The Dutch Supreme Court gave its long-awaited ruling about the legality of the Independent Grid Management Act, better known as the Unbundling Act, on 26 June 2015. This Act prevents electricity and gas network operators from being part of a corporate group that includes companies producing, supplying or trading in energy in the Netherlands (group prohibition).

In addition, the group that the network operator belongs to may not carry out activities that could affect the management of the network in question. Energy companies Essent, Eneco and Delta argued during the proceedings that the prohibitions violate European principles of free movement of capital and freedom of establishment. The Supreme Court disagreed and overturned rulings by the Court of Appeal of The Hague that the Unbundling Act violated freedom of establishment.

Assuming that the prohibitions restrict free movement of capital and free establishment, the Supreme Court considered these measures justified for reasons of public interest. They are also appropriate measures for achieving the legislators’ objectives and do not go beyond what is necessary in that respect. According to the Supreme Court, this meant that the principles of free movement of capital and freedom of establishment had not been violated.

For Essent, this is the end of the road. Eneco and Delta, however, invoked article 1 of the First Protocol to the European Convention on Human Rights during their appeal. Article 1 offers the right to peaceful enjoyment of possessions. This issue was not considered by the Court of Appeal because it already held the Unbundling Act contrary to free movement of capital and freedom of establishment. In its judgment, the Supreme Court referred this issue to the Court of Appeal of Amsterdam, which will have to assess the validity of Eneco’s and Delta’s arguments on protection of property.