Pro f. Do uto r Alain Ve rbe ke (Pro fe s s o r Ordin ario das Faculdade s de Direito das Universidades de Leuven, Tilburg e Antuérpia) Execution law and patrimonial transparency in Belgium and the Netherlands. Some comparative perspectives Thank you very much, Mr. Chairman. I thank you for inviting me to speak here, and I do not only thank but I also want to congratulate the Ministry of J ustice. As an outsider, I can assure you that I have the impression, as opposed to some interveners this morning, that there is a real debate going on here, a true and intense discussion on the reforming of executive action in Portugal. I have been asked, to speak 15 minutes. I will try to give you some headlines with the watch in my head to be sure that I stick to my time. I would like to give you a comparative view, mainly from Belgium and The Netherlands. Obviously, one should not limit the comparative painting to these countries, but we have other speakers. Evidently, I will not discuss France, since my distinguished colleague, Professor Théry, is much better placed to talk about the situation in France. I want briefly to make three major points: first of all, merely by way of introduction, a concise description on the situation in Belgium, The Netherlands and the likes; secondly I will try to point out to you that also in these countries we have a major problem in the execution system being the problem of patrimonial transparency; and thirdly if there is a problem, one should try to find, as you here in Portugal are trying to figure out, a solution. My conclusion will then be an attempt to suggest a possible solution for this problem. POINT 1 INTRODUCTION - In the Belgian situation, The Netherlands and so on, there is, in the execution system, a very important role for the judicial or execution officer, le huissier de justice, as he has been called already numerous times here today. In fact, the judicial officer is the arm and the eye of the judge on the field, and he has a function upstream and downstream. He has the function upstream in the introduction of a case before the court, to bring actions to court, and once a decision has been taken, once a judgment has been made, he has the downstream function of executing then this judgment on the field. As we are dealing with execution law, I will now focus on the downstream function of the huissier de justice, although we have a lot of problems in the Belgian system with the upstream situation. We have tremendous delays in getting a judgment, it takes years quite often to get an executory title. But that is another problem which is not a part of the execution law, strictly speaking. Execution law starts when one has this judgment, or a notary deed. Once you have such an executory title, then you have to make sure that it is executed as it has been said and declared in the judgment. This is the downstream function of the huissier de justice. He must, as an arm and eye of the judge, on the field, make sure that the judgment is fully and correctly executed. The huissier de justice has an autonomous function, he is an independent officer. He is a public officer but he is performing his job within the framework of a liberal profession. On the one hand, he has the power of the State in terms of execution, so he is really an auxiliary of the courts and of the justice system; but on the other hand, he is a professional, with a liberal profession, comparable to an attorney or a notary. This duality in the profession is comparable to the situation of notaries
public who also are public officers acting within a liberal profession. This concept is quite useful in terms of cost efficiency and so on. You in Portugal might discuss, if you want to introduce such a function, whether or not you would take it up as a liberal profession or entirely as a state or government function. I am inclined to say, try to figure out, try to study carefully the advantages of the liberal profession, certainly in terms of efficiency and cost reduction for the State. Probably I am biased by this experience of the Belgian, the Dutch and the French system, where it works quite well. In Belgium and the Netherlands, we have several systems of execution, individual execution, seizure and attachment, and of collective execution, bankruptcy for commercials, and since a couple of years, also a kind of civil bankruptcy (collective debt settlement). POINT 2 PROBLEM OF PATRIMONIAL TRANSPARENCY - A serious problem we have in our countries is not so much a problem of technical execution law. We have quite good execution methods and rules; we have the huissier de justice, which is a good, balanced, developed profession. He will execute, on the field, the judgment of the court, that is fine. But the big problem is: how can you execute if you do not find anything to execute.. We have a good system, but very often you cannot apply it because one does not find the assets to apply it to. One can make, in theory, the greatest system one can imagine, if there are no assets to attach and to sell, you have nothing and you can start from scratch again. This is my second point. In theory the system is more or less O.K., but the problem is that frequently the creditor cannot find the assets. This is the delicate issue of patrimonial transparency. In the collective systems of bankruptcy and collective debt settlement, there is, of course, patrimonial transparency through the curator, the liquidator, the administrator of the estate. That is more or less no problem. Of course here too we have a lot of fraudulent transactions, and so on. Fraud always is a possibility and one can never make a system that is entirely fraud-proof. So we should not focus too much on that. The situation is very different in case of individual seizure and attachment. I am talking here about the simple and ordinary creditor, the person who lets a house, who has not been paid, who gets a judgment, often after waiting a long time. He finally obtains a judgement. Now he has an executory title. And then he wants to attach assets in order to get paid, but he does not find any. And so the frustration is immense. You have this theoretical right but you cannot enforce it. In most of the European countries, there is a lack of well organised and consistent patrimonial transparency making it possible for a creditor to find assets for recovery (1). One notorious exception is Sweden where patrimonial transparency is quite large. But one could argue that the balance has shifted there too much towards recovery without due respect for the debtor s privacy rights. This problem is all over Europe. Witness thereof is the fact that in many countries obscure recovery agencies have been established, also in Belgium. They are very proudly advertising unorthodox recovery methods, offering the creditor a quick payment on a no cure no pay basis. We should bear in mind that the market acts in an economical way. If the regular public recovery system does not work, a parallel private network, not controlled, nor regulated by the legal system, will offer its services. That is what is happening today, in our countries.
