Thumbs Up for Privacy Shield Implementation, but Ombudsman Must be Appointed by February 28, 2019

By Francoise Gilbert on Posted in data protection, EU, European Union Law, GDPR, privacy

The European Commission published its report on the EU-U.S. Privacy Shield on Dec. 19.

The report shows that the United States “continues to ensure an adequate level of protection” for personal data transferred under the Privacy Shield from the EU to participating companies in the U.S., noting that the steps taken by U.S. authorities to implement the recommendations made by the Commission in last year’s report have “improved the functioning of the framework”. In addition, the report states that the Federal Trade Commission has demonstrated a more proactive approach to enforcement by monitoring the principles of the Privacy Shield, including by issuing subpoenas to request information from participating companies.

The European Commission states, however, that it expects the U.S. government to identify a nominee to fill the Ombudsperson position on a permanent basis by 28 February 2019 at the latest. Currently, there is only an acting Ombudsperson. If the position is not filled by that date, the Commission indicates that it “will consider taking appropriate measures, in accordance with the General Data Protection Regulation.”

To view the press release and full text of the report, click here.

Netherlands Commercial Court Approved by Dutch Senate

By Jasper van Gameren on Posted in EU, international litigation, litigation, Netherlands Commercial Court

On 11 December 2018 the Dutch Senate approved the bill for the establishment of the Netherlands Commercial Court (NCC). The NCC is a separate chamber of the District Court of Amsterdam, specializing in complex international commercial disputes. Proceedings before the NCC will be conducted in English, and judgments will be rendered in English. The NCC offers internationally operating companies the opportunity to conduct proceedings in the Netherlands before a specialized Dutch Court in the English language.

With the NCC, the Dutch Judiciary aims to meet the needs of internationally operating companies with cross-border commercial disputes. A change in legislation was needed to allow a Dutch court to render a decision in English. The approval of the bill by the Dutch Senate is the last step in the legislative process, and paves the way for the NCC to open its doors in 2019. The official open date for the NCC is not yet known.

Continue reading.

CJEU Renders Judgment: Taste is Not Protected by Copyright

By Willeke Kemkers on Posted in Copyright, EU, Intellectual Property Litigation

In August 2018 we published a blog about a case before the Court of Justice of the European Union (the CJEU) concerning the possibility of copyright on taste of a food product. The special advisor of the CJEU, the Advocate General, advised that taste should not be protected by copyright.

The main reason for this opinion was that taste cannot be objectively identified as a copyright-protected work. To establish whether a work can be protected by copyright, the work should be clear, precise, intelligible, and durable. Taste, according to the Advocate General, does not have such characteristics for the copyright to be established.

The CJEU’s recently rendered final judgment is consistent with the Advocate General’s opinion.

The CJEU first determines whether taste of a food product is eligible for copyright protection under the applicable European copyright directive. The CJEU holds that taste of a food product can be protected by copyright, but only if two cumulative conditions are satisfied.

  1. The subject matter at stake “must be original in the sense that it is the author’s own intellectual creation” (par. 36 of the judgment). This condition aims to exclude subject matter for which protection is requested by one party, but it has been created by another.
  2. “The subject matter protected by copyright must be expressed in a manner which makes it identifiable with sufficient precision and objectivity, even though that expression is not necessarily in permanent form” (par. 40 of the judgment). This condition seeks to provide clarity to all parties involved as to what precisely is protected, and rules out subjective elements in determining the copyright protection of a work.

In light of the second condition, the CJEU rules that taste cannot be sufficiently identified. According to the CJEU, the taste of a food product is identified based on taste sensations and experiences. These sensations and experiences are subjective and variable, as they depend on multiple factors such as age, food preferences, and consumption habits, as well as on the environment or context in which the product is consumed.

On the basis of these findings the CJEU concludes that the taste of a food product cannot be classified as a protectable work under the relevant European copyright directive.

Hoe ver reikt de informatieplicht van de franchisegever in de precontractuele fase?

