Dutch Subsidy Procedure and Legal Remedies
Subsidy in the Netherlands and Dutch legal remedies involved are regulated in the Dutch general administrative law (AWB). Several events can occur that the recipient of a subsidy should recognise in order to be aware of it’s legal positon. In this blog I will highlight with refusal and withdrawl of subsidy as well as suspension and modification of a Dutch subsidy. Of course I will deal with the legal remedies available for such events.
Objection to Dutch subsidy decision
An applicant who disagrees with the award (or refusal) of a Dutch subsidy may object to the subsidy decision. A Dutch subsidy lawyer can advise on this matter. A subsidy that is awarded, but is too low, may also be a reason for lodging an objection against the subsidy decision. The objection start the complaints procedure dealt with by the government body responsible for the subsidy (e.g. RVO). Other reasons for lodging an objection could be the conditions attached to the subsidy, obligations imposed on the subsidy applicant in a subsidy decision, the requirement of putting security for an advance on the subsidy, and requirements relating to the purpose of the subsidy (purpose-related obligations).
Subsidy reduction is subject to appeal
A Dutch subsidy decision ususually at first is a conditional entitlement to a subsidy. It is followed by a subsequent subsidy decision, which can also be requested by the applicant, concerning the definite amount of the subsidy. The amount of the subsidy may give rise to a dispute, for example in the event of a reduction or nil award of the subsidy. The applicant must object to the subsidy award if there is reason to do so. The applicant cannot wait for the subsidy to be awarded. The subsidy may also be fixed ex officio (i.e. without an application) by the grantor. The subsidy recipient must ensure that he or she lodges an objection within the six-week objection period if there is reason to do so. Therefore, you may wish to consult a lawyer for advice about the subsidy decision in good time.
Modification or withdrawal of the subsidy
The withdrawal or change of a subsidy can have far-reaching consequences for an organisation depending on the subsidy. Therefore, you should seek timely advice from a Dutch subsidy lawyer on the legal options for lodging an objection or appeal against that subsidy decision. The amendment or withdrawal of the subsidy has a retroactive effect on the decision to award the subsidy (Article 4:48 AWB). The grounds for revocation and amendment of the subsidy are:
• subsidy activities have not taken place or have not taken place in full;
• conditions of subsidy have not been complied with;
• incorrect or incomplete information provided by the subsidy applicant;
• the subsidy was not awarded correctly and the applicant should have known that;
• modification of the subsidy is in accordance with the established subsidy budget.
Suspension of aDutch subsidy
Article 4:56 of the Dutch general administrative law (AWB) provides that the obligation to pay an amount of a subsidy or an advance on a subsidy is suspended from the day on which the administrative body notifies the subsidy recipient in writing of a serious suspicion that there are grounds for applying Article 4:48 or 4:49 AWB (withdrawal of subsidy or amendment of subsidy). This can be done, for example, in the event of impending bankruptcy of the subsidy applicant. Suspension of the subsidy lasts up to and including the day on which the decision regarding the withdrawal or amendment of the subsidy is announced or when thirteen weeks have elapsed since the notification of the serious suspicion. In view of the various periods of time that can apply in the event of a subsidy being withdrawn or amended, it is advisable to seek the advice of a lawyer in good time.
Withdrawal of subsidy
Subsidies may be withdrawn with retroactive effect. A subsidy lawyer can assess whether a ground for withdrawal of the subsidy is justified and proportional. The grantor has the option of fixing the subsidy at a lower level than in accordance with the subsidy determination. However, the law provides the possibility to withdraw the subsidy in the event of irregularities in the granting of a subsidy.
Legal grounds to withdraw a subsidy:
- activities for which a grant has been awarded have not taken place, or have not taken place in full;
- subsidy conditions have not been complied with;
- the subsidy applicant has provided incorrect or incomplete information;
- the subsidy was awarded incorrectly and the applicant should have known this;
- sufficient funding has already been provided in accordance with the applicable subsidy scheme.
Advice Dutch lawyer on the withdrawal of a subsidy
A Dutch lawyer can assess whether the withdrawal of a subsidy is justified. In order to determine this, the lawyer checks the applicable subsidy scheme and the relevant grounds for withdrawal. The subsidy decision may also contain further conditions or obligations that can play a role. It is beneficial to ask a subsidy lawyer for their opinion on the likely outcome of litigation in the event of an appeal against the subsidy revocation decision. The same applies to changes to the subsidy, which will have consequences for the subsidy recipient.
Reasonable period of time for phasing out the subsidy after withdrawal/modification
In the event that withdrawal of the subsidy would be justified, the subsidy recipient is entitled to a reasonable period of time within which to reduce the subsidy. For example, the subsidy ruling of 14 November 2012, ECLI:NL:RVS:2012:BY3022 stipulates that the reasonable period referred to in Article 4:51(1) of the AWB is intended to enable the subsidy recipient to take measures to offset the consequences of the total or partial termination of the subsidy relationship. It must therefore be clear to the subsidy recipient what measures it should take within it’s organisation to compensate for the subsidy reductions.
Refusal of a Dutch subsidy
If a Dutch subsidy is refused, a lawyer can advise whether a ground for refusal has been correctly applied. There are statutory grounds for refusal of a subsidy (see below), but a ground for refusal of the subsidy may also follow from a specific subsidy regulation or implementing regulation. The Council of State has determined that a ground for refusal of a subsidy must meet three conditions:
(1) It must fit within the legal and regulatory frameworks,
(2) Reasons for refusal of a grant must not be unreasonable; and
(3) Refusal must be sufficiently linked to the purpose of the subsidy to be awarded (ECLI:NL:RVS:2017:1774, Rechtspraak.nl).
Grounds for refusal of subsidy application
Article 4:35 of the AWB contains the (general) grounds for refusing subsidies in the Netherlands:
a. the subsidy activities will not take place or will not take place in full;
b. the applicant will not comply with the obligations attached to the subsidy;
c. the applicant will not properly account for the activities carried out and the associated expenditure and income, insofar as they are relevant to the determination of the subsidy.
d. has supplied incorrect or incomplete information when applying for a subsidy and the provision of this information would have led to an incorrect decision on the application, or
e. the subsidy applicant has been declared bankrupt or has been granted a moratorium, a debt rescheduling arrangement is in force or has been applied for.
Refusal of subsidy by objection of competitor
A third party or competitor may also object to subsidies being granted to another party. The Council of State’s decision of 13 April 2011 in case no. 201006774/1/H2), held that, in a decision to grant a subsidy, a third interested party can be considered on the basis of its competitive position, if the subsidy is intended to support business activities, to be carried out within the same market segment and catchment area in which the third party (objector to the subsidy) is active. So a competitor can make life difficult for a fellow competitor. As well as another party that qualifies as a party with an interest, like a recipient that files a request for the same subsidy. It may be taken into account that the business activities supported by the subsidy may lead to a loss of turnover for the third party.