Actio pauliana

The actio pauliana, also known as the pauliana, is a remedy derived from Roman law and incorporated into Dutch law in Articles 3:45 and 3:46 of the Dutch Civil Code and in the Bankruptcy Act. It enables a creditor to set aside a transaction affecting the debtor’s assets where the transaction was entered into with knowledge that it would prejudice creditors.

The remedy is significant because it safeguards creditors’ rights of recourse against fraudulent transfers of assets, such as the diversion of assets shortly before an impending bankruptcy. The action may be brought both outside and within bankruptcy proceedings: outside bankruptcy by an individual creditor, and in bankruptcy by the trustee.

In practice, the actio pauliana is frequently invoked in respect of transactions with related parties or concluded at a non-arm’s length price, provided that prejudice to creditors and knowledge of that prejudice can be established.