Karel’s Legal Blog

Spigthoff verheugd met partnerbenoemingen

Per 1 juli 2010 zijn de advocaten mr Annemarijke Bach Kolling en mr Maike Bergervoet benoemd tot partner bij Spigthoff Advocaten & Belastingadviseurs te Curaçao.

We are pleased to inform you that effective July 1st, 2010 Spigthoff has named Annemarijke Bach Kolling and Maike Bergervoet partner of the firm.

Annemarijke Bach Kolling werkt sinds 1 september 2006 bij Spigthoff. Zij is expert op het gebied van procesrecht en houdt zich bezig met ondernemingsrechtelijke en arbeidsrechtelijke geschillen. Zij heeft ruime ervaring op het gebied van corporate litigation, met name aandeelhoudersgeschillen, bestuurdersaansprakelijkheid en overnamegeschillen. Daarnaast adviseert zij haar cliënten over het algemene contractenrecht. Annemarijke is bestuurslid van het Arbitrage Instituut Nederlandse Antillen & Aruba (AINAA).

Maike Bergervoet werkt sinds 15 februari 2007 bij Spigthoff. Haar werkterrein omvat financieel recht en ondernemingsrecht. Zij begeleidt fusies en overnames, splitsingen, conversies en zetelverplaatsingen. Maike heeft daarnaast veel ervaring met uiteenlopende financiële transacties. Zij is regelmatig betrokken bij grote internationale (her)financieringen voor (syndicaten van) banken, de ene keer als adviseur van banken dan weer als adviseur van leningnemers. Voorts adviseert zij beleggingsinstellingen, banken, verzekeringsmaatschappijen en andere vennootschappen op het gebied van het ondernemingsrecht, vestiging en uitwinning van zekerheidsrechten en toezichtsregelgeving. 

Over Spigthoff

Spigthoff Advocaten & Belastingadviseurs Curaçao is een gerenommeerd commercieel full service kantoor. De professionals van Spigthoff adviseren, procederen en begeleiden transacties. Tot de cliënten behoren nationale en internationale ondernemingen, ondernemers, financiële instellingen, beleggingsfondsen, trustkantoren, investeerders en vermogende particulieren.

De advocaten en belastingadviseurs van Spigthoff zijn gespecialiseerd in het ondernemingsrecht, financieel recht, belastingrecht en in geschillenbeslechting.

Karel Frielink

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Zie ook het Antilliaans Dagblad van 3 juli 2010

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Take care!

If parties have agreed upon a fixed term employment contract and the employee wishes to resign before the term of the contract has expired, may the employee terminate his employment contract prematurely? Article 7A:1615e, paragraph 3 Civil Code of the Netherlands Antilles stipulates that an employment contract for a fixed term may only be terminated if this right to premature termination for both parties is agreed in writing. In other words the right to premature termination must be agreed in writing and must be applicable to both parties. 

If premature termination has not been agreed in writing then the employee may only resign prematurely if the employer has no objections. The employment contract is then terminated by mutual consent (another possibility in our closed dismissal/resignation system) and not by resignation. If the employer does not consent to premature resignation then the employee will, in principle, have to fulfill his contract.

To complicate things even further: if the employee nevertheless chooses to resign, current case law of the Supreme Court holds that the resignation itself is valid. The resignation is however wrongful and the employee is then liable for damages. The amount of damages is equivalent to the salary that the employer would have paid if the employee had fulfilled his employment contract.

An example: an employee has entered into an employment contract for a period of 12 months. The contract doesn’t include the option of premature resignation. The contract commences on November 1, 2007 which means that it terminates ipso jure (read automatically) on November 1, 2008. The employee however resigns on June 15, 2008 as he has had enough at his employer. The employee runs the risk that his employer will sue him for wrongful resignation, with the possibility that the Court of First Instance will order the employee to pay his employer damages equal tot the amount of salary he would have received from June 15 to November 1, 2008. It is therefore wise for employees to ensure that a provision is included in their employment contracts allowing premature resignation.

It is more difficult for an employer to dismiss an employee prematurely as he requires prior approval from the Directorate of Labor Affairs for it to be legally valid. Premature dismissal without the prior approval of the Directorate of Labor Affairs is invalid, and the employment contract is not terminated by the dismissal.

The employer is required to submit his motivation to the Directorate of Labor Affairs justifying the need for premature termination. The employee may in his turn submit a statement of defense. If the employer receives aforementioned approval from the Directorate of Labor Affairs he may terminate the employment contract prematurely while observing the applicable notice period.

