new request under the new legislation.

In its (appeal) decision of 17 April 2012 the Joint Court determined that under the new law on inquiry proceedings, no petition can be filed for an investigation at a foundation to which no enterprise has belonged for a period of three years prior to filing the petition. According to the Joint Court this means that the foundation needed to have conducted economic activity with the aim to make profit. This was not the case. The Joint Court considered that the aim to make profit by the trust company (the manager of the foundation) could not be attributed to the foundation. Furthermore, the fact that the foundation collects dividends was not an aspect of making profit, as the foundation collects the dividends for the holder of certificates and the dividends are not part of the equity of the foundation. For these reasons, the request of the plaintiff under the new legislation was inadmissible.

In the appeal procedure under the old legislation, the Joint Court denied the request of the plaintiff for the following interesting reasons. The Joint Court considered that the mere fact that the managing director of the foundation was also the managing director of the operating company, did not mean that the foundation was in fact the managing director of the operating company or that it determined the strategic policy of the company. Further that the separate legal entities, the foundation and the limited liability company, could not be equated (vereenzelvigd) with each other solely for that reason. Furthermore, the fact that the foundation had certain voting/approval rights as a shareholder and access to certain documentation in that capacity did not make any difference.

Many company structures are so-called holding structures whereby a holding company or foundation holds all shares in the (operating) company. Often these holding companies/ foundations are managed by local trust companies. For foundations the decision means that if a foundation does not conduct economic activity with the aim to make profit, an investigation may not be requested.

For holding companies the appeal decision means that the mere fact that the holding company holds all shares in a subsidiary and both companies have the same managing director, this does not mean that the holding company determines the (strategic) policy of the subsidiary. Therefore, as long as the holding company acts in its capacity as shareholder, the Joint Court is of the opinion that no investigation may be held at the holding company.

In the years to come the Joint Court will deal with many corporate governance issues and will play an important role in the resolution of various disputes concerning corporations. The Joint Court will become the forum of choice for litigating shareholders’ disputes, mismanagement matters, disputes between (managing and supervisory) directors and contests for corporate control.

Karel Frielink / Dinesh Mishre
Attorneys (Lawyers)

(2 May 2012)
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The Central Bank of Curacao and St. Maarten is responsible for the care of the financial system’s health, effected through on and off site inspections of the banking and other financial institutions authorized to operate in Curacao and St. Maarten.

The National ordinance on the supervision of banks and credit institutions provides for requirements with regard to the prudential supervision in general. Such prudential supervision sees to the liquidity and solvency position of a bank.

The legislation provides for reporting requirements that need to be submitted to the Central Bank of Curacao and St. Maarten. On the basis of such reports and accounts the Central Bank has the authority to give further specific instructions with regard to the business operation of the respective bank involved.

Karel Frielink
Attorney (Lawyer) / Partner

(23 April 2012)
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ELEQT and Blue Bay Events present the 2nd Spigthoff Night Golf Tournament. 11 Teams of 6 players play 5 holes by night on illuminated fairways. Come and see this spectacle!

The proceeds of this night (including the auction) will go to support the Curacao athletes who want to participate in the 2012 Olympic Games.

When: Saturday, May 5, 2012

Where: Blue Bay Golf Resort Curacao

Time: 17:00 – 22:30 (players); 18:30 – 22.30 (spectators)

Charity Auction & Prize Ceremony: 22:00 – 22:30

Admission spectators: ANG 25 all in (drinks & snacks)

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In the Netherlands (the European part of the Kingdom), when an undertaking (onderneming) is transferred from one person or entity to another, by operation of law the employees have an employment relationship with the new owner on the terms and conditions agreed with the old employer. For example, such a transfer of the employment relationship may occur in the case of a take-over or merger. Following the transfer, the new owner must respect all existing employment terms and conditions, including the terms of any applicable collective labor agreement. In principle, the rules with respect to transfer by operation of law do not exist if the undertaking is acquired from an owner that has been declared bankrupt.

Curacao and St. Maarten do not have similar rules to protect the rights of employees. In Curacao and St. Maarten, statutory provisions protecting employee rights in the event of a ‘transfer of an undertaking’ do not exist. In other words: the concept of an automatic transfer of employees (and their rights) does not exist under the laws of Curacao and St. Maarten.

