Order subject to a penalty payment

What we do

The law states that an administrative body is authorized to impose an order under administrative coercion. The administrative body may also choose to impose an order under a penalty payment. An order under a penalty payment must be paid by the offender to prevent the violation or to ensure that the violation does not recur.

Pursuant to the law, a penalty payment order proves to be valid until it is lifted. If the decision has been in force for one year and no forfeiture has been imposed, the person who received the penalty payment may submit a request to the Municipal Executive to withdraw the decision. If the penalty payment is not paid or not paid on time, a reminder is sent. If payment is not made after the reminder, the arrears may be collected by means of a writ of execution. A writ of execution states the obligation to pay.

When organizations encounter enforcement issues, it is advisable to seek expert legal advice. We have extensive experience with enforcement issues and procedures. Contact us to discuss the possibilities.

What is a penalty payment order within supervision and enforcement?

The order subject to a penalty payment is one of the central remedial sanctions that an administrative body can employ within the framework of Supervision and Enforcement. Pursuant to Article 5:31d of the General Administrative Law Act, the order subject to a penalty payment consists of two components: an order to remedy or terminate the violation in whole or in part, and the obligation to pay a sum of money if that order is not executed (in a timely manner). Unlike an administrative fine, the penalty payment is not a punishment, but an incentive: the goal is for you to undo the violation yourself, not for you to be punished.

For our clients, this ranges from an international corporation in discussions with a regulator regarding a complex production violation to the baker on the corner who is informed by the municipality that a facade sign or a renovation does not comply with the rules. In all these cases, it revolves around the same question: how do you prevent the penalty from actually being forfeited, and was the order actually imposed lawfully?

Difference compared to an order under administrative coercion and an administrative fine

Pursuant to Article 5:32 of the General Administrative Law Act, the administrative body has the choice between an order subject to administrative coercion and an order subject to a penalty payment. With administrative coercion, the government ultimately intervenes physically itself (for example, by removing something or having it removed) at the expense of the offender; with a penalty payment, the execution remains with you, but you pay a sum of money if you fail to comply. A penalty payment may not be chosen if the interest protected by the violated regulation opposes it.

It is important to note that a penalty payment order is a remedial sanction, while an administrative fine is a punitive sanction. This distinction determines, among other things, which safeguards apply and how proportionality is assessed. Our lawyers and in-house counsel assess each situation to determine whether the correct sanction has been chosen and whether the chosen course of action allows for a less drastic solution.

Grace period and the amount of the penalty payment

The order must describe the remedial measures to be taken and include a grace period: the period within which you can terminate the violation without the penalty payment being forfeited (Article 5:32a of the General Administrative Law Act). That period may not be longer than necessary, but must be realistic; a period that is too short, during which compliance is factually impossible, may constitute grounds for challenging the order or requesting an extension.

The amount of the penalty payment is determined pursuant to Article 5:32b of the General Administrative Law Act: as a lump sum, per unit of time, or per violation, with a maximum. The amount must bear reasonable proportion to the severity of the violated interest and the intended effect. In practice, this proportionality requirement is frequently open to debate, particularly in the case of smaller entrepreneurs for whom a standard amount quickly proves to be disproportionately heavy.

Opinion, objection, appeal and preliminary relief

Usually, the administrative body announces its intention, and you are first allowed to submit your views. If the order is imposed nonetheless, you may lodge an objection within six weeks and subsequently appeal to the administrative court. Crucially, a notice of objection does not have a suspensive effect: the compliance period continues to run while the procedure has not yet been concluded.

Therefore, where necessary, we immediately request a preliminary injunction from the preliminary relief judge, so that the order is suspended until a decision has been made on your objection or appeal. Precisely because the compliance period is often only a few weeks and legal proceedings take much longer, swift and expert action makes the difference here between forfeiture and non-forfeiture.

Forfeiture by operation of law, collection and prescription

If you fail to comply with the order in a timely manner, the penalty payment will be forfeited by operation of law (Article 5:33 of the General Administrative Law Act): no additional decision is required to establish the payment obligation, and payment must be made within six weeks of forfeiture. If the administrative body wishes to actually collect the payment, it must first issue a collection decision (Article 5:37 of the General Administrative Law Act), against which you may challenge separately. In the proceedings against that decision, you may, among other things, dispute that the violation occurred and that the penalty payment has been forfeited.

The power to recover a forfeited penalty payment lapses one year after the day on which the penalty payment was forfeited (Article 5:35 of the General Administrative Law Act). Additionally, pursuant to Article 5:34 of the General Administrative Law Act, the administrative body may lift the order, suspend its duration, or reduce the penalty payment in the event of permanent or temporary impossibility to comply, and withdraw the order if the decision has been in force for a year without the penalty payment being forfeited. We closely monitor these time limits: a missed statute of limitations or an incorrect recovery decision often offers an effective line of defense.

Preventive order subject to a penalty payment

An order subject to a penalty payment can also be imposed preventively: in anticipation of a violation that has not yet occurred but is clearly imminent. Stricter requirements apply to such a preventive order, because the administrative body must demonstrate that the violation will occur with near certainty. In the supervision of businesses, this occurs, for example, when a supervisor wishes to prevent a planned activity. We assess whether this heavy burden of proof has been met and whether a preventive order is tenable in your case.

How MKB Juristen assists you

Our mixed teams of lawyers and in-house counsel guide you through every phase: from timely and well-substantiated submissions, filing objections, and requesting preliminary relief, to lodging appeals and challenging the collection order. Wherever possible, we first seek a workable solution in consultation with the administrative body to prevent forfeiture of the penalty payment.

Whether you are an international corporation dealing with a sector regulator or the entrepreneur around the corner receiving a letter from the municipality, we ensure an approach that matches the severity of the case and your interests. Are you facing a penalty payment order or impending enforcement? Contact us to discuss your options.