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With effect from 1 January 2024, a number of changes have been made to the regulations on quality assurance in construction. Much has already been written about it and market players have made the necessary investments to comply with the new rules. Those rules, on the one hand, deal with the required quality of construction (public law framework), where the contractor engages a quality assurance company to ensure that the quality of the construction work complies with laws and regulations. Currently, that system applies only to consequence class I structures and is limited to new construction. Because the change in the public law framework is extensive, much has been written about it in particular. In the context of this blog, we will not go into that further now. But the Civil Code has also been amended with effect from 1 January 2024, and this is to strengthen the position of the principal in construction projects (civil law framework). The amendments cover the following aspects:

1. Liability after completion (Section 7: 758 of the Civil Code)
2. Introduction of a contractor’s financial information obligation (section 7:765a of the Civil Code)
3. More concrete requirements apply to the implementation of the contractor’s duty to warn (section 7:754 of the Civil Code)
4. Introduction of a consumer file (Section 7:757a of the Civil Code)
5. The conditions surrounding the right of suspension (5% rule) have changed (section 7:768 of the Civil Code)

 In this blog, we address the changes in the liability regime (point 1 above), as we find in practice that many contractors/SMEs are still unfamiliar with the changes that have taken place.

Liability after completion

Liability after completion is governed by Section 1 of Title 12 Book & Civil Code (contracting work in general). Section 7:758 BW stipulates the following:

1. If the contractor has given notice that the work is ready to be delivered and the client does not inspect the work within a reasonable period and accepts it with or without reservation or refuses to accept it with indication of defects, the client is deemed to have tacitly accepted the work. After acceptance, the work shall be considered delivered.
2. After delivery, the work is at the client’s risk. Consequently, he remains liable for the price, regardless of any destruction or deterioration of the work due to a cause not attributable to the contractor.
3. The contractor is released from liability for defects that the client should reasonably have discovered at the time of delivery.
4. Notwithstanding the third paragraph, in the case of building contracts, the contractor shall be liable for defects that were not discovered when the work was delivered, unless such defects cannot be attributed to the contractor. This paragraph may not be derogated from to the detriment of the client to the extent that the client is a natural person not acting in the exercise of a profession or business. In other cases, this paragraph can only be deviated from to the detriment of the principal if this is explicitly included in the agreement.

Importantly, construction works (paragraph 4) are thus just subject to a different rule from the main rule set out in paragraph 3. For construction works, the contractor remains liable for defects not discovered at the time of delivery (paragraph 4). This can only be different if the defects cannot be attributed to the contractor. Suppose a contractor finds that the defects were caused by an expert hired by the client, the contractor can argue that the defect is not imputable to him.

With regard to this construction liability regime, the following is important:

• A construction contract for the construction of structures between professional parties may deviate from this liability regime. Deviation from the scheme must be done in the contracting agreement itself. Referring to general terms and conditions is not sufficient. Incidentally, the standard terms and conditions commonly used in the construction industry, such as the UAV 2012 and the Model Basic Agreement with UAV-GC 2005, have not yet been adapted to the new liability scheme at this time. This means that if you declare these terms and conditions applicable and do not include an explicit deviation from section 7:758(4) of the Civil Code in the agreement itself, the liability scheme from the standard terms and conditions is voidable under section 3:40(2) of the Civil Code. After all, the liability scheme from the standard terms and conditions is intended to protect only one of the parties. Since the main agreement does not explicitly deviate from Section 7:758(4) of the Civil Code, the contractor’s contracting party can in such a case invoke the voidability of the liability scheme in the standard terms and conditions.
• In a contract of hire with a private client, this statutory regulation may not be deviated from. This gives the private client (consumer) extra protection against defects that were not discovered at the time of delivery.
• Small entrepreneurs are not equated with private individuals and therefore simply fall under the rules for professional parties. The legislator did not want to make an exception for small entrepreneurs, such as greengrocers, ZZP-er or GPs. Although these parties are much like private contractors, they are classified as professional parties. The small entrepreneur should therefore take extra care when concluding a building contract to see what agreements one wants to make regarding liability for defects.

