allocating scarce goods & legal protection

Allocating Scarce Goods & Legal Protection

Expert Meeting

“The Allocation of Limited Authorizations and Grants in the European Member States”

Leiden University, 18–20 January 2012

19.01.2012

Prof. Dr. Ferdinand Wollenschläger

1


BIPOLAR STATE – CITIZEN PARADIGM

MULTIPOLAR ALLO-CATION CONFLICT

19.01.2012

2


STATE

CITIZEN

STATE

A 1 A 2 A 3

MULTIPOLARITY AS SPECIFIC CHARACTERISTIC


Consequences and challenges for legal protection

• Existence of remedies tailored to the multipolar situation? Adequacy of existing remedies?

• Who has standing before the court? Under which conditions is an interested party allowed to challenge the allocation in favour of another person?

• Particular stability of allocation decisions (excludes ex-post repeal)

• Role and adequacy of damages

• Phased decision-making when to lodge an appeal?

19.01.2012

3



I) Specific Remedies?

19.01.2012

4


Jurisdiction

Specific

Jurisdiction

Public Procurement

(EU)

Administrative

Courts

Public-law Disputes

Ordinary

Courts

Civil Disputes


I) Specific Remedies?

• Majority of disputes: public-law matters and thus jurisdiction of administrative courts (e.g. gambling licences, CO2 emission permits or radio/telecommunication frequencies)

• Since nature of dispute is decisive for determining jurisdiction, ordinary courts may be competent for reviewing administrative action whether the latter may be considered of a private law nature

• Award of contracts by public authorities (below the thresholds of EU public procurement law) has been a controversial case in this respect (BVerwG: ordinary courts).

19.01.2012

5



II) Standing before the Court

• Task of German administrative courts is not to review the legality of administrative action as such, but (only) to protect individual rights.

• To have standing, a violation of a subjective right must be claimed (§42 para. 2 VwGO)

• To succeed with an action to quash an administrative decision also in substantive terms, it has not only to be established that the latter is illegal, but also that it has violated a subjective right (§ 113 para. 1 s. 1 VwGO)

19.01.2012

6



II) Standing before the Court

• To win an allocation case

– it has to be established not only that the decision was illegal,

– but also that the applicant either may claim the good for himself or – in case of administrative discretion – has a chance to be considered when redistributing the good in line with the court’s findings.

19.01.2012

7



III) Stability

• According to general rules of administrative procedure law (§ 74 para. 1 and 2 VwGO), an allocation decision has to be challenged within one month of announcement (legal certainty; legitimate interests of the successful applicant)

• Beyond this, some allocation decisions are awarded a particular stability once executed: No ex-post repeal

• E.g. Public procurement contracts, admission to universities or award of posts in the public service

19.01.2012

8



III) Stability

Models

• No ex-post remedy, but damages

– Accepted by German Constitutional Court in case of public procurement below EU-thresholds (BVerfGE 116, 135)

19.01.2012

9



III) Stability

• No ex-post remedy, but preliminary action

– Posts in the public service, public procurement contracts (EU-regime)

– Applicants are informed about the negative decision and its pending execution …

– … and thus have the chance to apply for an injunction to prevent the execution

– Hence, the usual ex-post remedy is substituted by a preliminary ruling procedure expediting the process

19.01.2012

10



III) Stability

• No ex-post, but prospective remedy

– Admission of students to universities

– The decision cannot be challenged ex post;

– Whether it can be established that the applicant is entitled to receive the good, but had not been considered contrary to the law, he has a claim to receive a similar good in a future allocation procedure

19.01.2012

11



III) Stability

• Issues:

– To what extent are such limitations in line with the constitutional law, EU law and ECHR guarantee of effective legal protection?

– Advantages and disadvantages of the specific models?

19.01.2012

12



IV) When to lodge the appeal?

• Complexity entails phased decision-making to rationalise it, to enhance transparency and to reduce complexity

• E.g. definition of contractual object, award criteria and procedure – publication of a contract notice – evaluation of tenders in a multi-step procedure

• If an error becomes manifest, when to lodge an appeal?

only against final decision or already against intermediate

acts?

19.01.2012

13



IV) When to lodge the appeal?

• § 44a s. 1 VwGO: “Appeals against procedural acts by authorities may only be asserted at the same time as appeals which are admissible against the factual decision.”

– Usually: intermediate acts not challengeable

– Deviation in the field of allocating telecommunication frequen-cies: basis for subsequent procedure

• Public procurement (§ 107 para. 3 GWB): obligation to immediately notify error to contracting entity and, whether the latter is unwilling to redress the complaint, to lodge the appeal within 15 calendar days

19.01.2012

14



V) Damages

• Legal protection may also be realised by awarding damages for breach of individual rights

• Important role, in particular whether the possibility of annulment action is restricted

19.01.2012

15



V) Damages

• However: Damages are secondary to an action for annulment of an allocation decision

– Guarantee of effective judicial protection establishes the primacy of quashing unlawful decisions over awarding damages for having to accept them (effectiveness)

– When a claimant of damages has failed to avert the damage by not having recourse to available actions to quash administrative decisions, liability is excluded (e.g. § 839 para. 3 BGB)

19.01.2012

16



V) Damages

• (P) Effectiveness of damages proof of causation in case of administrative discretion

• Often it can be established that the decision was illegal and that the claimant might have been successful in an allocation in line with legal requirements …

• … but: in view of administrative discretion or the specific nature of the error (e.g. no call for tenders) it cannot be established that the claimant is the only one who should have received the good

19.01.2012

17



V) Damages

• Consequences

– No damages

• (P) effective legal protection

– Modification/shift of burden of proof

• (P) danger of over-compensation (potential number of claimants)

19.01.2012

18



V) Damages

– Liability for lost chances

• Avoids “all-or-nothing”-solution

• Problem: evaluation of chances

• § 126 s. 1 GWB: “If the contracting entity violates a provi-sion intended to protect undertakings, and if the underta-king would have had a real chance without this violation of being granted the award upon an assessment of the ten-ders, which, as a consequence of that infringement, was adversely affected, the undertaking may demand compen-sation for the costs of preparing the tender or of participa-ting in an award procedure.” [limited scope]

19.01.2012

19


Questions

1. Which specific problems of legal protection in disputes concerning limited authorizations and grants are discussed?

2. At what moment(s) in the allocation procedure can interested parties lodge an appeal?

3. Which judge (civil, administrative or otherwise) will have jurisdiction?

4. Is there an opportunity to discuss allocation decisions with the competent administrative authority before addressing a judge?

5. Is the normal procedure for interim relief sufficiently tailored to the allocation issues? Are there other possibilities such as an expedited procedure?

19.01.2012

20


6. Which parties (e.g. newcomers and competitors) are considered to be interested parties, and which decisions are considered in the allocation process?

7. Are there any examples of specific problems with the method of judicial review in regard to the (re)allocation of limited grants or subsidies? Is the judge able to review ‘more than marginally’? Do judges lack expert knowledge? Is there a specific requirement when motivating administrative decisions to facilitate judicial review? Which party bears the burden of proof?

8. How is transparency ensured within the judicial process? Which documents are at the disposal of interested parties?

9. How is effective restitution accomplished? Are the competences of the authorized judge sufficiently tailored to restitution in the event of irregularities with allocation procedures? Are there specific remedies?

19.01.2012

21


10.What role does the possibility of compensation for damages play in this respect?

19.01.2012

22


allocating scarce goods & legal protection

Documents