8.0 Summary

The delivery in advance of future property (levering bij voorbaat van toekomstige goederen) is a key concept of Dutch property law. Delivering future property in advance means that parties perform all the necessary acts required for a transfer or the creation of a right of pledge, in anticipation of the transferor or pledgor acquiring title to the delivered property. The concept is rooted in Article 3:97 of the Dutch Civil Code (Burgerlijk Wetboek, ‘BW’). Its significance lies primarily in the pledging in advance of future property in the context of credit transactions.

Delivery in advance is regarded as a technical and problematic phenomenon of property law. Its application continues to raise questions that are not answered by its rather brief statutory provisions. The aim of this book is to answer these questions by exploring in detail the legal aspects governing the concept of delivery in advance. To this end, this study not only gives an overview of the current state of affairs, but also tries to predict the course of future developments and critically examines the choices made by the legislature and judiciary.

Chapter 2 describes the historical development of the delivery in advance of future property as from the inception of the former BW of 1838. The emphasis lies on the last one hundred years. Dutch law has developed over this period from being fundamentally averse to the concept towards fully recognizing it. The original resistance among the courts and the statutory obstacles have been largely overcome. This development occurred slowly through case law and was then codified in the BW of 1992 before subsequently undergoing further refinement in the courts. The journey taken by Dutch law is in line with similar international developments. The possibility of delivering and pledging future property in advance is nowadays regarded as a fundamental principal of modern property law.

Nevertheless, there remain many limitations to, and uncertainties concerning, the delivery in advance. An important limitation is contained in Article 3:239(1) BW, which limits the undisclosed pledge of future claims to claims that will be acquired directly from an existing legal relationship. Furthermore, uncertainty exists in legal practice as to the possibility of delivering, for example, future shares in companies and future intellectual property rights. However, one may expect that the remaining obstacles and uncertainties will be taken away or reconsidered.

Chapter 3 deals with future property as the object of the delivery in advance. The chapter begins with a consideration of the meaning of the term ‘future property’. This term includes all property not belonging to a particular person, either because such property does not yet exist at all (so-called absolute future property), or because the property does exist but some other party is legally entitled to it (so-called relative future property). The term is therefore defined on the basis of the property not belonging to a particular person. The term future property can be given a clear and general meaning that can be applied throughout private law. A contextual approach by which the definition of the term depends on the relevant legal provision or concept is rejected.

The second part of Chapter 3 includes a detailed analysis of the point of time at which ownership of property is acquired, as a result ofwhich the property loses its future character. It focuses in particular on the point when moveable property, registered claims, shares in companies, book-entry securities and some intellectual property rights come into existence.

In determining the moment that moveable property is created, a central role is played by the common opinion (verkeersopvatting). The assessment in any actual case is largely based on the facts of that case, although some factors are identified as guiding principles.

The determination of the moment that a claim arises is a complex tenet that has been almost completely developed in the courts. In particular, there is no general criterion on which a future claim under an existing legal relationship can be distinguished from an existing, but non-enforceable claim.

The point of time at which a claim arises ultimately depends on the nature of the relevant legal relationship and – within certain limits – to the intention of the parties. The time a claim arises will be determined according to the type of claim involved. The second part of chapter 3 includes a detailed inventory of existing case law on this point. The types of claims are grouped in three categories: claims for compensation (in the widest sense of the term), public-law claims and contractual claims. The existence of claims under reciprocal contracts often, but not always, depends on the performance of the corresponding obligation. In principle, debtor and creditor are free to agree upon the existence of claims arising from their legal relationship. However, such agreements will also influence the positions of third parties with rights against such claims. Accordingly, the intention of the parties to such an agreement should be determined more objectively. It is not purely a matter of what they have agreed, but it also depends on what follows from their legal relationship according to common opinion. In particular, I would argue that the parties are not free to agree to characterise a claim as an existing one when in reality it is a future claim.

