U-I-303/97

Reference no.:
U-I-303/97
Objavljeno:
Official Gazette RS, no. 46/98 and OdlUS VII, 119 | 04.06.1998
ECLI:
ECLI:SI:USRS:1998:U.I.303.97
Act:
Decree of the Urban Municipality of Ptuj on the method of carrying out the award of concessions and conditions for performing the paid public service of distribution of household gas (Official Gazette of the Urban Municipality of Ptuj, no. 7/96), indent 4 of article 5 and para. 1 of article 7.
Operative provisions:
The fourth indent of article 5 of the Decree on the method of carrying out the award of concessions and conditions for performing the paid public service of distribution of household gas in the Urban Municipality of Ptuj is not in conflict with the Constitution and Law. The first paragraph of article 7 of the Decree from the first point of the judgement proper is annulled.
Abstract:
Distribution infrastructure which does not have the status of a constructed public good is not taken out of legal trade and it is permissible for it to be put up for purchase.

The decision of the competent municipal council for the selection of concessionaires for performing local paid public services is in conflict with the Local Government Act, which determines that a municipal administration decides on administrative matters within municipal competence at first instance, and the mayor at second instance.
Password:
Municipality, jurisdictions, concessions.
Public services, paid public services
Household gas, distribution.
Exercising and restricting rights.
Right to legal remedy.
Public good and natural wealth.
Dissenting opinion of a constitutional judge.
Legal basis:
Constitution, articles 15, 25 and 70.
Energy Economy of Slovenia Act (ZEG), articles 5 and 9
Public Utility Activities Act (ZKD), article 3
Paid Public Services Act (ZGJS), articles 9, 33 and 37
Building Lands Act (ZSZ), article 10
Local Government Act, article 3
Constitutional Court Act (ZUstS), articles 24, 26, 34 and para. 2 of article 45
Document in PDF:
The full text:
U-I-303/97
4.6.1998


DECISION


At a session held on 4 June 1998, in a proceeding for assessing constitutionality and legality commenced on the initiative of the company Plinarna Maribor d.d., Maribor, represented by Božidar Vidmar, attorney in Maribor, the Constitutional Court reached the following decision:

1. The fourth indent of article 5 of the Decree on the method of carrying out the award of concessions and conditions for performing the paid public service of distribution of household gas in the Urban Municipality of Ptuj (Official Gazette of the Urban Municipality of Ptuj, no. 7/96) is not in conflict with the Constitution and Law.

2. The first paragraph of article 7 of the Decree from the first point of the judgement proper is annulled.

Reasoning

A.

1. The company Plinarna Maribor d.d., Maribor lodged an initiative for the assessment of constitutionality and legality of indent 4 of article 5 of the Decree on the method of carrying out the award of concessions and conditions for performing the paid public service of distribution of household gas in the Urban Municipality of Ptuj (Official Gazette of the Urban Municipality of Ptuj, no. 7/96 - hereinafter: the Decree) because it is claimed to be in conflict with the second paragraph of article 3 of the Trade in Real Estate Act (Official Gazette SRS, no. 19/76, 42/86), the second paragraph of article 10 of the Building Land Act (Official Gazette RS, no. 44/97) and the first paragraph of article 70 of the Constitution.

2. The fourth indent of article 5 of the Decree determines that a concessionaire may perform a concession on the condition that he reaches agreement with the Urban Municipality of Ptuj on the repurchase of distribution infrastructure. The initiator believes that in the concrete case it is real estate outside legal trade since the distribution infrastructure (gas lines) are supposed to be a constructed public good to which a specific right to use may be obtained under conditions determined by the Law (first paragraph of article 70 of the Constitution). This infrastructural facility is claimed to have become the property of the Urban Municipality of Ptuj on the basis of article 76 of the Paid Public Services Act (Official Gazette RS, no. 32/93 - hereinafter: ZGJS). He also states that the purchase of distribution infrastructure or the reimbursement of the real value of invested resources as determined in the public call for tenders signifies the start of the auction price at the expense of the consumer who will have to pay the price that will be determined.

