- D. Francisco José Navarro Sanchis
Supreme Court Judge - Dr Ernesto Eseverri Martínez
Professor of Financial and Tax Law at the University of Granada - Dr Carmen Uriol Egido
Associate Professor at the Universitat de València - Dr Enrique de Miguel Canuto
Professor of Financial and Tax Law at the Universitat de València
Patrimonial responsibility of the Public Administration
The right to compensation is a sub-right of the right to good administration. Spanish domestic legislation, in Laws 39/2015 and 40/2015, establishes the patrimonial responsibility of the legislative State as a consequence of this right to be compensated.
The basis for this responsibility is established at the EU level in decisions rendered by the CJEU. From a Spanish legal standpoint, however, the chronology of events can be broken down into three distinct phases. At the beginning of the 21st century, Spanish case law began to address this principle, specifically in three judgments on the taxation of gambling. In these judgments, the appellant company initiated legal proceedings for financial compensation before the Supreme Court. The ruling was that the principle requires that the damages suffered by the appellant company be rectified. The second judgment differs from the previous one in that the other parties did not file an appeal. Upon learning of the judgment on the supplementary gaming levy, they initiated a liability action instead. In this case, the Supreme Court ruled that it is not acceptable for the taxpayer to bear the negative effects of legislative mistakes. For the sake of procedural economy, it is also prudent to recognise the potential for compensation. The third judgment, known as the Recreativos S.A. case, is of particular practical importance in that it makes a significant distinction. In the event of a res judicata, the only available course of action is a liability action. In the absence of a res judicata, a declaration of full nullity may be sought.
In essence, these resolutions formed the foundation for the reference guidelines, which in turn informed the Supreme Court’s elaboration of the rules governing patrimonial responsibility. Subsequently, in 2015, the regulatory framework that currently governs the public sector was approved, explicitly incorporating the legislator’s patrimonial responsibility.
The most recent development in this matter is the appeal filed by the Commission against Spain, which was resolved in 2020. This appeal declared the 2015 regulation to be contrary to EU law. In the preamble to the appeal, the Court determines that the economic-administrative remedy is inadequate to rectify the damage caused by the State.
Two concurrent grounds exist for making such a declaration. Firstly, a previous EU-level judgment established that the domestic legislation was in contravention of EU law. Furthermore, the condition set out in Law 40/2015 is contrary to European Union law as it does not provide an adequate solution, given that it does not include the exception that there is no prior administrative act. In light of the Court’s judgments on the right to good administration, we can derive two logical consequences.
On the one hand, the statute of limitations or termination of the claim action was initially set at one year from the date of the judgment. However, the Court held that if a prior judgment cannot be enforced, the publication of the judgment cannot be the sole basis for initiating legal proceedings.
On the other hand, with regard to the claim for compensation, the statute of limitations is considered to have expired five years after the judgment was published. The same principle applies here: the statute of limitations cannot be subordinated to the existence of a judgment. In a Supreme Court ruling, the Court states that when damage is caused by an administrative act, the five-year limitation period is interrupted and the damage is attributed to the act in question.
It is also worth considering whether a loss of profit could be claimed in the event of a breach of the principle of good administration. In this regard, the patrimonial responsibility of the administration is not only effective in a declaration against the public administration, but also as an accessory claim to a request for nullity. In other words, in a lawsuit involving an action by the administration, it is possible to make a claim for patrimonial responsibility as an ancillary matter to a process whose object is to challenge an administrative act. The aim of reparations is to restore the situation to its original state. This may entail a refund of what has been overpaid or interest for late payment. However, it is possible that the refund of what has been unduly paid may include other concepts, provided that the necessary requirements are met.