Finally, it is important to note that – insofar as it concerns construction works to which the ‘system of quality assurance’ applies from 1 January 2024 (consequence class I/new construction), in the event of financial damage on the basis of the liability scheme, the contractor can also consider whether this damage or part of it was not caused by the quality assurance officer being (partly) liable for the damage. The task of the quality assurance officer is to check for shortcomings with regard to the building regulations in the Building Works Decree for the living environment. To this end, he applies quality assurance instruments. The moment the quality assurance officer makes mistakes in this and therefore fails to notice a defect, for example, he may have wrongly issued a statement (that the building is in accordance with the rules), causing damage. In such a case, the contractor – who is himself liable for damage from defects in any case – may be able to recover part of the damage from the quality assurance officer. How much exactly will depend, among other things, on what has been contractually agreed between the contractor and the quality certifier.

Do you have any questions or would you like us to review your contracts? Please contact Erwin den Hartog or Petra Lindhout from our office.

In this blog series, we discuss the main aspects of expropriation law.

In the first blog of this series, we discussed the change effective from 1 January 2024, whereby expropriation no longer occurs through a Crown decision but through an expropriation order and the associated administrative procedure. In the second blog, we covered the criteria for expropriation. This third blog focuses on the procedure for determining compensation.

Once an expropriation order is announced, the expropriator can request the court to determine the associated compensation. Unlike the determination of the expropriation order (which is established by the administrative court), the compensation is determined by the civil court, hereafter referred to as ‘the court.’ The expropriator can request the court to determine the compensation even before the expropriation order becomes irrevocable. Whether this is advisable is beyond the scope of this blog and will depend on the specific situation.

If the expropriation order becomes irrevocable and the expropriator does not submit a compensation request within twelve months, the expropriation order lapses (Art. 11.12 Environmental Act). In other words, the expropriator cannot delay submitting the compensation request for too long.

In the request, the expropriator specifies the compensation offered to each interested party. It provides an overview of how the expropriator intends to compensate those affected by the expropriation. In response to the request, interested parties can submit a defense if they believe the proposed compensation is insufficient.

The court then schedules an oral hearing (before the expert report), during which parties can also express their views on which experts should be appointed by the court to advise on the compensation.

The next step in the procedure is the appointment of experts by the court. Article 15.39 of the Environmental Act requires the court to appoint an odd number of experts to provide advice on the compensation. The court cannot deviate from this requirement. The court also appoints a judge-commissioner who acts as the point of contact for the experts and parties during the preparation of the expert report.

The appointed experts then visit the site (descente) to assess the location and situation of the expropriated parcels. A judge-commissioner and a clerk are also present (Article 15.40 Environmental Act).

After the site visit, the court will determine a provisional compensation for each interested party as soon as possible. This provisional compensation serves as an advance on the final compensation.

Meanwhile, the experts conduct their investigation and will produce a draft expert report with their compensation estimates. In practice, interested parties and the applicant (expropriator) are given the opportunity to respond to the draft expert report. The final expert report is then submitted to the court.

The procedure continues with the court scheduling another oral hearing where parties can further explain their positions. The experts are also present to answer any questions from the court about their report or to provide their perspective on the parties' positions.

After the oral hearing, the court issues a final decision on the compensation (Art. 15.45 Environmental Act). The previously granted advance is deducted from the compensation in the final decision. The costs of the compensation procedure are borne by the expropriator. If legal and other expert assistance costs incurred by an interested party are reasonable, they are also eligible for reimbursement.

Unlike typical civil procedures, there is no right of appeal against the court's final decision. Only an appeal in cassation is possible (Art. 15.48 Environmental Act) within three months of the court's decision.

This concludes the civil compensation procedure. However, to effectuate the expropriation, ownership transfer must still occur. This is done through the execution of the expropriation deed by the notary. The notary must always check whether all requirements for the execution of the expropriation deed have been met (Article 11.16 Environmental Act). The expropriation deed is signed by the expropriator, and the notary ensures its registration in the public registers, whereby the expropriator acquires the expropriated property.