3. The initiator believes that actualising the impugned provision would create consequences difficult to rectify, and proposes that the Constitutional Court restrain implementation of the impugned provision until final decision.

4. The Urban Municipality of Ptuj states in answer that the initiator does not show legal interest in compliance with article 24 of the Constitutional Court Act (Official Gazette RS, no. 15/94 - hereinafter: ZUstS) since the concession for performing the paid public service of distribution of household gas in the Urban Municipality of Ptuj was not awarded to the initiator and thus the impugned provision does not refer to him. The lack of success of the initiator in the public calls for tenders in the opinion of the Urban Municipality of Ptuj is also claimed to be the exclusive reason for lodging the initiative.

5. It derives from the answer that the infrastructure for the distribution of household gas in the Urban Municipality of Ptuj is not a constructed public good since a decision has not been issued which could award this infrastructure such a status in conformity with article 5 of the Building Lands Act (Official Gazette RS, no. 44/97 - hereinafter: ZSZ).

6. The municipality believes that the initiator mistakenly interprets the impugned provision in understanding the word "repurchase" in the strict linguistic meaning. For a proper understanding of the provision of indent 4 of article 5 of the Decree, in the municipality's opinion, it is necessary to interpret the Decree as a whole and also its purpose. In interpreting the cited provision, it is also necessary to respect the provisions of indent 1 of article 4, article 16, articles 30 and 32 of the Decree, which determine that:

- the concessionaire obtains for the period of the duration of the concession exclusive right to the use and management of the network for distribution of household gas,

- newly constructed facilities and equipment shall at the end of the concession be transferred to the ownership of the concession giver,

- the concessionaire shall become the owner of the newly constructed network for the duration of the concession, and that - infrastructure may not be burdened by a mortgage.

7. After receipt of the response of the Urban Municipality of Ptuj, the initiator extended the initiative to an assessment of the constitutionality and legality of article 7 of the Decree, which determines that the concessionaire shall be chosen by the Town Council of the Urban Municipality of Ptuj on the recommendation of the mayor. The initiator believes that, on the basis of the Local Government Act (Official Gazette RS, no. 72/93 with amendments - hereinafter: ZLS), the municipal administration has jurisdiction for issuing a decision on the choice of concessionaire. The impugned provision, in the opinion of the appellant, excludes the possibility of appeal against the decision on the choice of concessionaire, which is claimed also to represent violation of article 25 of the Constitution.

8. The initiator proposes that the Constitutional Court annul ab initio the first paragraph of article 7 of the Decree, and until final decision restrains its implementation since the initiator has initiated an administrative dispute before the Supreme Court and believes that the decision in the administrative dispute also depends on the decision of the Constitutional Court.

9. The Urban Municipality of Ptuj also responded to the extension of the initiative. It states in answer that the provision of the first paragraph of article 7 of the Decree, which determines the jurisdiction of the Town Council of the Urban Municipality of Ptuj for the choice of concessionaire, is in compliance with the Law and the Constitution. A decision on the organ which is supposed to perform the choice of concessionaire is in its opinion left to the concession act. They state as legal grounds indent 12 of article 33 ZGJS, which determines that a concession act shall determine the organ which shall carry out the choice of concessionaire. The use of the provision of article 67 ZLS on the jurisdiction of a municipal administration for deciding on administrative matters under the jurisdiction of the municipality does not in its opinion enter into consideration since ZDJS is said to be lex specialis in relation to ZLS. The impugned provision is also claimed not to have been in conflict with the right to legal remedy guaranteed by article 25 of the Constitution, since it give the initiator the possibility of initiating an administrative dispute against a decision on the choice of concessionaire (which he also did) and he is thus guaranteed legal remedy.

