INTRODUCTION

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These are two important decisions relating to the management of the real estate assets of public entities which were rendered by the Council of State on December 2. Two separate cases which were nevertheless the subject of joint conclusions by C. Raquin, as the questions to be decided were so close.

 

To set the overall context, it will be recalled that public property law is heir to a long tradition of no obligation to put occupancy titles granted by public entities into competition. A tradition that became almost resistance while European pressure increased to make the establishment of a selection procedure obligatory for the allocation of occupation titles on public properties, on the basis of theso-called “services” directive of December 12, 2006[1] or the principle of transparency (ECJ, Dec. 7 2000, Telaustria). The decision ofCouncil of State City of Paris c/ Association Paris Jean Bouin of December 3, 2010 perfectly embodied this resistance. Since then, the order of April 19, 2017 has inserted into the general code of property of public persons aarticle L.2122-1-1 which prescribes, forauthorizations for occupation of the public domain for the exploitation of an economic activity, the establishment of a advertising and selection procedure presenting all the guarantees of transparency and impartiality. The following provisions provide for a whole battery of exceptions; we will not return to them.

 

But the two cases commented on here exceed the scope of these provisions. The first onedoes not fall within its temporal scope since it concerns facts which predate the entry into force of the 2017 order. The seconddoes not fall within its material scope since it concerns private propertyof a municipality. We understand here the interest of these decisions, which were both published in Lebon. The question was whether, in the absence of a provision of domestic law subjecting the authorization to use public property for economic exploitation to a prior selection procedure, the Services Directive or, failing that, primary Union law required the establishment of such a procedure. As a reminder, the Services Directive has only been partially transposed into domestic law. In particular, its article 12, which provides that:

 

“when the number of authorizations available for a given activity is limited due to the scarcity of usable resources or technical capabilities, Member States shall apply a selection procedure between potential candidates which provides for all guarantees of impartiality and transparency , in particular adequate publicity of the opening of the procedure, its progress and its closure.

 

This article is transposed into French law only with regard to authorizations to occupy public domain. However, European law ignores the distinction between public domain and private domain, the scope of application of this provision of the directive concerning all authorization regimes, understood, according to article 4 of the same text, as

 

“any procedure which has the effect of obliging a service provider or recipient to approach a competent authority with a view to obtaining a formal act or an implicit decision relating to access to a service activity or its exercise ".

 

However, this lack of transposition does not prevent the application of the services directive, these provisions being precise and unconditional, they can be invoked since the expiry of the transposition deadline, namely December 28, 2009.

 

Furthermore, even outside the scope of the Services Directive, it is also possible that the stipulations of the Treaty lead to a similar conclusion: the obligation for Member States to put in place a selection procedure. We will remember here that in his judgmentTelaustria of 2000, the Court of Justice ruled that although a contract did not fall within the scope of the procurement directive (at the time)[2], it remained subject to respect for the fundamental principles of the treaties, before deriving from the principle of non-discrimination a principle of transparency. Here, the applicants considered that in the absence of application of the Services Directive, the granting of such authorizations without procedure infringed in particular Article 49 of the Treaty on the Functioning of the European Union (TFEU) which prohibits restrictions on freedom of establishment.

 

Taking refuge behind the categories of French law, the Council of State made a distinction in the applicability of the services directive between authorizations to occupy the public domain, which are subject to it (I) and authorizations to occupy the private domain, which are not (II).

 

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I – PRIVATE OCCUPATION OF PUBLIC DOMAIN: COMPETITION IN PRINCIPLE

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decisionSté Paris Tennis definitely sounds the death knell for jurisprudenceParis Jean Bouin Association.

It results from a case which, like any good tennis exchange, was the subject of several back and forths between the Council of State and the lower courts. At issue was the conclusion by the Senate in 2016 of a contract authorizing the Paris Tennis League to operate the six tennis courts in the Luxembourg gardens for a period of fifteen years. The Paris Tennis company contested the contractvia appealTarn-et-Garonnebefore the Parisian courts without success, before the Council of State first censored the judgment of the Paris Administrative Court of Appeal rendered in this case in 2020. In this first decision, the Council of State annulled the judgment on the grounds that the appeal judges, considering that the contract in question did not present any certain cross-border interest, had ruled that nothing obliged the Senate to set up a selection procedure even though this circumstance, if it conditions the application of Article 49 of the TFEU, has no impact on that of the Services Directive (CE, July 10, 2020, Sté Paris Tennis, n° 434582). The Council of State already clearly statedimplement case law Promoimpresa (CJEU, July 14, 2016, Promoimpresa, C-458/14 and C-67/15) to legal situations prior to the entry into force of the 2017 order.