The above outlines the compensation procedure in a nutshell. It is well known that an expropriated owner must be compensated. However, others (third parties) can also suffer losses due to expropriation. The fourth (and final) blog in this series will address this group and how expropriation law affects them.

Need help and advice on expropriation issues? Contact us.

Have you ever faced enforcement proceedings that, in your opinion, were disproportionate or with which you disagreed? In a few cases, you may then be vindicated and the enforcement procedure is indeed deemed disproportionate. This was the case, for example, in the ruling we discuss in this post.

First, a word of theory. Enforcement by the government is possible only when laws and regulations provide for it. The government has a duty of principle to enforce. This means that, in principle, the government, or at least the competent authority, must enforce whenever possible under laws and regulations. Nevertheless, the government may refrain from enforcement in the event of special circumstances. Special circumstances exist if there is a concrete prospect of legalisation, or if enforcement is disproportionate in relation to the interests to be served.

In its judgment dated 13 December 2023 (ECLI:NL:RBAMS:2023:7985), the Amsterdam District Court had to rule on the proportionality of enforcement by the municipality. This case involved the following facts. The owner of a house had replaced a window frame in his house with one made of a different material, which did not enlarge the frame, but which caused the window layout to change. Under previous legislation (Wabo), a permit requirement for this was included in section 2.1(1)(a) of the Wabo. The college then received an enforcement request from local residents against replacing the window frame because the frame is of different material and causes a different window layout.

The court then ruled that the college could take the view that enforcement action was disproportionate in relation to the interests to be served by it. The board could therefore refrain from enforcement. After all, the dimensions and colour of the window frame had not changed, so that the replacement of the window frame had a minor spatial change, the interests of third parties were not disproportionately affected, and there was no question of an exception to the building regulations and no real nuisance for local residents. The court also took into account that the college had made it known that if a permit application had been submitted for the change of the window frame, it would have to grant it because of the absence of the ground for refusal. Finally, the change of window frame is not subject to a permit requirement under the Environment Act, and although the Environment Act does not apply to this case, it is relevant in the context of balancing interests. The college was therefore also allowed to consider this aspect in its decision-making.

If enforcement proceedings have been initiated in 2023 against works carried out by you without the required environmental permit, it is therefore wise to check whether a ground for refusal would exist if you submitted a permit application and whether similar works would also require an environmental permit under the Environment Act. After all, if this is not the case, there is a chance that enforcement would be disproportionate. Whether this is the case will always have to be considered on a situation-by-situation basis.

Are you yourself facing (disproportionate) enforcement proceedings or do you have other questions about enforcement proceedings? If so, please contact Gerard van der Wende, Petra Lindhout or Fleur Huisman.

In this blog series, we discuss the main aspects of expropriation law.

In the first blog of this expropriation special, we covered the change from a Crown decision to an expropriation order and the associated legal protections. This blog also outlined who can fall under the definition of 'expropriator.' According to Article 11.2 of the Expropriation Act (Ow), these include the municipality, the water board, the province, the state, and certain other legal entities.

In this second special blog on expropriation, we will outline the criteria for expropriation.

To expropriate land, expropriators must submit a request to the administrative court to obtain approval (ratification) of the expropriation order.

The administrative court will, in addition to checking compliance with all formal requirements, conduct a basic review as provided in Article 11.5 of the Environmental Act. This article includes the criteria an expropriation order must meet. The expropriation order can only be approved if:

1. It is in the interest of developing, using, or managing the physical living environment,
2. Expropriation is necessary, and
3. Expropriation is urgent.

Below, we discuss these criteria in detail.

Expropriation Interest

According to Article 11.6 of the Environmental Act, an expropriation interest exists only if the intended development, use, or management of the physical living environment is enabled by an established environmental plan, a granted environmental permit for an out-of-plan environmental plan activity, or an established project decision.

In short, the intended development, use, or management of the physical living environment (for which expropriation is needed) must have a basis in one of the above-mentioned legal instruments.

