Dutch Court of Appeal rules Ultimate Beneficial Owners can request shielding of data

Tuesday, 16 November 2021
Dutch Court of Appeal rules Ultimate Beneficial Owners can request shielding of data © Lisa S. / Shutterstock.com

A Dutch court has ruled on appeal in the summary proceedings brought by Privacy First concerning the Ultimate Beneficial Owners (UBO) register. Like the preliminary relief court, the Court of Appeal of The Hague unfortunately rejected Privacy First’s claims.

The court in preliminary relief proceedings earlier confirmed that there is every reason to doubt the legal validity of the European money laundering directives that form the basis for the UBO register. The judge ruled that it cannot be precluded that the highest European court, the Court of Justice of the EU (CJEU), will conclude that the public nature of the UBO register is not in line with the principle of proportionality. The ruling of the CJEU is expected in mid-2022.

Existing legal entities in the Netherlands do not have to register their UBOs until 27 March 2022. This is different for new legal entities: these have to register their UBOs immediately. The Court of Appeal of The Hague deems it unlikely that these UBOs will suffer serious damage in the short term and points out that UBOs fearing to be at risk from the disclosure of personal data can immediately shield these data from the general public. Dutch law provides for this possibility. The Hague Court of Appeal called this ‘a simple way to prevent UBO data from becoming or remaining public’. UBOs can apply to the Trade Register for shielding. As long as such applications are pending, UBO data will actually be protected. Now that the Court of Appeal has so emphatically pointed out this possibility, it is expected that many UBOs will follow this route.

‘The solution must come from the highest European court, the Court of Justice of the EU’, comments Privacy First’s attorney, Otto Volgenant of Boekx Attorneys. ‘It will rule on this in mid-2022. I expect that the Court will mark the end of the open nature of the UBO register. Thus far hardly any data have been entered into the register and I advise everyone to just wait as long as possible. The Dutch government has arbitrarily chosen a date by which UBOs must provide their data, namely 27 March 2022. It would be wise to postpone that end date by a few months until after the CJEU has provided clarity. That would prevent a lot of trouble and unnecessary costs.’

The judgment (in Dutch) of the district court in preliminary relief proceedings can be found here:
http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2021:2457  
while the judgment (in Dutch) of the Court of Appeal can be found here:
http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:GHDHA:2021:2176

Update 14 April 2022: further legal action by Privacy First against the UBO register may follow in mid-2022, depending on the outcome of similar Luxembourg lawsuits at the EU Court. Recently, Dutch Parliament passed a motion that until the ruling of the EU Court no fines should be imposed on organizations that have not yet registered their UBOs. It also seems that the UBO registration obligation of foundations and associations will not be enforced for the time being. Privacy First closely follows these developments and tries to have a positive influence on them as much as possible.

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