NB. The date of dismissal/resignation is not the same as the date on which the employment contract is formally terminated. The date of dismissal/resignation is the date on which the first party lets the second party know that the employment contract will be terminated at a specific date in the future. The employee is not obliged to ask the prior approval from the Directorate of Labor Affairs before resigning.

William ten Veen
Attorney – Spigthoff Curacao

(29 June 2010)

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More complex than you think!

Experience teaches us that it is often difficult for employers to deal with the often complex labor law legislation of the Netherlands Antilles in a practical manner. The legislation is not combined in one law or ordinance, but to complicate matters, it is spread out over the Civil Code (Book 7a), several ordinances like the ‘Termination of Employee Agreements Ordinance’, the ‘Cessantia Ordinance’, the ‘Collective Employment Agreements Ordinance’, and various resolutions and treaties like the ‘Hotel & Catering Industry Resolution’, the ‘Hotel, Restaurant and Casino Resolution’, and the ‘International Treaty of Human and Political Rights’.

When dealing with reorganizations, or a summary dismissal due to (alleged) theft or non-performance, it is, to say the least, useful for employers to keep the dismissal dossier up to date. I often come across situations in which an employee has, according to the employer, been underperforming for an extended period of time, while the employer has nothing about the matter in writing. Indeed, I have even encountered situations in which an employee has received a positive evaluation during performance appraisals while according to the employer the employee is actually unsatisfactory. As a lawyer I am then given the unrewarding task of convincing a judge that the positive appraisal was meant to motivate the employee, to improve his performance, or that the employer had difficulty telling his employee he was not performing as required, because he felt sorry him.

The possibilities for dismissal in the Netherlands Antilles labor laws are not easy to understand. When is a case ready for dismissal? How many verbal/written warnings must be given to an employee before he may be dismissed? Can an employee be dismissed summarily when arriving late for work for the umpteenth time? How do you go about terminating a contract by mutual consent? What can an employer do when he feels that his employee is taking too much vacation in a particular year, even though he has sufficient free days to do so? These are just a random selection of the many questions I receive on a weekly basis. You should receive lucid advice and concrete estimates of the chances, risks, and costs, from an attorney-at-law specialized in labor law. Additionally it is always useful to receive practical tips and suggestions on how to resolve dismissals as quickly and smoothly as possible. The well known proverb ‘pennywise pound-foolish’ is (perhaps) applicable here. Ask critical questions and lay down your demands clearly to your attorney, it’s your right to do so.
 
Most dismissal cases are ultimately resolved because the employer and employee, usually assisted by their own legal advisors, reach an amicable settlement. During termination of an employees’ employment contract it is important that you, as the employer, is up to date and well informed about your legal status and the strength of your case.
 
Which provisions should you never forget when drawing up a termination agreement? Unfortunately I observe too often that an employer thinks he has sufficient knowledge and experience to deal with these cases on his own and unfortunately forgets to clear an outstanding loan at the end of the employment term, while parties grant each other full and final discharge. Do not assume too readily that you in your role of employer understand labor law in all its facets. Using legal counsel can help you avoid pitfalls. Prevention is often better than the cure, also financially.

William ten Veen
Attorney – Spigthoff Curacao

(22 June 2010)

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A somewhat unique figure

The Managing Director (bestuurder) under the articles of incorporation of an NV or BV is a somewhat unique figure in Netherlands Antilles labor law due to the fact that he enjoys considerably less protection from a labor law perspective than a regular employee. In other words an employer can more easily dismiss a managing director than an employee. An employer does not, for example, require prior approval from the Directorate of Labor Affairs to terminate the employment contract of a managing director. It goes without saying, that the agreed period of notice between the parties must be respected.

In practice ‘Managing Director (by title)’  is often used when ‘Managing director (under the Articles of Incorporation)’ is meant and vice versa. A Managing Director under the Articles of Incorporation is appointed upon incorporation and afterwards by the General Meeting of Shareholders, unless the Articles of Incorporation determine otherwise. Legally there is a big difference between a ‘Managing Director (by title)’ and a ‘Managing Director (under the articles of incorporation)’. In practice both are called director, CEO, General Manager, President or other creative names, however not every title conceals a statutory position. A Managing Director is often not aware of his statutory position. The question, whether this is due to ignorance or just plain laziness, is not easily answered.

