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Background Information to the Council of Europe standards for debt adjustment by the former Chairman of the Expert Group Dr. G.H. Lankhorst, Unit Access to Justice, Ministry of Justice, The Hague, The Netherlands
On 20 June 2007, the Committee of Ministers of the Council of Europe adopted a Recommendation to the European Member States, with an explanatory report entitled “Seeking legal solutions to debt problems”, in Strasbourg.

We already reported and documented the recommendation itself and the final activity report of the expert group on this website.

We now received this article from the former chairman of the expert group that worked on the paper with the follwoing explanation:

"Perhaps you might be interested in this little article that I wrote (and I had it translated here by our service at the Ministry of Justice) about the project to offer a little bit of background information to the readers." We appreciate this information and make it available here. You find the whole paper with footnotes annexed.


Dr. G.H. Lankhorst, Unit Access to Justice, Ministry of Justice, The Hague, The Netherlands

On 20 June 2007, the Committee of Ministers of the Council of Europe adopted a Recommendation to the European Member States, with an explanatory report entitled “Seeking legal solutions to debt problems”, in Strasbourg. The text of the Recommendation itself is printed below, the explanatory report plus other documentation is available on the Council of Europe’s web site.

Towards a European-wide Recommendation
In 2006, the Council of Europe in Strasbourg developed a Recommendation on debt adjustment. This Recommendation is addressed to all Member States of the Council of Europe and is the first specific international instrument regarding debt adjustment. The general liquidation legislation already had cross-border instruments in place, drawn up in the context of the European Union.

The “Seeking legal solutions to debt problems” Recommendation is the result of the resolution adopted on 8 April 2005 in Helsinki during the 26th Conference of European Ministers of Justice, on which there are previous publications . This introductory resolution marked the start to agree on a European standard for controlling debt problems. The idea behind the Recommendation is that European Member States that wish to draw up legislation in the fields of debt counselling and debt adjustment can use the Recommendation as a source of inspiration, and that they may consider the standards it contains as minimum standards which a decent system in Europe should meet. The Recommendation does not have the legally binding force of a European Directive; the latter must be implemented within a specific period of time by the national legislative branches in national legislation. Nevertheless, the Recommendation is part of the European legislation and has a very regulating effect, as the level of legislation is adopted by the joint Member States. The Council of Europe in practice acts – c.f. note 2 – also as a stepping stone in the development of European standards, as we often see that ideas formed in Strasbourg appear on the Brussels’ agenda not long thereafter.

The Recommendation was developed by the Group of specialists on seeking legal solutions to debt problems (CJ-S-Debt). The final activity report of the expert group which drew up the document (CJ-S-Debt 2006-6-final) is available on the web site of the Council of Europe (, c.f. note 1). This final activity report includes a report of the three meetings held by the expert group, the expert group’s terms of reference , a list of participants , and of course the text of the Recommendation and the Explanatory Report. The underlying document for the expert group was, apart from the terms of reference mentioned, an inventory prepared by the Swedish University of Umeå , which provides a wide range of interesting insights into the various debt-adjustment systems in the European countries. Despite the many differences, the number of similarities between the European systems was dominant, as one learns from reading this report, which conclusion is a fertile ground for a widely endorsed European Recommendation. The report gives a fairly complete impression of all aspects of debt counselling and debt adjustment.


With the adoption of the resolution in the spring of 2005, the policy on the debt problems was put on the agenda of the Council of Europe. The debt-adjustment theme seems to fit in with the socio-legal theme of the Council of Europe (“social cohesion”) and definitely with the multi-disciplinary approach they are used to in Strasbourg. Debt counselling and debt adjustment do not only require an approach from a legal or legislative perspective, but also from a policy and social perspective. Nevertheless, the opening bid of the Recommendation (the document’s title says it all) is to seek legal solutions to debt problems. Hence, a draft of the Recommendation (plus Explanatory Report) was submitted to the Dutch Legal Aid Council (Raad voor Rechtsbijstand) in Den Bosch for comments.

The general insight is that the government should be involved to some extent in solving the increasing debt problems, whether (as is the case in most countries) it is the Ministry of Social Affairs or the Ministry of Justice, or (as is the case in a few countries) the Ministry of Welfare or the Interior or (in Luxembourg) the Ministry of Family Affairs. This is necessary, because the market apparently does not function properly: in the majority of the cases in which the credit arrangement is settled as should, the players on the market benefit, but in a minority with serious negative consequences, the market does not have a solution. In those cases, the government has to step in, where there is the problem of the sense of responsibility on the part of market players becoming less and less if the government gives shape to the safety net (whether it is debt counselling or debt adjustment or both) in an active way – after all, isn’t there already a good provision created by the government? The motives for government involvement differ: sometimes, they want to restrict themselves to adjusting existing debts that cannot be solved otherwise, at other times, the national policy makers think more along the lines of preventative measures: preventing all sorts of problems arising from the debts.

The Recommendation has not been developed in a plenary session, i.e. not all 46 member states have actively participated in its drafting. It goes without saying that the final result was argued and approved early 2007 in the plenary session of the CDCJ. The choice was to have it drafted by a small expert group, the less time-consuming scenario (not least because of financial considerations). Participation by Dutch experts was obvious, for the Netherlands is regarded as one of the model countries in the field of debt problems within Europe – in spite of the system being criticised in the Netherlands. That also applies to countries such as France, Ireland, Austria, Belgium and Denmark, which all have a reasonably well-functioning “two-stage system” in place, the out-of-court or amicable debt counselling route and the court-ordered debt adjustment on the basis of a specific statutory scheme, combined with a supervising administrator of some sort.