10. The initiator also answered these statements of the Urban Municipality of Ptuj. He states in answer that ZGJS determines that the concession giver shall decide on the concessionaire by administrative decision, and stressed that the concession giver is the Urban Municipality of Ptuj and not the Town Council of the Urban Municipality of Ptuj, and that the Statute of the Urban Municipality of Ptuj determines that administrative decisions in the Urban municipality shall be taken by the municipal administration. They believe that although the Town Council may select the concessionaire, it cannot issue an administrative decision. In view of the statutory position of the distribution infrastructure, it states that administrative organs are bound to find by decision that the distribution infrastructure is a constructed public good of local importance when it issued a permit for use and that the Town Council of the Urban Municipality of Ptuj may not decide about this arbitrarily.

11. The Town Council of the Urban Municipality of Ptuj supplemented its answer on 22.4.1998. It explains in it that the provision of paragraph 1 of article 7 of the Decree is also in compliance with the European Charter of Local Government (Official Gazette RS, no. 15/96). It believes that on the basis of the cited provision, deciding on the award of a concession for performing the paid public service of distribution of household gas is within the jurisdiction of the Town Council. The Town Council of the Urban Municipality of Ptuj also declared its own costs and proposes to the Constitutional Court that it imposes payment of them on the initiator.

B.

12. According to the provision of article 24 ZUstS, anyone may provide a written initiative for commencing a proceeding if he shows his legal interest. Legal interest is given if a regulation or general act for exercising public authority whose assessment the initiator proposes directly encroaches on his rights, legal interest or legal position.

13. The Constitutional Court decided that it is sufficient for the existence of legal interest in the case being tried that the initiator registered in the public call for tenders for the award of a concession. It is not important for the existence of legal interest, as the Urban Municipality of Ptuj mistakenly believes, that the initiator was not selected as concessionaire in the public call for tenders. If the impugned provisions of the Decree had really been unconstitutional and illegal in the sense introduced by the initiator, annulment ab initio of the impugned Decree would also be possible, which could effect his legal position.

14. The Constitutional Court accepted the initiative. Since the material circumstances in the case have been clarified and because the opposing party had deposed on the initiative, after accepting the initiative, on the basis of the fourth paragraph of article 26, it continued with deciding on the matter itself.

15. In a proceeding before the Constitutional Court, each party bears their own costs unless the Constitutional Court decides otherwise (first paragraph of article 34 ZUstS). Special reasons would have to exist for such a decision, which the Town Council of the Urban Municipality of Ptuj does not claim.

16. In the context of assessing the constitutionality and legality of the Decree, the Constitutional Court dealt with two questions, namely:

a) whether the provision of indent 4 of article 5 of the Decree, which determines as one of the conditions for performing the concession an agreement on the repurchase of the distribution infrastructure, is in compliance with the valid legislation and with the first paragraph of article 70 of the Constitution, which determines that a special right to use of a public good may be obtained under conditions defined by Law?

b) whether the decision of competence of the Town Council for the choice of concessionaire (first paragraph of article 7 of the Decree) is in accordance with valid legislation and whether such a decision is a violation of the right to legal remedy (article 25 of the Constitution)?

a) Judgement of indent 4 of article 5 of the Decree.

17. The distribution of household gas, on the basis of the still valid article 5 of the Energy Economy Act (Official Gazette SRS, no. 33/81s with amendments)1 is defined as a matter of special social importance in oil-gas activities. Supply of gas from local networks is defined in article 9 of the Energy Economy Act and the still valid part of the third paragraph of point 8 of article 3 of the Public Utility Activities Act2 as a public utility activity. ZGJS determined that until the adoption of new laws in the sphere of energy, transport and communications, public utility and water management and other laws in specific fields, matters of special social importance shall be considered paid public services which are guaranteed in compliance with the cited laws. Supply of gas from local networks is thus a selected local paid public service.

