Retail space is often a matter of municipal politics. Municipalities try to force shops like Lidl and Action to establish themselves in the centre. And try to keep rapid delivery services like Gorillas out of the centre. According to a ruling on shops in Appingedam, the EU Services Directive gives greater direction to municipal policy. The permission or refusal of shops by a municipality is often not in accordance with European regulations. Zoning plans (land-use plan) often do not meet the standards set out in recent rulings and by the administrative courts. As a result, more and more shops are going to court. Whether or not to allow a shoe shop, cheese shop, megastore or sports shop is a difficult task for the municipality. The judge regularly has to assess the planning of the municipality.
Opportunities of the Services Directive for smart entrepreneurs and their lawyers
In the Appingedam ruling, concerning the branching of shops, the Services Directive was held to be applicable to retail. This is important for retail businesses in the Netherlands. As a result, the importance of the Services Directive, which, even before this ruling, created requirements for the criteria that may be set for the granting of licences, has only increased for entrepreneurs. In this blog, I will discuss the developments that have taken place in this context and give a number of examples of the many situations in which entrepreneurs (and their lawyers) can defend themselves against spatial plans with use of the Services Directive. As will become clear, the Services Directive is applicable to more and more spatial plans. Also interesting: Dutch business license and litigation.
Dutch Court ruling on zoning plans and the impact on retail trade, alongside the Services Directive
Since the Appingedam ruling, the Services Directive has become applicable to ‘requirements’ stemming from retail zoning plans. This involves situations where a zoning plan contains a rule that restricts the establishment of a (service provider) entrepreneur, such as a retailer. This may concern all kinds of restrictions, for example when certain types of retail are restricted to a certain location, or there is a maximum number of specific retail trade (e.g. tourist shops), or retail establishments are allowed up to a maximum retail area.
Refusal of retail licence outside the centre
More and more municipalities are trying to move discounters and shops like Lidl and Action to the centre. Therefore, permits requested from these shops outside the centre are often refused through reference to the zoning plan. However, in light of the recent court ruling in Appingedam, these retail zoning plans are often outdated. Municipalities now have a backlog in updating zoning plans. This offers retail businesses opportunities to still be able to establish a retail outlet at desired locations on the outskirts of the city or outlying area. This often has to be done with a specialised lawyer, through litigation, as municipalities are known to stick to their outdated zoning plans and may therefor refuse a retail business license.
Importance of Appingedam judgment and Services Directive for retail trade
In short, the Appingedam ruling on retail held:
(1) spatial planning rules, such as zoning rules, fall within the scope of the Services Directive;
(2) that retail trade is a ‘service’, and that the Services Directive also covers the establishment of retail planning restrictions, and;
(3) that land-use plans should not impose ‘requirements’ defined in the Services Directive, which restrict the establishment of a service provider and which cannot be justified under the Services Directive.
The Council of State, for example, has opened the door for the application of the Services Directive to ‘requirements’ in, for example, a zoning plan, but also to ‘licensing systems’ laid down in those spatial plans.
Zeewolde ruling; reliance on the Services Directive in lawsuit concerning wind turbines
Since then, much has been added to the rules on retail. The possibilities for stakeholders to make use of the Services Directive have been extended to plans other than the land-use plan, including to environmental licences. Retail rules in zoning plans, but also in other plans, can prevent prohibited ‘requirements’ or ‘demands’ that have to be justified. Such a requirement in a plan must be based on an overriding reason in the general interest, and be necessary and proportionate.
Decathlon store and the (final) Appingedam ruling: another application of the Services Directive (2019)
The application of the Services Directive to spatial planning has once again become apparent last year.
• In March 2019, the administrative court ruled in a case concerning the establishment of two Decathlon branches on business parks in the municipalities of Schiedam and The Hague. The Administrative Jurisdiction Division applied the Services Directive to a provincial instruction (provinciale instructieregel) rule stipulating that sellers of certain goods were not allowed to establish themselves in a certain area. This means that there is also a way of applying the Services Directive to spatial plans that are not directly addressed to the service provider, but that also affect that service provider through, for example, a zoning plan.
• In July 2019, the final judgment was handed down in the Appingedam case. Although the judgment did not discuss a new plan, it follows from that judgment that the reasoning that can be expected from the administrative body when it states that a (branching) rule is contrary to the Services Directive:
(a) has to be justified by an overriding reason relating to the public interest, and
(b) is proportionate to that compelling reason.
In other words: it has become clearer that the investigative burden placed on the administrative body is quite heavy, and that a service directive argument can have significant force in an appeal to the administrative court against a spatial plan or refusal of an environmental licence. The administrative authority will have to carry out or have carried out a thorough investigation by a research bureau into the effectiveness and proportionality of the measure. All kinds of questions will have to be answered, such as: is the measure suitable for achieving the administrative authority’s objectives, is the measure part of a consistent and systematic approach by the administrative authority, and are the interests of entrepreneurs sufficiently taken into account? The Service Directive was implemented in the Dutch Services Act.
Services Directive offers opportunities for entrepreneurs against strict regulations
The Services Directive is a difficult but, as can be seen, often relevant directive for retail trade. A specialised lawyer with relevant knowledge of case law can make all the difference when applying the Services Directive. Those who, as interested parties, are confronted with a licensing system, requirements in a zoning plan or regulation, or with the distribution of scarce or non-scarce licences (see also the blog about the book: ‘The battle for scarce licences’), may be able to appeal on the basis of the legal protection offered by the Services Directive. An example is the restriction on B&B owners in Amsterdam who may have to close their B&B by lottery; more on this here. You would be well advised to hire a specialised lawyer at this time.
Our retail lawyers are happy to assist you.