Some of you were stating that there can never be too much guaranties, but I can assure you, in the Belgian system and in lots of European countries, we see a development towards a grey parallel circuit where there are no guaranties at all any more. If the profession that is acting in the recovery business, such as unofficial recovery agencies, is not controlled by the State, by any regulation, not bound by any professional ethics, then such business will act entirely in its own interest. A quick recovery will be the one and only objective, not taking into account legitimate interests of the debtor, nor guaranteeing him a human treatment. It is well known that these agencies, and it has been said this morning by a speaker, do not hesitate to apply unacceptable techniques such as stalking and intimidation. Think of the black and pink brigades, in Germany and in Spain. Therefore, I dare say that the lack of patrimonial transparency in the regular recovery system leads to less privacy, to less guaranties, to less humanity for the debtor. The inefficiency of the public system drives creditors to private agencies, operating in a dark or grey area, while constantly infringing fundamental rights of debtors. There is a tremendous need for balanced and controlled patrimonial transparency in execution law. This is not only required for the sake of the creditor but is equally important in the interest of protecting the debtor. So that is why I really think it is time to reinstall the balance. And I repeat, the Belgian, Dutch and French experience learns that it is not sufficient to have a good system of execution officers, huissier de justice, who do a good job, to have rather good methods of seizure and attachment on bank accounts, on immovable property, on movables, which is all working quite well. This will not solve the major, preliminary but very practical and therefore essential, problem, which is that all of these methods and rules are worth nothing if you cannot apply them to something. I was lecturing in Paris last month at the J ournées de Paris of the French huissiers de justice. They confirmed me to be very concerned about this problem, they also have the feeling that the parallel circuit is taking over, and that the protection for the debtor and for the citizens is really weakening. It is clear that the debtor enjoys fundamental rights but the creditor has some rights too. And these rights should be balanced. Let us first look at the rights of the debtor. He has a right to a human treatment, he has a right to dignity. It is quite obvious that he also has a right to privacy. And I think these rights are pretty well protected in the regular legal system. For instance in terms of humanity and dignity, we have had in the last decades numerous laws, acts, statutes, that protect the dignity and the human life of the debtor. We have these laws that say you cannot attach that part of the income, you cannot attach these professional goods, you cannot take a table and a bed and the toys of the kids, and so on. That is all very human, it is very noble, and I am very much in favour of that. But it has to stop somewhere! There can be no discussion about the right of a debtor to a human treatment and a minimum of dignity. However a legitimate discussion may arise around the determination of such a minimum standard. It is one thing to state theoretically that the debtor s humanity cannot be threatened, it is another thing to define concretely how this concept of humanity should be understood. Here a balancing exercise is needed, e.g. to determine what part of the income cannot be attached. In Belgium, in March of 2000 only, we have again added to what is not attachable income, 2.000 Belgian Francs or about 50 Euro per child in charge of the debtor. If a couple in Belgium is professionally active, with three children, then the situation would be as
follows. Around 1000 Euro net salary of the husband and around 1000 Euro net salary of the wife, 150 Euro for the three children and the child allocation of around 380 Euro, in total more than 2500 Euro of net income is unattachable. Are you surprised that a lot of debtors organize themselves, under these lines, and for the rest they have officially - nothing! There are debtors who can play the art of being invisible (as a child I adored these American series called the Invisible Man starring Lee Majors -), well, I must say, some debtors remind me of Lee, and if they are not invisible themselves, their assets are. Secondly there is the fundamental right of the creditor to recover. Let us not turn everything the other way around. We live in a society, also in Belgium, celebrating the culture of the victim. If something happens, it is my right to be protected, and I would never think about my duty or responsibility, or what did I do wrong? No, it is always somebody else, it is society, it is my youth, it is whatever, but it is never myself. Whatever victim the debtor may be, the creditor too has some rights, he has a right to recover. You owe him some money, the judge has confirmed and declared that you owe him some money, there is a final executory title, well, this should be executed. I have developed in previous publications several arguments for this fundamental right (2). We have discussed article 6 ECHR this morning. It is quite evident that if article 6 guarantees an efficient procedure, in due time, at a minimum cost, this should also include all necessary means to be able to execute such a judgment. So the right to patrimonial transparency is included in article 6. Moreover, if you say we have a judgment of a court and you cannot execute that judgment, that is what the English would call contempt of court. I mean, it is laughing at the judge. It is saying: J udge, we are playing, we are fooling around. You can make a judgment, but do not think we will execute it. No. It is just for fun, it is just a game. Well, if you do not take the judgment seriously, you are really, as a State, as a Government, not doing one of the most essential aspects of your job. We then have these two rights, debtor on the one side and creditor at the other side, and these rights, they clash. How should we solve this collision? It is very simple: First clash, humanity and dignity against recovery rights. There is no clash