Chapter 4 deals with the legal character and legal consequences of delivery in advance.

Delivery in advance is limited in a number of ways. Future registered property (registergoederen) and future property which is prohibited to be the subject matter of a contract, are excluded fromdelivery in advance by virtue of Article 3:97(1) BW. The exclusion of registered property is aimed at preventing the contamination of the public registers. However, this argument is an insufficient justification for the categorical exclusion of registered property. Delivery in advance of (relative) future registered property could be possible without causing too many problems to the current set-up of the public registers. The exclusion of property which is prohibited from being the subject matter of a contract is a superfluous provision due to the causal system for the transfer of property under Dutch law. If parties cannot validly agree upon a contract regarding certain future property, a transfer of such property would already fail due to the absence of a valid legal title for transfer (causa traditionis).

Delivery in advance is also limited by the various requirements for a valid delivery. These include requirements that apply to every delivery, such as the prerequisite that the delivered property must be sufficiently specified (voldoende bepaaldheid). The significance of this requirement for sufficient specification with regard to future property is that the delivered goods are properly identifiable at the time when they are acquired by the transferor. In other words, not the time when the delivery is carried out, but the later point in time when the delivery becomes effective is the decisive moment.

By its very nature, delivery in advance has an anticipatory character. Delivery may be effected – conditionally – right away, in anticipation of a future capacity of ownership of the future property. The requirements for the delivery of the property may be satisfied now, albeit that the transfer is not effected until such time as the delivered future property is acquired by the transferor. A delivery of future property does not result in an immediate transfer or the creation of a right of pledge. However, delivery in advance does immediately create a special property-law relationship between the transferor (or pledgor) and the transferee (or pledgee). By virtue of this legal relationship and as soon as the delivered future property is acquired by the transferor, this property is automatically transferred – but not retroactively – to the transferee, without the necessity of any further or new act. The delivered future property thus passes the estate of the transferor for a legal (or fictitious) second. In the interval between the performance of the delivery in advance and the ultimate transfer, the transferor is bound to the transaction in the sense that he cannot unilaterally free himself from the effect of the delivery. To this extent the position of the transferee of the future property is protected.

The special legal relationship between the transferor and the transferee is susceptible to transmission, either under universal title (overgang onder algemene titel), such as in the case of a legal merger of companies, or, in the case of a pledge in advance, as a result of its dependent character when the secured obligations are assigned to another party.

Delivery in advance should be regarded as a type of conditional delivery. It is a delivery conditional upon the transferor acquiring the delivered goods. This approach offers an adequate integration of the concept within the statutory system of the transfer of property. Its conditional character explains on the one hand the postponed effect of the delivery in advance to ultimately effect a transfer or the creation of a right of pledge and, on the other hand, the immediate creation of a special legal relationship with certain legal consequences, such as its binding force upon the transferor.

Chapter 5 deals in detail with the delivery or pledging of particular types of future property. In particular, it tests to what extent the prescribed formalities permit, or actually prevent, the delivery or pledging in advance. This chapter is limited to certain types of property that are of special significance to the legal practice. It deals, successively, with the delivery and pledging of future moveables, registered claims, shares in companies, bookentry securities and several intellectual property rights.

There are almost no restrictions regarding moveable property. Delivery of future moveables is always possible in the form of an anticipatory transfer of possession by way of a stipulation that the transferor shall hold the future moveables for the transferee (traditio constituto possessorio). However, in certain cases a traditio brevi manu or traditio longa manu in advance is also possible. In the case of relative future moveables it is argued that delivery in advance is even possible by providing the transferee in advance with actual control of the moveable.

