We recently found out whether the appeal directed against a judgment ordering a client to cooperate in delivery by means of a penalty payment should be entered in the remedies register.
After searching the Internet, we found that opinions are divided on this issue. This prompted us to delve into the Register of Remedies (see also the related article "The Danger of the Unknown Register of Remedies" on this subject) and the obligation of registering the remedy if there is an order for delivery.
Article 3:301(2) BW
Especially in real estate practice, Article 3:301(2) of the Civil Code is a common pitfall, but this provision can also be important for other areas of law, such as construction law, environmental law, bankruptcy law or liability law. In brief, this provision entails the obligation to register an appeal against a judgment that replaces a deed intended for the delivery of registered property in the register of legal remedies. While there are different opinions in the literature on the precise application of Article 3:301 of the Civil Code, the rigorous sanction of not (correctly) applying it is not in dispute. Failure to compulsorily register a remedy in the register of remedies leads to inadmissibility.
The article comes to life with the following procedural history. Firstly, the seller will have to refuse to cooperate in a delivery of a registered property. Next, the judge will have to order the seller to deliver, and in the event delivery still fails to occur, he will have to substitute his ruling for a (delivery) deed to be drawn up by the parties. Only if one of the parties to the litigation appeals against this ruling, Article 3:301 of the Civil Code will apply. attorneys should be keenly aware that in this particular litigation, this obligation to tender suddenly comes to life. Nevertheless, in practice this obligation is so frequently overlooked that Article 3:301 of the Dutch Civil Code has become known as a litigation assassin as a result. In our opinion, this is reason enough to take a closer look at Section 3:301 of the DCC.
Law system
A buyer can claim performance from a seller under Article 3:296 of the Civil Code to perform the act of delivery necessary for the transfer of a registered property. The buyer often claims this act of delivery against a penalty payment. As a rule, a penalty payment provides enough pressure to induce the seller to deliver. However, if the seller is insolvent, in a comatose state or simply does not respond, a penalty payment is often not the most appropriate means to still induce delivery. In such situations the court can - often in summary proceedings - order a party to deliver on the basis of Article 3:300 paragraph 2 of the Dutch Civil Code and, in doing so, let its judgment take the place of a (delivery) deed to be drawn up by the parties. Enforcement of the judgment takes place through registration of the judgment in the public registers. However, Article 3:301 paragraph 1 in conjunction with Article 3:17 paragraph 1 under e of the Civil Code provides that registration is only possible if the judgment has been served and a) has become res judicata - this will have to appear from a so-called "registrar's certificate" (Article 25 paragraph 1 under a of the Land Registry Act) -, b) or is provisionally enforceable and a term set by the court has expired.
Judgments that have become res judicata (see subparagraph a) offer the most certainty in terms of property law. A judgment that has been declared provisionally enforceable (see subparagraph b) can be registered immediately without having the force of res judicata, although it can still be set aside as long as there are legal remedies against it. To keep the registers as reliable as possible, the legislator indicated in the explanatory memorandum that judgments within the meaning of article 3:300 paragraph 2 of the Civil Code should preferably not be declared provisionally enforceable. Moreover, a declaration of enforceability does not mean that the buyer - from the moment of registration of the purchaser - will be able to dispose of the registered property immediately. A third-party purchaser or mortgagee will (have to) exercise restraint in view of the uncertainty about possible future annulment of the court ruling. However, the possibility is included in the law for pressing cases. Practice is obstinate: in spite of the legislator, these types of judgments are often provisionally enforceable.
The law names the registration requirement for specifically three procedures: opposition, appeal and cassation appeal. The remedy to be registered is the (appeal or cassation) summons. In concrete terms, this means that all district courts, courts of appeal and the Supreme Court must keep a remedies register. Article 3:301(2) of the Civil Code requires that the remedy must be entered in the register of remedies within eight days. For the party wishing to file an appeal, it is advisable to pay close attention to the exact moment it does so. This is because the eight-day period already begins to run from the time the appeal is filed and not from the time the appeal period expires. Recovery within the appeal period is no longer possible (HR November 27, 2015, ECLI:NL:HR:2015:3420).
Ratio
The idea behind this procedural rule is that the court clerk should be able to check whether a judgment is res judicata. The registration requirement applies with respect to appeals against both regular and provisionally enforceable judgments. If the clerk could not check whether the judgment is res judicata, he could not issue a clerk's certificate either. For regular court judgments, the consequence is that they are not enforceable for the time being. For enforceable judgments, the importance lies in providing security to any mortgagee or third-party purchaser. By means of a registry declaration, the acquirer can demonstrate the irrevocability of the judgment and, as a result, can actually dispose of the registered property.