On March 1, 2004 the new Civil Code (Book 2) of the Netherlands Antilles was introduced. Article 2:8, paragraph 5 of the Civil Code specifies that the legal relationship between a director and the company is not considered or not also considered as an employment contract. In understandable English this new rule means that a Managing Director under the articles of incorporation does not have an employment contract with the company. However if the Managing Director (hereinafter director) was appointed before the introduction of Book 2 of the Civil Code he remains an employee as long as he is director. There is therefore no retroactive effect regarding previously acquired rights.

Directors appointed on or after March 1, 2004 are not defined as employees and will be unable invoke the protective provisions of the labor law. By introducing this new law the legislator has endeavored to simplify the complicated discussion which has been going on for some time, mainly going on in the Netherlands, on the position of managing directors (under the articles of incorporation) under corporate law in relation to labor law.

A director can have an employment contract with a group company as long as he does not hold the formal position of managing director under the articles of incorporation. In addition it is possible that both parties declare that certain or all private law stipulations regarding employment contracts are correspondingly applicable in their contract, for example provisions concerning the notice period and the continuation of salary during illness. Although the employment agreement is not accepted by civil law, the legal relationship between parties, usually structured in the form of a contract for professional services, can be deemed such for tax purposes.

The director may be dismissed at any time by the General Meeting of Shareholders, unless the Articles of Incorporation state otherwise. Prior to such a decision the director must have the opportunity of being heard (seriously) and to caste his advisory vote. Such was the case in the well known ruling Janssen Pers of the Supreme Court on March 10, 1995.

As stated above, the ‘new generation’ of directors has no employment agreement with the corporation. In their case it is questionable whether or not a claim for compensation based on a manifestly unreasonable dismissal will be considered admissible by a court. One may argue, that a director cannot invoke this right, as this possibility is only open to employees and, quite reasonably, concerns a specific employee provision. Some caution is warranted here as the judiciary has not yet expressed its opinion on this matter.

The above is all the more reason to include a ‘golden parachute’ provision in a contract between the director and the corporation. Simply put this is a provision that guarantees the director severance pay if he is blameless for his dismissal. The golden parachute can be structured in various ways. Sometimes long terms of notice are agreed which can be seen as a sort of compensation on dismissal.

William ten Veen

Attorney – Spigthoff Curacao

(15 June 2010)

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Article published in Trusts & Trustees (Oxford Journals)

Trusts & Trustees is the leading international journal on trust law and practice. The most significant source of information in its field, the journal is essential for all trusts practitioners and lawyers. Maike Bergervoet and Jeroen Starreveld of Spigthoff Attorneys & Tax Advisers have written an article on the Netherlands Antilles Private Foundation (a.k.a. SPF), which is published in Trust & Trustees (2010, Volume 16, Number 6, Pp. 496-502).

Abstract

A Netherlands Antilles Private Foundation is a very flexible solution for asset protection and privacy purposes. It can be easily implemented in international holding structures through the Netherlands Antilles and is very suitable for family asset protection. By means of a letter of wishes or provisions in the articles of incorporation, the settlor of the Private Foundation may appoint the beneficiaries of the Private Foundation. A Private Foundation structure should not trigger negative tax consequences in the Netherlands Antilles, even with respect to future distributions. This especially applies to international holding structures set up for privacy or asset protection purposes. Full text.

Karel Frielink

(10 June 2010)

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Arbitration as an alternative for settling disputes in Curacao

Parties with a legal dispute can turn to the public court system to settle the dispute; however, instead of bringing a lawsuit in a public court, they can also opt for arbitration. Arbitration is a form of private dispute settlement in which the parties instruct one or more persons (arbitrators) to render a binding decision on their dispute. The arbitrators may be jurists, but they can also be laypersons. People with specific expertise or experience in a certain branch or industry are often chosen as arbitrator.

Parties can include a so-called arbitration clause in their contracts, on the basis of which they can choose, in advance, for the settlement of any disputes related to the contract via arbitration. They may also choose for arbitration after a dispute has arisen between them.

What if, once a case has been resolved through arbitration in the favor of one of the parties, the other party does not keep to the arbitral decision? If one of the parties does not adhere to the arbitral decision, the other party may revert to the public court system to enforce the arbitral decision. This does however not mean that the court will examine the merits of the case again. The procedure is simple and fast; the court will, in brief, only test whether certain procedural rules have been observed and whether the enforcement of the arbitral decision is not contrary to public order or good morals.

Why opt for arbitration instead of a public court? One advantage of arbitration was just mentioned: the parties themselves can influence who is appointed as (expert or not) arbiter(s). That is not possible with a public court system. For example, in relation to a dispute about the construction of a house between a contractor and a client, it may be useful to have one or several architects on the arbitration board. In the Netherlands, a number of branches of industry have their own arbitration institute, for example the Arbitration Board for the Graphic Industry or the Arbitration Board for the Building Industry.