However, an additional criterion applies to the environmental plan. The plan must specify the form of development, use, or management of the physical living environment that should be realized in the public interest. This prevents authorities from expropriating based on an environmental plan that offers such diverse building and use options that it is unclear which construction, use, or management should be realized in the public interest.

Therefore, the environmental plan must include a specification showing that the intended form of development, use, or management of the physical living environment aligns with the public interest.

Moreover, the use of all three legal instruments requires that they be established before the expropriation order can be issued. Referring to a draft environmental plan is insufficient.

Necessity

According to Article 11.7 of the Environmental Act, expropriation is not necessary if:

• The expropriator has not made a reasonable attempt to amicably acquire the property. A reasonable attempt involves serious negotiations.
• The expropriator has not made a reasonable attempt to reach an agreement with the property owner regarding the cancellation of property or personal rights. What constitutes a reasonable attempt depends on the specific circumstances.
• It is likely that an agreement on amicable acquisition will be reached shortly, and the property will be transferred soon after. An offer must be made that relates to the property.
• It is likely that an agreement on the cancellation of property or personal rights will be reached shortly, and the rights will be cancelled soon after. If there are other right holders besides the owner, and the owner cannot deliver the property free of encumbrances and rights, the expropriator must also negotiate with those other right holders.

Additionally, expropriation is not necessary if:

• The property owner can and wants to realize the intended form of development, use, or management of the physical living environment,
• He has intentions to do so and has made this known to the competent authority, and
• The intended form of development, use, or management of the physical living environment will be realized in the way the competent authority desires.

It is not sufficient for the owner to merely state his intention to execute the plan himself. He must demonstrate that he can actually do so in the manner desired by the expropriator and that he has concrete plans, which he has shared with the expropriator. The owner cannot avoid expropriation by simply claiming he will implement the plan. He must have real and executable plans.

In addition to the general necessity requirement in Article 11.7 Ow, Articles 11.8 to 11.10 Ow discuss more specific cases where expropriation is deemed necessary. These criteria apply in addition to those in Article 11.7 Ow.

The specific situations include:

• Necessary expropriation for public order (Article 11.8 Ow). Maintaining public order around a building may necessitate its expropriation. This is only possible if less intrusive measures are insufficient.
• Necessary expropriation under the Opium Act (Article 11.9 Ow). Again, this is only possible if less intrusive measures are insufficient.
• Necessary expropriation for liveability, health, and safety (Article 11.10 Ow). This is also only possible if less intrusive measures are insufficient.

Urgency

The urgency of expropriation is discussed in Article 11.11 of the Environmental Act. It states that urgency exists if it is likely that the development, use, or management of the physical living environment for which expropriation is necessary must begin within three years after the expropriation deed is registered.

Government agencies can demonstrate this by presenting concrete project plans and schedules.

Conclusion

In summary, expropriation can only occur if the plan for which expropriation is needed is enabled by one of the three legal instruments, is necessary for the intended development, use, and management of the physical living environment, and if there is urgency.

An expropriation interest exists if the plan is enabled by an established environmental plan or project decision or a granted environmental permit for an out-of-plan environmental plan activity.

Expropriation is necessary if amicable acquisition of the property free of property or personal rights has proven impossible and will likely remain so. Additionally, the current property owner must not be able or willing to realize the intended form of development, use, or management of the physical living environment himself.

To qualify as an urgent expropriation, the expropriator must begin realizing the plan or project within three years after expropriation.

All in all, expropriation is subject to numerous criteria because property ownership is one of the most fundamental human rights. Government agencies cannot arbitrarily expropriate properties to realize their plans unless expropriation is necessary, urgent, and enabled by a legal instrument.

In recent years, more and more employers are putting the non-competition clause as a standard clause in the employment contract. We too often recommend including a competition and/or relation clause in the employment contract. Especially in highly competitive markets, such as in recruitment or sales positions.