More obstacles exist in respect of future claims. In the case of a disclosed assignment or pledge in advance, only the required notification of the debtor forms a limitation insofar as the identity of the future debtor is unknown. An undisclosed assignment or pledge in advance is limited by law (Articles 3:94(1) and 3:239(1) BW) to claims that will arise directly from a legal relationship existing at that time. Although the background to this limitation is usually regarded as a means of protecting unsecured creditors, it must primarily be linked to the undertaking by the legislature to guarantee the continuity of existing financing patterns in the light of the introduction of the new BW in 1992. The precise significance of the limitation is analysed in detail. It especially excludes the assignment and pledge of future claims arising from new legal relationships and claims resulting from the future crediting of a bank account with sums received from third parties. In order to assign or pledge future claims arising from new legal relationships, parties may periodically execute supplemental deeds of assignment or pledge. If so desired, the assignor or pledgor may be represented by virtue of a power of attorney. This applies in particular to the pledging of future claims to secure banking credit. The supplemental deeds of pledge may be executed with one joint deed (verzamelakte) whereby practically all pledgors are represented by the bank on the basis of an irrevocable power of attorney. It is not necessary to specify by name the represented pledgors in such a deed. A generic description by which they can be – retrospectively or otherwise – identified, is sufficient. In the light of these developments, the requirement that a future claim must arise directly from an existing legal relationship in order to assign of pledge it undisclosed and in advance has become a toothless tiger and accordingly it would seem appropriate to dispense with the limitation.

The uncertainty surrounding the possibility to deliver or pledge future shares in companies arises from the specific provisions of Book 2 of the BW. However, a look at the legislative history of these rules reveals that the legislature had no intention whatsoever to make the delivery and pledging of future shares impossible. From a reasonable interpretation of the relevant rules, it would follow that for a delivery or pledge of future shares to be valid it suffices that the relevant shares and relevant parties are identifiable – retrospectively or otherwise – on the basis of the required notarial deed.

In terms of intellectual property rights, the chapter looks at copyright and neighbouring rights (naburige rechten), as well as patents and claims to patent rights. Limitations with regard to future copyrights and neighbouring rights no longer exist. Contrary to common perception, it is possible for an author or artist to deliver in advance their ‘entire works’, including future work. This is not limited by the general requirement of sufficient specification of the delivered property. Future patents and future claims to patent rights can also be delivered or pledged in advance. However, the prescribed deed cannot be registered in the patents register under the current policy of the keeper of this register. Accordingly, the delivery or pledging of future patents and rights under patent applications has a limited third-party effect.

Chapter 6 deals with conflicting claims on future property. The same future property may be delivered or pledged in advance several times to various transferees of pledgees. These competing claims are settled on the basis of seniority, so that an earlier transaction takes priority over a later one. This follows from Article 3:97(2) BW and can be seen as an application of the property-law principle of priority.

The transferor (or pledgor) and the transferees (or pledgees) may, however, agree to reshuffle their claims in a different order than would follow from the priority principle. In the case of multiple pledges of the same future property, it is possible to change – with immediate effect – their mutual priority ranking.

If multiple deliveries or pledges of future property are performed simultaneously, then the conflicting rights will, insofar as possible, have equal weight as between each other. In regard to rights of pledge, this means that if competing pledges are created in advance at the same time, these rights of pledge will have an equal rank. However, attributing equal ranking forms no solution for a double delivery of future property. The respective claims of the transferees must then be settled, so is argued, on the basis of the oldest right to delivery.

The priority principle has no exception in favour of suppliers (in its relation to a lender of its debtor with an earlier right of pledge) in the case of a so-called prolonged retention of title with regard to the proceeds or products of the supplied goods (verlengd eigendomsvoorbehoud). The benefits of such an exception do not outweigh the disadvantages for the desired legal certainty in credit transactions. Furthermore, an exception is unnecessary since the supplier and the lender can voluntarily agree to change their respective priority rankings in favour of the supplier and the supplier may, as a lowerranked pledgee, claim the right as set out in Article 3:234(2) BW to compel the higher-ranked pledgee to first enforce its rights of pledge on other property of the pledgor (beneficium excussionis).

In a limited number of cases it is possible to have a delivery or pledge in advance competing with and an attachment (beslag) of the same future property levied by an individual creditor. In such a case, the relationship between these rights is also settled on the basis of the priority principle.

