October 2014
News Update Energy
Recent developments in the Energy market
When the Independent Grid Management Act, the so-called Unbundling Act, was
enacted in the Netherlands in 2008 energy companies turned to the court to uphold
their rights under European law. The Act requires, amongst other, the integrated
energy companies to unbundle their network companies and forbids privatization,
which three large energy companies argue is against the fundamental freedoms. After
well over six years since the matter was initiated against the State by the energy
companies and a preliminary ruling by the Court of Justice of the European Union,
Advocate-General Mr Keus advised the Dutch Supreme Court on the outcome of the
case.
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On 3 October 2014, Advocate-General Keus advised the Supreme Court in the matter of the Dutch
Independent Grid Management Act (‘Wet onafhankelijk netbeheer’), also called the Unbundling Act
(‘Splitsingswet). The Unbundling Act was introduced in the Netherlands in 2008 and requires integrated
energy companies to unbundle their network companies from their group (the ‘group prohibition’). The
Act also prohibits 'sideline activities' of the network companies and further forbids the transfer of
shares in network companies, which are held by provinces and municipalities, to parties outside of the
scope of the government (the ‘privatization prohibition’). Three of the largest energy companies Delta,
Eneco and Essent are of the opinion that the Unbundling Act is in conflict with European law by
restricting the right to free movement of capital. They have requested the court to declare the
Unbundling Act nonbinding. After the District Court ruled in favour of the State, the Court of A ppeal
quashed this ruling in favour of the energy companies. The appellate court ruling was based partly on
the interpretation of EU law and partly on the assessment that the prohibitions of the Unbundling Act
go beyond what is necessary to attain the objectives pursued. The objectives served by the
prohibitions does not constitute overriding reasons of public interest, the Court of Appeal ruled. The
State has appealed to the Supreme Court, which referred the key questions to the Court of Justice of
the European Union for a preliminary ruling. The ruling of the ECJ came on the 22 October 2013; the
Unbundling Act is indeed in breach of the right to free movement of capital, but such a breach may be
justified by the (underlying) public interests, such as consumer protection and security of supply. The
question whether the prohibitions of the Unbundling Act are appropriate to these objectives and do not
go beyond what is necessary to attain them are left to be answered by the Dutch court. At the end of
last week, Advocate-General Keus advised the Supreme Court on the outcome of the case. The
Advocate-General advised in favour of the Dutch State that the decision of the appellate court should
be overturned. Amongst other things, the Advocate-General is of the opinion that any breach of the
fundamental right of free movement of capital does not regard the energy companies. Therefore, in his
view, the energy companies have no legal interest in their request to declare the Unbundling Act
nonbinding. The Dutch Supreme Court must now decide whether it affirms or overturns the appellate
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October 2014
News Update Energy
court’s decision that the Unbundling Act is nonbinding. The Supreme Court’s decision is expected 9
January 2015.
Read the Advocate-General's advice to the Dutch Supreme Court in the matter of the State vs. Essent
(Dutch only)
Contact
Willem de Nijs Bik
Partner, Corporate Transactions
T +310206056166
M +31653566533
E w.de.nijs.bik@houthoff.com
Amsterdam
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Marc van Beuge
Sr. Associate, EU & Regulated
Markets
T +31206056582
M +31622987889
E m.van.beuge@houthoff.com
Amsterdam
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Bart van der Wiel
Partner, Dispute Resolution
T +31202056111
M +31620250758
E b.van.der.wiel@houthoff.com
Amsterdam