On April 2, 2012, in a surprise decision, the Court in First Instance in St. Maarten ruled differently. The case involved the Pelican Resort. The Workers Institute for Organized Labor (Wifol) had a collective labor agreement with the former owner of the resort, the Tenant’s Association Pelican Resort Club (TAPRC). When the resort was sold in foreclosure, the new resort owner, Simpson Bay Resort Management Company (SBRMC), asserted that it had no connection to the prior resort owner and therefore did not have an obligation to employ all 182 Wifol members under TAPRC’s labor agreement. Wifol went to court two separate times in injunction proceedings and won, however the appellate court reversed or stayed the lower court decisions. Wifol then brought the most recent case as a regular proceeding, and not as an injunction case.

In rendering the April 2, 2012 decision, the court in first instance ruled that Simpson Bay had to assume Wifol’s collective labor agreement, adding that Simpson Bay must pay all back wages to all the Wifol employees, regardless of whether they still work at the resort, and a $50,000.00 fine within two days.

According to the court, if the owner of an undertaking sells and transfers his undertaking to a new owner, while the employees without protesting continue to carry out their duties, it is to be held that the employment agreements were tacitly transferred from the old to the new owner. The court used this rationale to find that the new resort owner was bound by the terms of Wifol’s collective labor agreement.

This ruling raises several questions. First, St. Maarten labor law following the former Netherlands Antilles labor law answers the question “who must be considered an employer” based on a firm rule in the contractual law and that is by looking at which parties entered into an agreement. The party who entered into an employment agreement is the so-called formal employer. The formal employer is responsible for all obligations stemming from individual and/or collective labor agreements. Employees do not automatically go into the service of a possible new operator, owner, company or person who starts operating the same business as the formal employer. This means that unless the new operator or new owner offers the employees employment and they accept, in principle the employees remained employed by the formal employer, even if the new operator starts to exercise authority over the employees as the so-called material employer because the employees in question simply remained in the business that the new operator/new owner started operating.

This cardinal principle of our labor law that the formal employer remains responsible for the individual and collective labor agreements with the employees, is only crossed in case it is established that there is “misuse of corporate identity” between the formal and the material employer or another form of a tortuous act, in which case it is – under certain conditions – possible to unify the formal with the material employer, thereby making the material employer responsible for the individual and/or collective labor agreements, on the same foot as the formal employer. The case law clearly shows that exceptional circumstances are required to unify the formal employer with the material employer.

In its judgment dated November 4th and 7th, 2011, in the injunction case, the Court of Appeals specifically ruled that in the Pelican Resort case there is no misuse of corporate identity or a tortuous act and as such no grounds to unify SBRMC with the formal employer Pelican Resort Club, The Management Company N.V. (PRCMC).

The transfer, in the opinion of the court, by the formal employer PRCMC of its business to another party is governed by article 6:159 of the St. Maarten Civil Code. This article requires a deed of transfer. Next, the formal employer is compelled to procure for a correct termination of the employment agreements with its employees. The buyer (new owner) can opt to enter into labor agreements with the employees and to that extent make offers to the employees as per the terms deemed prudent by the buyer/new owner. The buyer does not have any form or sort of obligation to maintain the employees of the previous employer in its service.

In its April 2, 2012 ruling the court assumed that it was not likely for the employees to work on behalf of the previous owner for a short period of time following the take-over of Pelican resort. The court further assumed that the employees must therefore have formed the same employee-employer relationship with the new owner as with the previous resort owner, and under the same terms. In making these assumptions, the court did not determine:

1. whether or not all employees continued to work;
2. if they entered into new agreements with the new operator following possible job offers by the new operator; and
3. if the employment agreements between the employees and the previous owner have been terminated.

In other words: without considering whether each employee actually had a particular relationship with the new owner, the court also ordered SBRMC to retroactively pay all of the former workers.

And what about the collective labor agreement? Given the fact that the concept of an automatic transfer of employees (and their rights) does not exist under the laws of Curacao and St. Maarten, and that the new owner can only become employer if in relation to particular person he either has concluded an employment agreement or he acts if he is the employer (i.e. giving instructions, paying salary etc.), what is the basis for the court’s ruling that SBRMC is obligated to fulfill the employers’ obligations laid down in the collective labor agreement?