The conflict between a delivery or pledge of future property and a subsequent opening of (collective) insolvency proceedings is settled in a different manner. The rights of a prior transferee (or pledgee) with regard to future property are in principle thwarted if the property is acquired by the transferor (or pledgor) after the opening of the insolvency proceedings. Accordingly, the priority principle does not apply where there is a conflict of a delivery in advance and the opening of insolvency proceedings in respect of the transferor. If the future property that was delivered in advance is acquired by the transferor or pledgor after the commencement of such proceedings, such after-acquired property then becomes part of the insolvent estate and the transferee or pledgee cannot enforce any property rights against this estate. This exception in respect of bankruptcy (faillissement) is derived from Article 35(2) of the Dutch Bankruptcy Act (Faillissementswet, the ‘Fw’). The same rule applies to the conflict of a delivery of future property with other insolvency proceedings such as a suspension of payments (surseance van betaling) or the statutory debt relief proceedings for natural persons (wettelijke schuldsaneringsprocedure voor natuurlijke personen).

The rule of Article 35(2) Fw is an elaboration of the so-called fixation principle (fixatiebeginsel), which underpins the Dutch Bankruptcy Act, and of the notion that the insolvent estate should not be prejudiced by a prior delivery of future property that was not yet acquired by the debtor on the date the insolvency proceedings were opened. An important sub-element in the context of Article 35(2) Fw is formed by the case law of the Dutch Supreme Court (Hoge Raad) concerning the point in time when claims come into existence. It follows from this jurisprudence that claims whose enforceability still depends on a future act by either the creditor or debtor are usually regarded as future claims before such acts are carried out. This case law of the Supreme Court appears to voice the principle that payments for performances carried out to the expense of an insolvent estate must in principle be served to the benefit of that estate. This ‘quid pro quo principle’ (tegenprestatiebeginsel) is connected with the fixation principle. The value of the performance carried out to the expense of the estate is regarded as an unencumbered claim that in principle reverts back to the benefit of the same estate. The quid quo pro principle is also related to the right of the liquidator in bankruptcy (curator) to choose whether or not to perform under contracts the debtor has entered into before the opening of the proceedings. It is argued that a system in which the point in time when contractual claims come into existence is linked to the carrying out of the corresponding obligation (quid pro quo), promotes the interests of the estate,whilst at the same time ensures that the interests of the other contractual party and the transferee or pledgee of the claim are not unnecessarily prejudiced.

The liquidator in bankruptcy can, in its turn, deliver future property of the insolvent estate. This may serve the interests of the estate, for example, in the context of continuing the business of the debtor, or the granting of credit to the estate. Article 35(2) Fw is not a hindrance to this, nor does it prevent that the liquidator can approve of a prior delivery in advance performed by the debtor to, in spite of the general rule, have effect against the insolvent estate with regard to after-acquired property.

Delivery in advance may, however, also be open to annulment by the liquidator on the basis of fraudulent preference (actio Pauliana). Delivery in advance falls within the scope of this ground for annulment as a legal act performed by the debtor prior to its declaration of bankruptcy. Whether the requirements for a fraudulent preference have been satisfied should be determined according to the point in time when the delivery in advance was carried out, and not the later point in time when the delivery has led to an automatic transfer of the property. Besides countering the delivery in advance itself, the liquidator may also indirectly counter the consequences of the delivery in advance. Where the case arises, the acquisition by the debtor of property that was delivered in advance may be annulled on the grounds of fraudulent preference. One might also include here the acquisition of a claim by virtue of the debtor entering into a contract with a third party or by virtue of the debtor performing the corresponding obligation necessary for a claim to arise. The creditors of the debtor may be prejudiced by such actions if the value of the performance was at the expense of their possibilities of take recourse against the debtor’s assets, and the value of this performance accrues to the assignee or pledgee of the claim.