28 May 2024
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Consequences of the Didam Ruling Re-examined

The Supreme Court’s ruling in the Didam case has been a hot topic since 2021. In that judgment, the Supreme Court held that a government body may not simply sell a piece of real estate directly to a party of its choosing. Instead, the government body is obliged to provide an opportunity for competition to any other (potential) candidates by following a public selection procedure. This would only be different if, based on objective criteria, there is only one serious candidate from the outset. In the aftermath of the judgment, further confusion arose regarding the consequences for an agreement that was concluded in violation of the rules of the Didam ruling. Did that now result in a void or voidable agreement or did it (merely) constitute an unlawful act in those cases?

Now that an appeal has been filed in the substantive proceedings of the same Didam case, this provides an excellent opportunity to clarify the application of the Didam criteria. In his conclusion dated 24 May 2024, Advocate General (AG) Snijders advised the Supreme Court to not only clarify the application of the rules from the earlier Didam judgment but also to limit their scope.

Firstly, the AG argues in his opinion that the principle of equality, as a general principle of proper administration in national law, is interpreted differently from the principle of equality in EU law or public procurement law. In particular, the principle of equality in national law does not, a priori, require offering equal opportunities (competition) to potential interested parties but merely demands that similar cases be treated alike. This would mean that if the government has a valid reason to engage with a particular candidate, this could provide a reasonable and objective justification for differential treatment compared to other candidates. This point was wrongly not examined in the earlier Didam judgment.

Secondly, the AG considers that actions in violation of the Didam rules do not lead to nullity or voidability of the underlying agreement because such a violation does not fall under a specific legal basis for nullity, nor does it constitute a violation of fundamental principles of the legal order or the general interests of a fundamental nature. As a sanction for non-compliance with the Didam rules, only a claim for damages based on a tort would remain.

Finally, in his opinion, the AG advised the Supreme Court to clarify precisely which governmental actions the Didam rules apply to and how equal opportunities can be provided when the Didam rules are applicable, in order to avoid legal ambiguity.

The AG’s conclusion is an important step towards greater clarity regarding the application criteria and strengthening legal certainty concerning agreements that were concluded before the Didam ruling.

The Supreme Court’s ruling is currently scheduled for 25 October 2024.