
Dutch Supreme Court upholds Appeal Court’s ruling that producer of soja based meat substitute products falls within scope rules of the mandatory pension fund for convenience products, because their meat replacing products qualify as hamburgers, meat balls or ‘frikandellen’.
The company ‘Like Meat’ is a producer of vegan meat replacing products, such as meatless hamburgers and other snacks, such as the (Dutch and Belgian speciality) frikandel.
The pension fund’s scope rules inter alia dictate that a company is considered a producer of convenience product, and therefore is subject to mandatory participation in the pension fund, if it produces “frikandellen, prepared meat balls, hamburgers, [etc]”. The company took the position that it did not fall within the scope rules, because other than in the aforementioned products no meat is involved in the production of vegetarian snacks.
Initially, the pension fund confirmed this view to be correct. However, a few years later the pension fund changed its position. The fund argued that a literal interpretation of the scope rules does not indicate such a thing as a ‘meat requirement’, meaning that also products that do not include meat can be considered a product that typically is made out of meat, such as a hamburger. The company argued inter alia that it is obvious for the neutral reader that a product is not a hamburger absent any meat involvement, and that at the time that these scope rules were drafted, meat substitute products were not as common as they are now, making it unlikely that it was the drafting parties’ intention to also include these products.
The court in first instance followed the company’s argumentation. However, the appeals court overturned this court’s decision and held that the company’s products were to be considered frikandellen, prepared meat balls, hamburgers, making the scope rules apply to the company. The appeals court inter alia considered that it follows from Dutch standard case law that interpretation rules for CLA’s and scope rules differ from how (commercial) contracts are interpreted. The latter are interpreted on the basis of the parties intentions which may be derived from all circumstances, such as negotiation history between the two parties. CLA’s and scope rules may only be interpreted on the basis of the parties’ intention if such intention is apparent from circumstances known to all third parties, typically only being the text of the documents and any attachments to it. This in principle leads to a more literal interpretation.
Here, the appeals court used a very literal interpretation, by arguing that it is literally not included in the scope rules that a hamburger should be meat-based to be a hamburger. Further, the appeals court held that, although it is correct that when the scope rules were drafted no one would have thought that a meatless product can be a hamburger, there has been a shift in what people see as a hamburger. As such, the interpretation of scope rules may develop over time following social development, even if the text has remained the same.
The supreme court upheld the appeals court’s ruling, without further elaboration. This forms an indication that appeals courts have a broad discretion when it comes to interpreting scope rules and CLA’s.
We see a tendency of scope rules being interpreted very broadly, on the basis of constantly evolving interpretation of old texts. One could debate whether this is in line with the aim of the interpretation mechanism for CLA’s and scope rules, which after all is meant to give third parties certainty about how these scope rules and CLA’s will be interpreted by a court. As such, companies, especially those operating in new markets, could be at risk of their activities at once falling within old scope rules.
This article is also published in Lexology (ILO).