Track Record: Lifting of Prejudgment Attachment Refused in Solar Panel Dispute Between Turkish Supplier and Dutch Distributor

Mr. Vincent Besters represented ESTG B.V. in summary proceedings concerning prejudgment attachment in an international trade dispute

In January 2018, the Gelderland District Court (Arnhem) issued a judgment in summary proceedings in which mr. V.M. Besters acted as counsel for ESTG B.V. (European Solar Technology Group), a wholesaler in solar panels. A Turkish supplier had obtained prejudgment attachment over ESTG's bank account. ESTG sought the lifting of that attachment — the court refused.

What was the case about?

ESTG had purchased approximately €1 million worth of solar panels from a Turkish manufacturer. An amount of over €533,000 remained unpaid. However, ESTG disputed the claim, citing among other things:

• Significant quality defects (bent panels, colour differences, duplicate serial numbers);
• A six-month delivery delay, causing ESTG to miss an entire season;
• Unfulfilled warranty and certification obligations;
• An unexpected price increase by the supplier.

ESTG put its total damages at approximately €126,000, which it sought to set off against the outstanding purchase price.

The Turkish supplier had previously (in 2016) obtained an attachment, which was lifted after ESTG provided a bank guarantee. Subsequently, the court had ruled in April 2017 — in earlier main proceedings — that the dispute had to be resolved through arbitration in Munich (the DIS). The supplier then commenced arbitration proceedings and obtained a new prejudgment attachment.

ESTG's position

ESTG sought lifting of the new attachment on the grounds that:

• The Turkish supplier's claim was unfounded given the counterclaim available for set-off;
• The supplier was already secured by the previously provided bank guarantee of €533,447;
• The new attachment on top of that bank guarantee was disproportionate and unnecessary.

What did the court decide?

The court in summary proceedings refused to lift the attachment:

• Prima facie existence of the claim established. The Turkish supplier had sufficiently demonstrated that a substantial outstanding payment claim existed. ESTG's counterclaims were not straightforwardly available for set-off in lifting proceedings.
• Bank guarantee did not fully secure the claim. The previously provided bank guarantee was only callable following an enforceable judgment in the main proceedings — but those main proceedings were now the arbitration in Munich. The court doubted whether the bank guarantee could also be called upon following an arbitral award.
• Substantial interests of the attaching party. Given the uncertainty about whether the bank guarantee could be invoked in the context of arbitration, there was sufficient ground to maintain the attachment.

What does this mean for entrepreneurs?

This ruling offers practical lessons for entrepreneurs dealing with prejudgment attachment and international trade contracts:

• A bank guarantee is not automatically an alternative to attachment in arbitration. When providing security, ensure that the guarantee terms also align with the chosen method of dispute resolution (arbitration vs. court proceedings).
• Prejudgment attachment is a powerful tool. A creditor who can prima facie establish its claim is in principle entitled to maintain an attachment — even if the debtor has a substantial counterclaim.
• Quality complaints must be raised promptly and in writing. In international sale contracts (here governed by the CISG), strict time limits apply to quality notifications. Late complaints can undermine your counterclaim.
• International trade disputes require attention to procedural detail. The applicable law for attachment proceedings (here: Dutch law) and the applicable law for the main claim (here: Turkish law / CISG) can differ significantly.

Case Reference

This post is based on ECLI:NL:RBGEL:2018:629.

Mr. V.M. Besters acted as counsel for ESTG B.V. in this case.