At bottom, the legislature was concerned with ensuring the reliability of the public registers. Indeed, if the Register of Remedies and the Registrar's Statement did not exist, judicial decisions subject to annulment would too often be entered in the public registers. This would cause the public registers to reflect reality to a reduced extent. This would be a development that would create too much uncertainty for real estate and financing practice, which could cause considerable delays in the purchase and delivery of real estate and the establishment of mortgages, among other things.
Supreme Court: strict application of a flexible line
Because of the heavy sanction - inadmissibility - the Supreme Court applies a flexible line from which follows that this sanction, in view of the ratio of Article 3:301 paragraph 2 of the Civil Code, may only relate to the part of the judgment that replaces the instrument to be drawn up by the parties as referred to in Article 3:300 paragraph 2 of the Civil Code (HR 24 December 1999, NJ 2000/495 (Dudnik/Hagens). The party who has failed to register his appeal in the legal remedies register will therefore only be inadmissible for the part of the judgment that relates to the actual execution of a delivery of registered property. Case law shows that there can be discussion as to what exactly constitutes real execution. For example, a grievance against the amount of the purchase price does see real execution if it also contests the delivery (HR 4 May 2007, ECLI:NL:HR:2007:AZ7615, NJ 2018/141). Consequence: failure to register and therefore inadmissible. As soon as the grievance only relates to the purchase price and the delivery is not disputed then there is no default and therefore no sanction follows (HR 11 September 2015, ECLI:NL:HR:2015:2531, NJ 2015/368).
On the other hand, the Supreme Court is strict in the application of the inadmissibility sanction as soon as the issuance of the clerk's certificate might be compromised. The Supreme Court takes as its benchmark the question of whether the clerk can determine whether the judgment has become res judicata and not whether the reliability of the public records is sufficiently protected. This distinction came up in a judgment where entry in the public registers was not yet possible because the judgment had not yet been served. The Supreme Court ruled that, despite the fact that the reliability of the public registers was not at issue, the obligation to enter the appeal in the register of legal remedies remained unaffected (HR 4 May 2007, ECLI:NL:HR:2007:AZ7615, NJ 2018/141).
That practice is often unfamiliar with the register of legal remedies follows very nicely from a recent Supreme Court judgment of April 23, 2021, ECLI:NL:HR:2021:647. It follows again from this judgment (with a worth reading note by A. Steneker) that the judge before whom the appeal has been lodged must ex officio check whether the appeal has been registered. If the court fails to do so - which the Court of Appeal did in this case - and nothing is said about this in the proceedings and the judgment, the Supreme Court will still have to assess ex officio whether this obligation has also been fulfilled in the second instance. In this case this was not done and the party in question was retroactively inadmissible. An error with serious consequences.
Article 3:301(2) BW: a lawyers paradise?
All in all, the legal figures of the clerk's declaration and the register of remedies create a labyrinth of rules. The latent registration obligation follows from the law and only comes to life on the basis of a court order as referred to in Article 3:300 paragraph 2 of the Civil Code. This requires a certain keenness on the part of the lawyer involved to concretely test this type of situation each time. In our opinion, it is therefore not surprising that article 3:301 paragraph 2 DCC is experienced as a pitfall in practice by attorneys . To avoid this pitfall, we advise to always check for a possible registration obligation as soon as there is 1) a claim for the delivery of 2) registered property and 3) whether there is a judgment that replaces a deed. Consider: how frustrating would it be - after all the work done (!) - to lose a case because of this formal requirement? When in doubt: always do it. Indeed, Article 433 Rv provides that any appeal can and may be registered.
Do not forget this registration requirement and also always check whether the lawyer-defendant has done so in the particular case. The judge should check this ex officio, but the empirical research does show, that not only attorneys, but also the judicial authorities themselves are unfamiliar with the remedies register.
Back to the case study
The case thus involved an order to cooperate in a delivery of a registered property on pain of a penalty payment. Does the obligation under Article 3:301(2) of the Civil Code apply now?
On the one hand, the first thought was: no, because from the law this obligation follows only in the case of an appeal against a judgment in which this judgment replaces a deed. But on the other hand, an appeal filed could also have the effect of setting aside the judgment in which the client was ordered to deliver and that delivery must be reversed.
After our research and after the rationale of the register of remedies and its mandatory registration at 3:301(2) BW has been well understood, it was clear to us. If a party is ordered to cooperate in delivery and he does so, but at the same time lodges an appeal, registration of the remedy is not mandatory. Indeed, the public records will remain "clean" in that case anyway, so the custodian of the public records will not directly benefit from a clerk's statement. If the judgment is annulled and the delivery must be reversed, an action such as cancellation will be required to undo it. It is not the case that a voided judgment is registered.
Nevertheless, in this case we chose to register the remedy. The remedy can and may be registered, and an unnecessary registration cannot do any harm in any case. All the more so because, unfortunately, we cannot assume that even the courts always have this ratio in sharp focus.
