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News Lawsuit

Landlord on the run with phosphate rights

24 September 2019 - Wouter Baan

The lease chamber of the Arnhem-Leeuwarden Court of Appeal maintains that the lessor is entitled to phosphate rights. This became clear on Tuesday September 24 in a ruling that is seen as a trial trial. The Association of Land Tenants and Own Land Users (BLHB) is disappointed in the verdict and is therefore seeking cassation.

After it interlocutory judgment took place on March 26 (which involves a farm lease), the lease chamber issued the final verdict on September 24. In the interlocutory judgment it became clear that lessors can also claim the phosphate rights of leased dairy farmers, although the lease must then be long-term (minimum 12 years). The lower limit was also set at 15 hectares.

Leaseholder must repay lessor
The judge has now judged that the lessee, under the above conditions, is obliged to transfer part of his phosphate rights to the lessor. Although the lessee puts forward as a counter argument that he sold the farm in question at a price higher than the market value, with which the lessor has terminated the agreement in his view, the Court of Appeal maintains its position.

The lessee is therefore obliged to transfer half of the phosphate rights to the lessor. However, the lessee has already sold these phosphate rights at an earlier stage, as a result of which the judge has decided that half of the sales value (€180 per right) must be repaid.

More things on the shelf
The BLHB saw this procedure as a pilot process for more comparable cases and is therefore closely involved in the process. Hans Meijer, the acting chairman at BLHB, calls the ruling disappointing for tenants. "What particularly stings us is the meager substantiation of the Court of Appeal," Meijer says.

According to the acting chairman, the judge has not given any valid arguments, which makes the verdict inimitable and debatable in various parts. Since there are still similar situations between tenants and lessees, the ruling is said to have far-reaching consequences. Meijer cannot give an estimate of how many cases this may concern.

in cassation
The BLHB considers it necessary to appeal in cassation. However, this step must be approved by the relevant tenant. According to the BLHB, the view of the Court of Appeal is incorrect. "They see phosphate rights as a production right, while this is in fact an environmental right," Meijer reports. That is why BLHB is convinced that the verdict in this trial process will probably not hold up in the long term.  

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Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

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