By Nini Blom on Posted in Competition Law, contracts, Corporate Law

Een franchiseovereenkomst is een samenwerkingsovereenkomst waarbij de franchisegever en de franchisenemer afspreken dat de franchisenemer tegen vergoeding een licentie verkrijgt om de franchiseformule (naam, stijl, producten en/of diensten) van de franchisegever voor zijn eigen winkel te gebruiken. Het staat de franchisegever en -nemer vrij om de franchiseovereenkomst naar eigen inzicht op te stellen. Alvorens een franchiseovereenkomst aan te gaan, zullen zij daarover natuurlijk onderhandelen. De periode voorafgaand aan het sluiten van de overeenkomst heet de precontractuele fase.

In zijn arrest van 21 september 2018 heeft de Hoge Raad zich uitgelaten over de informatieplicht van de franchisegever in de precontractuele fase. In deze zaak speelt het volgende. Eiseres heeft jarenlang op franchisebasis een C1000 supermarkt geëxploiteerd. In 2011 wordt C1000 overgenomen door Jumbo. De Nederlandse Mededingingsautoriteit verplicht Jumbo om een aantal vestigingen, waaronder die van eiseres, af te stoten.

Eiseres treedt vervolgens in onderhandeling met Albert Heijn (“AH”). Met het oog op het sluiten van een mogelijke franchiseovereenkomst met eiseres, heeft AH onderzoek gedaan naar het omzetpotentieel van eiseres als AH-supermarkt. In dat kader heeft AH aan eiseres een Lange Termijn Prognose (“LTP”) verstrekt. In de LTP staat onder meer de te verwachten gemiddelde weekomzet voor de komende drie jaar van eiseres als AH-supermarkt. Eiseres sluit vervolgens een franchiseovereenkomst met AH. Na ombouw tot AH-supermarkt wordt de geprognotiseerde weekomzet niet gehaald. De weekomzet van eiseres is zelfs aanzienlijk lager dan onder de C1000 formule.

Eiseres vordert vervolgens een verklaring voor recht bij de rechtbank, dat zij bij het aangaan van de franchiseovereenkomst heeft gedwaald. Eiseres beroept zich voorts op de Europese Erecode inzake Franchising (“Erecode”) en stelt dat de in deze Erecode neergelegde afspraken de franchisegever (AH) verplichten om in de precontractuele fase alle informatie en overige gegevens te verstrekken die de franchisenemer nodig heeft om over het sluiten van de franchiseovereenkomst te kunnen beslissen.

De vorderingen van eiseres worden door de rechtbank toegewezen, maar vervolgens afgewezen door het hof. Eiseres gaat vervolgens in cassatie. De Hoge Raad verwerpt het beroep van eiseres en oordeelt dat het hof voldoende heeft gemotiveerd waarom de LTP van AH deugdelijk was. AH heeft bij het opstellen van de LTP diverse, specifiek voor de locatie van eiseres, relevante omstandigheden in acht genomen. Voorts heeft eiseres volgens de Hoge Raad onvoldoende gemotiveerd waarom de door AH voor de LTP gehanteerde rekenmethodes onjuist, dan wel niet reëel waren.

De Hoge Raad oordeelt voorts dat de in de Erecode neergelegde afspraken niet kwalificeren als in Nederland levende rechtsovertuigingen (artikel 3:12 BW). Dit betekent dat op franchisegevers niet de plicht rust om in de precontractuele fase alle informatie en overige gegevens aan de franchisenemer te verstrekken. Opgemerkt zij dat franchisegevers zich bij de totstandkoming van de Erecode beriepen op het normerend effect van de Erecode. Het arrest van de Hoge Raad verschaft duidelijkheid op dit punt en zet een streep door deze redenering door te oordelen dat in de Erecode neergelegde afspraken niet kwalificeren als in Nederland levende rechtsovertuigingen.

