On March 11, 2009 the District Court of The Hague rendered a decision in three cases of energy companies against the Dutch government. These civil procedures were instigated by Delta N.V., Eneco Holding N.V. and Essent N.V., in which they argued that the introduction of the so-called Group Ban for energy companies was unlawful. However, the Court ruled that the Dutch government was entitled to enact the Group Ban and denied all claims of the energy companies.

Summary

On July 1, 2008, the Unbundling Act (Splitsingswet) came into force in the Netherlands . The Unbundling Act prohibits the operation of gas and electricity networks and the production, trade or supply of gas and electricity to be carried out within the same group of companies, the so-called Group Ban. Each Netherlands integrated energy company faces major reorganizations to split into two separate groups of companies; one company operating the network assets, and one company operating the commercial assets.

Delta N.V., Eneco Holding N.V. and Essent N.V. (hereinafter referred to as the "energy companies") filed suit against the Dutch government over the introduction of the Group Ban. According to the energy companies, represented by Allen & Overy, Baker & McKenzie and Freshfields respectively, the Group Ban would lead to major costs. The energy companies asked the district court of The Hague (the "Court") for a declaratory statement that: (i) the Dutch government acted unlawfully vis-à-vis the energy companies to enact the Group Ban; and (ii) the Group Ban is contrary to articles 43 and 56 of the EC Treaty and Article 1 of the First Protocol to the European Convention of Human Rights. Last, the energy companies claimed that they would sustain substantial expenses due to the introduction of the Group Ban.

The energy companies based their claims primarily on grounds of tort (onrechtmatige daad). According to the energy companies, statements of the Minister of Economic Affairs (the "Minister") would have given rise to the legitimate expectation of the energy companies that the Group Ban would not be introduced as long as independent network management was secured. Furthermore, the introduction of the Group Ban would lead to unlawful impediments of free movement of capital (vrije verkeer van kapitaal) and to the energy companies' cross border lease contracts. Last but not least, in the energy companies' opinion, the introduction of the Group Ban would lead to expropriation pursuant to Article 1(1) of the First Protocol to the European Convention of Human Rights for which no compensation is provided.

In summary, the Court found that there were no (legal) grounds for the energy companies' arguments that the introduction of the Group Ban was unlawful. The Minister's statements could not be regarded by the energy companies as "unconditional" and are not legally enforceable. Therefore, there is no breach of the principle of legitimate expectations (vertrouwensbeginsel).

Subsequently, the Court assessed whether the introduction of the Group Ban was an unlawful impediment to the free movement of capital, one of the fundamental freedoms under the EC Treaty. The Court found that the introduction of the Group Ban was necessary - and an appropriate and proportional remedy - to secure that network companies remain publicly owned. It has neither been argued, nor has it become evident, that there are less far-reaching provisions which could have been applied by the Dutch government which would produce the same effect as the Group Ban.

The Court also considered that the introduction of the Group Ban does not lead to a breach of Article 1(1) of the First Protocol to the European Convention of Human Rights. The necessity and proportionality of the Group Ban in light of the public interest of certainty of supply, leads to the conclusion that there is a fair balance between said public interest and the energy companies' individual interest. The Dutch government has extensive liberty to choose which measures it imposes to reach a goal of public interest.

As to the energy companies' assertion that they would sustain substantial expenses due to the Group Ban, the Court ruled that there exists no rule of law which prohibits a legislator to introduce laws which may lead to extra costs for legal entities. Insofar the energy companies have based their claim on the ground that they will sustain substantial expenses in relation to the energy companies' cross border lease contracts (e.g. reorganization costs), this claim is also inadmissible. According to the Court, the energy companies did not substantiate this claim. The Court ruled furthermore that entering into cross border lease contracts is the energy companies' commercial risk. This includes the possibility that new legislation will have a (negative) effect on these contracts. The existence of these private contracts cannot limit the legislature in its ability to act.

The Court concludes that the introduction of the Group Ban is not contrary to the provisions of the EC Treaty and the First Protocol to the European Convention of Human Rights invoked by the energy companies and that their claims are consequently inadmissible. The energy companies, as unsuccessful parties, are ordered to pay the costs of the proceedings.