Beach bar in Duinbergen shut out after 18 years because its operator was ‘not a director’: Knokke-Heist went too far, the award of four lots is suspended
Knokke-Heist declared the proposal of B. BV — which has run a beach bar in Duinbergen for 18 years — irregular because its operator K.J. was not a director of the candidate itself, but the 75% shareholder and a director of the corporate director that wholly owns the candidate; the acting President of the Xth Chamber finds that this exclusion appears disproportionate to the aim of the participation condition and suspends the award of the four lots in the Duinbergen zone.
What happened?
The municipality of Knokke-Heist holds the concession for the beach and seafront on its territory; its new head concession with the Flemish Region (‘Beach and seafront concession 2027-2035’) runs for nine years and may be renewed once for nine years. On 26 February 2026 the municipality adopted concession guidelines for a market consultation procedure: sub-concessions for beach bars (lot group 1) and children’s play areas (lot group 2). The guidelines state expressly that the concession is not governed by the Concessions Act of 17 June 2016 nor by public procurement rules, but is conducted in accordance with transparency, fair competition and equal treatment. At the heart of the dispute is Article 14.1: the municipality wanted to avoid bids from anyone who would not personally run the business. A legal entity could therefore only apply if it had a ‘structural (corporate) link’ with the natural person-operator, meaning that the operator is a director of the entity and holds at least 25% of its shares. Proposals not meeting that condition would be rejected. Four lots were available in the Duinbergen zone. B. BV, which has operated a beach bar there for 18 years on a site that roughly corresponds to lot 1, submitted a proposal naming K.J. as operator. The structure: B. BV is a wholly owned subsidiary of S. BV; K.J. holds 75% of the shares in S. BV and is one of its directors; her husband M.B. holds the remaining 25% and is also a director. S. BV is the sole director of B. BV, with M.B. as its permanent representative. By letter of 10 June 2026 the municipality accepted that the shareholding condition (indirectly 75%) was met, but asked for a document showing that K.J. was a director of B. BV, or the permanent representative of the corporate director. The reply of 14 June 2026 referred to K.J.’s directorship and majority shareholding in S. BV, the articles of association, the UBO register and the share register, but enclosed no new document. In the evaluation report of 26 August 2026 the proposal was therefore declared irregular, not assessed and not ranked; the four lots went to other candidates, including the intervening party for lot 4. The board of mayor and aldermen approved that report on 28 August 2026. Six other extreme-urgency actions were brought against the same decision. After a confidential meeting on 4 September 2026 the municipality announced on 9 September that it would not withdraw its decision; B. BV went to the Council of State on 11 September. The municipality argued that the application was too complex for the summary extreme-urgency procedure, but the Council saw no problem in a single plea with four limbs. The objection that B. BV could not bridge the points gap also failed: the plea targets the finding of irregularity itself, and a proposal that turns out to be regular must be assessed and ranked. On the merits, the municipality and the intervening party relied on Article 2:55 of the Companies and Associations Code to argue that only the permanent representative binds a corporate director, and that K.J., as an ‘ordinary’ director of S. BV, cannot exercise the directorship in B. BV. State Councillor Patricia De Somere, acting President of the Xth Chamber, did not agree. She acknowledges that a grantor of a public domain concession has discretion to set participation conditions, but ‘this discretion does not appear to be unlimited’. The participation form, the documents and a power of attorney from B. BV (through M.B.) authorising K.J. to submit and sign the proposal show, prima facie, that a structural link does exist. In addition, Articles 7 and 8 of the model concession agreement prevent the concession, the shares or members of the core team from being transferred to outside third parties. Rejecting the proposal ‘for the sole reason that K.J. has not been appointed as permanent representative of S. BV’ appears disproportionate to the aim pursued. Extreme urgency was also accepted: on the basis of verifiable accounting data, including a certified financial report of 9 September 2026, B. BV showed that even a temporary loss strikes at its very reason for existing; the fact that the current operation ends on 15 October 2026 anyway and a new concession can only start on 15 March 2027 made no difference. The municipality and the intervening party did not as such dispute the urgency. The requested interim measure — a ban on concluding the concession agreement — was refused, because the application did not contain the separate statement of facts required by Article 4(2) of the Royal Decree of 19 November 2024. Because the award decision is materially severable, the suspension was limited to the four lots in the Duinbergen zone. The first auditor-head of section Ann Eylenbosch had delivered a concurring opinion.
Why does this matter?
Beach concessions, terrace permits, LED billboards, car parks: many local authorities grant scarce public domain concessions outside public procurement law, using their own ‘guidelines’. This judgment confirms that such guidelines are no blank cheque. A participation condition may be strict, but its application is reviewed against the principle of proportionality and against its own purpose. Knokke-Heist wanted to ensure that the operator stands behind the proposal and controls the candidate — a legitimate aim. But someone who owns 75% of the holding company that fully controls the candidate, sits on its board, signed the proposal herself under a power of attorney and is tied to the concession by contractual transfer bans, prima facie meets that aim. A point of company law (who is the permanent representative of the corporate director) is then not enough to exclude a candidate with 18 years of experience on that very spot without even assessing its proposal. The judgment does not stand alone: on the same day the same chamber also suspended the awards in the Knokke and Zoute zones (judgments 268.134 and 268.135), so a large part of Knokke-Heist’s beach bar concessions for 2027-2035 is on hold for now. Procedurally, there are two useful lessons: the Council accepts existential harm as urgency when it is backed by a certified financial report, and a claim for interim measures fails without a separate statement of facts.
The lesson
For candidates: read participation conditions on corporate structure both literally and functionally, and make sure your structure meets the literal reading before you bid. If the grantor asks for a supporting document, provide exactly that document — K.J. could have been appointed permanent representative before the evaluation, as the municipality and the intervening party were keen to point out. That B. BV still obtained the suspension is owed to a proportionality review in summary proceedings, not to any certainty. If, beyond a suspension, you also want a ban on concluding the contract, devote a separate statement of facts to it. And base your urgency on figures: a certified financial report carries more weight than assertions. For grantors: draft participation conditions with their purpose in mind and expressly provide for equivalent structures (holding company, permanent representative, power of attorney). Apply them proportionately too: where the rationale of the condition is demonstrably met, a purely formal rejection becomes vulnerable — especially when the contract already contains other safeguards, such as transfer and replacement bans.
Ask yourself
As a candidate: does my corporate structure meet the literal wording of the participation condition, or am I relying on a ‘functional’ reading? When asked for additional documents, did I provide exactly the document requested, rather than just a confirming letter? Can I support my urgency with a certified financial report and verifiable figures? Have I supported any claim for interim measures with a separate statement of facts? As a grantor: what concrete guarantee do I want each participation condition to secure, and does the wording exclude equivalent structures that offer the same guarantee? Do my contractual clauses (transfer and replacement bans) already provide part of the protection I am seeking through the participation condition?
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The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →