Karel’s Legal Blog

Limitations apply to a foreign insurance company

A foreign insurance company, i.e. a company not having its seat in the Netherlands Antilles and not operating through any kind of branch office (including a local representative), is allowed to insure a risk located in the Netherlands Antilles (for instance Curaçao), provided this occurs on an incidental basis (Explanatory Memorandum NOSI, Parliament of the Netherlands Antilles, Session 1987-1988, No. 3, p. 7).

In such cases, no license or registration requirements apply. The point is, however, that it is up to the Central Bank to decide whether this criterion has been met. Unfortunately there are no policy guidelines or guidance available (e.g. no case-law) on what is considered ‘incidental‘. It is likely that, amongst other things, both the number of insurance policies concluded as well as the total of the (yearly) premiums will be of relevance.

Although the Explanatory Memorandum only mentions ‘risks situated in the Netherlands Antilles’, I see no justification for the view that ‘risks situated outside the Netherlands Antilles’ are thus excluded. In my opinion, a foreign insurance company (as defined above) is allowed to insure a risk in or outside the Netherlands Antilles, for an Antillean client, provided this takes place on an incidental basis.

According to Article 44 NOSI, the Minister of Finance of the Netherlands Antilles may, at the request of the Central Bank, issue an order to prevent a particular foreign insurance company from offering its services in the Netherlands Antilles. It may reasonably be assumed that such an order will not affect any insurance agreements previously concluded.

Karel Frielink
Attorney (Lawyer) / Partner

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A license is required

The insurance business in the Netherlands Antilles is regulated by the National Ordinance on the Supervision of the Insurance Business 1990 (Landsverordening toezicht verzekeringswezen, the “NOSI”).

The NOSI divides the insurance business into life insurance and indemnity insurance products. Indemnity insurance products are in turn divided into a number of categories: (i) accident and health insurance; (ii) motor vehicle insurance; (iii) maritime, transport and aviation insurance; (iv) fire insurance and other property insurance; and (v) other indemnity insurance.

Any person or entity wishing to conduct either life insurance or indemnity insurance business in or from the Netherlands Antilles must first obtain a license from the Central Bank. The NOSI does not allow insurance business other than life insurance or indemnity insurance to be carried out, but does allow reinsurance, for which no license is required.

The NOSI distinguishes between foreign and Netherlands Antilles insurance companies. Licensed Netherlands Antilles insurance companies must have the legal form of a mutual insurance association (onderlinge waarborgmaatschappij) or a public or private company with limited liability (naamloze of besloten vennootschap). At least two people must be responsible for the insurance company’s day-to-day policy. These will usually be the members of the Management Board. In addition, public or private companies must have at least three Supervisory Board members. In exceptional circumstances the Central Bank may grant exemptions from this requirement, for instance, if an insurance company is a direct or indirect subsidiary of a company with a Supervisory Board.

Those persons responsible for the day-to-day policy in a licensed insurance company must have sufficient expertise and be considered sufficiently trustworthy by the Central Bank. The Central Bank assesses their expertise and trustworthiness when the application for a license is processed.

Karel Frielink
Attorney (Lawyer) / Partner

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This is done by a bailiff

What is the procedure for the service of foreign proceedings under Netherlands Antilles procedural law for a company having its registered address in, for instance Curaçao?

Under Netherlands Antilles procedural law, the service of proceedings on a Netherlands Antilles legal person will be done by means of a bailiff’s notification. This notification shall be served (i) on the person or residence of the president of the management board of the company or (ii) on the business and/or registered address of the company.

Netherlands Antilles procedural law does not provide for the possibility to serve the proceedings on the address of the company’s lawyer.

In our view the required language of documents of proceedings before, for instance an English court, to be served on a defendant in the Netherlands Antilles, would, being based on English law, have to be in English. However, the official language in the Netherlands Antilles is Dutch. English is not an official language on Curacao. Therefore, insofar as this is not already required under English law, I would advise attaching a certified Dutch translation of the official court document in which the company involved is called to appear before the English court, to the documents to be served.

Karel Frielink
Attorney (Lawyer) / Partner

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An agent is entitled to commission

Under the Civil Code of the Netherlands Antilles (article 7:428), an agency agreement is defined as a contract for a fixed or indefinite period of time between a principal and an agent, whereby the agent agrees, against payment, to mediate in the conclusion of contracts and to eventually conclude these contracts in the name and for the account of the principal, without being subordinate to the principal.

An agent shall be entitled to a commission for the negotiation of commercial transactions concluded after the sales representation contract has been terminated:

• if the transaction is mainly attributable to the sales representative’s efforts during the period covered by the sales representation contract and if the transaction was entered into within a reasonable period after the sales representation contract was terminated; or
• if the third party’s order reached the principal or the sales representative before the sales representation contract was effectively terminated, provided certain conditions are met, for instance that the agent mediated in the conclusion of the order.

It should be noted that the terms “mainly attributable” and “reasonable period” are not defined by the Netherlands Antilles Civil Code. In the event that the agency agreement has been terminated and certain conditions are met, an agent may be entitled to goodwill compensation.

Karel Frielink
Attorney (Lawyer) / Partner

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Dutch Caribbean law firm operates in a borderless business world

National boundaries these days are increasingly less significant, even for small or mid-size law firms. Though Spigthoff Attorneys & Tax Advisers can hardly be called a global law firm, with only two offices, one in Curacao and one in Amsterdam, we can however offer services to our clients world wide.

It is not necessary to have a presence in every region of the world to operate across borders and cultures. One can work together with reputable local law firms in any and all countries. It saves time and money not having to be bothered by issues related to organizing ones foreign offices, how to compete in a global legal arena or how to manage ones staff on a global scale. In other words: a mid-sized firm like Spigthoff is able to provide effective legal representation in every country and in every major area of legal practice, without being bothered by major overheads. Thus even a small or mid-size law firm can be a “one-stop shop”, provided it continually monitors the standard of quality of the foreign law firms it works with.

Also, being a global firm raises the probability of conflicts. As a small or mid-size law firm one can choose among various alternatives consulting with the client and carefully considering his needs and wishes.

Spigthoff Attorneys & Tax Advisers (Curacao, Netherlands Antilles)

Spigthoff law firm is a market leader with its strengths in the areas of financial services, corporate, tax and litigation. We practice law throughout the Dutch Caribbean and are routinely called in to assist clients with their most critical issues.

Our clients include a diverse group of institutions and individuals: from local and international banks to large funds; from foreign companies seeking to transact business in the Dutch Caribbean to local companies doing business abroad; from high net-worth individuals to governments; from telecom companies to airlines; from real estate project developers to hotel chains.

Spigthoff is a top law firm. Our attorneys and tax advisers are not only excellent professionals, they are also practical, creative and proactive in working with our clients. Their goal: cost-effective and straightforward solutions to complex legal and tax issues, combining skill with a tough approach where necessary.

Our lawyers and tax advisers deal with complex issues on a daily basis and finding effective solutions is second nature to them. Resolution by mutual agreement is often the preferred way to go, however we do not shun litigation in the interest of our clients. A quick solution via rapid injunctions is often preferable to time consuming debates. We are ambitious and assertive, with a strong client commitment. Just what the doctor ordered for those requiring a “robust” solution to their problem.

We started our firm in 2001 with litigation experts specialized in the fields of corporate, securities and banking law, however also including tax law professionals. Spigthoff has since built up a fearsome reputation based on quality, an unwavering sense of direction and on fearlessness. With our focus on international business, our Curacao office has through the years also developed a distinct local practice.

Clients see us as being on the ball: rapid and solution-oriented. They appreciate our personal style, our accessibility and straight talk.

Corporate law

Spigthoff is highly experienced in public and private transactions, including mergers, takeovers, management buyouts and corporate governance. We provide legal services to a variety of clients, from (publicly held) large multinational companies to (start-up) private businesses.

