Published On: Fri, Feb 25th, 2022

Pels Rijcken analysis: granting long lease has to be in accordance with Didam-arrest

PHILIPSBURG — The government can no longer sell immovable assets exclusively to one party without making the intention to do so public beforehand. The office of the Dutch Country Attorney Pels Rijcken arrives at this conclusion in a factsheet it produced at the request of the Minister of Home Affairs and Kingdom Relations, Hanke Bruins Slot after studying the arrest of the Supreme Court in the Didam-case.

StMaartenNews.com reported about this arrest in November of last year (see: Supreme Court ruling affects long lease-rules in St. Maarten). Pels Rijcken agrees in its factsheet with an observation former Justice Minister Roland Duncan made in November: governments (and municipalities) have to “seriously reckon” that the Supreme Court ruling not only applies to the sale of government-owned land (and other immovable assets), but also to granting the rights of long lease.

This is currently a hot topic in St. Maarten where VROMI-Minister Egbert Doran has presented a draft land issuance policy to Parliament. That policy has been a work in progress since at least November of last year, when Doran asked the Integrity Chamber for advice about the draft. In January, the Court in First Instance froze all decisions about granting rights of long lease in the Over the Bank-area. It ruled that the minister is obliged to establish criteria for the selection of candidates who want to obtain a right of long lease and that the minister has to abide by the principles of good governance and equality.

The court ruling echoes the conclusions of the Supreme Court and Pels Rijcken’s interpretation of the Didam-arrest.

In the meantime the Integrity Chamber has also added its two cents to the debate with an advice that was published in the National Gazette of February 18. This advice states that conditions should always be objective and reasonable. Demanding that applicants must be employed full-time or that they have a minimum-income is not the way to go, according to the advice. “The minimum-income requirement puts persons with a higher income at an advantage. A maximum income could be considered.”

The Integrity Chamber furthermore recommends the establishment of written internal procedures and putting checks and balances in place to ensure the proper execution of the policy. Other recommendations are the establishment of a comprehensive land registry system and a complaints-procedure.

The Pels Rijcken factsheet notes that the government must give potential candidates the opportunity to compete for a property based on objective, reviewable and reasonable criteria. The government must adhere to the equality principle, it must exercise a fitting level of transparency and it must make the information public in a timely manner. That information has to deal with the availability of an asset, the selection procedure, the timeline and the criteria.

A selection procedure is required if there are several candidates or if it is expected that there will be several candidates. “The sole fact that other parties might be interested is sufficient,” the factsheet states.

According to Pels Rijcken (and to the Supreme Court) the government is allowed to make certain demands of candidates as long as they are objective, reviewable and reasonable. The factsheet mentions financial capacity and expertise with development activities as possible requirements. The government could also exclude candidates, for instance if they are in a state of bankruptcy or liquidation.

Lastly, the factsheet deals with the question what should be done with agreements that did not follow the rules described in the Supreme Court-arrest. “It is not likely that existing agreements will be void or will be declared void. For situations where negotiations are ongoing, government should suspend the procedure. The government can be liable for damages if it aborts negotiations, but the standard to justify that is quite strict.”

Pels Rijcken concludes that from now on sales of immovable assets (including the granting of rights of long lease) will have to be in accordance with the Didam-arrest.


Related articles:
Court freezes Over the Bank long lease decisions
Supreme Court-decision affects long lease-rules in St. Maarten