Wetgeving

Er bestaat momenteel geen specifieke wetgeving voor franchiseovereenkomsten. Dit betekent dat een franchiseovereenkomst enkel aan het algemene contractenrecht dient te voldoen. Vanuit de praktijk is er echter vraag naar een wettelijke regeling. In mei 2018 hebben staatssecretaris Keijzer (Economische Zaken en Klimaat) en minister Dekker (Rechtsbescherming) aangekondigd dat een nieuw wetsvoorstel zal worden ingediend om de positie van de franchisenemer te versterken. Het is tot op heden onbekend wanneer het veld over het conceptwetsvoorstel wordt geconsulteerd.

Energy Label C Obligation for All Office Buildings in the Netherlands in 2023 (With Few Exceptions)

By Jacomijn Christ and Monisha Sardjoe on Posted in Dutch Property Law, Dutch Real Estate Law, energy label, governing law, property law, real estate

Introduction

Beginning January 2023, energy labels of the major part of office buildings in the Netherlands will have to be at least in category C, because of an amendment to the Dutch Buildings Decree 2012 (Bouwbesluit 2012), published 2 November 2018. This generally means that owners of office buildings with energy labels from D to G (or without any energy label) should quickly implement energy-saving measures to comply with this obligation.

Background

Since 1 January 2008, energy labels for nonresidential buildings (e.g., office buildings, schools, hospitals) have been mandatory when selling, letting, or transferring such buildings. A similar obligation exists for residential buildings in the Netherlands.

An energy label demonstrates the energy performance of a building. It also includes a standard of which energy-saving measures need to be taken to improve energy performance. The lower the energy label, the more energy-saving measures may be required to obtain a better energy label and to improve the energy performance of a building. The label categories range from A to G, with G being the lowest in terms of energy performance and having the most energy-saving measures needed to obtain a higher energy label.

At present, having an energy label in place is mandatory regardless of the category. Starting in 2023, however, stricter regulations will apply to office buildings concerning energy labels. These stricter regulations will be implemented in the Dutch Buildings Decree 2012.

New Requirements for 2023

Starting 1 January 2023, office buildings must have an energy label in category C or higher. The use of office buildings with an energy label below C will be prohibited as of that date. Exceptions will apply in the following circumstances:

  • the office building is part of a (larger) building and the total usable area for office functions is less than 50 percent of the total usable surface area of that building;
  • the total usable area for office functions and ancillary functions in the office building or the building in which the office building is a part is less than 100 square metres;
  • an office building that is mentioned in Article 2.2 Energy Performance Buildings Decree (Besluit energieprestatie gebouwen). Important exceptions based on this article 2.2 are:
    • an office building that is a national monument;
    • an office building that is only used for a maximum of two years.

Office space owners who can demonstrate that, before 1 January 2023, they have taken all measures needed to realize an energy label in category C with an earn-back-period of up to 10 years, can get by with an energy label lower than category C. The application of this provision and especially the application of the earn-back-period are not clearly explained in the amendment to the Dutch Buildings Decree 2012. It is, moreover, unclear how the effect of this provision will be enforced by the relevant authorities.

Consequences of the Energy Label C Obligation

The abovementioned amendments follow from the Energy Agreement (het Energieakkoord) for sustainable growth of 2013. This Energy Agreement aims to, among other things, limit CO2 emissions and save energy consumption in the Netherlands.

In practice we see that office buildings with energy label D, E, or F could, generally speaking, achieve a label C without major renovations (e.g., by lighting or heating measures). For office buildings with an energy label G, more drastic measures may be necessary.

Tenancy

A tenant is not responsible for compliance with the energy label C obligation with respect to the authorities. However, contractual stipulations in the lease agreement may require the tenant to be responsible for or cooperate with taking energy saving measures (e.g., in the case of a shell lease).