The Dutch administrator or debt counsellor that reads the Recommendation may not derive many exciting new insights from it at first sight. In 1998, the Netherlands introduced a specific statutory arrangement and it has a long tradition in the field of out-of-court debt counselling. However, that does not mean that an indifferent reaction is justified. The answers to the Questionnaire sent round by the Finnish Minister of Justice in the summer of 2004 and the report by Kiesilainen and Henrikson referred to above show that a substantial number of European countries have no or little legislation regarding debt adjustment . For those countries the standard recently set by the Recommendation is rather high. A lot will be accomplished if those member states can draw inspiration from the Recommendation or hire experts. The idea of watching our European neighbours seems a good idea, so that not every legislative branch has to reinvent the wheel, but that specific core principles are made available via the Council of Europe.

This Dutch legislation was enacted only nine years ago, and other countries (e.g. France) have had experience with court-ordered debt adjustment for longer, and often were slightly quicker with implementing similar amendments to the legislation as we did. These include Finland and Sweden. There are also member states that only recently got acquainted with the achievements of the free market economy thanks to the iron curtain, where credit development is growing even more quickly than has been the case in Western Europe, and which could do with some timely advice, even if they (or precisely because they) are not in ever respect ready for legislation with this form of social legal protection. The documents prepared by the Council of Europe show that even a “model country” can learn a thing or two from their neighbour’s different approach. In the Netherlands, the Debt Repayment (Natural Persons) Act (Wet schuldsanering natuurlijke personen) strongly resembles bankruptcy, but that is not necessarily so elsewhere. Perhaps, we could learn something from the less legal set up of a debt-adjustment system as France has, where regional committees for “surendettement” (excessive loans) in each area review requests for help with problematic debts? It is interesting to know that the Banque de France plays a prominent role in those regional committees, which have members from many different positions, and where it is impossible for the credit lenders to shirk away from their responsibility.

Another striking feature is the good-faith principle used in the Scandinavian countries, France and the Netherlands, but not in Germany and Austria – where admission to the arrangement (as is the case in our bankruptcy cases, c.f. Section 6 of the Dutch Liquidation Act) depends on the state of insolvency, and where the reason for the debtor’s problems is less relevant. Moreover, it is worth considering that the debt-adjustment term and the ‘clean slate’ seem shortest in the Netherlands and Denmark (3 to 5 years), but before creditors find this disgraceful, they should realize that the Dutch attachment system (90% of the guaranteed minimum income) and the almighty administrator are very stringent compared to other member states . The choice of the national legislative branches seems to be between a short-term stringent regime and a longer-term, less stringent regime. There is a case for either option. Some creditors would rather see a short-term and stringent regime, whereas a longer-term, but less stringent regime would prove more helpful to others, such as the seven-year debt adjustment in Austria. For creditors, the net proceeds of either option (short-term/long-term) need not be very different, as it does not only concern the term, but also the amount seized. The extent to which the cost of the procedure is settled (fee of administrator, publications) are charged to the estate assets is a co-determining factor for the recovery rate. Our system, under which administrators are in part subsidized by the government, is rather favourable for the creditor: the Dutch government pays part of their fee, while the proceeds of a debt-adjustment arrangement are for the creditors . Another interesting factor is the extent to which the judiciary is involved in the debt adjustment – which may vary, but the Council of Europe assumes that (in light of the creditors’ interests) a court order is essential, in view of Article 6 ECHR . An interesting question is whether that applies to both the decision on whether someone is eligible for the arrangement and the decision to remit the rest of the debts, or only for the latter.


What is not covered by the Recommendation? It does not give a pan-European definition of a debt situation that is considered problematic. The expert group consciously opted for not attempting to pursue a common international definition, which would probably be a difficult and fruitless exercise and would have resulted in very little. The expert group believed it was more useful to word actual recommendations in the time available under the terms of reference, as the terms of reference did not specify the expert group’s duties as ‘seeking legal definitions for debt problems’.

Taking into account the various legal systems in the member states, it was best to formulate common principles which could be a recognizable starting point for legislation or policies for each European legislative branch.
A comparative study between the European legal systems was available (in respect of some aspects in the annexes) thanks to the report written by Kiesilainen and Henrikson, but that has not been given a rating by the expert group. The Recommendation asks the member states to analyze each other’s legislation and to exchange best (or at any rate: good) practices. It is true that one can also learn from “bad” practices, but experience shows that member states are not very eager to share those.

The Recommendation acknowledges that lending has become an essential part of our economy and also has made economic growth and prosperity possible (and still does). The negative excesses of unlimited lending, however, must be stopped, and it is up to the member states to strike a balance between the interests of the debtors and those of the creditors.

The official text of the Recommendation is available in English and French and divided into four types of recommendation : preventative measures (no. 2), alleviation measures (no. 3), rehabilitation and reintegration measures (no. 4), and last but not least, implementation measures (no. 5). The text of the Recommendation is printed in full below. An extensive explanation to each individual sub-recommendation can be found in the Explanatory Report .

For footnotes and the text of the recommendation see the annex.

ID: 40247
Author(s): UR
Publication date: 17/09/07

Council of euopre Statement 2005

Council of Europe Declaration 2007

Created: 17/09/07. Last changed: 20/09/07.
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