Our broad practice intersects with related practices, in particular tax, labor law and banking & securities. Prof. Alexander Mohr of Spigthoff co-drafted the Netherlands Antilles corporate code and Karel Frielink is the author of the leading corporate textbook.

Spigthoff represents a variety of businesses with regards to their original establishment, initial capitalization, ongoing financing transactions (private equity and debt), (cross-border) contractual relationships, joint ventures, shareholders’ agreements and directors liability. Our areas of practice include advice on exit-strategies, whether by private sale or initial public offering, E-Commerce, limited partnerships and tenders.

Financial Transactions

Spigthoff has wide experience in financial transactions, including securities transactions, private equity, venture capital,  investment and hedge funds, corporate and project  finance, IPOs, private placements, (term loan) credit facility agreements, structured finance (collateralized debt obligations, credit-linked notes, note issuance programmes, securitizations and acquisitions), security documentation, ship financing, aircraft financing, group finance companies and convertibles.

We also advise our clients on reporting matters and regulatory issues, helping our clients develop compliance systems and procedures.

Spigthoff represents a variety of clients regarding the establishment, structuring, and regulatory matters related to funds, including private investment funds, mutual funds, hedge funds, umbrella funds and real estate funds. We advise on exit-strategies, whether by private sale or initial public offering.

Additionally, we often assist national and international clients dealing with complex financial transactions and the resulting tax issues. Tax considerations often represent a central consideration in structuring hedge and other funds. Our tax lawyers have worked on various international tax-planning strategies and transactions.

Tax law

Spigthoff provides guidance on the full range of business and personal tax issues for clients, including investment and hedge funds, high net-worth individuals, venture capitalists, multinational companies, emerging companies and lending institutions. We strive to find innovative solutions to complex situations.

Our tax professionals advise on mergers and acquisitions, joint ventures, limited liability companies, reorganizations, the structuring of foreign investments, debt-for-stock and other exchanges, private foundations, real property investments, e-commerce, e-zone companies and individual as well as corporate (international) tax-planning.

Spigthoff also represents clients in tax disputes, including profit tax, personal income tax, sales tax, estate and gift tax, international tax, and disputes related to international treaties. We have extensive experience in dealing with various tax authorities. We attempt to resolve disputes out-of-court, but if necessary we stand ready to engage in tax litigation.

Litigation

Spigthoff is routinely called on to assist clients with their most critical matters. We handle complex commercial litigation, including shareholder and corporate control disputes, director liability issues, contractual disputes, investment management disputes, insurance coverage, regulatory and administrative law, intellectual property infringements, employment disputes, telecommunication matters and real estate related disputes.

We attempt to resolve disputes out-of-court, but if necessary we stand ready to engage in litigation, whether in court or any alternative dispute forum. We also counsel clients on minimizing litigation risks.

Spigthoff represents a variety of investors, financial institutions, private persons and businesses. The cases we handle are as varied as the clients we represent, who have chosen Spigthoff because they need a troubleshooter in their corner.

If you have any questions or if you are considering engaging our firm, please feel free to contact me at Karel.Frielink@Spigthoff.com. We have been life savers for many before you.

Karel Frielink
Attorney (lawyer) / Partner

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Permission required

The termination of the employment contracts of more than 25 employees or of 25% or more of the employees of a company is considered a mass lay-off. For such a mass lay-off permission is required from the Director of the Department of Labor and Social Affairs irrespective of the nature of the company’s activities. The Director must be informed by the employer at least two months prior to the (intended date of) termination of the employment contracts. Simultaneously, or at least within eight days of notifying de Director the employer must provide the Director with a redundancy arrangement (“afvloeiingsregeling”).

The redundancy arrangement should include the (financial) measures the employer has taken or is willing to take to mitigate the consequences of being laid-off for the employees. The Director will base his decision on whether these terminations are reasonable and socially acceptable on the foregoing, in combination with an assessment of the financial position of the company.

Although there are no exact guidelines on how to determine the reasonableness of a redundancy arrangement, we consider that the so called ‘cantonal court formula’ (kantonrechtersformule), a guideline the court will use when asked to dissolve an employment contract, is an important indicator.

