Netherlands: Damage Compensation Act And Procedural Administrative Law Amendment Act

Entry into force of new Dutch laws on compensation of damage from administrative decisions and on administrative procedures

1. Compensation of damage resulting from administrative decisions

On 29 January 2013 the upper house of the Dutch Parliament approved a new law: the Compensation of Damage from Lawful and Unlawful Administrative Decisions Act (the "Damage Compensation Act"). This Act introduces a new statutory basis for the payment of compensation to private citizens and businesses that are damaged by governmental activities, whether lawful or unlawful.

Compensation of damage resulting from lawful administrative decisions

As a rule, private citizens or businesses that suffer damage as a result of lawful administrative decisions (such as lost turnover caused by infrastructure works) must bear that damage themselves. If, however, the damage is greater than the "normal societal risk" and the injured party is affected disproportionately compared to others, for example because the infrastructure work continues for many years, a right to compensation from the government can arise. The Damage Compensation Act creates a general statutory basis for this compensation, to be incorporated in section 4:126 of the General Administrative Law Act ("GALA"). The new Act also provides that all requests for compensation of this nature must be heard by the administrative division of the competent district court and no longer by the civil division. The civil division will also cease to have jurisdiction over disputes concerning acts against which there is no administrative remedy.

Compensation of damage resulting from unlawful administrative decisions

The Damage Compensation Act also introduces new rules on the compensation of damage resulting from unlawful administrative decisions; these rules will likewise be incorporated in the General Administrative Law Act (section 8:88 and further). Once the new Act enters into force, claims for damages on account of unlawful administrative decisions which, if appealed would ultimately fall under the jurisdiction of the Central Appeals Tribunal (for public service and social security matters) or the Tax Division of the Supreme Court will first be heard exclusively by the administrative division of the competent district court and no longer by the civil division.

For damage claims on account of all other unlawful administrative decisions (i.e. those which, if appealed, would ultimately fall under the jurisdiction of the Administrative Division of the Council of State or the Trade and Industry Appeals Tribunal), the amount of the claim is decisive. For claims up to EUR 25,000, the injured party may choose between the administrative and civil divisions of the competent district court. For claims above that amount, only the civil division has jurisdiction.

For damage claims on account of unlawful administrative decisions against which no administrative remedy is available (e.g. where an administrative authority has provided incorrect information or exercised disproportionate supervision), the civil division of the competent district court retains exclusive jurisdiction.

It remains to be seen whether the introduction of the Damage Compensation Act will in practice make things simpler. This appears to be the case for the rules relating to the compensation of damage resulting from lawful administrative decisions, but not in the case of unlawful administrative decisions. The consolidation of the relevant rules in the General Administrative Law Act should, however, have a positive effect on legal uniformity and certainty.

The government has explicitly stated it is not the intention to pay out higher damages (as was also mentioned in a recent article in the Dutch newspaper "Financieel Dagblad" of 28 January). The changes are intended to increase legal certainty and legal equality and to lower transaction costs. In practice, the courts already exercise great restraint when it comes to awarding damages, and tend to hold that the damage falls within the private party's "normal societal risk". (The Administrative Division of the Council of State recently reached such a conclusion in a case decided on 31 October 2012, reference LJN BY1724).

Entry into force and transitional law

The new Act has not yet been published (in the Dutch Bulletin of Acts and Decrees) and the effective date must still be set by royal decree. As a rule, laws enter into force on 1 January or 1 July. It is therefore likely that the Act will enter into force on 1 July 2013. The government may, however, choose an earlier date.

2. Procedural Administrative Law Amendment Act

On 18 December 2012 the upper house of the Dutch Parliament approved the Procedural Administrative Law Amendment Act, which both supplements and amends some of the existing provisions of the General Administrative Law Act. Most of the new provisions entered into force on 1 January 2013. The most important changes are summarised below.

The new Act has introduced the "relativity requirement" in the entire field of administrative law (section 8:69a GALA). The requirement does not prevent an "interested party" (within the meaning of section 1:3 GALA) from filing an objection or appeal, but does affect the grounds on which the objection or appeal can succeed. The objection or appeal can now only lead to annulment of the disputed decision if that ground aims to protect the interest of the party that invokes it.

Furthermore, the Procedural Administrative Law Amendment Act now codifies the legal obligation of an administrative court (which includes both the administrative division of a district court and the various administrative appeal tribunals) to, wherever possible, render a final judgment and permanently resolve the dispute before it (section 8:41a GALA). Some of the new and amended provisions of the General Administrative Law Act are intended to help the administrative courts meet this obligation. For example: substantive as well as procedural defects of a decision may be disregarded if that will not adversely affect interested parties (section 6:22 GALA).

The provisions regarding an appeal from a judgement by an administrative court have now been consolidated in the General Administrative Law Act (previously they were contained in separate laws). Moreover, several new provisions regarding such appeals have been added. For example, under certain circumstances a case may now be heard by five instead of three judges (section 8:10a General Administrative Law Act) and a (non-binding) legal opinion may be requested from the judge designated for this purpose (section 8:12a GALA).

Entry into force and transitional law

The changes described above entered into force on 1 January 2013. If an objection or appeal is filed against an administrative decision published/notified before 1 January 2013 or an appeal or motion to set aside is filed against a judgment notified before that date, the old law applies. The same is true for requests for provisional relief.

The Procedural Administrative Law Amendment Act also introduces the possibility of filing a cross-appeal at the highest appellate level (sections 8:110-8:112 GALA). However, these provisions have not yet entered into force as it became evident that they would cause problems in immigration cases. This point will be resolved very soon in corrective legislation and the provisions are therefore expected to enter into force on 1 July 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.