Administrative disputes – general considerations
Author: Radu Damaschin
Administrative contracts have a special place in the legal circuit due to both their object – the management of state assets and public services – and the special regime by which they are governed. This is the reason why, in this field, the lawmaker focused consistently on creating remedies intended to ensure a balance between the protection of the public interest, the swift resolution of the legal uncertainties and the equitable treatment and just compensation of the contracting parties. However, disputes arising out of these types of contracts gave rise over time to highly sensitive legal problems, most of them generated by the dual perspective (of experts in both administrative and civil law) over certain classic concepts: statute of limitations, competence, judicial procedure, etc.)
This article is intended to provide a general overview of the cases arising out of this type of contracts, analyzed under the purview of Law 101/2016[1] and of Law 554 of July 25, 2004[2], as amended by Law 212 of July 25, 2018[3]. This analysis excludes the mechanisms for challenging the documents issued by the contracting authorities in the public procurement proceedings; however, we will refer to the proceedings related to the issuance of damages for harm that was caused during this period, only for the purpose of identifying to the fullest extent certain differences in the management of this type of cases.
Judicial conflicts that may arise from an administrative contract may fall under following general categories: actions regarding the conclusion, interpretation and modification[4] of the contract; actions regarding the performance/suspension and termination, and, finally, the actions regarding the annulment of administrative contracts. We will further present the specifics of these judicial actions by following the natural succession of the steps specific to the dynamic of an administrative litigation/ dispute.
The first aspect analyzed in the logic of a judicial dispute is the identification of the situations in which the parties resort to the court after a preliminary administrative proceeding. In administrative disputes, the absence of this mandatory formality is considered a reason for the refusal to admit the action which, pursuant to Art. 7 para. 1 of Law 554/2004 corroborated with Art. 193 para. 1 of the Code of Civil Procedure results in the dismissal of the action. Art. 7 para. 6 of Law 554/2004, as modified by Law 212 of July 25, 2018, regulates the obligation to undergo the preliminary complaint procedure in two scenarios: i) in the litigations related to the conclusion of the agreement, in which case the complaint must be filed within 6 months from the conclusion of the contract and ii) in the litigations related to the annulment of the contract, in which case the preliminary proceeding must be initiated within the same 6 month deadline, calculated from the date when plaintiff became aware of the cause for annulment but no later than 1 year from the conclusion of the contract. Law 212/2018 also removed the obligation of undergoing the preliminary proceeding in the case of actions arising out of the interpretation, performance and termination of the administrative contract[5].
However, in the case of actions regarding the performance and annulment of the contract, as well as the actions for damages for the harm caused during the award procedures, the preliminary proceeding was removed by Art. 53 para. 7 of Law 101/2016[6] – a special law that derogates from the generally applicable law in the form of the Law on administrative disputes[7]. In the case of the actions having as subject the interpretation, performance and interpretation of the administrative contract, the same obligation was also removed by Law 212/2018, which, by Art. I item 7 expressly abrogated Art. 7 para. 6 let. c), d) and e) of Law 554/2004.