No later than six weeks after receipt of the redundancy arrangement the Director will communicate his (written) opinion thereof. An employer is obliged to wait for the Director’s opinion before it may terminate the employment contracts. Should the employer not do so or should it terminate the contracts in spite of a negative advice from the Director then the employees will be entitled to start legal proceedings for damages on the grounds of manifestly unreasonable dismissal.

Another possibility is to institute proceedings for dissolution of (all) employment contracts through the courts. In these proceedings the statutory period of notice is not applicable. The court may be requested to dissolve the agreements at the earliest possible date. The dissolution proceedings will usually take approximately two months. If the court agrees to the dissolution, it will generally dissolve the contracts as of the date of its decision.

Karel Frielink
Attorney (Lawyer) / Partner

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Wanted: on-shore rescuers

The Citizens’ Rescue Organization, Curacao (CITRO) provides search and rescue services in the waters around Curacao in the Netherlands Antilles. The organization comprises a group of volunteers, who are on call and prepared for sea rescue 24 hours a day 7 days a week.

As a member of the CITRO Advisory Council I am in charge of fundraising. CITRO requires funding on an ongoing basis for its activities. Please consider being one of CITRO’s ‘on-shore rescuers’ and feel free to contact me for further information. Thank you.

Karel Frielink

News from Citizens Rescue Organization Curacao

By CITRO Operations, Dick Braakman.

CITRO Curacao has been quite active this year – and it is not over yet, as of writing this in October 2008.

Until now we have had 58 emergencies of which 39 were successfully resolved (as much as during the whole of 2007). In total 55 people were brought to safety. The fast rescue boats ‘Antje’ and ‘Griend’ were deployed in 14 of the operations while ‘Cornelius Zwaan’, our sturdy work-horse, in the remaining 25.

It isn’t surprising that assistance rendered to fishing vessels and small motorboats with technical failure formed the bulk of all SAR-cases.

There appears to be an increase of accidents with people overboard or lost at sea. The count is up to 10 with 4 fatalities – in 2 cases CITRO recovered the bodies. One very successful SAR-action, in which 4 divers were rescued, will be described below in some detail.

CITRO Medico, which has been an asset of our rescue-community since the beginning of the nineties, which is comprised of a group of 12 doctors on a voluntary basis, was quite active and useful last year. The members of this group are available to the RCC on a two-weekly basis for radio-medical advice (Medico), and if necessary for assistance during medical evacuations (Medevac). Some of them are even crew-members on the CITRO boats. Often assisted by para-medical crewmembers they participated in 11 operations of which 6 were evacuations. This represents a definite increase compared to previous years.

On August 31st high alert was sounded after notification was received that 4 divers were reported overdue at the end of day at the small island of Klein Curacao. Griend, Antje and a CITRO auxiliary boat ‘Bimini Twist’ were launched and rushed to the island (7 nautical miles east of Curacao). Together with a Navy ship, a Coastguard cutter, the Coastguard plane and helicopter, a search was started at sunset and continued – for the CITRO-units – till about midnight. While the Navy and Coastguard ships with their longer staying power remained in the area, the CITRO-units returned for refueling and some rest, to resume searching at first light. Search areas were once more plotted by the Navy ship, acting as the -on-scene- coordinator, over a large area, because of the reports of strong currents variable in various directions (probably the reason for the divers going missing in the first place).

After a number of hours of intensive search all 4 were spotted by the Coastguard Dash and by a Navy Rib of the Navy vessel Van Speyck, and safely brought aboard. They all proved to be in good health as confirmed by one of CITRO Medico’s doctors who was on board the Antje and was transferred to the Van Speyck.

Important lessons learned, as concluded in the debriefing some time afterwards:

• Divers and their accompanying dive-boats should be aware of strong and (around small islands) varying currents.
• Divers should carry effective signaling devices, especially lights in some form – even if they plan to only dive during daylight (it would most certainly have made the search by night easier and more effective).
• Healthy divers can survive quite well in these waters (they have to stay – connected – together!); the presence nevertheless of illuminated search-units, even when active search is suspended because of darkness, is of strong (psychological) importance.
• As always: combined effort by different units is the most successful.
• These lessons also should be made known to the public.

