Netherlands, Supreme Court of the Netherlands, 29 April 2016 15/00044; 15/00063

Identification of the case

• Article 6:233 of the Dutch Civil Code
• Article 6:240 DCC
• Article 3:305a DCC

• Directive 93/13/EEC

Summary of the case

The case was brought by a foundation representing the interests of holders of long-term ground lease in Amsterdam (Stichting Erfpachters Belang Amsterdam or SEBA), as well as a number of individual lease holders, against the municipality of Amsterdam. It concerned a dispute about the validity of the ground rent revision clause in the general conditions of the deed creating a ground lease. The ground rent was unilaterally revised in 2006-2009, based on a binding decision of experts. The claimants argued that the clause allowing for a unilateral revision of the ground rent was unfair. In the individual actions brought by the lease holders, the Amsterdam Court of Appeal had annulled the clauses at issue. In the collective action brought by SEBA, however, it had referred the case to the Court of Appeal in The Hague, which has exclusive jurisdiction to hear actions on the basis of Article 6:240 of the Dutch Civil Code (DCC).

Because most underlying contracts had been concluded before 31 December 1994 (i.e. in 1915, 1934 and 1937), Directive 93/13/EEC was not applicable. With respect to the contracts concluded in 2000, which contained a clause similar to the one in the older contracts, the Supreme Court interpreted Article 6:233 DCC in conformity with the Directive. The case is also relevant for collective actions on the basis of Articles 3:305a and 6:241 DCC, in the light of Directive 98/27/EC on injunctions for the protection of consumers’ interests.

• Civil judicial enforcement
• Collective enforcement (other)

See the reasoning below.

The Supreme Court’s judgment addresses multiple issues. For the purpose of the present project, two main issues are discussed here:

(1)   Admissibility of the collective action. Pursuant to Article 6:240 DCC, the Court of Appeal in The Hague has exclusive jurisdiction to issue a declaratory judgment that specific stipulations in specific standard terms and conditions are unreasonably burdensome. The action can be brought by, in short, a legal person whose objective it is to protect the interests of persons conducting a professional practice or business or the interests of end-users of goods or services not to be used in the conduct of a professional practice or business. The declaratory judgment may  contain – among other things – an additional prohibition to use or to promote the stipulations at issue. If the party who uses these stipulations nevertheless keeps using them when entering into a contract, they are voidable (Article 6:243 DCC) by any other person who enters into a contract with that party.

The Supreme Court held that the possibility of such an action does not preclude a collective action on the basis of Article 3:305a DCC for the annulment of an unreasonably burdensome clause, or a declaratory judgment that the clause is unreasonably burdensome and therefore null and void. The collective action brought by SEBA was aimed at obtaining such a declaratory judgment, not at achieving the specific consequences of an action on the basis of Article 6:240 DCC. Therefore, there was no exclusive jurisdiction of the Court of Appeal in The Hague, and the Amsterdam Court of Appeal should not have declared the action inadmissible.

The Advocate-General had in his Opinion already clarified the distinction between Article 6:240 DCC and Article 3:305a DCC, or rather: he had emphasized the need for not making a too strict division. A 6:240-action concerns a preventive, abstract assessment of standard terms resulting in a judgment that can be invoked by third parties. It cannot result in an (ex ante) annulment of the terms at issue. By contrast, a 3:305a-action pertains to concrete legal relationships between the defendant and its contractual counterparties, whose interests are being collectively represented. It results in a judgment that has, in principle, only binding force between the parties involved; it is retrospective. To strive for efficient and effective legal protection would require that both actions should not be mutually exclusive, and should not be split up between two different courts. In case of a conflict, the 6:240-action could be reserved for claimants who want to achieve the specific consequences of, in particular, Article 6:243 DCC.

(2)   Unilateral revision not in general unreasonably burdensome. The claimants  alleged that the revision clause constituted a stipulation which provides for the settlement of a dispute other than by a court of law (Article 6:236 sub n DCC), because it provided for unilateral revision based on a binding decision of experts. The Amsterdam Court of Appeal had qualified the clause as a ‘settlement agreement’ in the sense of Article 7:900 DCC, by means of which the parties bind themselves towards each other to the assessment and establishment of a new legal status between them, in order to end or to avoid any uncertainty or dispute in the future. The experts were not asked to settle a dispute, but to objectively determine the ground rent, unless the lease holder and the municipality could mutually agree.