(Office) building tenants should inform or remind their landlords of the energy label obligation in a timely manner, as it will be prohibited to use noncompliant office buildings starting 1 January 2023. Furthermore, the execution of energy-saving measures could temporarily interfere with the use and occupation of an office building. Tenants should plan the execution of any measures with the owner/landlord. In addition, owners should communicate with their tenants about the planned energy-saving measures and how to prevent nuisance for the tenant as much as possible.

Sanctions

Starting 1 January 2023, it will be prohibited to use an office building that does not have an energy label C and is not exempted from this obligation. Violations of the energy label-obligation may result in administrative enforcement actions or criminal enforcement actions. This could lead to the imposition of an order subject to a penalty (last onder dwangsom), an administrative enforcement order (last onder bestuursdwang), or administrative fines (bestuursrechtelijke boete).

For the Future

The Energy Agreement aims for an energy label A requirement for the use of office buildings in 2030. Further legislation will likely follow to achieve this goal. Owners of office buildings should take this into account when investing in measures to upgrade their energy label.

Nederlands rulingbeleid wordt aangepast

By Thomas van der Vliet on Posted in Dutch Tax Law

Eén van de pijlers van het Nederlandse “vestigingsklimaat” is van oudsher ons “rulingbeleid”: belastingbetalers kunnen onder bepaalde omstandigheden zekerheid vooraf verkrijgen over hun Nederlandse fiscale positie. Een rulingproces duurt relatief kort, zeker vergeleken met de ons omringende landen. Een Nederlandse ruling, zoals een Advance Tax Ruling (ATR) of een Advance Pricing Agreement (APA), geeft een helder en betrouwbaar uitgangspunt voor de Nederlandse fiscale positie voor de komende jaren.

Nederland staat al jaren onder (inter-)nationale politieke druk om zijn belastingregime aan te scherpen. Ons rulingbeleid kreeg in 2015 bijzondere aandacht, toen de Europese Commissie kritiek uitte op Nederland naar aanleiding van veronderstelde staatssteun door middel van een zogenaamde “belastingdeal”. Sindsdien is het uitgangspunt gemeengoed geworden dat het Nederlandse belastingregime slechts nog ondernemingen zou moeten faciliteren als deze operationeel actief zijn op Nederlandse bodem.

Afgelopen donderdag, 22 november 2018, heeft dit uitgangspunt ook zijn weerslag gekregen in het Nederlandse rulingbeleid. Voor rulings met een internationaal karakter (“Rulings”) heeft de staatssecretaris van Financiën namelijk (onder meer) de volgende maatregelen aangekondigd:

  1. Alle Rulings zullen in de toekomst worden gepubliceerd in geanonimiseerde en samengevatte vorm.
  2. De Rulings zullen worden afgegeven door een kleine groep specialisten, het College Internationale Fiscale Zekerheid.
  3. Belastingplichtigen die een Ruling vragen dienen al jaren te voldoen aan een lijst met substance-eisen. Eerder dit jaar was sprake van een aanscherping van de bestaande lijst per 1 januari 2019, met een minimum aan loonkosten van EUR 100.000 en de aanwezigheid van een huurovereenkomst voor kantoorruimte van tenminste 24 maanden. Nu wordt afscheid genomen van de bestaande lijst en voorgenomen uitbreiding daarvan, en wordt een nieuw vereiste geïntroduceerd van ‘economische nexus’ met Nederland.
  4. Indien het doorslaggevende motief van de belastingplichtige bestaat uit het besparen van Nederlandse of buitenlandse belasting, zal geen Ruling worden gegeven.

Het nieuwe vereiste van economische nexus wordt door de staatssecretaris uitgelegd als het drijven van bedrijfseconomische operationele activiteiten die daadwerkelijk voor rekening en risico van de Nederlandse vennootschap worden uitgeoefend, waarbij voldoende personeel in Nederland beschikbaar moet zijn om die activiteiten uit te voeren. De aankondiging laat nog veel ruimte over voor interpretatie, en de staatssecretaris kondigt aan dat verdere details bekend zullen worden gemaakt in een nader beleidsbesluit. Uiteindelijk wil de staatssecretaris de wijzigingen in werking laten treden per 1 juli 2019.