  

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An interest must be proved

When two parties are involved in legal proceedings a third party may request permission to join the proceedings thereby to joining with one party in raising defense against the other (‘voeging’). Alternatively, a third party may request permission to intervene (’tussenkomen‘) in pending proceedings, in which case neither party is joined.

The Dutch Supreme Court (May 3, 1957, NJ 1959, nr. 62) ruled that a joinder between parties in pending proceedings may only be sustained if the party requesting the joinder have an evident interest in supporting one of the parties’ positions, and thus in protecting its own rights or legal position, whereby a decision against the party being supported would be detrimental to the requesting party. This requirement applies to proceedings on the merits (cf. also Supreme Court, May 22, 1992, NJ 1992, nr. 512).

In case of interlocutory proceedings (a.k.a. preliminary relief proceedings), other (broader) standards may, in principle, be observed, since i) interlocutory proceedings are by nature of a less formal character and ii) in interlocutory proceedings there is no question of the establishment of rights. In other words: a joinder sustained in interlocutory proceedings does not imply that a request for joinder by the same intervener in proceedings on the merits between the original parties also qualifies to be granted. Such a request shall be reviewed on its own merits.

The rationale of a joinder is to resolve several disputes in a single legal case where more proceedings would otherwise have been necessary to resolve them. Regarding these disputes the intervener should at least be considered  to have a case if he were to institute proceedings (independently) and it may not be known in advance that his claims will fail. If his case were to be declared inadmissible and/or it were to be known in advance that his claims would fail, then he may not be admitted as party to the procedure at hand between other parties.

Karel Frielink
Attorney (Lawyer) / Partner

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Bankruptcy pledgor will prevent valid pledge

Under the laws of the Netherlands Antilles, a right of pledge may be established on future receivables, however, the right of pledge on a future receivable will only be perfected the moment such a receivable comes into existence, provided that, at such a time, the pledgor is authorized to dispose over or encumber such receivables (‘beschikkingsbevoegd’).

Therefore, if a pledgor has been granted a suspension of payments (‘surséance van betaling verleend’) or has been declared bankrupt (‘failliet verklaard’) in the Netherlands Antilles, before a future receivable, directly resulting from an existing legal relationship, comes into existence, such receivable will not be subject to the created security right and will therefore become part of the bankruptcy estate of such pledgor.

Karel Frielink
Attorney (Lawyer) / Partner

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OECD Secretary-General compliments the Netherlands Antilles and Aruba

In his speech on 21 October 2008, OECD Secretary-General Angel Gurría, addressed the issue of transparency and exchange of tax information in relation to offshore jurisdictions. The Secretary-General:

“In 2000 we identified over 40 tax havens and between 2000 and 2005 we were able to convince 35 of these tax havens to commit to the OECD standards of transparency and exchange of information. Seven tax havens initially refused to make this political commitment and were placed on a list of uncooperative tax havens. By 2008 this list had been reduced to Andorra, Liechtenstein and Monaco.

Also in 2000 the OECD launched a parallel project to improve access to banking information for tax authorities within the OECD membership. We agreed an ideal standard of access which all 30 Members endorsed. This standard has now been widely implemented both within the OECD and beyond and has been endorsed by the G8, the G20, the EU, and we hope it will be soon by the UN. However, some countries have still not fully reached this standard.

We continue to work on both of these initiatives and are proud to say that there have been interesting achievements. For example, Belgium now has a tax treaty with the US which, for the first time, provides for exchange of bank information for all tax purposes. This is a significant breakthrough. Further, a total of 27 tax information exchange agreements have been signed since 2000 and around 40 more are under negotiation. Most of the progress, however, has been with just six offshore financial centers that are actively negotiating agreements (Aruba, Bermuda, Isle of Man, Jersey, Guernsey and Netherlands Antilles).”

Karel Frielink
Attorney (Lawyer) / Partner

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