Concept of Public Interest in Decisions of European Institutions

Public interest is a concept belonging to the category of indefinite concepts, making its definition neither easy nor directly possible. Public interest is interpreted differently by the individual decision-making bodies and changes through time. Also, there is a difference in terminology. Terms such as general interest (in connection with the European Court of Human Rights, “ECHR”) and categorical reasons of general interest (in connection with the European Court of Justice, “ECJ”) appear. The authors of this article want to summarise the actual reflection of this concept in the existing decisions of European court institutions.

The category of public interest is interpreted relatively widely and if a measure (generally a normative legal act, not an individual legal act, see Sporrong, Lönnroth vs. Sweden, where individual prohibitions on construction works were issued and decisions on expropriation were rendered is excluded) is recognised as a measure in public interest, it does not have to necessarily mean that it is in favour of the majority or that it is in favour of society as a whole.

An example of a measure which was found in compliance with public interest despite being in favour of minority is the decision of the ECHR in Chassagnou vs. France where an act from which the compulsory membership of hunting associations for owners of real property and the compulsory transfer of exclusive rights to hunting to the members of a hunting association arose – only persons concerned with hunting benefitted from the measure – was adopted.

Also a measure which is in favour of individuals may be considered a measure in the public interest. The ECHR gave a decision in James and others vs. Great Britain, in which the applicants were deprived of a significant part of their revenue because tenants in lucrative parts of London were given the right to acquire ownership of real property for a lower price than the market price. Although ultimately the individuals benefited from this reform, the ECHR admitted the public interest which in its opinion consisted in establishing greater social justice in housing.

In some legal systems some reasons of public interest are excluded in advance: in European Community law purely economic interests cannot ever, according to the ECJ’s decisions, serve to justify the limitations of the fundamental freedoms of the internal market (see for example decision C-265/95 Commission vs. France, C-398/95 SETTEG, S-367/98 Commission vs. Portugal, where specifically, the ECJ refused to admit the justification according to which the public interest lied in the selection of a strategic partner, the strenghtening of competition structure of the market in question or the modernisation and enhacement of efficiency of production means.)

If there is a dispute whether by a given measure the rights of an individual were encroached upon (in our case the right to property or the ownership right or the right to exercise freedom of free movement of capital or freedom of establishment), the existence of the public interest is not generally the only criterion of the examination of certain performance.

In the individual systems the examination may be closely connected with fulfilling the condition of proportionality, by the examination of legality of a given measure or the existence of discrimination. In some cases these elements are interconnected so tightly that they are not possible to artificially separate. For example, the ECHR defines proportionality as the establishment of just balance between the general interest (called, in some judgments, the public interest) and the protection of the individual’s basic rights. Thus, the protection of public interest, and its interpretation and examination are generally vested in the decision-making or legislative bodies. The existence of public interest (together with the fulfillment of other conditions) allows an exception from the given rule (in our case the protection of an ownership right), that is, a sort of “escape clause” is concerned.

A somewhat specific area of European Union law is the area of international investment arbitration proceedings. Under EU law the exercise of the freedom of free movement of capital and the exercise of freedom of establishment may be limited with reference to the existence of the important public interest (however, it is necessary that other conditions, that is, a measure limiting these freedoms must be reasonable with regard to the anticipated goal and must not be discriminate against state citizenship, are met). Unlike the two areas mentioned this concept was created by the judgments of the ECJ. On the other hand it is interesting to note that even here en exception is concerned (the exception from free movement of capital and freedom of establishment), that is, the public interest serves (upon fulfillment of other conditions) to justify the intervention in the guaranteed freedom of capital and freedom of establishment.

The concept of public interest in the context of the protecting an investor’s rights under bilateral treaties, “BIT”, was concisely expressed by Christoph Schreuer: “It is impossible to compensate a foreign investor for every measure taken by the host State that has some adverse effect, however minimal, on its business operation. Such a requirement would severely impair the State in its sovereign functions. On the other hand, the fact that a regulatory measure serves some legitimate public purpose cannot automatically lead to the conclusion that no expropriation has occurred and that, therefore, no compensation is due”

In other words, emphasis is placed on the existence of public interest and its substantiation; these elements are, of course, examined only if the alleged encroachment upon the ownership rights and at the same time the commencement of the arbitration proceedings takes place.

In no case is it possible to say that there would exist any list of reasons which are in the public interest. This was expressly confirmed by the ECJ in Cassis de Dijon (C-120/78 Rewe Zentral). The ECHR also believes that the space left to a legislator for free consideration in realising the social and economic policy should be big and leaves it up to the legislator to determine what is in the public interest. The only limit is the absence of a reasonable basis in a legislator’s judgment (James and others vs. Great Britain).

With regard to this casuistic approach it is evident that the public interest is theoretically a hardly sizeable category and only has importance in specific situations.

In the ECHR decision Mellacher vs. Austria the lessor’s gains from leased real properties were significantly decreased by a new act on leases. Although certain differences can be seen here – under the Constitution (Slovak or Austrian) it is not possible to require access to housing (unlike access to medical care – Article 40 of the Constitution of the Slovak Republic); in housing it is the same burning issue as in securing medical care. “Such laws [the laws which regulate the use of property] are especially called for and usual in the field of housing, which in our modern societies is a central concern of social and economic policies, In order to implement such policies, the legislature must have a wide margin of appreciation both with regard to the existence of a problem of public concern warranting and as to the choice of the detailed rules for the implementation of such measures (para 45, the constant practice of the courts is concerned. The same opinion was expressed in James and others vs. Great Britain). The ECHR admitted that the law enabling persons with less money to more easily obtain housing by determining reasonable (that is, for these persons, acceptable) prices is in the public interest (together with the regulation of leases the incentives for improving low-category flats were created).

In this case it is also interesting to see the legislative development and changes in looking upon the necessity of regulation in this area – in 1967 the market for flats was opened, in 1947 the limitation with respect to the leasing of low-category real properties was re-introduced. Finally, in 1981 the system was to prevent significant and unjustified differences between leases for flats in the same category and suppress speculation in real estate was legalised. In their words, the state’s policy in these areas is not unchangeable and a state has the right to change it if it considers it justified.

If the ECHR finds that a measure (a generally a normative legal act and an individual legal act is excluded – see Sporrong, Lönnroth vs. Sweden where individual prohibitions on construction works were issued and a decision on expropriation was rendered) was in the public interest, private interests must (if other conditions are met – that is, the proportionality of a measure, non-discrimination and the legality of the measure) give way to the public interest (see Mellacher and others vs. Austria, James and others vs. Great Britain where revenues from rent were limited in the public interest of improving housing policy, Baner vs Sweden where a certain type of licence for fishing was cancelled and the revenues of the holders of these licences were decreased in the public interest of lower costs of recreation for the inhabitants or Ian Edgar (Liverpool) Limited vs. Great Britain where the sale of certain types of weapons was limited and so the complainant`s income was decreased in the public interest of controlling dealing in weapons).

Bohdana Jedličková

ROWAN LEGAL