Services of General Interest (EU) as Indicators of Public Functions in the Sense of Public Administrative Law – Using EU Concepts to Deal with Problems of National Law, by Margrét Vala Kristjánsdóttir

The question and the context in which it is raised

Do the characteristics of Services of General Interest (SGIs), that give them a special status in EU law, provide guidelines for the definition of ‘publicness’ in the sense of public administrative law at the national level? This question is raised in the context of Icelandic administrative law and service contracts, i.e., when private entities undertake to perform public services under contracts with public authorities and receive payment for doing so.

The scope of the Icelandic Administrative Procedure Act is limited to decisions of state/municipalities on individuals´ rights and obligations. However, unwritten general principles of Icelandic administrative law have wider scope – they can apply to the relations between the user of statutory services and a private body providing services under service contracts, as far as the contracted activities concern public administration in the substantive sense. Accordingly, the type or character of public functions is key to the protection provided by public administrative law to the users of services provided under service contracts. Thus, the ‘publicness’ of the services in question must be detected to determine the applicability of general principles of administrative law.

As an EFTA Member State, Iceland is subject to the rules in various substantive fields under the EEA Agreement, including EU legislation concerning SGIs that have been implemented in Icelandic law or derived from the relevant case law of the EU and EFTA courts. This blog is not about how the special status of SGIs, or administrative rules is implemented in Icelandic law. It is about the characteristics that make certain services so special that they are given special status in EU law and whether this is useful for recognising the functions that trigger the applicability of general principles of Icelandic administrative law.

Why seek to consult SGIs?

SGIs under EU law and public services at the national level share notable features. Firstly, both concepts are based on values and goals concerning the public; to ensure the availability of well-functioning, high quality, accessible and affordable services of general interest to the public (see Commission, ‘White Paper on Services of General Interest’). Notably, EU law is neutral with regard to the identity of the provider of SGIs. A provider of such services is subject to the same rights and obligations, irrespective of whether this body is classified as a private or public entity, (see, for instance, Commission, ‘Communication from the Commission – Services of General Interest in Europe’ and ‘White Paper on Services of General Interest’.

Secondly, at both the EU and the national level the analysis of the nature of a particular task determines the appropriate set of rules applicable to a situation. Let me explain: At the EU level, the definition of a particular service as an SGI affects the reach of the general rules governing the EU internal market. Certain services (non-economic services of economic interest, ) are placed outside their scope, and certain services (economic services of general interest,  justify deviations from such rules. At the national level, a private body, engaged in economic activities that otherwise would be subject to the rules of private law, may be subject to public law principles for the parts that constitute public administration in the substantive sense.

Thus, both SGIs and public services provided under service contracts concern services of a special character, and this makes them important enough to justify and allow deviations from general rules within each legal system. It is acknowledged that the EU rules exist in a particular framework, in which the market objectives are clear. National public administrative rules, on the other hand, govern the activities of national public authorities in their relations with its citizens, although certain international or European aspects may also be involved. Still, because of the shared features and the functional approach to SGIs (activity rather than the actor), it seems a good idea to ask whether the definitions and the examples of the services that have been acknowledged as SGIs can be viewed as indicators of ‘publicness’ of an activity carried out under a service contract at the national level – and so identify the situations when private law principles should at least partly, give way to public law principles.

The SGI concept(s) and definitions

The general term SGI has two subgroups, non-economic (NSGIs) and economic (SGEIs) services of general interest. A fourth concept has also been evolving in EU law, i.e., social services of general interest (SSGIs), which are of either economic or non-economic character, (a subgroup of NSGIs or SGEIs). The legal texts that refer to these terms do not provide absolute definitions, nor do they articulate the connections between them nor what distinguishes them from each other and other kinds of services. Still, some benchmarks have been developed by EU court rulings in individual cases as well as clarifications as to the type of services (examples) constituting SGIs. Some have been adopted in EU legislation, such as the Treaty of Lisbon, Protocol (26) on services of general interest; TFEU, Articles 14 and 106 (2), Article 36 of the Charter of Fundamental Rights, and Directive 2006/123/EC on services in the internal market, while others are found in documents of the European Commission in the form of Commission Decisions, such as on the Application of Article 106(2) of the TFEU of State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest and Communications, such as the Green paper on Services of general interest, the White paper on services of general interest,  Services of general interest, including social services of general interest; a new European commitment.

