Didam II verdict

On November 15, 2024, the Supreme Court issued a judgment in the Didam case. In this case, the Montferland municipality wanted to sell a piece of land in Didam, which was owned by the municipality, to a real estate developer. The municipality had also been approached by another real estate entrepreneur, who was also interested in buying the piece of land. The municipality eventually sold the land to the property developer and not to the real estate entrepreneur. The real estate entrepreneur disagreed and initiated summary proceedings against the municipality and the developer. This was because he believed that all candidates should have been given a chance to buy the piece of land. 

In 2021, the Supreme Court ruled on this issue. It considered that a public body seeking to sell a piece of real estate must give everyone interested an equal opportunity to buy the property. The Supreme Court established further rules for that process, known as the “Didam Rules". 

In the follow-up case, in which the Supreme Court has now delivered its judgment, it was necessary to rule on the real estate company's claim, which argued that the purchase agreement between the municipality and the developer should be annulled and that the municipality was allowed to sell the land only if it complied with the Didam rules. The court rejected the real estate company's claim at first instance. The court, on the other hand, granted the claim and set aside the purchase agreement between the municipality and the developer and prohibited the municipality from buying the land without complying with the Didam rules. In addition, the court ordered the municipality to pay damages to the real estate company. 

The municipality and the property developer have both appealed to the Supreme Court. They are of the opinion that the Didam Rules only apply from the date of the (first) Didam judgment, that the violation of the Didam Rules can at most lead to a wrongful act on the part of the government and not to the annulment of the purchase agreement. 

Advocate General Snijders has written an opinion, advising the Supreme Court to overturn the court's ruling. 

The Supreme Court then ruled as follows:

• The Didam Rules do not apply only from the date of the (first) judgment in 2021. The Didam Rules are partly based on general principles of proper administration and there is no reason to limit their applicability until after the (first) Didam judgment. 
• A purchase agreement entered into in violation of the Didam Rules is not void or voidable. Such an agreement is and remains valid even if the municipality did not (properly) follow the Didam Rules when concluding it. 
• However, the (potential) candidate who did not get the chance to buy the plot of land may be able to claim damages from the municipality on the grounds of tort. 

The Supreme Court annulled the judgment of the Arnhem Court of Appeal and referred the case to the Court of Appeal of The Hague for further consideration and decision. 

In practice, this means the following. Even for agreements concluded before the (first) ruling in 2021, governments had to comply with the Didam rules. If a contract was nevertheless concluded without compliance with the Didam Rules, this does not immediately mean that the contract is void or voidable, but it does mean that the prospective buyer who did not get a chance to buy the piece of land can claim compensation based on a wrongful act by the municipality. 

If you have any questions following the Supreme Court ruling, please contact Gerard van der Wende and Fleur Huisman.