1. Introduction
In many legal systems, judicial review of administrative discretion is received increasing attention. If the legislator grants administrative authorities a power that leaves room for balancing interests, it is obvious that the authorities should weigh the relevant interests when exercising that power. However, authorities are not allowed to prioritize interests entirely at their own discretion. An important legal standard for authorities is the proportionality principle. This principle requires authorities to exercise a discretionary power in a way that affects the relevant interests of individuals as little as possible.
So the authorities’ responsibility is clear. But how should courts assess the administrative balancing of interests ex post? There are two schools of thought[1] in this respect:
- either the court opts for a limited review. It asks, for example, whether the authority could reasonably have arrived at the contested decision;
- or the court tests the administrative action directly against the proportionality principle. It then assesses whether the requirements of this principle have been met. Is the decision suitable to achieve the intended (legal) goal, is it necessary to adopt the decision, and is the decision proportionate given the interests of citizens involved?
In practice, these two approaches may merge. This creates a range of intensities of review.
For the Dutch administrative courts, limited reasonableness review has been the starting point for a long time.[2] This approach dated back to old case law of the civil courts.[3] In winter 2022 this starting point has been abandoned however. Proportionality review is currently the new standard. Perhaps even more noteworthy is that the Dutch general highest administrative court (the Administrative Law Division of the Council of State) has also accepted the possibility of testing bounded powers against the proportionality principle under certain conditions. This interesting development is briefly discussed below and the new case law is evaluated in the conclusions.
2. The big course change: first act
That Dutch administrative law would change course had been in the air for some time. In the literature criticism has been raised with respect to the traditional reasonableness test. This test was said to be too general and to offer too little legal protection. The test was also said not to be well aligned with the proportionality test in European Union law. However, the straw that broke the camel’s back was a major political-administrative affair about the enforcement of tax legislation (the so-called “childcare allowance affair”). Due to an inflexible fraud and clawback policy, many people in the Netherlands got into serious financial trouble through no fault of their own. A more intensive review of the extremely strict decisions to recover tax benefits could have prevented much misery. However, the administrative courts have remained passive for a long time.[4]
On 2 February 2022, the Administrative Law Division of the Council of State (hereinafter the Division) set a new course for all decisions in which the administration has room to weigh interests.[5] A Grand Chamber of the Division ruled that the limited review of discretion should no longer be the starting point. When reviewing discretion, the administrative courts must review the balancing of interests in accordance with Article 3:4(2) of the General Administrative Law Act. This provision reads, “The adverse consequences of a decision for one or more interested parties must not be disproportionate in relation to the aims to be served by the decision”.
The Division ruled that the suitability, necessity and balance of the decision can play a role when testing against Article 3:4(2) of the General Administrative Law Act. The highest administrative court also pointed out two important landmarks for the intensity of review: 1. the nature and weight of the interests involved in the decision, and 2. the far-reaching nature of the decision and the extent to which it affects fundamental rights of interested parties.
In the end, the Division did not opt for an overly prescriptive proportionality test. In practice, the intensity of the review exercised on discretion depends on so many factors that it is placed on a sliding scale on which all intensities between full and restrained can be applied. Since 2022, Dutch administrative law judges have been busy implementing the new approach. There is a focus on proportionality review for all kinds of decisions, but also for so-called ‘general binding regulations’ (i.e. a form of general administrative action). General binding regulations – insofar as they do not originate from the national constitutional legislature[6] – may also be tested in the Netherlands against legal principles and thus against the proportionality principle. However, case law emphasizes that the court should be cautious in technically complex matters and with respect to considerations that are politically sensitive.[7]
3. A hard nut to crack: second act
Bound administrative powers leave in principle no room for balancing interests. The idea is that the legislature has already weighed interests in the abstract. The administration does not have to do so afterwards. Nevertheless, it may turn out that the application of a bound power has particularly disproportionate consequences for specific interested parties. These may be situations in which the application of the law in a specific case turns out to be very unjust or cases that were not considered by the legislator. Shouldn’t the courts then still be able to correct the law through a proportionality test?
On 26 March 2024, the Trade and Industry Appeals Tribunal (hereinafter: the Tribunal)[8] issued an important ruling on this question. The case involved the rejection of a subsidy for a company under a ministerial regulation. This scheme offered temporary support to companies for the drop in turnover during the COVID-19 pandemic. A pig farm did not meet the conditions of the scheme. However, the bound power left no room for the award of a subsidy even though this could be regarded as a special case. Moreover, there was no hardship clause in the legislation for the administration to be able to make an exception.
