Private persons exercising public functions
The identification of acts as done in the exercise of public authority or State authority will not always be straightforward. For example, in Land Oberdsterreich v CEZ as,11 proceedings were brought in Austria by an Austrian local authority against a Czech energy supply company in the majority ownership of the Czech State. The claimant sought an order that the company close down a nuclear power plant on the supposed ground that it was irradiating part of Austria. The referring court did not ask whether the proceedings were brought in respect of a civil or commercial matter. The European Court considered it unnecessary to say anything on the question, as Article 22(1) would not have given the Austrian court jurisdiction in any event. In principle, the obligation not to commit a nuisance applies to any owner or occupier of land. If the proceedings were seen as having been brought against a private party, the legal basis of the proceedings would lie in private law, even if the claimant were a body exercising authority under public law.[1] But if the defendant were to be seen as acting in the exercise of public powers, the principle in Lechouritou would override this provisional conclusion, and carry the proceedings outside the material scope of the Convention after all.
The problem is that the provision of utility services by, or under licence granted by, the State is not easy to categorise. In principle, a company limited by shares should be presumed to be acting as a private entity, even where the shares are in the hands of the State; but where the entity is acting under authority granted by the State, it is more tempting (though not obligatory) to see it as acting in the exercise of a delegated public authority: if a public authority can act by the exercise of private powers, it may be that a private body may sometimes act in the exercise of public powers, whether these are undertaken within a scheme of public regulation, or take the form of public powers delegated for their exercise to a private provider.
For example, a claim against a private company charged with transporting accused persons to court, or with the running of prisons, or against the company (in which the State has a 49 per cent share) which runs the national air traffic control system, may plead and rely on ordinary civil law duties of care. The approximate question is whether the liability of the defendant asserted in the proceedings is the kind of liability which any defendant might owe, or which is peculiar to this defendant because it is ‘doing, or sub-contracted to do, the State’s job’; and as the line between governmental and private functions becomes increasingly blurred, the answer becomes harder to see.
From what has been said above, it will be seen that there are a number of strands which help, but no clear single principle which determines whether proceedings are brought in respect of a civil or commercial matter. By way of summary and recapitulation, the following four points may capture the essence of the law as it has been explained.
First, if the claim is one based on ordinary civil law duties, which is to say, it originates in a private law relationship (contract, tort, maintenance), it will be a civil or commercial one, even when enforced by a public law entity. It retains this character even if the only claimant which could bring the present proceedings is a public law entity, for it is the character of the right or obligation relied on, rather than the nature of the claimant doing the relying, which determines the impact of Article 1.
Second, if the claim is brought against a defendant which performs the functions out of which the claim is brought as a matter of public law, it is unlikely, though not impossible, that the proceedings will be in a civil or commercial matter. But it will be a civil or commercial matter if the allegation made against the defendant is that it was negligent, or acted without legal excuse for what it did, in a way which is, in terms of its content, practically identical with duties owed by other persons in other contexts.
Third, if the claim is brought by a claimant to enforce duties which are owed to it, and which duties (as distinct from locus standi to bring the proceedings) arise from the unique fact that it has powers to interfere with the defendant’s life or business which other entities do not have, the matter will not be civil or commercial in nature. For example, proceedings brought against an airline which is required by legislation to make payments for air traffic control services, or a person who is required by law to pay the State broadcaster a licence fee to own a television (whether or not the broadcaster’s programmes are actually watched), on pain of imprisonment if this fee is not paid, probably should not be regarded as arising in a civil or commercial matter.
Fourth, if the claim is brought against an individual who is placed in the position in which he finds himself as a matter of public law,[2] and the duty which he owes is enforced against him by an entity exercising the rights which only it has, the claim will not be a civil or commercial one.
It bears repeating that claims brought by, or against, a utility company provide a good example of the potential difficulties. In England, water and electricity services are provided, and the railways and what remains of the postal service are run, or at any rate owned, by private, or semiprivate, companies performing the functions which were until fairly recently, and which in a decent world would still be, and which may in other Lugano States still be, performed by public bodies or run by statutory boards for the public benefit. It appears from the Land Oberdsterreich decision that electricity supply in the Czech Republic is, as it is in many Lugano States, undertaken by entities which do not fit easily into the categories of public or private entity. A claim against one of these providers alleging that it has, in some respect, failed to supply clean water, or power at a steady voltage, or rails which are straight and true, is hard to place on one or the other side of the line. The supply to customers may be technically contractual, and in England the supplier, though subject to statutory regulation, supplies in accordance with some sort of contract, but that does not inevitably mean that claims arising from the relationship are civil or commercial. There may be no alternative to asking the rather blunt question whether the cause of action appears to be a private law claim, asserting rights and duties which arise in private law, even though a party to the legal relationship may be a public law entity.
It cannot be right to regard utility supply as a matter of public law just because at some point in the past the supply was a matter of State monopoly or because it may be a State monopoly in other Lugano States. It may be preferable to ask whether there is any real difference between this case and any other purchase from a powerful, or quasi-monopoly, supplier which can dictate the terms on which it deals. If there is none, consequent disputes should be seen as being in civil or commercial matters, at least unless and until the rights and powers relied on by the supplier are not those in the contract, but are created by legislation to be exorbitant and unique to the utility company.
- [1] As in C-167/00 Verein fur Konsumenteninformation v Henkel [2002] ECR 1-8111. 2 The principle of separate corporate personality appears to require this conclusion. 3 C-302/13 flyLAL-Lithuanian Airlines AS v Starptautiskd Hdosta Riga IAS EU:C:2014:2319, [2015] ILPr 28. 4 By contrast, a claim for beach of statutory duty would be less obviously civil or commercial, even though it sounds in tort. 5 For illustration, C-302/13 flyLAL-Lithuanian Airlines AS v Starptautiskd Hdosta Riga K4S EU:C:2014:2319, [2015] ILPr 28. ' 6 It has to be admitted that Sonntag is not easy to reconcile with this, if it is correct to say that, as a matter of German law, the defendant schoolteacher was acting in the exercise of public authority.
- [2] It is arguable that this could have been said of the defendant in Netherlands v Riiffer. It will depend on whether one focuses on the defendant’s liability for obstructing an international waterway, or on his liability to reverse the unjust enrichment which resulted from his liability to remove the obstruction having been discharged by a public body. 2 And practically anything else which the Government fancied it owned and dared to sell. 3 In the sense that a customer may decline the service and avoid the obligation to pay.
