Don’t get scammed, and don’t let scammers scam: the legal framework for mistaken payments clarified

Recent case law shows that cases like this are not unique to Bol.com. In his judgment of 28 May 2021, the Dutch Supreme Court clarifies the legal framework concerning payments in discharge of an obligation, particularly when it comes to mistaken payments due to online scams (ECLI:NL:HR:2021:783).

The case in first instance and appeal

In this case, Hascor B.V. (“Hascor”), a Dutch company active in the international trade of metals, ordered a batch of ferrochrome from Yildirim Holding A.S. (“Yildirim”), a long-standing business partner. As per usual, Yildirim appointed the order to a subsidiary company, namely Devante Minerals Trading Ltd. (“Devante”). Yildirim confirmed the shipment by sending an e-mail that included the shipment documents and invoice for the payment.

Just a couple of minutes later, Hascor received a similar e-mail from the same e-mail address, stating: “Please neglect previous shipping documents due to mistakes. We will correct immediately and resend to you. Please acknowledge. Best wishes (...)”.  A third e-mail contained the same shipping documents as the first e-mail; however, the bank account number on the invoice was changed.

Hascor subsequently paid the sum to the bank account named on the (new) invoice. During the next few months, more e-mails were exchanged over similar-looking (but different) e-mail addresses. It was not until Hascor paid the sum of a second order to the wrong bank account that Hascor and Devante discovered they had been duped: the bank account number both invoices had been paid to did not belong to Devante. Hascor could still reverse the second payment, but the first payment was long gone.

Devante demanded payment from Hascor for the first shipment. Hascor refused and stated that they had in essence been relieved of their duty to pay by paying the scammers, because they rightfully trusted in the false invoice. Devante disagreed and started proceedings, claiming performance from Hascor. 

The court in first instance ruled that Hascor had not been relieved of the duty to pay (ECLI:NL:RBGEL:2017:2940). According to the court, Devante’s actions could not be considered negligent, and the alleged trust in the false invoice was not enough to consider Devante bound by the false invoice.

The court of appeal, however, decided that in the circumstances Hascor had reason to trust the false invoice and that there were additional circumstances to justify attributing the risk of the scam to Devante (ECLI:NL:GHARL:2019:11338).

The court of appeal inferred this from the Supreme Court ruling in the Kamerman/Aro Lease-case (HR 7 February 1992, ECLI:NL:HR:1992:ZC0398), where the Supreme Court ruled that when a person falsely assumes someone’s identity, the person who was impersonated can rely on the fact that the false statement was not his. The impersonated person is not liable for the false statement, not even when the scammed person has trusted rightfully in this false statement. Under special circumstances, however, where the risk of the consequences following from the false statement should be attributed to the impersonated, the scammed can be discharged of his obligations. This follows from the principles underlying articles 3:35, 3:36, 3:61 (2) and 6:147 of the Dutch Civil Code (“DCC”) (articles concerning trust; in intentions of counterparties, power of attorney and securities).

According to the court of appeal, various circumstances in this case led to the conclusion that the payment of the false invoice was attributable to Devante: the e-mails Hascor received were sent from the correct e-mail address and it is not unusual for shipping documents to change, and as a result Hascor did not have any reason to check the invoice documents. Finally, Devante prescribed the method of invoicing by e-mail, which made the scamming by e-mail possible.

The judgment of the Supreme Court

Devante appealed this decision to the Supreme Court. In Devante’s opinion, there were no special circumstances that justified the conclusion that the payment of the false invoice was attributable to Devante. Besides this, Devante complained about the fact that the court of appeal made no or insufficient distinction between the question whether Hascor could reasonably trust the e-mail containing the invoice, and the distinguishable question whether Devante can be blamed for this. Therefore the Supreme Court had to clarify whether the Kamerman/Aro Lease case is applicable in cases like these, and if so, what circumstances can lead to the conclusion that a false statement should be attributed to the impersonated.

According to the Supreme Court, the court of appeal correctly applied the criterion following from the Kamerman/Aro Lease case.  The Supreme Court rejected all complaints and upheld the court of appeal’s decision. It was not necessary for the court to divide between facts that supported the decision of reasonable trust on one hand, and facts that formed the additional circumstances that led to the accountability of Devante on the other. Which exact circumstance led to the decision is unclear, however; in the end the Supreme Court found the circumstances sufficient to support the decision of the court of appeal.

Observations on the judgment

Three important observations can be inferred from the Supreme Court’s  judgment.

First of all, the Supreme Court adds ‘in abundance’ that if your company is scammed due to a falsified invoice, the Kamerman/Aro Lease jurisprudence is decisive, and article 6:34 DCC is not applicable. The court in first instance in this case had already concluded this as well. Article 6:34 DCC determines that a debtor is released by payment when he pays someone who was not authorised to receive the payment, even though he had reasonable grounds to believe that the person he paid to was entitled to the receive the payment. This article aims to protect a debtor that, on reasonable grounds, pays to a party that in reality is not his creditor. This is a different situation than addressed here, where the debtor does not pay the wrong person assuming that the person was authorised to receive the payment, but the debtor unknowingly pays to the wrong person.

This decision is interesting because in lower case law article 6:34 DCC is often cited in cases such as these. In the Bol.com case, for example, the court of first instance stated that neither the most prominent literature nor the parliamentary history made clear that article 6:34 DCC was not applicable in cases where a debtor pays to a party posing as the creditor. Therefore, the court used article 6:34 DCC to decide in the Bol.com case, and concluded that Bol.com could not reasonably have trusted the fake e-mail, in part because there were many errors in the language used. 

Secondly, the Supreme Court weighed the interests of parties in light of the circumstances in order to decide in whose scope of responsibility the wrongful payment falls. The level of adequate precautions taken by a party in order to reduce the risk of fraud can contribute to the level of responsibility they carry within the Kamerman/Aro Lease criterion. So, it is not just in your best interest to prevent yourself being scammed, but you must also take precautions for your counterparty to not be scammed - in your name - as well.

Thirdly, the Supreme Court ruled that the risk attribution need not necessarily be all-or-nothing; the circumstances may be such that the rightful trust of the addressed in the impersonation is only to a certain degree attributable to the impersonated. This equitable distribution of the 'pain' is, however, not as easy as it seems. Claiming performance is in essence an all-or-nothing claim; it is unlike a tort claim, where the obligation to compensate damage can be reduced by – for example – invoking a claim based on the ‘own fault’ of the injured person. A claim of performance cannot (directly) be reduced by invoking own fault by the claimant. The Supreme Court does not clarify on which legal ground this distribution can take place. It is conceivable that the effects of an agreement can be mitigated and supplemented by the standards of reasonableness and fairness (article 6:248 DCC), but this is a high bar.

What is clear, however, is that the possible (adequate) precautions measures (or a lack thereof) that a company took has taken to prevent fraud might prove essential in this process of equitable distribution. That means that companies should make sure they take the necessary measures to prevent fraud, and when it gets to a legal dispute, to mitigate any attribution to the company they represent.

This blog was written together with Chrisjan de Looff, student trainee at Stibbe during May-July 2021.