Right of Pledge on Receivables

Under Dutch Caribbean law, both existing and future receivables can be pledged either by a disclosed right of pledge (which requires notifying the debtor of the pledged claim); or an undisclosed right of pledge. Due to a statutory limitation, an undisclosed right of pledge on future receivables can only be validly created insofar as the pledgor will acquire these receivables directly from its debtors by virtue of an existing legal relationship at the time the pledge is created. However, earlier this year, the Supreme Court expanded the potential scope of a deed establishing a right of pledge on receivables.

The Supreme Court has now also approved the simultaneous creation of an undisclosed pledge over all existing and (insofar as possible) future receivables and a disclosed pledge on all other future receivables (which are not acquired directly from debtors by virtue of an existing legal relationship), all in the same deed of pledge. When the right of pledge is renewed, disclosed rights of pledge which have not yet been perfected (that is, not yet been communicated to the debtor of the pledged claim) will automatically be replaced by undisclosed rights of pledge where applicable. The Supreme court also held that, when interpreting the deed of pledge, it should be assumed that the scope of the security was intended to be as extensive as possible, unless there are indications supporting a different interpretation.