 

After a new rejection by the Paris Administrative Court of Appeal, the Council of State was required to rule again. He first criticizes, once again, the reasoning of the trial judges by considering that the latter had wrongly believed that they had received an appeal seeking to terminate the execution of the contract - known as appeal Cross-Channel (CE, Sect., June 30, 2017, Joint union for the promotion of cross-Channel activity), when in reality they were seized of an appealTarn-et-Garonne. Then, judging the case on the merits - which he had not done in 2020 when the applicant company asked him to do so - he terminated the contract with deferred effect until March 1, 2023, in a classic application of his office as judge. of validity.

 

Where the case is interesting, beyond these questions of contractual dispute, is that the Council of State judges that thecontract in question fell perfectly within the provisions of Article 12 of the Services Directiveand should, therefore, be subject to a prior selection procedure. Expressly relying on case lawPromoimpresa, the Council of State considers that the activity in question is indeed aservice activity, that the title authorizing the exploitation of the land constitutes a authorization within the meaning of the directive as he:

 

“ constitutes a formal act relating to access to a service activity or its exercise, issued following a procedure with a competent authority ".

 

Such an analysis should, according to the public rapporteur, concern all state-owned titles.

 

However, there remainscondition of the limited nature of the number of authorizations available. If here the question is quickly decided by the Council of State, tennis courts in the heart of Paris and in such a prestigious location are not commonplace, it remains theoretically possible to still escape submission to a selection procedure when the number of permissions is not limited.

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II– PRIVATE OCCUPATION OF DOMAIN PSHORE :

FREEDOM OF ATTRIBUTION OF PRINCIPLE

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The second affair takes us to the Basque coast and takes place at the Hôtel du Palais de Biarritz, a luxurious establishment on the Atlantic coast which stands on the site of the Villa Eugénie, the imperial residence of Napoleon III and the Empress ( the original building was destroyed in 1903 in a fire and the new palace retains few elements of its predecessor - we will still note an "E" shaped architecture, in homage to the empress). Acquired in 1956 by the municipality of Biarritz, the hotel is part of its private domain, having never been assigned to direct public use or public service. It has been operated since 1961 by Socomix, a mixed economy company majority owned by the city of Biarritz. In 2018, at the same time as a restructuring of the capital of Socomix, the municipality decided to authorize its mayor to sign with the said company a long lease for a period of seventy-five years relating to the walls and outbuildings of the palace , this without prior selection procedure. It is this deliberation dated July 30, 2018 which is contested by two municipal councilors.

 

For the Services Directive to be applicable, it was still necessary to consider that the long lease in question could be qualified as an authorization within the meaning of Article 4 of the text. However, considers the Council of State with elliptical motivation,

 

“it follows neither from the terms of this directive nor from the case law of the Court of Justice that such obligations would apply to public persons prior to the conclusion of leases relating to property belonging to their private domain, which does not constitute a authorization for access to a service activity or its exercise within the meaning of 6) of Article 4 of this same directive”.

 

In his conclusions, C. Raquin considers that as it manages property belonging to its private domain, the public entity cannot be qualified as a “competent authority” granting authorization within the meaning of Article 4 of the directive. , since precisely, by managing its private domain, it behaves in the same way as a private operator. This distinction is known in domestic law, but it is rather surprising that in this case,it establishes an interpretation of a text of European law which itself does not contain such a distinction. On the contrary, Article 4 of the Services Directivedoes not distinguish according to the prerogatives of the competent authority and makes it possible to subject to the provisions of the directive any prior public intervention necessary for the operation of a service activity. However, it is difficult to justify that the operation of the Palais de Biarritz hotel is possible without authorization from the municipality of Biarritz, here materialized by the long lease. If, moreover, we consider the obvious rarity of the authorization (there is only one Hôtel du Palais in Biarritz), it seems to us that the lease should have been subject to the procedure imposed by article 12 of the Services Directive.

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Finally, on the possible infringement of Article 49 of the TFEU, the Council of State judges, still in an elliptical manner, that the administrative court of appeal of Bordeaux did not commit an error of law in considering thatthe lease did not, in itself, infringe the freedom of establishment on the territory of the municipality. Here again, such reasoning only holds because the Council of State considers that the lease does not constitute an authorization to carry out an activity, but a simple act of management of the private domain. Once again, such reasoning is quite questionable if we place ourselves from a European perspective since it leads toremove these acts of management from the private domain from the scope of the obligations arising from the treaties, in particular from the principle of transparency. The solution is all the more questionable if we consider the facts: here, the operation of a 5-star palace by the sea is at issue, the cross-border interest of which is, moreover, obvious.

 

It is true, to conclude, that the submission of authorizations to use the private property of public entities would have unfortunate consequences. In particular, the necessary competition would probably oppose the conclusion of renewable leases on the private domain, in particular commercial leases (see in this sense, P.-M. Murgue-Varoclier, “Les baux revolvings sur le private domain: uncertainties”, RFDA, 2021, p. 9).

 

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[1] Directive 2006/123/EC of the European Parliament and of the Council of December 12, 2006.

[2] Council Directive 92/50/EEC of June 18, 1992, coordinating procedures for the award of public service contracts.

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