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The Application Initiating Legal Proceedings May Qualify as a Notice of Default

Generally speaking, for a party to be in default under Dutch Caribbean law a written notice must first be issued in order to put the debtor in default. Giving written notice is in fact nothing more than giving the debtor a second chance to perform correctly. This requirement emphasizes the importance given, in Dutch Caribbean law, to eventual performance of the contractual obligation. Notice has to be given accompanied with a reasonable term, in which the debtor has the opportunity to (still) perform correctly. If he does not, the debtor will be in default and, if the other legal requirements are also fulfilled, liable for damages (including statutory interest in the case of a payment obligation). In a Sint Maarten case it was confirmed, by the Supreme Court, that an application initiating legal proceedings may qualify as a notice of default, with all accompanying legal consequences.

The Sint Maarten case concerned a claim for repayment of two monetary loans plus statutory interest. The Court of First Instance of Sint Maarten as well as, on appeal, the Common Court of Justice granted the claim. In cassation, the debtor objected against the order to pay statutory interest. According to the debtor, statutory interest is only due for the period in which a debtor is in default. The debtor argued he has never been in default because he has not been given notice of default. The Supreme Court rejected this standpoint.

Pursuant to Section 6:82(2) of the Sint Maarten Civil Code, if the debtor is temporarily unable to comply or if it follows from his attitude that a reminder would be useless, the notice of default required for the occurrence of default can take place by means of a written notice stating that the debtor is held liable for failure to comply. According to the Supreme Court, the Joint Court of Justice rightly ruled that the petition initiating legal proceedings (subject to conditions) can be regarded as a written notice within the meaning of Section 6:82(2) of the Sint Maarten Civil Code. Therefore, from that date the default had commenced, and the statutory interest period had started to run.