Another advantage is that parties can – to some extent – influence the procedural rules of an arbitration. Parties for instance often exclude the possibility of appeal, so that arbitral procedures may proceed faster than a lawsuit in a government court.

In addition, it may be an advantage that arbitral decisions are not public. Rulings of the public courts are in principle public. If, for instance, a corporation does not want its trade secrets to become public knowledge, arbitration can be the way to go.

A disadvantage of arbitration could be that the costs may mount substantially. The salary of the arbitrators must, after all, be paid by the parties themselves. However, as far as international commercial disputes are concerned arbitration can in fact turn out to be cheaper, for example, as an alternative to long drawn-out lawsuits in America.

Arbitration is often applied in international business transactions. In international trade contracts, arbitration is increasingly favored. Parties often declare the procedural rules of a recognized international arbitration institute applicable, such as that of the International Court of Arbitration or the International Chamber of Commerce. The Netherlands is a popular forum for international commercial arbitrations on the basis of the arbitration rules of the renowned Dutch Arbitration Institute (NAI).

An arbitration institute has also been established here in Curacao, namely the Arbitration Institute of the Netherlands Antilles and Aruba (AINAA). Arbitration is however relatively seldom used here. One wonders why? One explanation could be that there is considerable confidence here in the public courts system. The courts are accessible, lawsuits can be carried through (relatively) quickly and the costs are (again: relatively) low. However the most important explanation is probably that arbitration as an alternative method for settling disputes is relatively unknown here.

The use of arbitration in disputes on specific issues (for example construction, insurance, accountancy, trust) can also be interesting in Curacao. Additionally Curacao could be an attractive forum for international commercial disputes.

In order to put Curacao on the arbitration map a well-known arbitration institute and renowned arbitrators are required. The AINAA is currently working hard on further professionalizing their institute. There are also plans to organize a symposium to give more widespread publicity to the phenomenon of arbitration phenomenon. The first steps towards a flourishing arbitration practice have therefore been taken, providing the enterprises in Curacao with a good alternative to the public courts system: “See you in arbitration” instead of “See you in Court”!

Annemarijke Bach Kolling
Attorney – Spigthoff Curacao

(4 June 2010)

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A cartoon has been drawn by Mike Flanagan for the 5th anniversary of the launch of Karel’s Legal Blog

June 1st, 2010 marks the 5th anniversary of my legal blog. This is an important milestone for me. Back in May 2005 I only had a rough idea about blogging and what it would take to create a successful legal blog a.k.a. blawg. Now, five years and some 350,000 page views later, I know that despite the small size of my jurisdiction, it is worthwhile providing legal-oriented content on the web on a regular basis. If the regular messages I receive from so many readers is anything to go on, many of my postings are considered worth reading.

It has never been my intention to offer a clear position on legal issues, but rather to give some insight into Dutch Caribbean legal issues that people – including potential clients – may face or are interested in; at the same doing my best to do so in clear, understandable language. My legal blog has proven an excellent way to also inform people about new or future developments.

For a blog to be successful, it is not necessary that it be listed in the top 100 or top 1,000 blawgs or blogs. It all depends on your own goals. In my case, success is measured by the number of visitors, responses, and new clients my blog generates. Thus despite the fact that my blog is almost non-existent according to the Alexa or Technorati rankings, i.e. compared to websites that attract millions of visitors daily, it provides what I need and appears to serve my audience well.

I am truly thankful for the wonderful colleagues and friends who have made these 5 years a success, some of whom I would like to specially mention here, in no particular order: Steve Purkiss, Steve Cranko, and Hazlitt Eastman.

Karel Frielink
Attorney (Lawyer) / Partner

(1 June 2010)

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NOTISIA PA PRENSA –  31 di mei 2010

Karel’s Legal Blog ta eksistí 5 aña

Dia 1 di yüni 2010 Karel’s Legal Blog (www.curacao-law.com) ta eksistí 5 aña. E weblog hurídiko aki ta un inisiativa di Karel Frielink, abogado i sosio di Spigthoff Advocaten & Belastingadviseurs na Kòrsou. Karel ta e promé abogado di Antia Neerlandes i Aruba ku un weblog hurídiko.