here. It is obvious that a human life and the dignity of the debtor should always be guaranteed. That is clear and that is why I have been emphasizing the danger and risks of these unofficial recovery agencies since these fundamental rights of the debtor are not protected in these cases. As I already told you, it can be a point of discussion where to draw the line, where do we put the limit of humanity. Second point, and here we have a major conflict, privacy of the debtor against the recovery right of the creditor. In case of collective liquidation, everyone accepts total transparency of the estate and of the patrimony. The liquidator must see everything, he must see the books, the bank accounts, whatever (3). But in case of an individual attachment or seizure, everyone says, no, no, you cannot know anything, you should not be able to see or to find the bank accounts. Why not? Why would the recovery right of the creditor not entitle him to find assets out of which he can be paid? Although in all our countries we have information systems, enabling the creditor by and large to find out where some of the assets are, these systems are not efficient (enough), otherwise parallel recovery circuits would not be working so well. POINT 3 SOLUTION - The conflict between privacy of the debtor and the right of a creditor to recover must be solved by applying the balancing act that is
well known by the European Court of Human Rights. First of all, to infringe the right of privacy, which is one fundamental right, to have it infringed by another fundamental right, which is the right of the creditor to recover, you must have a legal basis. Therefore, I beg you, Mr. Minister of J ustice, create such a legal basis. The second condition is proportionality, and that is, of course, the most important aspect of the game. You must make sure that you only infringe on the privacy of the debtor in proportion to the objective that you are looking for, which is the recovery of one claim. So, in that way, the declaration of patrimony that exists in Germany is not really in proportion, because the debtor has to declare his entire patrimony under oath, for one claim. The suggestion I have been making in Belgium and recently in France, is the following. We have one important function existing for years and performing well, i.e. the huissier de justice. Why not transform this function into a real execution officer, who would have the power of investigation, the power of research, in the execution procedure, to find the assets at a very low cost (4). This means that no expensive seizure procedure would be needed to find out whether the debtor has a bank account with such or such bank. We need a system where this person can have the power to ask anyone, the debtor as well as any third party, for relevant information regarding the debtor s income and assets, to look everywhere he thinks it is important. If he finds the information, he can only use it within the proportion that is needed for the recovery of that claim, and then he shuts up, he does not tell anyone. The execution officer is bound by a very strict professional secrecy, he could share this information with colleagues of the same profession, but he could never use it outside that. If you would have such an execution officer who is trustworthy, of a high moral standard, then you would have a proportional solution, there would be the possibility for the creditor to recover, and a guaranty for the privacy of the debtor. In Belgium and France, I have proposed this solution under the condition that the actual professional statute of the huissier de justice be adapted, which means that the rules of professional ethics should be improved (5). I want much more control on the professional ethics. First of all in the commission that will look into professional mistakes and abuses, we must have a sufficient number of external members. This is already true in The Netherlands. Secondly I want much more efficient sanctions, disciplinary sanctions, penal sanctions, financial sanctions. The previous ideas are the reason why I have to leave this conference, to my regret: because tomorrow in Brussels I have to address, at a conference of the huissiers de justice, exactly these points on changing of the professional statute. I will conclude now. You have a great opportunity here in Portugal. You are in the right state of mind to make changes and improvements, to make your system much more efficient. You envisage a new profession which could be the huissier de justice. Please take the opportunity to organize this profession in a way that you also solve the preliminary problem of patrimonial transparency. Make it a profession that is armed sufficiently with all means in order to realise this delicate balance between privacy and efficient recovery. Create the function of an execution officer of a very high standard, and I think a law degree, as has been said this morning, is quite evidently a necessity. But this is not enough, it is much more than that. Especially on the disciplinary level, strict guaranties are required. If you could realise that, it might be that you would, all of a sudden,
become an example in Europe. I wish you good luck. Thank you very much for your attention. Notes: (1) For more details see A. Verbeke & M.T. Caupain (eds.), La transparence patrimoniale. Condition nécessaire et insuffisante du titre conservatoire européen?, Paris, Quercy, 2001. (2)See e.g. De gerechtsdeurwaarder: motor en garantie voor een effectieve executie, Revue Générale de Droit Civil Belge 1999, p. 94-119 and Information sur le patrimoine. Nécessité d un droit d exécution équilibré», in Le rôle social et économique de l huissier de justice», Brussels, Story-Scientia, 2000, p. 161-195. (3)See also my article Les officiers judiciaries comme régulateurs dans les cas d insolvabilité, in L efficacité de la justice civile en Europe, Brussels, Larcier, 2000, p. 403-414, in particular p. 410. (4)See the publications cited above and also my article Execution Officers as a Balance Wheel in Insolvency Cases, Tilburg Foreign Law Review 2001, Vol. 9:5, p. 5-18. (5)See my article De gerechtsdeurwaarder anno 2001 (Execution Officers anno 2001), in Conference book of National Conference Belgian Huissiers de Justice, Brussels, 18 November 2000 (to appear).