On 9 July 2019, the Amsterdam Court of Appeal denied a claim of Commerz against the Port of Rotterdam (Havenbedrijf Rotterdam N.V.). Commerz claimed EUR 70 million (including EUR 46 million for interest) on the basis of a guarantee issued by the former director of the Port of Rotterdam in 2004.
After 15 years of litigation, four decisions of the Courts of Appeal, two decisions of the Supreme Court, and a decision of the European Court of Justice, the last remaining claim on the basis of the guarantees issued by the former director of the Port of Rotterdam Willem Scholten in 2003-2004, has been denied.
The claims of in total EUR 75 million (excluding interest) filed against the municipality of Rotterdam in this matter, had already been denied earlier. Jeroen van den Brande led the team defending the municipality of Rotterdam and represented the municipality in court in the Barclays and Residex matters.
In its judgment of 9 July 2019, the Amsterdam Court of Appeal confirmed an earlier judgment of the Court of Appeal in The Hague that the 2004 guarantee providing security for a loan granted by Commerz is null and void as it constitutes illegal state aid.
After the Supreme Court decided that the reasoning of the Court of Appeal in The Hague was insufficient to reach that conclusion, the Amsterdam Court of Appeal had to look into the matter again, but reached the same conclusion.
The reasoning of the Amsterdam Court of Appeal can be summarized as follows:
- for state aid purposes, the 2004 guarantee can be attributed to the municipality of Rotterdam;
- Commerz illegally benefited from the 2004 guarantee as it provided security to Commerz for a loan that Commerz had granted to a third party which was previously unsecured;
- the loan was unsecured as a 2003 guarantee that purported to secure the loan, was issued by the director of the Port of Rotterdam without proper authorization. At the time, the Port of Rotterdam still formed part of the municipality of Rotterdam;
- in relation to the 2003 guarantee, Commerz solely relied on a legal opinion which was wrongly issued by a Dutch law firm, and not on any statement of the municipality of Rotterdam, which was at the time unaware of the 2003 guarantee; and
- given the specific circumstances of the matter, and to avoid further benefits arising from the guarantee for Commerz, the nullification of the guarantee is an appropriate and effective measure.
In its judgment, the Amsterdam Court of Appeal applied the rules set out by the European Court of Justice in the matter involving the municipality of Rotterdam and Residex (Case C-275/10). In that matter, the European Court of Justice held for the first time that guarantees can be null and void if they constitute state aid.
The specific circumstances that justified the nullification of the guarantee in the Commerz matter are the high risk of the guarantee, Commerz being aware of the uncertain financial situation that arose when an affiliate of the beneficiary of the loan went bankrupt, the loan being unsecured, and the fact that the commercial conditions of the loan were not changed upon the issuance of the guarantee.
Commerz unsuccessfully argued that the 2003 guarantee was legally binding for the municipality of Rotterdam. In its judgment, the Amsterdam Court of Appeal followed an earlier judgment of another chamber of the same court in the matter involving the municipality of Rotterdam and Barclays.
Although Commerz’s claim of EUR 44 million was denied, it was awarded a minor claim of some EUR 20,000 outstanding under other guarantees. Commerz’s claim for compensation of its legal fees amounting to EUR 2.4 million was also denied.
For more information, please contact Jeroen van den Brande.