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Enforcement of private law by regulatory authorities

On Wednesday 13 December at 16.15 hrs René Hage will defend his doctoral thesis entitled ‘Handhaving van privaatrecht door toezichthouders’ (Enforcement of private law by regulatory authorities) at the Academy Building of Leiden University. His supervisors are Professor Jaap Hijma and Dr Iris Houben.

René Hage.
René Hage

Law is divided into public law and private law. Public law, including administrative law and criminal law, pertains to the relationship between government and citizens and private law regulates the relationship between citizens (this can also include legal entities). Public law and private law have different objectives. In brief,  public law should serve the general interest and private law should serve the interests of the parties involved. To achieve these objectives various enforcement measures are used. For example, in public law an administrative penalty can be applied because it has a preventive effect. This administrative penalty can be placed on (all) who infringe the statutory rules. In the case of private law, a party for instance can claim damages from another party. A contractual penalty is also one of the options, but this works only with respect to the other party to the contract.

Regulatory Authorities

Public law regulatory authorities however are increasingly responsible for regulating important sections of private law. The regulatory authorities examined in this dissertation are appointed on the grounds of European legislation because the enforcement of private law is failing to achieve the objectives of the European Union.    For example, private law is not able to completely protect consumers because sanctions under private law do not act as a deterrent.  Sanctions under private law are also often not appropriate for  rectifying the initial situation and civil law enforcement is not intended to serve the public interest.    

The question is how administrative law regulatory authorities apply private law. The research focussed mainly on contract law. The question then arises whether and to what extent private law is suitable for enforcement using administrative measures.

An analysis was made on the basis of decisions by the Netherlands Authority for Consumers & Markets (ACM) and the Netherlands Authority for the Financial Markets (AFM) in the areas of telecommunications law, consumer law and financial law. Using this information, it was attempted to answer the research questions.

General interest

Considering the decisions and judgments examined, it is noticeable that private law is not always enforced by the regulatory authority in the same way as a civil court would do so.  The reason for this seems to be that administrative law, in contrast to private law, aims to serve the general interest. Individual cases and circumstances are then not taken into account. This difference in approach can have the consequence that a regulatory authority imposes a fine on a business for example, but that the business does not then have to pay damages to the aggrieved party.  It also appears that open standards are less appropriate for enforcement using administrative law.  In order to determine what an infringement is and how to impose fines, clear and specific rules are required so that it is can be identified when a regulation has been infringed and when a penalty can be expected (the principle of legality).

In addition, it appears that regulatory authorities are too active in detecting infringements and imposing high fines. Finally it was observed that in certain cases, a person seeking justice requires private law and administrative law proceedings to achieve a satisfactory outcome.   

Regulated contract law

The conclusion is that regulated contract law seems to arise for specialist areas covered by the regulatory authorities and that these legal sub areas have their own rules.  In addition, it is concluded that the need for effective enforcement should take priority above doubts concerning system coherence. When this coherence appears to be unattainable, it is better to aim for efficient procedures. For example, besides better alignment of enforcement by private law and administrative law actors, new types of enforcement could be considered where private law and administrative law enforcement methods could be combined and placed in one hand (hybrid enforcement). 

Professor  J. Hijma on René Hage

"The research performed by René Hage concerns the intriguing grey area of public law and private law. To write his book, he had to delve into various fields of law: telecommunications law, consumer law and financial law. This has produced a doctoral thesis that is not only broad in scope, but also provides depth in the separate fields of law examined.  I take my hat off to him!"


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