The following interesting aspect regards the court that has substantive and territoarial jurisdiction to adjudicate such case. The solution is provided by Art. 53 paras. 1, 11 and 12 and Art. 55 para. 3 of Law 101/2016. On the one hand, the cases and claims for damages for the reparation of the harm caused during the public procurement proceedings as well as those regarding the annulment or the nullity of the contracts is resolved in the first level court by the administrative and fiscal dispute section of the trial court in the jurisdiction of which the contracting authority’s main office is located, through panels that are specialized in public procurement issues. On the other hand, the cases that arise out of the performance of administrative contracts is resolved on the merits by the civil court in the jurisdiction of which the contracting authority is located[8]. As far as we are concerned, the lawmaker’s decision to opt for the jurisdiction of the civil court is not equivalent to changing the nature of the litigation from administrative to civil. This is because the nature of litigation and implicitly the rules that govern it are bestowed by the nature of the act or of the legal relationship that is the subject of the litigation, which in this case is administrative. The lawmaker’s current solution may seem unusual; however, in addition to the intention declared in the Substantiation of grounds for Law 212/2018, namely that of balancing the volume of activity among the various court departments, can be justified by the fact that the issues related to the conclusion and annulment of the administrative contracts involves the preliminary analysis of certain public interest issues, whereas issues related to the assigning responsibility to the contracting parties for the way in which the contract is implemented are closer to purely civil legal mechanisms. From the perspective of territorial jurisdiction, alternatively, both types of actions may be filed in the jurisdiction of the place where the contract was concluded, if this place has a functioning unit that belongs to the contracting authority. Finally, according to Art. 57 of Law 101/2016, “the parties may agree that any dispute arising out of the interpretation, conclusion, performance and termination of agreements will be resolved by arbitration”. The wording of the legal text does not mention the action for the annulment/nullity of the contract, which means that, if the lawmaker did not intend to include the annulment/nullity under the larger sphere of “termination”, then the issue of annulment/nullity is implicitly excluded from arbitration. Additionally, if the plaintiff were to be a third party, there would be no arbitration case. This issue, however, most certainly deserves a larger discussion in another context.
We will not spend much time on the amount of the stamp duty since, absent a decision of the Constitutional Court regarding the constitutionality of Art. 56 para. 1 of Law 101/2016, all the litigations to which a pecuniary value arising out of an administrative contract or related thereto are subject to a stamp duty calculated as a percentage (1% or 2% of the estimated value of the contract). This topic undoubtedly deserves a more in-depth analysis; however we cannot help but ask why cases claiming damages for harm that was caused during the award part of the procedure should be subject to a stamp duty calculated based on the estimated value of the contract with which the (harmed) bidder no longer has any connection. We also fail to understand the reason for having plaintiff pay for claims of minimal value a stamp duty calculated based on the value of the contract, thus even higher than the amount of the claims raised before the court.
With respect to the applicable statute of limitations, cases filed for the issuance of damages for the reparation of harm caused during the award procedure, Art. 53 para. 8 of Law 101/2016 are subject to a 1-year statute of limitations from the date when the right to file a case arises.[9] For actions that are based on the performance, annulment, termination or unilateral termination of the contract (absent any special exemptive regulation) the statute of limitations is 3 years from the date when the right to file an action arises. We also take this opportunity to note a legislative inconsistency related to the statute of limitations governing an action for the annulment of an administrative contract that arises out of the provisions of Art. 60 para. 1 of Law 101/2016 and that govern the filing of such an action within a 30-day term calculated pursuant to the distinctions contained in letter a)[10] or within a 6-month term from the date of publication of the participation announcement. The two aforementioned limitation terms are a faithful transposition of Art. 2f of Directive 89/665/CEE[11]. In other words, the very same action is subject to both the statute of limitations and the forfeiture of the right;and non-compliance with either of them leads to the same result, namely preventing the adjudication of the merits of the case. Given that their legal nature is different, it would be most advisable to ensure compliance with the shorter term. Actions instituted in connection with the conclusion and modification of the contract should be subject to the general statute of limitations It is our opinion that the existence or non-existence of an administrative contract, as well as the potential amendment of its clauses, should represent an issue that must be clarified with priority and not be subject to the general statute of limitation rules.
Finally, a last issue that must be taken into account from the perspective of filing a case within the appropriate statute of limitations is that, according to Art. 6 para. 4 of the Civil Code, “statutes of limitations, forfeiture of rights and rights of use that had started and had not expired by the date the new law came into effect are fully subject to the legal provisions that created them.” In other words, the modification (extension) of the statute of limitations is not beneficial to the plaintiffs whose right to raise a claim arose subsequent to the modification.