Duidelijk is dat het minder gemakkelijk zal worden om een Ruling te krijgen. Het vereiste van voldoende economische nexus zal in theorie strenger uitwerken dan de huidige lijst met substance vereisten, al moeten we afwachten hoe dit nieuwe vereiste in de praktijk zal worden gehanteerd. Met betrekking tot het publiceren van een samenvatting van elke Ruling kan men zich afvragen in hoeverre dit voornemen botst met de geheimhoudingsplicht van de fiscus. In de praktijk zal een en ander afhangen van de mate van anonimisering, waarbij niet alleen namen moeten wegvallen maar ook andere typerende aspecten zouden moeten worden weggelaten.

Brexit Consequences for Governing Law and Jurisdiction Clauses

By Jasper van Gameren on Posted in Brexit, choice of law, contracts, Corporate Law, EU, European Union Law, governing law, jurisdiction, Uncategorized

Parties who do cross-border business often declare English law applicable in commercial contracts, accompanied by a jurisdiction clause making the English courts (exclusively) competent to hear claims arising out of the business relationship. In light of Brexit, the question arises what the position of decisions given by the English courts will be in the EU, and vice versa, post-Brexit. The draft withdrawal agreement published on 14 November 2018 does not offer a permanent solution. Therefore, the impact of Brexit on UK court decisions is still uncertain and could hold unexpected and unwanted consequences for parties bound by an exclusive jurisdiction clause.

Governing Law

English law is often chosen by parties to govern a cross-border commercial contract, even when parties have no connection to the UK. English law is generally considered comparatively stable, predictable, and as having an emphasis on the text of the contractual arrangements between parties. English law provides a lot of freedom to contracting parties and generally adheres to contractual obligations. There is a limited scope for public policy or similar principles to interfere with contractual obligations.

The main factors that make English law an attractive choice for contracting parties, therefore, have little to do with the UK’s membership in the EU or the influence of EU law. Most of the important contractual issues, such as offer, acceptance, applicability, and implication of general terms and conditions, breach, and damages are derived from substantive English law, and are for the most part not affected by EU law and a Brexit. However, a choice of law clause for English law currently means English law including the applicable EU law. After Brexit, EU law will no longer automatically apply, which can in some circumstances lead to a different outcome based solely on English substantive law.

Recognition and Enforcement of UK Court Decisions

Like governing law clauses, jurisdiction clauses for English courts are commonly incorporated into contracts between commercial parties who are located in different countries. English courts have a reputation for being reliable, sophisticated and, most importantly, commercially orientated. However, proceedings before English courts are generally perceived as expensive.

Currently, decisions from English courts are automatically recognized and can be enforced in other EU member states based on Regulation (EU) 1215/2012 (Brussels Recast Regulation). If a Brexit is ultimately avoided, the Brussels Recast Regulation will continue to apply. However, if the UK leaves the European Union, the UK will in principle no longer be subject to the Brussels Recast Regulation.

On 14 November 2018, the Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (Draft Withdrawal Agreement) was published. Title VI of the separation provisions (part three) of the Draft Withdrawal Agreement contains provisions on judicial cooperation in civil and commercial matters. Article 67 states that in the United Kingdom, as well as in the EU in situations involving the United Kingdom, the provisions of the Brussels Recast Regulation regarding jurisdiction and recognition and enforcement of decisions shall continue to apply for legal proceedings instituted before the end of the transition period. The transition period is currently set to end on 31 December 2020, but can be extended. However, the fate of the Draft Withdrawal Agreement remains uncertain, as it still needs the required majority vote in the UK Parliament to be finalized.

