2021-11-doc2 Was Rembrandt involved in cross-border insolvency issues?

Rembrandt (1606-1669) is seen as one of the greatest Dutch Golden Age painters. Was Rembrandt involved in cross-border insolvency matters? Research shows there are traces of commissions coming from outside Holland and indeed, financial distress surrounded him in the first half of the 1650s. In 1656 he went ‘bankrupt’, that is to say, Rembrandt voluntarily (no creditors chasing him) requested a court to grant him “cessio bonorum”.

Cessio bonorum Cessio bonorum (or assignment of an estate) has its roots in Roman law. It was essentially a legal means to avoid being imprisoned for outstanding debts and was quite a common practice in medieval and early modern North-West Europe. Insolvency law in Holland the 17th century was something of a legal melting pot, which included canon law and Roman law, legislative collections like the Great Placard books, collections of jurisprudence, opinions of legal authors and the publications of, for instance, Dutch humanist Hugo de Groot (Grotius). In the city of Amsterdam, an Ordinance dated 1643 and revised in 1659 applied to insolvency matters. This mixed legal system of law in Holland, the result of the growth of an uncoordinated set of rules and principles, is referred to as Roman-Dutch law, a term still used today in South Africa.

Desolate Boedelskamer. In this area of law, the Amsterdam Chamber of Abandoned and Insolvent Estates (Desolate Boedelskamer) had a specific role; in today’s terms it would be a partly administrative, partly legal institution. In a recent study, Maurits den Hollander, an assistant professor at Tilburg Law School, evaluated its ancient records to see how the Chamber of Abandoned and Insolvent Estates and its staff were able to contribute to the development of what he terms as ‘innovative insolvency procedures’ in 17th century Amsterdam. He found that the Chamber was a rather small size organisation with politically appointed commissioners. They managed the institution under a classic collegiate form of power-sharing, as part of their ‘civic duty’ as regents of the urban community. He also has found that the Chamber introduced important improvements to the existing insolvency procedure and practices, such as transparency, objectivity and an equal treatment of all parties. In all, Den Hollander concluded that the Chamber is a clear example of how professionalisation and good governance are able to provide systemic trust in a world of growing complexity.

And cross-border insolvency? Rembrandt indeed had foreign clients beyond ‘Holland’ including a Portuguese merchant and a Sicilian nobleman who purchased his paintings – but their involvement as creditors in Rembrandt’s cession bonorum, if any, has not been documented. As an area of interest, private international law (or conflict of laws) indeed did exist at the time. Since the 14th century, local or regional rules could be determinative in situations with regard to subjects such as the legal age of adulthood, the independence of a person to act without the consent of someone else, the transfer of real estate or the payment of obligations. In those days there was no legal distinction between a person and his business. The strong medieval city-states in northern Italy in particular had developed a system of so-called statuta. These were local ordinances that were issued for the territory of the city-state. They deviated in certain respects from Roman law, which had continued to live on in Italy as ius commune, the general applicable law in the Roman Empire. Because these statutes differed and because there was intense mutual trade and legal transactions, there were sometimes conflicts between these statutes and these were resolved by legal scholars.

The Low countries. A similar development could be noted in the Low Countries. Regions (usually provinces or cities) established rules that led to rather divergent systems of law applied in different territorial circles. As an example, one often found that if an inheritance fell open, the real estate would be inherited according to the law of succession of the place where it was located, while the other components of the estate would be inherited according to the law of the place where the deceased person had last resided. The internationalisation of private law was the result of the internationalisation of society at that time, with growing mobility among different groups of the population, cross-border economic traffic, interest in investing outside one’s own territory and emerging international trade. Well into the 19th century, private international law was mainly determined by various methods developed by writers. The rules then generally had cities as geographic territory. In the 17th century it was assumed in Holland and Zeeland (provinces of the Netherlands) that a legacy of movable property was valid, and according to the law of the city of Middelburg – the capital of Zeeland – it remained valid after the transfer of domicile to another city where a rule of prohibition was in force. The law that declared the property of spouses common also did not apply to property located outside the territory of the legislator, unless different prenuptial agreements had been drawn up.

Comity. There was also an open attitude with regard to foreign law (which applied outside the relevant legal circle) related to persons. Its application was assumed on the basis of the principle of comitas, which means that legal circles mutually respect the validity of each other’s legislation, not because a rule of law (a treaty) obliges them to do so, but “ex comitate”, out of benevolence and the importance of continuity of good relationships between these legal circles. Here too, recent legal-historic research has posited an important question: within the territory of the city of Amsterdam, what is the position of ‘foreign’ creditors – for instance creditors located in Middelburg, Delft or Dordrecht – in relation to insolvency proceedings initiated or supervised by the Chamber of Abandoned and Insolvent Estates in Amsterdam? Overcoming geographical distance and informing these creditors was an obvious obstacle in those days. A foreign creditor might hear about an insolvency too late to successfully file his claim.

Recent historical research by Den Hollander and another Tilburg lecturer, Remko Mooi, draws the conclusion ‘… that in the case of cross-border insolvency procedures, cooperation rather than competition between local authorities formed the leading motive for the creation of open access institutions’, meaning that the commissioners of the Chamber ‘… actively stimulated and facilitated arbitration, preferring a widely supported accord to the ‘hard’ execution of an estate. At the end of the day, this benefitted all parties involved in the insolvency, both locals and foreigners’. Handling insolvencies in early modern Europe was supported by networks of correspondence between local authorities, including cities such as Frankfurt, which ‘… utilised the principle of reciprocity to the mutual benefit of all of their citizens’. Den Hollander and Mooi conclude: ‘The improved intercity relations provided all creditors with a stronger position in foreign insolvency proceedings. This reduced risks, strengthened mutual trust, and thereby likely increased the availability of credit. From the cases discussed in this article, it becomes clear that reciprocal inter-city cooperation on insolvency matters played an important role in the rise of open access institutions and a truly international economy’.

This all sounds very familiar in our day and age. The European Insolvency Regulation is based on ‘mutual trust’, while the foundation of Chapter 15 of the US Bankruptcy Code lies in ‘comity’. They both form the cornerstone of present-day cross-border insolvency law, and also the starting point for my next journey: my work on the 5th edition of my books concerning International Insolvency Law, Parts I and II, for which I will periodically ask readers’ practical input.

Further reading

Rembrandt had a rather troublesome, discordant nature. He was a party to many contracts and notarial deeds that lead to over 20 disputes and conflicts during nearly all of his Amsterdam period from around 1632 till 1669. He was engaged in legal misunderstandings, conflicts or battles of all kinds, with family members, patrons, neighbours, personnel and creditors, that touched upon 17th century Dutch family law, marriage law, inheritance law, contract law and the law of obligations, company law, insolvency law and private international law (conflict of laws). Mid November 2021 my new book was published in which I cover a large part of this troublesome legal and financial characer, see Bob Wessels, ‘Rembrandt’s Money. The legal and financial life of an artist-entrepreneur in 17th century Holland’, Deventer: Wolters Kluwer. ISBN 9789013164893. Please feel free to support in these troublesome times for cultural institution, the and order the book (written in English) here: https://webshop.rembrandthuis.nl/nl/rembrandts-money.html. More about the author, Bob Wessels, with references to the creation of the story of his book, see https://bobwessels.nl/blog/2021-11-doc1-rembrandts-money-book-out-now/.