What were the rules from the first Didam ruling?
The rules from the Didam judgment of Nov. 26, 2021, oblige public bodies, by virtue of the knock-on effect of the general principles of good administration (such as the principles of equality and legitimate expectations) through Article 3:14 of the Civil Code, to offer equal opportunities to potential candidates when selling real estate.
If it is established in advance or can reasonably be assumed that there is only one serious candidate based on objective, verifiable and reasonable criteria, a public selection procedure may be omitted. In such cases, there is a duty of publication in which the public body in question announces the intention to sell and motivates why there is only one serious candidate.
Retroactivity of Didam rules
The Supreme Court confirmed in the Didam II judgment(ECLI:NL:HR:2024:1661) that the Didam rules have retroactive effect. This means that these rules also apply to actions by public bodies that took place before the 2021 judgment. Thus, public bodies must always comply with the Didam rules, regardless of the time of the transaction.
No nullity or voidability
Importantly, the Supreme Court has ruled that (purchase) agreements concluded in violation of the Didam Rules are not void or voidable under Article 3:40(2) of the Civil Code. The Didam Rules are based on the general principles of proper administration and violation of those rules does not constitute a violation of a mandatory statutory provision. The consequences for already concluded purchase agreements therefore do not seem to be too serious.
Unlawful conduct and liability for damages
Public bodies that act in violation of the Didam rules may, however, act unlawfully toward candidates who have not been given an equal opportunity. This can lead to liability for damages to injured parties.
Delivery
However, the ruling does show that, as long as no agreement has been reached obliging the public body to deliver, or as long as delivery to another has not yet taken place, an interested party may, under circumstances, enforce through the courts that delivery be stopped.
Only serious candidate
Even if only one candidate can meet the plan developed by the public body, the Didam rules apply (advance notice of the proposed purchase and clear justification as to why there is only one serious candidate based on objective, testable and reasonable criteria).
Practical implications for real estate professionals
The ruling highlights the importance for public bodies to act carefully and transparently when selling real estate, as required under the Didam rules. At the same time, the legal certainty of purchase agreements has increased. As a result of this ruling, the opportunity for an interested party to counter a proposed sale is more limited than may have been previously assumed based on lower case law. Real estate professionals and their advisors should remain alert to this to avoid legal risks.
