Privatisation in France, the Conseil Constitutionnel and the scope of paragraph 9 of

the Preamble to the Constitution of 1946

- (Abigael)

Constitutional Limits on Privatisation

Preamble to the Constitution of 1946, paragraph 9:

“Any property or business organisation whose operation has acquired, or acquires, the characteristics of a public national service or de facto monopoly, shall pass into public ownership”

Constitutional Limits on Privatisation

• Over the past two decades the Constitutional Council has given numerous rulings about what privatisation and denationalisation is allowed under the Constitution of the Fifth Republic.

• The Constitutional Council (Conseil Constitutionnel) has looked at the scope of paragraph 9 of the Preamble to the Constitution of 1946 and the prohibition on private property causing a “de facto monopoly” or the “characteristics of a public national service”

Background on the Constitutional Council and the French judiciary

• The French legal system is diverse from that of common law countries such as the USA or UK in that it is not organizsed into a single hierarchy. In France, administrative Courts fall under the Council of State, the Court of Cassation (which oversees civil and criminal courts) and other institutions with advisory functions.

• Court of Cassation - civil and criminal law• Council of State - administrative court and protects basic

rights, where they are violated or at risk of being violated by the State

Where does the Constitutional Council fit into the French judicial system?

• The Constitutional Council was established by the Constitution of 1958 • The Constitutional Council’s organisation and operation is governed by

Ordinance No 58-1067 Constituting and Institutional Act on the Constitutional Council

• In 1971, the Council ruled that conformity with the Constitution entails conformity with two texts referred to by the preamble of that constitution: the Declaration of the Rights of Man and Citizen and the Preamble to the Constitution of 1946.

• Since 2004 the Charter for the Environment was added to the Preamble to the Constitution of 1946

• The role of the Constitutional Council:– Constitutional also has the role of supervising elections– Rulings as to Constitutionality

Where does the Constitutional Council fit into the French judicial system?

A brief history of privatisation in France

• In 1986 the Loi n. 86-793 of 2 July 1986 ("Privatisation Law of 1986”) authorised by the Government to take diverse measures for economic and social order. – A significant turning point in French politics– Followed with the general 1980s trend to allow private

companies to perform public functions

• Law No. 86-912 of 6 August 1986 as amended by Law No. 93-923 of 19 July 1993, and Law No. 96-314 of 12 April 1996.

Rulings as to Constitutionality• The Constitutional Council can give rulings re: Constitution

of France (including the Declaration of the Rights of Man and Citizen and the Preamble to the 1946 Constitution)

• The Constitutional Council must give reasons for rulings• The Constitutional Council can declare laws to contravene

treaties to which France is a signatory, including the European Convention on Human Rights

• The French government or provincial agencies or officials can request that the Constitutional Council whether a legislative or executive act is constitutional before it is enacted or passed by parliament

Limitations• Historically, no aggrieved individuals could challenge the

constitutionality of a law at the Constitutional Council. • However, the exception to this rule came with a 2009 reform,

effective from 1 March 2010 which allows a case or trial to question the constitutionality (prioritaire de constitutionnalité) of the law that is being applied to them.

• If the Constitutional Council holds such a law to the unconstitutional then it sets a precedent in that the decision applies to every-one, not just the parties in the case that brought the question of constitutionality before the Constitutional Council

See: Ordinance No 58-1067 Constituting and Institutional Act on the Constitutional Council, as amended by Ordinance n° 59-223 of February 4th 1959 and Institutional Acts n°s 74-1101 of December 26th 1974, 90-383 of May 10th 1990, 95-63 of January 19th 1995, 2007-223 of February 21st 2007, 2008-695 of July 15th 2008 and 2009-1523 of December 10th 2009.

Rulings on the meaning of the “public service” in France

• France also has a strong conception of the public service, and legal obligation that those (who possess power by) providing a public service have to abide by the public service principles (les lois du service public).

• Constitutional Council decision no. 2004-501 DC, August 5, 2004 Rec 134 articulated the minimum norms applicable to all public services as: – adaptability to evolve to circumstances necessary for the public interest; – continuity of service provision;– equality (or non-discrimination and neutrality of service provision)

On the principal of ‘continuity’, see also Constitutional Council decision no. 79-105 DC, July 25, 1979, Rec. 3, CE, June 13, 1980, Mm Honjean Rec. Lebon 274On the principal of ‘equality, see also CC decision no. 86-217 DC, Sept. 18, 1986, Rec. 141; CE, May 3, 2000, Mlle Marteaux J.O. June 23, 2000, p. 9471.

“Public service has not been synominous with public ownership in France” (Tirard, 290)

Source: Abovementioned cases, and Manuel Tirard, “Privatisation and Public Law Values: A View from France, Indiana Journal of Global Legal Studies Vol. 15, No 1 (Winter 2008) 285-204, 297.

Activities that cannot be privatised or “contracted-out”

• Some core governmental activities and corresponding services cannot be privatised/contracted out

(CC decision no. 86-207 DC, June 25-26, 1986, J.O., June 27, 1986, p. 7978 at 53) • The “constitutional public services” include justice, police, defence,

education and healthcare (CC decision No. 87-232 DC, Jan 7 1988, J.O. 482)• Policing cannot be contracted out (this does not include street parking,

vehicle towing and like services)• Prisons themselves cannot be privatised in France as punishment is

seen as the responsibility and entitlement of the state. However, electronic surveillance of prisoners can be run by private firms

• (CC Decision no. 2002-461 SC, Aug 29, 2002)

The difference between “contracting out’ in France and privatisation in the USA

• “In France, by contrast, as soon as a service is connected with the public interest, private parties are subject to specific public law precepts. Consequently, contracting out does not mean the eviction of public law values. This solution is deeply rooted in French legal history. Indeed, if one objective public law is to protect the interests and rights of individuals against invasion by the government, as is the case in the United States, it also has to be reconciled with a sense of community” (Manuel Tirard, 297)

• This is important for understanding that, at least on some level, there is an idea of the commons in that some property and services will always be subject to public law values, regardless of whether there are also private property rights or interests involved

• Manuel Tirard describes the French model as a “specific way of protecting public law values, both by limiting the scope of privatization and by applying a legal regime within which public law norms play an active role” (Manuel Tirard, 304)

“Golden Shares” to “Protect the Public Interests”

• 19 July 1993 – a privatisation law gives the French government the option to keep a “golden share” in privatised countries for the purpose of “protect[ing] the national interests”.

• The “golden share” gave the French government the following rights: – To make it compulsory for any investor(s) acting together to own

more than a threshold percentage of a firm’s capital to have to obtain authorization from the Ministry of the Economy, Finance and Industry;

– To name up to two non-voting members to the firm's board of directors; and

– To block the sale of any asset to protect "national interests." Assets could include shares, but also buildings, technology, patents, trademarks, and any other tangible or intangible property.

“Golden Shares” to “Protect the Public Interests”

• June 2002 – European Court of Justice ruled the golden shares with a serious impediment to the basic principle of free movement of capital within the EU. Nevertheless, France retained the Golden share rule.

• 7 December 2006 – a French law was passed in relation to the energy sector and the French government was allowed to keep a ‘golden share’ in Gaz de France so as to be able to stop any decision that might jeopardise security of energy supplies. Gaz se France merged with Suez and the French Government retained its golden share

• The idea of a “golden share” to protect the public interests is linked to the notion of the bene commune in the sense that even though there is privatisation, the government is still supposed to retain some control over the privatised entity so that it cannot act against the public interests.