The black spots of the public watchdogs?
Enforcement of civil law by regulatory authorities.
We are all consumers. We all have mobile phones. We all travel, consume energy and we all need health care and insurance. So we are all dealing with services of a general interest. These services should be universally available at affordable prices, reflecting a desire to ensure social, economic and territorial cohesion. Therefore we should all profit from these services and consume in a safe and fair way.
To create this safe and fair environment, regulatory authorities are to an increasing degree being enabled to enforce civil law with public law measures. Public law serves the public interest and as the above-mentioned services and activities are of public interest what else can be a better enforcement tool than regulatory authorities established under public law? Examples in the Netherlands of regulatory authorities are the Authority for Consumers and Markets (ACM) and the Authority for the Financial Markets (AFM).
The origin of enforcement by regulatory authorities can be found in the idea that civil law, in particular the enforcement of civil law, lacks efficiency in specific situations. This applies in particular in relation to the protection of the weaker party, the establishment of a competitive market and the safeguarding of the independency of former state companies. To be “successful” in civil law, certain requirements must be met. There must be damage, conclusive proof of the arguments must be provided, and the costs of proceedings must not, in relation to the maximum profit, weigh too heavily on the claimant.
The background of administrative enforcement, however, is different compared to civil law enforcement. Usually civil law is enforced with civil law remedies before a civil court initiated by civilians or legal entities. The proceedings before the civil court are limited by the interest of the proceeding parties. Public law is in the interest of the public and it does not necessarily concern the interest of a particular individual.
Enforcing civil law with public law measures can be established in two ways, either by translating civil law concepts into public law concepts or by referring in a public law to the Dutch Civil Code. However, can civil law concepts just be isolated from their civil law context as for example they are embedded in a whole civil law framework like reasonableness and fairness? The question is how public law deals with civil law. An example of this issue can be found in the body of facts of the Novec and Alticom cases. Both companies are active on the telecommunications market. Novec is an operator of an antenna site that is situated on a concrete base owned by Alticom. A rental agreement has been concluded between Novec and Alticom, where Alticom lets out the concrete base to Novec. Parties can turn to the ACM in the event of a dispute related to the contract. However, does and can the ACM take into account civil law concepts? And how much room is left for the civil court to decide on these matters?
Another example can be found in a decision of the Trade and Industry Appeals Tribunal (CBb) concerning Investerra. Investerra is an investment institution operating under the Financial Supervision Act and has acted in violation of this Act as it does not have the proper permission for the related activities. The AFM instructs Investerra to stop all activities, even the activities based on concluded contracts. To what extent is this in line with article 1:75 (3) of the Financial Supervision Act? And on what basis can the obligations deriving from the concluded contracts be stopped?
At the joint Interaction between Legal Systems conference workshop on Wednesday 21 January 2015 we will be looking further into these issues. I hereby invite you to come, to participate and to join the discussion and share your opinions on this topic.