Pursuant to Article 7:904 DCC, a binding decision taken following a ‘settlement agreement’ is voidable only if it would in the given circumstances be unacceptable according to standards of reasonableness and fairness. If the decision is annulled or not rendered in due time, the court may (re)assess the legal status between the parties. The claimants argued that the court could do so and to set guidelines for the future determination of ground rent. The Supreme Court held that the Amsterdam Court of Appeal’s judgment did not concern Article 7:904, but the interpretation or effects of the general conditions (and the question whether a reasonable indexation of the ground rent is in accordance with the purpose of the statutory system of long-term ground lease). However, the Court of Appeal did not state sufficient reasons for its finding that the revision clause was unreasonably burdensome. The mere fact that the clause at issue is on the indicative list of Directive 93/13/EEC (Annex, sub j) is not decisive. The Supreme Court referred to Article 3 of Directive 93/13/EEC and reaffirmed that the context and the relevant circumstances of the case must be taken into account for the assessment whether a certain clause is unfair. The ratio of the revision clause and the justifications for using it could entail that it is not unreasonably burdensome. Moreover, the Court of Appeal had not offered the parties the opportunity to present their views as to the applicability of, and the assessment under, Directive 93/13/EEC. 

The Supreme Court overturned the judgment of the Amsterdam Court of Appeal and referred the case to the Court of Appeal in The Hague for further adjudication.

Role of the Charter and role of the general principles on enforcement

Neither the Supreme Court nor the Advocate General expressly refer to the Charter or the right to effective judicial protection, but the case falls within the scope of the Charter insofar as Directive 93/13/EEC is applicable, and insofar as Articles 3:305a and 6:240 DCC can be regarded as an implementation of the Injunction Directive 98/27EC (the legislative history at least shows that those provisions been amended as a consequence of this Directive, see e.g. Parliamentary Papers 1998-1999, 26 693, nr. 3).

The Advocate General explicitly mentions ‘effective legal protection’ as a reason for not making a too strict division between a 6:240-action and a 3:305a-action. To declare the claim brought by SEBA, which represents the collective interests of the lease holders, inadmissible would be a potential obstruction of the right of access to court, as well as the right to an effective remedy. The case also pertains to the protection the court is obliged to offer when assessing allegedly unfair contract terms, in particular to observe the right to be heard.

• Effectiveness
• Dissuasiveness

It could be said that the principles of effectiveness and dissuasiveness are at stake here, in connection with Directive 93/13/EEC and the Injunction Directive 98/27/EC.

It could be said that the principles of effectiveness and dissuasiveness are at stake here, in connection with Directive 93/13/EEC and the Injunction Directive 98/27/EC.

Elements of judicial dialogue

Consistent interpretation: the Supreme Court referred to two previous judgments, Van Marrum/Wolff and Heesakkers/Voets (see our ACTIONES templates), containing extensive references to the case law of the EU Court of Justice.

Horizontal Judicial Interaction: The Supreme Court only assessed the judgment of the Amsterdam Court of Appeal in the same case, which it was required to do in cassation appeal.

Vertical Judicial Interaction: Only indirectly; see the use of judicial interaction technique(s) above.

The Supreme Court overturned the Court of Appeal’s judgment, because it was not in conformity with (the Supreme Court’s interpretation of) the CJEU’s case law.

Additional notes on the decision

The entire system of long-term ground lease in Amsterdam is currently under review. The municipality of Amsterdam has already changed the ground rent revision in the general conditions 2016 (we will not discuss the details here). SEBA has issued a statement on its website that it finds the Supreme Court’s judgment disappointing, and that the uncertainty about long-term ground lease has not been resolved. The case is still pending before the Court of Appeal in The Hague; apparently oral pleadings will take place on 20 March 2017 (http://www.erfpachtinamsterdam.nl/onze-rechtszaken.html).

We have found one published reference to the Supreme Court’s judgment: the Court of Appeal Arnhem-Leeuwarden has held that the mere fact that a clause is on the indicative list does not necessarily entail that it is unfair (judgment of 30 August 2016, ECLI:NL:GHARL:2016:6941).