For considerations that are easy to understand, all legal disputes arising out of administrative contracts are adjudicated pursuant to Art. 53 paras. 1 and 11 of Law 101/2016 on an expedited and priority basis, pursuant to the requirements of Art. 50 of the same law. More specifically, the first hearing date is set for maximum 20 days from the date the complaint is filed in court and the answer is filed within 5 working days from the communication of the answer by the defendant. Hearing dates may not be set for more than 15 days and the duration of the adjudication of the case may not exceed 45 days from the date when the complaint is filed. The grounds for the decision must be drafted within 7 days from the date of the decision, which may be challenged by appeal that must be filed within 10 days from service. The same requirements applicable to the adjudication on the merits also apply on appeal, with the specification that the adjudication of the appeal should not exceed 30 days from the date when the complaint is filed. Until the resolution of the merits of the case, the court may decide to suspend the enforcement of the contract or order any other temporary measure. Such decision is subject to appeal separately within 5 days from communication. It is true that deadlines established by Law 212/2016, at least theoretically, satisfy the exigencies of maximum celerity. However, in practice, with the exception of the claim for the annulment of the administrative contract and of the appeal that could be in extremis resolved within the deadlines recommended by law, it is hard to believe that the claims regarding the performance of such contracts, especially when they require the introduction of complex evidence, can ensure the correct resolution of the case under the constraints of celerity recommended by the law. At this point, there are cases that havre been pending before the courts for more than two years since the filing of the complaint.
As we specified in the beginning of this article, this short attempt to delve into the field of judicial remedies specific to administrative contracts in intended to provide only a few guiding procedural reference points in the highly complex universe of these specific types of cases. As always, behind the new and apparently clear rules are the details and nuances that will continue to generate disputes, (some already foreseeable) controversies and frustrations but, we hope, will ultimately result in correct and constructive solutions.
[1] Published in the Official Gazette nr. 393 of May 23, 2016, as subsequently modified.
[2] Published in the Official Gazette nr. 658 of July 30, 2018.
[3] Published in the Offical gazette nr. 658 of july 30, 2018.
[4] Even though in practice the disputes regarding the interpretation and modification of administrative contracts arise most times in the stage of performance/implementation of the contracts, the issues posed are usually related to their legal content, which should result in their qualification under this first typology.
[5] Art. I item 7 of Law 212/2018 expressly abrogated Art. 7 para. 6 lit. c), d) and e) of Law 554/2004.
[6] Introduced by Art. IV item 15 of GEO nr. 107/2017, published in the Offical Gazette nr. 102 of December 22, 2017.
[7] The solution is also supported by the partial abrogation of Art. 7 para. 6 of Law 554/2004 and by the modification of Art. 53 paras. (1) (1) an (1^1) of Law 101/2016 intorduced by Law 212/2018.
[8] Surprisingly, the lawmaker omitted to esure consistency between the provisions of Art. 53 para. 11 with the language of Art. 51 para. 3 or, as the sace may be, with Art. 55 para. 3 of Law 101/2016, in which case the way to challenge the decision of the civil court would be, according to the law, to appeal to the administrative and fiscal dispute department of the Court of Appeals. From a procedural perspective, jurisdiction refers to the case in its entirety, so that it is unconceivable to raise the challenge before a deparment other than the one that adjudicated the case on the merits.
[9] According to Art. 2523 of the Civil Code, “the statute of limitations starts to run from the moment when the entity who has the right to bring a claim knew or, depending on the case, should have known that an action occured.”
[10] According to Art. 60 para. 1 letter a) :
“The claims for requesting the confirmation of the nullity o the agreements will be filed within 30 days, as of the day following:
– the publication of the agreement award announcement, provided that said announcement contains the substantiation of the decision of the contracting authority to award the agreement without first publishing a participation announcement in the Official Journal of the European Union;
– the notification by the contracting authority of the interested tenderers and candidates on the agreement award decision or admission into a dynamic procurement system, provided that the notification is accompanied by a summary of the pertinent grounds that underlined the decision; should the disclosure of certain information on the award of the agreement or the admission into a dynamic system of acquisition prevent the application of certain legal provisions, be contrary to the public interest, could affect the competition or the legitimate commercial interests of a public or private business agent, the contracting authority has the right not to notify them;”
[11] Directive 89/665/CEE of December 21, 1989 regarding the coordination of binding decisional documents administrat9ive decisions regarding the application of procedures related to means of challenge of the award of procurement contracts for products and for works.