The Tribunal made it clear that under Dutch law, in the case of bound powers, two routes are open for a proportionality test. These routes are partly alternatives.
The first route is to test the statutory provision ‘as such’ against the proportionality principle. In this case, the court tests the legal basis of the bound act against this principle. This constitutes a form of indirect review of administrative action[9]. A test against the proportionality principle may result in the court declaring a statutory provision inapplicable in the concrete case or even completely non-binding (in all cases).[10] There is one major exception in the Netherlands: in view of the Dutch Constitution, the court may not test national law in a formal sense ‘as such’ against a general principle of law and thus also against the proportionality principle. This rule was recently confirmed by the Administrative Law Division of the Council of State.[11] Review would only be possible after amending the Constitution.
There is a second route for the review of a bound act against the principle of proportionality. Indeed, in very special cases, a statutory provision can be disapplied in concrete terms because of a violation of the proportionality principle. In that case, the court does not test the law “as such” against the principle of proportionality. It can only overrule the law in the specific case due to very special circumstances. Case law then refers to a contra legem application of the proportionality principle. This method of review is permitted in the case of all legal regulations and thus also in the case of the law in the formal sense. However, a restriction applies to the review of the law in the formal sense: contra legem application is only allowed if special circumstances arise that have not or not fully been taken into account by the legislator when it adopted the law. This restriction does not apply to lower legislation (e.g. a ministerial regulation).
Ultimately, the proportionality test of a bound decision in concreto cannot be fully the same as the test of a discretionary decision. After all, the legislature has already weighed interests in the abstract. Assuming a conflict with the principle of proportionality in the case of bounded powers therefore requires (very) special circumstances that lead to an evident conflict with the principle of proportionality.
4. Conclusion
A ‘small revolution’ has taken place in Dutch administrative law in recent years. The review of discretionary decisions has been intensified. The traditional test of reasonableness has been replaced by a graduated proportionality test. Remarkably, Dutch case law has also sought ways to test bounded powers of the administration against the proportionality principle. Although case law is still in the process of fleshing out the new lines, it is clear that the administrative courts have developed a better grip on situations in which the strict implementation of the law in concrete cases turns out to be (very) disproportionate. For the room for maneuver of the administration, however, the new case law does not seem to have far-reaching negative consequences because the political-administrative space is also taken into account.
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Posted by Raymond Schlössels (Hoogleraar bestuursrecht aan Maastricht University).
[1] See for instance J. Jowell, ‘Proportionality and Unreasonableness: Neither Merger nor Takeover’, in: H. Wilberg & M. Elliott eds. The Scope and Intensity of Substantive Review. Traversing Taggart’s Rainbow, Oxford/Portland: Hart Publishing 2017, p. 41 ff.
[2] Although exceptions were recognised, for example in the case of punitive sanctions and the restriction of fundamental rights.
[3] Hoge Raad 25 February 1949, NJ 1959, 558 (Doetinchem).
[4] Only in 2019 came the first update of the case law. ABRvS 23 October 2019, ECLI:NL:RVS2019:3535 and 3536.
[5] ABRvS 2 February 2022, ECLI:NL:RVS:2022:285 (Harderwijk). This case concerned the temporary closure of a residence due to drug trafficking. The administrative judge went into detail about the necessity of the house closure and the consequences for the family’s housing interests. Article 8 ECHR and the interests of the minor children also came into the picture.
[6] In the Netherlands, one speaks of ‘the legislature in the formal sense’. It refers to the laws that come into being on the basis of Article 81 of the Constitution.
[7] See inter alia CRvB 1 July 2019, ECLI:NL:CRVB:2019:2016 and ABRvS 12 February 2020, ECLI:NL:RVS:2020:452.
[8] Another Dutch supreme administrative court judge.
[9] In the Netherlands, there is no direct appeal to the administrative courts against generally binding regulations. See Article 8:3(1) opening words under a General Administrative Law Act.
[10] In the latter case, the statutory provision may no longer be applied under any circumstances. Dutch case law otherwise excludes declaring a provision non-binding solely due to violation of formal principles (e.g. poor reasoning); a substantive principle must have been violated.
[11] ABRvS 1 March 2023, ECLI:NL:RVS:2023:772. Review of laws in the formal sense against universally binding provisions of treaties and decrees of international legal organisations, as well as directly effective Union law is possible.
