True Sale Problems in The Netherlands Solved

Introduction
On May 19, 1995 the Netherlands Supreme Court rendered a decision (the "Sogelease Decision") which took away most of the uncertainty surrounding the validity of sale and leaseback transactions involving assets located in The Netherlands (including aircraft registered as to nationality in The Netherlands).

The uncertainty stemmed from Section 3:84(3) of the Netherlands Civil Code ("NCC") which invalidates transfers of title for purposes of security or lacking the purpose of bringing the property into the estate of the transferee.

This clause was enacted to enforce the closed system of security rights under Netherlands law which provides exclusively for rights in rem, i.e. the right of pledge (pandrecht) in respect of moveable assets and intangible property and the mortgage (hypotheek) in respect of "registered" property (i.e. real estate, sea-going vessels and aircraft registered in the title record).