Assignment of claims: the principle
Claims are, in principle, freely assignable, unless the law or the nature and purpose of the claim preclude this. A claim that is disputed in legal proceedings may also be the subject of an assignment. The assignee then assumes the assignor’s position in the proceedings and may therefore take any procedural step available to the assignor, such as lodging an appeal, even if the assignee was not a party to the proceedings at first instance (Court of Cassation 23 September 2022, F.20.0119.N).
The right of redemption: a curb on speculation
The legislator seeks to prevent disputed claims from becoming the subject of speculative transactions. For this reason, the legislator grants the debtor what is known as a right of redemption. This right means that, under certain conditions, the debtor can obtain a discharge by paying the assignee not the full disputed amount (e.g. 1,000 euros), but only the - typically lower - price that the assignee paid to the assignor (e.g. 300 euros). The right of redemption thus provides the debtor with a financial safeguard against assignments aimed solely at profit (speculation) from an ongoing dispute.
Requirements for the right of redemption
The debtor may exercise the right of redemption only if two cumulative conditions are met before the assignment of the claim takes place: first, legal proceedings regarding the claim must already have been initiated, and second, the debtor must have actually contested the claim in a procedural document.
In addition, the right of redemption applies only where the assignment of the disputed claim has been agreed upon in exchange for payment of a price. If the assignment is made gratuitously or in the form of an exchange, the debtor cannot invoke the right of redemption.
Determination of price as a point of dispute
The requirement that the assignment takes place in exchange for payment of a price gives rise to frequent disputes in practice - particularly when the disputed claim is part of a broader set of assets.
If a disputed claim is assigned as part of a de facto universality of assets (an entire collection of assets) for a single lump-sum price, the debtor may exercise the right of redemption only if the actual price of the individual claim has been determined by the parties or is determinable. It is, in principle, for the trial court to make a sovereign assessment of whether the price of the individual claim can be inferred from the parties’ common intention, as evidenced, among other things, by the wording of the agreement. However, the court may not take the place of the parties in this regard and cannot itself determine a price ex aequo et bono (Court of Cassation 30 November 2023, C.23.0255.N).
Recent clarification by the Court of Cassation
In a recent decision, the Court of Cassation further refined this standard. The Court held that the actual price for the assignment of a disputed claim ‘must be known to the parties involved in that assignment or can reasonably be determined’ (Court of Cassation 6 January 2026, P.25.1384.N). For example, in the case of two successive assignments of the same claim, a trial court could determine that the price for the assignment of a claim consists of an amount that the assignee - rather than the assignor - paid directly to a previous assignor.
Practical relevance
The case law discussed above is of direct relevance to a wide range of transactions, including the transfer of a legal or de facto universality (such as a business), the assignment of claims to specialised collection agencies, the transfer of loan portfolios between credit institutions, the transfer of an insurance portfolio, third-party litigation funding, mergers and demergers.
Anyone acquiring disputed claims in such transactions would be well advised to document the pricing carefully; failure to do so may result in the right of redemption posing an unexpected financial risk.
Should you wish to discuss your specific situation, please contact Eubelius.
Authors:
- Ignace Claeys, Partner at Eubelius
- Thijs Tanghe, Counsel at Eubelius
- Camille Desmet, Advocaat at Eubelius