18. The Urban Municipality of Ptuj determined with the Decree on paid public services on the territory of the Urban Municipality of Ptuj (Official Gazette of the Municipalities of Ormož and Ptuj, no. 25/95) activities which are performed as paid public services on the territory of the Urban Municipality of Ptuj. According to the provision of article 4 of the Decree on paid public services, supply of gas is defined as a selected local public service. By this decree, the Decree on public utility activities in the municipality of Ptuj3 (Official Gazette of the Municipalities of Ormož and Ptuj, no. 9/93 and 14/91) was annulled, which already in 1983, in compliance with the then valid Public Utility Activities Act, defined supply of gas from a local network as a public utility activity.

19. By the Decree on activities and conditions for performing paid public services by concession (Official Gazette of the Municipalities of Ormož and Ptuj, no. 27/95 and the Official Gazette of the Urban Municipality of Ptuj, no 1/98) the Urban Municipality of Ptuj decided to transfer the implementation of the public service of the supply of gas to a person of civil law, thus to award a concession. By the Decree on the method of implementing the award of a concession and conditions for the performance of the paid public service of the distribution of household gas in the Urban Municipality of Ptuj (Official Gazette of the Urban Municipality of Ptuj, no. 7/96 - hereinafter: the Decree) and determined the content of implementation as the concession act.

20. The impugned provision (indent 4 of article 5) of the Decree, which is the last in a series of regulations of the local community in the context of regulating local paid public services for the supply of gas, determined as one of the conditions for the award of a concession the repurchase of the distribution infrastructure. The repurchase of the distribution infrastructure, which is the property of the Urban Municipality of Ptuj4, is regulated further in article 31 of the Decree, which determines that the repurchase will be regulated by a concession contract.

21. From the statements of the initiator and the Urban Municipality of Ptuj derive various standpoints in relation to the meaning of the impugned provision on the repurchase of the infrastructural network. The municipality, namely, claims in its answers that it is not in fact repurchase and that a strict linguistic interpretation leads to a mistaken interpretation. The real meaning of the impugned provision is said to derive from an interpretation of the Decree as a whole and its purpose. The Constitutional Court did not take a standpoint on these statements. Without taking a position on the cited "repurchase" it found that even in a case in which it was repurchase, which is the legal title for the transfer of ownership rights, the initiator's reproach was unfounded.

22. The distribution infrastructure (infrastructural facilities and equipment) intended for the direct implementation of the local paid public service of the supply of gas from local networks is considered on the basis of article 7 and 76 ZGJS and the Instructions on what shall be considered secondary, primary and main networks of public utility and other facilities and equipment (Official Gazette SRS, no. 27/85) and on the basis of article 29 of the Decree, to be public economic infrastructure. The distribution networks consist of infrastructural facilities and equipment for the distribution of household gas.

23. The legal status of the distribution infrastructure intended for implementing the local paid public service of supply of gas is regulated both by law and by regulation of local communities.

24. The legal regime of infrastructural facilities and equipment must be adapted to the nature or intention of the public services. Because of the strong presence of a public interest or public function of this asset of a municipality, it is necessary to form the legal regime in relation to the availability, use and other rights and obligations connected with this asset, such that to the greatest possible extent it will reflect the presence of a public interest or will be adapted to the nature or intention of the public service. So a special legal regime is formed in the theory and legislation, which relates above all to the use of infrastructure (third paragraph of article 9 ZGJS) and to the possibility of legal transactions (article 10 of the Building Lands Act). The subject of the further treatment, in relation to the demonstrated question, is only the legal trade in the infrastructure under treatment, and not also its use. The Constitutional Court, therefore, also did not take into consideration the claim of the initiator in relation to the discordance of the Decree with the first paragraph of article 70 of the Constitution, which determines that special rights of use to a public good may be obtained only under conditions determined by Law.

25. The Building Lands Act (hereinafter: ZSZ) determined that facilities of public infrastructure are a constructed public good which under the law is barred from legal trade. ZSZ determined that facilities of public infrastructure obtain the status of a constructed public good of local importance by a decision that a municipal administration issues on the basis of the resolution of a competent municipal organ. It follows from this that a distribution network for the distribution of household gas, which is public infrastructure, obtains the status of a constructed public good by administrative decision. The Urban Municipality of Ptuj did not issue such a decision, so the public infrastructure in question does not have the status of a constructed public good and thus is not barred from legal trade. The impugned provision of the Decree on the repurchase of the distribution infrastructure, or more precisely, the decision on the sale of the infrastructure to the concessionaire is therefore not in conflict with ZSZ.