A study in 2021 found that employers include a competition or relation clause even when there is no need or reason to do so. This causes employees to be restricted in their free choice of employment. As a result of this research, a draft bill has emerged to curb the non-competition clause. And not so little too. These restrictions will be quite severe.

The Council of Ministers has approved the Bill on Modernisation of Non-competition Agreements and the proposal has been open for internet consultation since 4 March 2024. It will tighten the rules governing the non-compete clause.

In short, it comes down to the fact that an employer will soon be allowed to invoke the non-competition clause up to a maximum of 1 year after the end of the employment contract and that, in order to do so, an employer must pay the employee 50% of the monthly salary each month for every month he invokes the clause. Do you want to keep the employee to the maximum term of 1 year? Then you actually have to pay six months’ salary at the end date! The internet consultation already raised many questions about possible abuse by calculating ex-employees.

The following changes are now in the bill:

• a non-competition clause can have effect for a maximum of 1 year after the end of the employment contract
• the employer must justify the duration of the non-competition clause in writing (is already done now)
• the employer must motivate the geographical scope in writing (is usually already done);
• the overriding business or service interest for a non-competition clause must be justified in writing for all employment contracts (so not only for temporary employment contracts, as is currently the case) and if that justification changes (because of job changes, e.g.), then this must be amended to which the employee must then again give consent;
• an employer must indicate immediately at the time of termination or in the event of termination by operation of law no later than one month before the end of the employment contract whether the non-competition clause will be invoked and for how long (there are exceptions, e.g. in the event of summary dismissal or dissolution by the subdistrict court);
• the employer must pay the employee compensation if the non-competition clause is invoked. The compensation is 50% of the last-earned monthly salary, for each month the non-competition clause is invoked. There is no cap on the salary. The payment must be made immediately on the termination date. There are also exceptions to this in case of summary dismissal or dissolution. Do you not pay on time? Then you may no longer invoke the non-competition clause, but employer must still pay;
• Does the employee violate the invoked non-competition clause? Then the compensation counts as an undue payment and the employee must repay it. The employer can also invoke a penalty clause provided it has been agreed in the employment contract (or settlement agreement);
• in a settlement agreement, you can deviate from the compensation obligation and invocation obligation.

Under the new bill, the non-competition clause will only apply after the end of the employment contract if the employer invokes the clause in writing and in good time and if the employer owes compensation. Is the clause invoked a day late or the compensation paid a day late? Then it is unfortunate but unfortunate. The employee can then join the biggest competitor and may keep the compensation if it has already been paid.

Competition clauses validly agreed before the bill comes into force will remain valid. However, an employer will have to pay the compensation if the employee is held to the clause.

The above would also apply to relation clauses that prevent employees from working for or with the employers’ relations, such as customers and clients.

Although the proposal still has to pass the Lower and Upper Houses first, the bill is expected to take effect as early as 1 January 2025.

As far as we are concerned, this bill goes too far with regard to the compensation obligation and calculating employees can easily abuse this regulation. Why?

Suppose an employee terminates on the last day of the month, the employer has to think that same day about whether to invoke the non-competition and/or non-solicitation clause. Employers then come under pressure and the question is whether the right decision is then taken. Especially if employees indicate (possibly wrongly) that they want to join the competitor. For instance, employees can easily take a paid holiday of (at most) six months and quietly look for a job with a non-competitor. The question is whether, as an employer, you can then invoke cheating and want to start (costly) proceedings for this to recover the compensation. And does the employer have to pay double compensation if it wants to invoke both the non-compete and relationship clauses?

Action employer for now?

Wait a little longer until it is clear whether the bill will be implemented in its current form, and then adjust the current models of employment contracts and settlement agreements for competition and relation clauses. In exceptional cases, anti-solicitation clauses may possibly also fall under these stricter rules.

Questions? Please contact one of our Employment Law attorneys Dennis Oud, Elke Hofman or Tessa Sipkema.

Our colleague Petra Lindhout wrote the following annotation for the journal Milieu & Recht (2024/23) on a ruling by the Zeeland-West-Brabant District Court. Download the publication here.

For any questions, please contact our Environmental Law specialists.