Supreme Court-decision affects long lease-rules in St. Maarten

PHILIPSBURG — Selling government-owned land or giving it out in long lease is subject to rules ministers cannot ignore, it appears from a recent ruling by the Dutch Supreme Court. According to former Minister of Justice Roland Duncan, the ruling has far-reaching consequences for the way the government of St. Maarten issues domain land in long lease.

The dispute in the Netherlands revolves around a decision by the municipality of Montferland to sell the former town hall in the center of Didam without much ado to supermarket chain Co-op, while one of its competitors, a franchisee that exploits Albert Heijn supermarkets, had also expressed interest in the location.

In 2016 the franchisee spoke for the first time with the municipality about its interest in purchasing the former town hall. The responsible alderman told the company that the town hall is not for sale separately but that it is a part of the complete redevelopment of the town hall square. The redevelopment plan aimed to bring supermarkets into the center of town.

In August 2018 the franchisee wrote to the alderman, pointing out that the town hall had been granted to the Co-op supermarket, while this company was already established in the town center. The franchisee demanded a public tender for the town hall location, but the municipality did not comply. Instead, it signed a purchase agreement with the Co-op in 2019.

In 2016 the advice department of the Council of State ruled that potentially interested parties in scarce permits are entitled to a realistic chance to compete for those permits and that this principle also applies to the issuing of scarce land.

Government entities with an authority based on civil law are not allowed to exercise that authority in violation of written or unwritten rules of public law, the Supreme Court ruled. Part of those rules is the principle of good governance.

“This means that a government entity has to abide by the general principles of good governance and the equality principle in the execution of agreements based on private law. Therefore this also applies to decisions about with whom and under which conditions it signs agreements to sell immovable property. In this sense, the position of a government entity differs from that of a private party.”

The Supreme Court emphasizes that the equality principle forces government entities to offer equal opportunities to potentially interested parties when it intends to sell immovable property. The government entity will have to create the criteria it will use to select a buyer. “These criteria have to be objective, reviewable and reasonable.”

The Supreme Court sent the case back to the court in Den Bosch for further handling and decision making.

Former Minister Duncan posted on Facebook that the Supreme Court judgment also applies to the issuance of land in long lease in St. Maarten. “The general principles of good governance apply to all government actions. Government may not arbitrarily issue long leases and fail to apply the aforementioned principles. The minister’s discretion is also limited by and subject to these principles.”

###

Roland E. Duncan post on Facebook
Supreme Court ruling (in Dutch)
Explanatory article about ruling (in Dutch)

Read the latest court ruling about long lease land in St. Maarten:
Court freezes Over the Bank long lease decisions