The court’s ruling came much as a surprise. In my opinion, the ruling goes beyond applying and interpreting the law. The court should have limited itself to the question as to whether each and every individual employee (i) was offered, and subsequently accepted, an employment agreement with the new owner, or (ii) whether or not there exist, in case it is determined in a substantiated matter that the employees are working for the new owner as a consequence whereof the new owner should be considered the material employer, grounds to establish that the previous owner (formal employer) must be unified with the new owner (material employer). In my opinion the lower court failed to adduce sufficient reasons for its finding that the new owner is also the subsequent employer of all the employees of the former owner.

This court ruling makes it almost impossible to initiate a reorganization process in which, through the transfer of a business to a new owner, costs – and in particular labor costs – can be reduced. Let’s hope that the appeal court will be given the chance to review this lower court decision soon. Appellate proceedings in Curacao and St. Maarten (as in the other islands of the Dutch Caribbean) provide for a full review of the appealed decision: the grounds on which the appeal court can reverse the original judgment are not, as in certain other jurisdictions, limited to procedural matters.

Karel Frielink
Attorney (Lawyer) / Partner

(4 April 2012)
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Under Curacao law the transfer of ownership requires transfer of title (levering) pursuant to a valid legal title (geldige titel) by a person who has the power of disposal over the asset (beschikkingsbevoegheid) being transferred. The rules on transfer of title (levering) are equally applicable to the creation of a right of pledge over receivables. Until recently, the Curacao Civil Code, allowed for the following two methods of transfer of title (levering) of receivables:

1. By means of a deed of assignment (cessie) signed by the assignor and assignee or by the assignor only and notification (mededeling) thereof to the relevant debtor(s), meaning that the assignment is only perfected after the assignment is notified to the debtor (the so-called disclosed assignment (openbare cessie). Without such notification legal ownership shall not have been transferred from the assignor to the assignee. Notification after the assignor has been declared bankrupt will thus not prevent the receivables from falling in the bankruptcy estate of the assignor.
2. By means of a deed of assignment (cessie), without notification to the debtor being required, if the receivables were being assigned as security for the repayment of debt and provided that such receivables exist at the time of assignment or result directly from an existing legal relationship (rechtstreeks zullen worden verkregen uit een bestaande rechtsverhouding) (the so-called undisclosed assignment; stille cessie). However, notification is still required in order for debtors to be able to validly discharge their obligations (bevrijdend betalen) under the receivables by paying the assignor. No additional perfection requirements apply. In this case, the receivables will not fall in the bankruptcy estate of the assignor and the debtor may continue to validly discharge its obligations (bevrijdend betalen) under the receivables by paying the (bankrupt) assignor.

As of January 1st 2012, the Curacao Civil Code has been amended to the effect that for an undisclosed assignment it is no longer required that the receivables are being assigned as security for the repayment of debt. Notification is thus no longer necessary for the perfection of an assignment that is a true sale. This is also the case in the Netherlands. However, there the deed of assignment needs to be in notarial form or it has to be registered with the tax authorities for the assignment to be perfected. As set out above, without notification debtors will still be able to validly discharge their obligations (bevrijdend betalen) by paying the assignor.

Receivables may now be assigned, regardless of the purposes of such assignment, by virtue of a private deed (without any notarial or registration requirements), without any notification(s) being required for the perfection of the assignment. In the event of bankruptcy of the assignor the receivables will not fall in the bankruptcy estate of the assignor. The debtors will need to be informed as soon as possible. Otherwise, they may continue to validly discharge their obligations (bevrijdend betalen) by paying the bankrupt assignor.

The abolition of the notification requirement has benefits for (commercial) transactions where a true sale is required and notification to the debtors of the underlying receivables is undesirable, impractical or impossible. Examples include factoring arrangements, securitizations and the transfer of receivables to a trust.

Karel Frielink
Attorney (Lawyer) / Partner

(4 April 2012)
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In this memorandum the possibilities for Sharia’a compliant aircraft financing by registering the aircraft in Aruba and using a Curacao Trust or Private Foundation are outlined (click here).

Aruban and Curacao law make it possible to ensure that the acquisition of aircraft and income distribution is tax neutral and in compliance with Sharia’a laws.

Spigthoff is a member of ISFIN: The World’s Leading Islamic Finance Lawyers.

Karel Frielink

(21 March 2012)
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