Without a permanent deal on this subject, decisions by English courts rendered in proceedings instituted after the transition period will only be enforceable in other EU countries under the rules each individual country applies for recognition and enforcement of non-EU court decisions. In general, this will mean that decisions from UK courts will not be automatically recognized and enforceable in other EU member states but will be subject to a stricter regime for recognition and potentially time-consuming proceedings. Furthermore, court decisions from EU member states will no longer be automatically recognized and enforceable in the UK.

Possible Solutions

To counter this, the UK and the EU could negotiate a permanent deal that involves the UK acceding to a convention on enforceability of court decisions. In this regard, there are several options. In theory, the EU and the UK could agree that the Brussels Recast Regulation will continue to apply to the UK indefinitely after the transition period. The UK could also join a convention to which the EU has already acceded. The most probable option would be the Lugano Convention of 2007, which also applies between the EU, Norway, Switzerland, and Iceland. This convention allows for enforcement on broadly the same terms as the Brussels Recast Regulation. Another possibility for the UK would be to join the 2005 Hague Convention on Choice of Court Agreements. This convention, however, applies only in case of an exclusive jurisdiction clause in a contract.

Conclusion

The exact arrangements under which the United Kingdom will leave the European Union remain uncertain. Parties involved in cross-border business who use contracts governed by English law and with an exclusive jurisdiction clause for the English courts should be aware of potential issues when it comes to recognition and enforcement of English court decisions in other EU member states after the transition period, and potentially change their contract clauses accordingly.

Another Privacy Regulation, but This Time on ‘Non-Personal Data’

By Willeke Kemkers on Posted in data protection, digital single market, EU, European Union Law, GDPR, privacy

The European Union continues to roll out regulations in furtherance of the EU Digital Single Market, a strategy that covers digital marketing, e-commerce, and telecommunications. The GDPR went into force in May 2018, the new ePrivacy Regulation is planned for 2019, and on Friday, 9 November 2018, a new milestone was reached when the Council of the European Union approved another regulation that provides a framework for the free flow of non-personal data in the EU (the Regulation). The EU Parliament already approved the Regulation on 4 October 2018.

Background

Electronic data are at the center of modern, innovative economic systems and societies. You could say a new “data economy” is emerging.

Besides personal data (the protection of which has strongly improved with the GDPR), non-personal data are becoming a greater source of value. Non-personal data includes data sets used for big data analytics with the aim of improving website functionality. In this respect, clickstream data are analyzed and used to make desired improvements.

At the moment, effective and efficient functioning of non-personal data processing and the development of the data economy in the EU are hampered by national laws. For example, member states use data localization requirements mandating that data be stored on a device that is physically present within the borders of a specific country. Furthermore, “vendor lock-in” practices in the private sector limit the free flow of non-personal data. “Vendor lock-in” is a situation in which a customer who uses a product or service cannot easily transition to the products or services of a competitor.

The Regulation aims to remove these restrictions and to provide for free movement of non- personal data within the EU by applying the following provisions:

Scope

The Regulation applies to the processing of electronic data other than personal data in the EU. “Processing” of data covers a wide range of data operations, such as collecting, filing, storing, using, and transferring. Such data processing should be provided by service providers to users residing or having an establishment in the EU, regardless of whether or not the provider is established in the EU. The data processing may also be carried out by a natural or legal person for their own needs, and residing or having an establishment in the EU.

Free movement of data within the EU

The data localization requirements shall no longer apply: under the Regulation, the location of non-personal data for storage or processing within the EU shall not be restricted to the territory of a member state. As such, free movement of data should be established. In practice, this means that a cloud service provider in the EU may decide for itself where it stores non-personal data.

Porting of data

To eliminate vendor lock-in practices, the Regulation provides for and encourages the development of codes of conduct for service providers. With these codes of conduct, consumers should be able to switch to other service providers more easily. Such codes of conduct focus, for example, on the provision of sufficient and clear information to consumers before a contract is concluded.

Single points of contact

Each member state shall appoint a single point of contact regarding the application of the Regulation. Such point of contact shall liaise with the designated points of contact in the other member states to discuss any issues regarding the Regulation.

