The Court of Appeal in ’s-Hertogenbosch recently ruled on a case in which parties to the sale of a property agreed that the buyer will not lodge any objection or appeal now or in the future against the operating of a company in nearby premises or against the future occupation of that property by residents. The agreement was included by the civil-law notary as a so-called qualitative obligation in the deed of delivery, which means that subsequent owners of the property sold will also be bound by it. The deed of delivery also stipulated that this qualitative obligation lapses after a 25-year period.
According to the Court of Appeal, this condition imposed an obligation that is irreconcilable with the fundamental legal principles enshrined in Dutch law since third parties (subsequent owners) are denied access to legal protection against any plans by the owner of the nearby premises. According to the Court of Appeal, the condition is in conflict with public order and therefore invalid. The fact that its operation has been time-limited does not affect this.
The Court ruled that a condition of this kind – known in the literature as a "gagging clause" – is not at odds with public order by definition, but is so in this case. The way in which it denies legal protection to third parties for a long period is deemed by the Court to be unacceptable because it is in conflict with the fundamental legal principles of Dutch law. However, there are pointers to be found in the literature and legal precedent that provide scope for the inclusion of this kind of condition. But if it goes too far or is formulated too generally, the condition will be at odds with public order and invalid in accordance with Article 3:40, paragraph 1 of the Dutch Civil Code (BW). The Court ruled that this particular case did not fall within the scope referred to above.
When including these kinds of obligations and conditions in a purchase agreement, it is therefore advisable to make the relevant enquiries to find out whether the condition in question is at odds with the fundamental legal principles of Dutch law and therefore invalid in accordance with Article 3:40, para 1 BW.