In our real estate practice, we have noticed that there is still a great deal of uncertainty surrounding the Didam ruling.
These are the three biggest Didam misconceptions we have encountered in practice:
- “Serious interest = serious candidate”
Those involved in real estate transactions sometimes claim that the municipality is not allowed to sell a property one-on-one to one party, “because if there is more interest in that property, the municipality must give every potential buyer an equal opportunity”.
We have also encountered situations where the municipality’s proposed one-to-one sale was criticised “because another party with an alternative plan had come forward”.
What is overlooked is that in these situations, the exception formulated by the Supreme Court may apply, allowing one-to-one sales despite the fact that there is more interest.
The Didam ruling states that the municipality does not have to offer competition if it is clear in advance or can reasonably be assumed that, on the basis of objective, verifiable and reasonable criteria (otr criteria) drawn up in advance by the municipality, only one serious candidate is eligible for the sale.
The criteria are therefore decisive: if only one serious candidate is eligible on the basis of the OTR criteria, then a private sale is permitted. If this is not the case, then competition must be offered and a selection procedure organised.
When drawing up these criteria, certainly when it comes to area development, the municipality has a great deal of policy freedom. Within the framework of that policy freedom and the objectives to be set, the municipality can and may, for example, use land positions to achieve its policy objectives (Court of Appeal of ‘s-Hertogenbosch, 13 February 2024, ECLI:NL:GHSHE:2024:436).
In that case, however, the municipality must announce its intention to issue the land in good time (prior to the issue) in such a way that everyone can take note of it, and it must justify why, on the basis of the OTR criteria, it is clear in advance or can reasonably be assumed that only one serious candidate will be eligible.
- “Agreements that contravene Didam are null and void”
Another argument we have seen is that if the municipality were to proceed with the proposed one-to-one sale and not hold a public sale procedure, the purchase agreement could be declared null and void, according to recent court rulings.
Contrary to what the certainty of this ruling might suggest, case law has by no means established that agreements that contravene Didam are void. For example, in Didam II (Court of Appeal of Arnhem-Leeuwarden, 4 April 2023,
ECLI:NL:GHARL:2023:2796) ruled that agreements concluded in violation of the Didam judgment are not void, but may be subject to annulment under certain circumstances, the Gelderland District Court intends to refer questions for a preliminary ruling (Court of Gelderland 29 May 2024, ECLI:NL:RBGEL:2024:3314),
and AG Snijders concludes in the Didam proceedings on the merits (Public Prosecutor’s Office at the Supreme Court 24 May 2024, ECLI:NL:PHR:2024:567) that an agreement is not invalid if it has been concluded in contravention of the Didam rules, but that, in principle, the government can only be liable for the damage caused by its failure to comply with those rules.
- “Didam judgment has retroactive effect”
As a defence for a private land transaction entered into in the past, it is sometimes argued that the parties were not familiar with the rules before Didam, that this concerns (an application of) new rules, which – due to the principle of legal certainty – cannot be applied retroactively.
However, lower courts emphasise that Didam concerns the interpretation of existing law. Even before the Didam ruling, public authorities were bound by the principle of equality. The Supreme Court interprets this principle as an obligation to offer potential candidates equal opportunities to compete when selling scarce immovable property. This interpretation of existing law is not regarded (in lower court rulings) as new legislation (District Court of Midden-Nederland, 22 March 2023, ECLI:NL:RBMNE:2023:1244; District Court of Midden-Nederland, 18 March 2022, ECLI:NL:RBMNE:2022:1017).
The fact that the above is (more) nuanced is evident from the recent opinion of AG Snijders and the accompanying press release on the Supreme Court’s website:
https://www.hogeraad.nl/actueel/nieuwsoverzicht/2024/mei/advies-ag-hoge-raad-verduidelijk-beperk-didamregels/:
“The Didam rules were new. They caused a great deal of unrest. Before the Didam ruling, it was assumed in practice that the government had a great deal of freedom. The government often offered equal opportunities when issuing goods, but often not exactly in accordance with the Didam rules. The government also often failed to offer equal opportunities because it had a good reason to do business with a particular party.
Because the Didam ruling does not include transitional law, the Didam rules also apply to the past. This raised the question of when exactly it can be said that the government did not comply with those rules in the past.”
AG Snijders therefore advises the Supreme Court to clarify and limit the rules from the Didam ruling, so that practitioners know where they stand.
The Supreme Court’s ruling is provisionally set for 25 October 2024. To be continued, therefore.
For more information on this subject and the scope for 1-to-1 issuance in light of the Didam ruling, please contact our Didam specialists Patou Courtens (p.courtens@paulussen.nl) or Bert Lejeune (b.lejeune@paulussen.nl).
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