26. The initiator submitted to the Constitutional Court four decisions which confirm that permits for use were issued for individual facilities and equipment of public infrastructure, and draws attention that these facilities and equipment should have obtained the status of a constructed public good. He believes that the municipality may not arbitrarily decide on awarding the status of a constructed public good. The Constitutional Court did not deal with this legal question, since the question relates to ZSZ, which the initiator did not impugn.

b) Judgement of the first paragraph of article 7 of the Decree

27. The first paragraph of article 7 of the Decree determines: "A concessionaire shall be chosen by the Town Council of the Urban Municipality of Ptuj on the basis of a public call for tenders and tenders received." On the basis of this provision, on 28.4.1997, the Town Council of the Urban Municipality of Ptuj issued a decision on the choice of concessionaire for performing the paid public service of the distribution of household gas (no. 403- 65/97-60-HG). It follows from legal study of the cited decision that candidates who registered in the public call for tenders had the possibility of initiating an administrative dispute before the Supreme Court, but they were not give the opportunity to appeal. The initiator impugns the decision because he believes that the municipal administration and not the municipal council has jurisdiction for issuing a decision on the choice of concessionaire, on the basis of the provisions ZLS, and because he believes that because of the exclusion of the possibility of appeal, the provision is in conflict with article 25 of the Constitution.

28. According to the provision of article 37 ZGJS, the concession giver decides on the choice of concessionaire by administrative decision. The position of parties in an administrative procedure is recognised for all who take part in the procedure of a public call for tenders. In the case being tried, this means that a municipality, when it decides on administrative matters within its original jurisdiction, must conduct the administrative procedure according to the provisions of the General Administrative Procedures Act (Official Gazette SFRY, no. 47/86 with amendments - hereinafter: ZUP). In the second paragraph of article 67, ZLS determined that a municipal administration shall decide on administrative matters within municipal jurisdiction at first instance, and at second instance the mayor, unless otherwise determined by statute.

29. The Urban Municipality of Ptuj states in answer that indent 12 of article 33 ZGJS5 left the determination of the organ which will carry out the choice of concessionaire to the concession act, so the use of the provision of article 67 ZLS on the jurisdictions of a municipal administration for deciding on administrative matters did not enter into consideration. The Constitutional Court did not follow these claims. The provisions of indent 12 of article 33 ZGJS, namely, cannot be understood as introducing authority under article 67 ZLS, according to which the law may determine that someone other than the municipal administration may also decide on individual administrative matters.

30. The Constitutional Court also did not follow the statements of the Urban Municipality when it refers to article 3 of the European Charter on Local Government (Official Gazette RS, no. 15/96). By this document, signatories bound themselves to fulfil the basic rules which ensure political, administrative and financial independence of local authorities, it is necessary to interpret it more as a manifest of political will. These provisions in principle, which only define the concept of local self-government, therefore, can in no way be interpreted as determining the jurisdictions of a municipal council for choosing a concessionaire, as the Urban Municipality of Ptuj interprets them.

31. In view of the above, the provision of the first paragraph of article 7 of the Decree is in conflict with the provision of the second paragraph of article 67 ZLS, so the Constitutional Court annulled it ab initio. The Constitutional Court decided in favour of annulling ab initio the illegal provision, which has retroactive effect, because the Town Council of the Urban Municipality of Ptuj has already selected the concessionaire.

32. The Constitutional Court did not deal with the question of the compliance of the first paragraph of article 7 of the Decree with article 25 of the Constitution in the case being tried. The Constitutional Court did not judge whether an illegal decision of organs for deciding in an administrative procedure infringes also the right to appeal guaranteed in article 25 of the Constitution.

