Breaking News From The Netherlands On Pledges

Summary

In its judgment Rabobank/Reuser of 3 June 2016, the highest court of justice in the Netherlands (Hoge Raad or Supreme Court) ruled that:

• the purchaser of goods delivered subject to retention of title may establish a valid pledge on his conditional property right
• payment to the seller may cause this conditional property right to evolve into full ownership rights on such goods after the purchaser's bankruptcy
• as a result of payment to the seller, the pledgee (rather than the receiver) is entitled to the goods because a valid pledge was established on the goods concerned.

Until now, it was assumed that a valid pledge could no longer be established on account of the pledgor having lost his power to dispose of his property and because the goods formed part of the insolvent estate.