Conclusion

The Regulation is another step towards the Single Digital Market and the free flow of data. It should make it easier for service providers to store and process non-personal data within the EU, while consumers should be able to switch between service providers more easily. It remains to be seen whether the Regulation will make a difference, considering that many data sets will contain both non-personal data and personal data, and a completely different regulation (the GDPR) applies for the latter.

The Regulation will be published in the Official Journal of the EU within a couple of weeks. Six months after the date of publication, the Regulation enters into force without further required implementation.

Geen bestuursrechtelijke handhaving zonder verbodsbepaling

By Marijn Bodelier on Posted in Dutch Real Estate Law

De Afdeling bestuursrechtspraak van de Raad van State heeft in een uitspraak van 31 oktober 2018 (ECLI:NL:RVS:2018:3564) nog eens bevestigd dat het een bestuursorgaan niet vrijstaat handhavend op te treden (bijv. met een last onder dwangsom of bestuursdwang) wanneer in strijd wordt gehandeld met een specifieke wettelijke bepaling waaraan geen verbod is gekoppeld.

In deze zaak had een onderneming een nieuw pand gebouwd op een afstand van acht tot tien centimeter van het pand van een naastgelegen onderneming. Laatste was het daar niet mee eens. In de lokale bouwverordening is opgenomen dat tussen de bebouwing op twee percelen geen tussenruimte aanwezig mag zijn die minder dan één meter breed is. Daar werd dus niet aan voldaan. De naastgelegen onderneming had eerder dan ook bezwaar gemaakt tegen de omgevingsvergunning voor de nieuwbouw (vroeger de “bouwvergunning” genoemd). Dit bezwaar was echter te laat ingediend (na afloop van de bezwaartermijn) en dus niet ontvankelijk, zo was reeds in een andere procedure bepaald.

De naastgelegen onderneming had vervolgens een verzoek om handhaving ingediend bij het gemeentebestuur. Daarover gaat deze uitspraak. Het verzoek om handhaving is door burgemeester en wethouders afgewezen. Volgens de Afdeling bestuursrechtspraak van de Raad van State was dat terecht. De betreffende bepalingen van de bouwverordening geven volgens de Afdeling geen zelfstandige bevoegdheid voor handhavend optreden, alleen al omdat aan deze specifieke regel uit de bouwverordening geen verbodsbepaling is verbonden. De vraag of het nieuwe bouwwerk in strijd is met de bouwverordening had aan de orde moeten worden gesteld in een procedure tegen de omgevingsvergunning, aldus de Afdeling.

Uit deze uitspraak blijkt eens te meer dat de overheid niet elke regel kan handhaven maar dat daarvoor een wettelijke basis moet zijn (het “legaliteitsbeginsel”). Ook benadrukt deze uitspraak nog eens het belang om alert te zijn op publicaties van de gemeente van verleende vergunningen of andere besluiten. Die publicaties kunnen worden gemonitord in het lokale sufferdje of op de website van de gemeente. Er zijn ook apps beschikbaar als hulpmiddel. Als er bezwaren zijn tegen een (ontwerp)vergunning, moet tijdig een zienswijze worden ingediend, bezwaar worden gemaakt of beroep worden ingesteld. Als de rechtsmiddelentermijn onbenut verstrijkt, zal de rechter in beginsel uitgaan van de juistheid van de vergunning. Dan kan alleen handhavend worden opgetreden als een verbodsbepaling wordt overtreden (in de wet of een vergunningvoorschrift).

 

Right of First Refusal: Please Specify the Scope!

By Rutger Sterk on Posted in Dutch Property Law, Dutch Real Estate Law, property law, real estate

In certain lease agreements we see a right of first refusal to purchase the leased property (voorkeursrecht tot koop van het gehuurde object), to the benefit of the tenant. Disputes may arise between the tenant and the landlord if it is unclear whether a transaction triggers the provision.