Karel Frielink: ‘Na ougùstùs di 2004 m’a bira miembro di e redanan sosial Linkedin i Ecademy, i na òktober di 2004 miembro di Xing. Ei m’a bin konosé e fenómeno weblog. Ora m’a ripará ku un weblog lo por ta un instrumento efikas pa marketing i pa estrechá vínkulo ku kliente, m’a kuminsá ku mi mes weblog. Semanalmente, sentenares di hende ta bishitá mi website’.

E website ta trata lei di Antia Neerlandes i Aruba. Espesialmente lei komersial, finansiero i ‘procesrecht’. Mayoría di e tekstonan ta na ingles ku eksepshon di e krónika ‘Mijn opinie’ (Mi opinion) ku ta na hulandes. Den e krónika aki frekuentemente Karel ta skibi tokante asuntunan polítiko di aktualidat di un forma skèrpi.

Ya a konta mas ku 350 mil ‘pageviews’ (esaki ta e kantidat di bia ku nan a wak e páginanan di e website). Mayoria di e bishitantenan di e weblog ta di Merka. Na di dos lugá ta bin Antia Neerlandes siguí pa Hulanda, Gran Bretaña i Kánada. ‘Un weblog ta un medio ekselente pa tene klientenan eksistente pero tambe pa atraé kliente nobo. Sí t’asina ku bo mester ta dispuesto na  invertí hopi tempu i energia den dje’, di akuerdo ku Karel.

In de Pers:

Antilliaans Dagblad van 1 juni 2010: pagina 7 en pagina 28

Paradise FM / Persbureau Curacao 1 juni 2010: klik hier

Amigoe 1 juni 2010: pagina 5

Extra 4 juni 2010: pagina 46

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Non-residents can be sued

A general rule under the Netherlands Antilles code of civil procedure is that the Curacao court (or another court in the Dutch Caribbean as the case may be) has jurisdiction over defendants which are (in this example) Curacao residents or companies with an office in Curacao. In the case of multiple defendants, there is a general rule to the effect that if a Netherlands Antilles court has jurisdiction over one of the defendants (i.e., where the defendant has its corporate seat or domicile) it has jurisdiction over all defendants, including non-Netherlands Antilles residents or companies in cases regarding personal actions (actions with respect to the fulfillment of a personal obligation, claims arising from an agreement or the law) or movable property.

From a Netherlands Antilles law perspective, proceedings commenced in the Curacao court, can be served outside the jurisdiction on other defendants who are not resident in Curacao. Netherlands Antilles law provides for a specific stipulation on serving court papers on non-Netherlands Antilles residents.

Karel Frielink
Attorney (Lawyer) / Partner

(28 May 2010)

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Item about fire trucks (click here)

The kids news in the Netherlands Antilles and Aruba has won the ‘KNN Award’ during the annual summit of the eight Kids News Network programmes. The award is a yearly professional prize for the best report of the network (see FreeVoice news item).

Sulin Passial, chief editor of the Caribbean Kids News has proudly received the price in the form of a South African art piece, on behalf of her team (picture above, taken by Ole Chavannes). The Caribbean Kids News broadcasts since September 2009 on six islands in English, Dutch and Papiamento.

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Differences with the United States

Civil proceedings in Aruba differ substantially from those in the United States. In Aruba there are, for instance, no juries. In principle, legal proceedings are basically conducted in writing. Oral pleadings are customary in preliminary relief proceedings, but optional in proceedings on the merits. Discovery proceedings like those in the United States do not exist. Pre-trial motions similar to those in the United States do not exist in Aruba either. There are, however, so-called incidents or ancillary proceedings in Aruba.

An ancillary proceeding may be a separate procedural step or an ancillary step within the framework of the main proceedings. Ancillary proceedings may involve an ancillary procedure, an incidental defense, or a court-ordered ancillary proceeding. Examples of an ancillary procedure include a procedure for joining parties, a procedure for joining claims, and a procedure for obtaining security for costs.

If proceedings on the merits are initiated by a non-resident plaintiff, the defendant may ask the court to order the plaintiff to provide security for damages, costs and interest which it might have to pay as a result of the judgment in those proceedings. This “cautio judicatum solvi” does not have to be provided if a Treaty on legal proceedings exists between Aruba and the country of residence or establishment of the plaintiff.

There is no possibility for a (pre-trial) motion to dismiss the case, based, for instance, on the fact that there already is a settlement agreement in place. The most important incidental defense is the defense that the court is not competent to hear the case, for instance, because the parties have agreed to submit the dispute to an arbitral tribunal.

Karel Frielink
Attorney (Lawyer) / Partner

(22 May 2010)

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