NSGIs constitute services that are operated exclusively under the principle of solidarity, are subject to public control or are linked to the exercise of state prerogatives and the fulfilment of state responsibility towards the population. These include activities, such as policing, air navigation safety and control, maritime traffic control and safety, anti-pollution surveillance, the execution of prison sentences, compulsory social security schemes and social security. Furthermore, healthcare systems that are directly funded by social security contributions and other state resources provide their services free of charge to affiliated persons based on universal coverage, and activities such as education organised within the national educational system that is funded and supervised by the state.  

SGEIs are concerned with important tasks in the public interest but such services are also marketable to some degree. According to the definition of SGEIs, they cover, ‘in particular’, services such as transport, postal services, energy, and communications, and numerous services concerning, for instance, the distribution and supply of water, treatment of waste, and public broadcasting. However, they also cover person-centred services that are meant to ensure that citizens can effectively enjoy their fundamental rights and a high level of social protection.

The concept of SSGIs recognises the general interests involved in social services. SSGIs can be of either economic or non-economic character, depending on the activity involved. The former consists of social security schemes covering the main risks in life, which include services such as those linked to health, ageing, occupational accidents, unemployment, retirement, and disability. The second group consists of a range of other essential services that play a preventive and social-cohesion role and consist of customised assistance to individuals to facilitate social inclusion and safeguard fundamental rights.

Characteristics used as indicators

It is suggested that activities to which the defining factors of NSGIs apply, including the non-economic SSGIs, provide useful benchmarks for the identification of ‘publicness’. It is noted that some of these activities are not typically contracted out and are therefore not in the ‘grey zone’ in which this discussion takes place. However, some are, such as education at all levels. When delivered under a contract, the status of the service in question as an NSGI indicates a public function in the sense of Icelandic administrative law.

As a private body receives payment for public services provided under a service contract, there is an economic aspect to the services in question. If the services can be identified with SGIs, the economic aspect suggests that they should be classified as SGEIs. At the EU level, this means that the rules of the EU´s internal market are not applied in full. Transferred to national law, private law principles should, at least partly, give way to public law principles. In other words, individual protection provided by public administrative law may remain, notwithstanding the involvement of a private party. Here, a second question arises, i.e., whether all types of SGEIs should be regarded alike when used as guidelines for the identification of ‘publicness’ in this regard. Here, the concept of SSGIs may be of help.

SSGIs have very specific objectives. The concept is intricately connected with that of social services, such services apply at the personal level, and they enjoy greater protection than other SGIs. In other words, SGEIs that constitute SSGIs have features that distinguish them from other SGEIs. It is submitted that these features may form a basis for distinguishing between public services in the context of public administrative law. This means that, for example, services that assist those faced with personal challenges or crises, reintegration into society and return to the labour market, as well as services concerning health or disability problems, age, and social housing, are subject to general principles of Icelandic public administrative law when provided by private bodies under service contracts. On the other hand, the relations between the user and private provider of services, such as those that conform to the standards applicable to the services provided by industries (see examples above), should not be subject to such rules. On this basis, the categorisation of services of economic interest as SSGIs can help single out those public functions that constitute public functions to which principles of Icelandic administrative law from those that do not.

Conclusions

The benefit of consulting EU law on the definition of ‘publicness’, in the context of the reach of Icelandic administrative law in service contract situations, is attributable to the fact that the various types of EU services of general interest have been categorised. The defining factors provide interesting information on the characteristics of services that have dissimilar effects as regards the otherwise applicable EU rules. It is concluded that the available definitions and examples of each type of SGI provide useful guidance as regards the identification of ‘publicness’ and can help single out those public functions that remain subject to general principles of Icelandic administrative law despite being conducted by private bodies.

Posted by Dr. Margrét Vala Kristjánsdóttir, Associate Professor at Reykjavík University.

Suggested citation: M. Vala Kristjánsdóttir, “Services of General Interest (EU) as Indicators of Public Functions in the Sense of Public Administrative Law – Using EU Concepts to Deal with Problems of National Law”, REALaw.blog available at https://realaw.blog/?p=2159