33. In the context of the answer to the claim of the Urban Municipality, the Constitutional Court clarifies the content of the right to appeal guaranteed by article 25 of the Constitution. Article 25 of the Constitution, which guarantees the right to legal remedy, determines that anyone is guaranteed the right to appeal or other legal remedy against the decision of courts and other state organs, organs of local communities and holders of public authority, with which these decide on his rights, obligations or legal interests. This constitutional provision guarantees respect for the principle of instance also against decisions of organs of local communities. The decision of a single instance procedure whereby the rights of an individual are decided represents an infringement of rights under article 25 of the Constitution. Infringement of the right to appeal (as well as of other rights protected by the Constitution) is only permissible with law when this is determined by the Constitution, or if this is necessary because of the very nature of the individual rights or freedoms (second paragraph of article 15 of the Constitution). The right to appeal in compliance with article 25 of the Constitution is also determined in the second paragraph of article 67 ZLS, and an administrative dispute cannot represent a substitute for appeal. An administrative dispute, namely, is an institution for ensuring judicial protection of the legality of individual acts.

C.

34. The Constitutional Court adopted this decision on the basis of the second paragraph of article 45 of ZUstS, composed of: president Dr. Lovro Šturm and judges Dr. Miroslava Geč-Korošec, Dr. Peter Jambrek, Dr. Tone Jerovšek, Mag. Matevž Krivic, Franc Testen, Dr Lojze Ude, Dr. Dragica Wedam-Lukiš and Dr. Boštjan M. Zupančič. The resolution was adopted with eight votes against one, Judge Ude voted against, and announced a dissenting opinion.


P r e s i d e n t:
Dr. Lovro Šturm



Notes:
1. The Paid Public Services Act took effect on 17.6.1998 (Official Gazette RS, no. 32/93), which determined in article 81 that, with its taking effect, the provisions of the Energy Economy Act ceased to apply, except for the provisions of articles 2 to 10, 12, 13, 19, 21, 63 and 65-88.
2. ZGJS determines in point 3 of article 81 that with the day of its taking effect, the Public Utilities Act ceased to apply, except for the provisions of articles 3, 4, 5, 6, the first paragraph of article 7, and articles 11 and 14.
With the day of the Environmental Protection Act (Official Gazette RS, no. 32/93) taking effect, the following provisions of the Public Utility Activities Act additionally ceased to apply: the provision of article 3, except for point 5 of the first paragraph in the part which refers to the regulation of public parking places, and point 7 of the first paragraph and the third paragraph of this article, the provisions of articles 4, 5, 6, the first paragraph of article 7 and articles 11 and 14.
On 25.7.1997, when the Building Lands Act took effect, point 5 of the first paragraph of article 3 and the third paragraph of article 3 of the Public Utility Activities in the part which refers to the arranging of streets, squares and roads, also ceased to apply.
According to all the cited annulments, only part of the provision of the third paragraph of point 7 of article 3 of the Public Utility Activities Act is valid, which determines that a municipal assembly may, in compliance with the Energy Economy Act, determine as a public utility activity the provision of settlements with heating energy and gas from local networks.
3. This enabled the transition from the former public utility system of self-management interest groups, or the free exchange of labour in the framework of activities of special social importance, to the new arrangement of so-called public services which ZGJS introduced.
4. Distribution infrastructure came into the ownership of the Urban Municipality of Ptuj on the basis of ZGJS.
5. Indent 12 of article 33 ZGJS:
A concession act shall contain: - the organ which carries out the choice of concessionaire.
Type of procedure:
review of constitutionality and legality of regulations and other general acts
Type of act:
municipal regulation
Applicant:
The company Plinarna Maribor d.d., Maribor
Date of application:
25.11.1997
Date of decision:
04.06.1998
Type of decision adopted:
decision
Outcome of proceedings:
annulment ab initio of an executive regulation /regulation for exercise of public authority
Document:
AN01477