Didam ruling also affects land rental

In late 2021, the Supreme Court ruled in the Didam ruling that the principle of equality precludes a one-for-one sale of real estate by government entities. We wrote this article about this earlier. The interim relief judge of the District Court of Midden-Nederland recently ruled that the rules from the Didam judgment apply not only to sales, but also to the temporary lease of land by a municipality. Eline Holtland - van der Zwaag and Nika Niels explain what this judgment means for the (rental) practice.

What is the case study?

This summary proceedings concerned the temporary rental of municipal land. The municipality of Nieuwegein owns a piece of land and wishes to lease it to Aldi for a definite period of time. Therefore, a lease agreement is concluded between the municipality and Aldi. The municipality made its plan to lease the land to Aldi known at some point, justifying why Aldi was the only serious applicant.

However, other supermarkets disagree. They would have liked the opportunity to rent this land to operate a temporary supermarket. They therefore jointly challenge the municipality's decision to consider Aldi as the only serious candidate. The other supermarkets demand that the municipality still hold a selection procedure for the lease of the land in question.

The municipality raises a defense. They believe that the rules from the Didam ruling do not apply here, as it concerns the temporary rental of municipal land, not a sale.

How does the preliminary injunction judge rule on this?

Besides the judge's opinion that the supermarkets have made it sufficiently plausible that they have a sufficient interest in renting the piece of land in question, the judge in preliminary relief proceedings does not go along with the municipality's defense. It ruled as follows:

"In the Didam judgment, the Supreme Court formulated a clear starting point for private law government action. Thus, in the opinion of the interim relief judge, the Didam judgment has a broader meaning than that it refers only to the sale of real estate by a government body.

It can be seen from the Didam judgment that the principle of equality, which must be respected by the public authorities, (also) implies that the public authorities must offer equal opportunities if more than one candidate is interested in the public body's offer. Such equal opportunities must then be provided by organizing a public selection procedure. It cannot be understood that the principle of equality referred to above (providing equal opportunities) only applies to the sale of a property by the public authority.

This situation also occurs in the case of (temporary) rental of a property by the government, provided there is more than one interested party for this purpose."

Conclusion

So the conclusion is that even if the municipality wants to rent out a piece of municipal land, the rules from the Didam judgment must be followed. Generally, a municipality will have to conduct a public selection procedure even when leasing.

The last word has not yet been spoken on this matter as it is a preliminary decision of the judge in preliminary relief proceedings. It remains to be seen whether the judgment will stand up in the course of the proceedings. This was therefore a reason for Aldi not to close its supermarket doors yet, even though the municipality requested it to do so (to avoid paying penalties). On Jan. 5, the municipality faced Aldi in court to obtain that Aldi will close its doors. The outcome of this is still pending.