Such a dispute occurred between a famous Dutch warehouse (the tenant) and its landlords. Five parallel proceedings regarding the warehouses in Rotterdam, Amsterdam, Eindhoven, Maastricht, and The Hague were initiated by the tenant. On 19 September 2018, the District Court of Rotterdam (rechtbank Rotterdam) rendered a decision as to whether a right of first refusal could be triggered regarding the warehouse and accompanying parking garage in Rotterdam.

Context

A right of first refusal to purchase leased property (RoFR) typically prohibits the landlord from selling the leased property to a (third) party without offering the leased property first to the tenant. The conditions of such offer to the tenant should be equal or more favorable than those of the offer to the potential purchaser. Due to the importance of the RoFR and by way of incentivizing the landlord to adhere to this obligation, violation of the RoFR is usually subject to a substantial contractual penalty. The lease agreement would normally also contain provisions regarding the offering procedure (if the RoFR is triggered), the scope of the RoFR, and any other relevant conditions.

Background

In the underlying case before the Rotterdam court, the tenant previously was the owner of all its warehouses in the Netherlands until 2005. In that year, the warehouses were sold by way of a “sale-and-leaseback” transaction to the new (ultimate) owner (the Investor), the sole shareholder of several companies (the Propcos), which were also party to the transaction. The lease agreements entered upon this sale-and-leaseback each contained a RoFR. The scope of the RoFR extended to any legal actions that would have the same material effect as a direct sale of the properties.

After restructuring its real estate portfolio, the Investor’s ownership of the warehouse and parking garage in Rotterdam can be visualized as follows:

In 2017, the Investor sold all shares in the capital of the Holding to a consortium of purchasers. The conditions of the sale and transfer were laid out in a share purchase agreement. As a result of the transaction, (ultimate) ownership of the warehouse and parking garage was transferred from the Investor to the consortium. However, the relevant Propcos remained as direct owner of the warehouse and the parking garage, and therefore as landlord.

The tenant brought proceedings before the District Court, arguing the transaction triggered the RoFR and therefore the warehouses should have been offered for purchase directly to the tenant (as opposed to an offer of shares of the ultimate holding company).

 Verdict

The District Court of Rotterdam ruled that the RoFR was not triggered and there was no obligation to offer the properties directly or indirectly via shares to the tenant. It substantiated its verdict as follows:

The RoFR is unclear and should be interpreted in accordance with the general rules under applicable Dutch law regarding interpretation. It is well-established case law in the Netherlands that, as a principle, the wording of an agreement is the starting point to interpret an agreement and any provision therein, but ultimately the parties’ intent is decisive (the so called Haviltex doctrine). However, the court ruled that a more literal interpretation of the RoFR should be applied in this case in light of:

  • the capacity of the parties (being commercial parties);
  • the fact that the parties hired professional advisors to negotiate and draft the lease agreement; and
  • the fact that the current landlord is a different party than the initial landlord. Hence, the current landlord could not have been aware of the initial landlord’s intent.

The court ruled that the RoFR only applies in case of a direct sale by the Propcos, meaning only in case of a change of identity of the landlord. According to the court, any transaction entered by another (related) party is irrelevant. If the parties intended for the RoFR to cover any other transaction, such as the sale of the shares of the (ultimate) holding company, they should have made this explicitly clear in the lease. The change of the (ultimate) owner is legally and factually different than the sale of the properties by the Propcos.

The court also found it plausible that the parties intended to exclude the disputed transaction from the RoFR; otherwise, the RoFR could very well have lowered the value of the real estate portfolio. Moreover, neither the Investor nor the Propcos have taken any actions that might frustrate the tenant’s rights, according to the court. Therefore, the court dismissed all claims by the tenant.

Conclusion

If an RoFR is intended to extend to an indirect sale of a leased property, this should be explicitly stated. To effect such RoFR, the (ultimate) shareholder of the landlord should assume the obligations under the RoFR, for example by way of co-signing the lease agreement.

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