450 c a s e s t u d i e s

Under Belgian, Spanish and Italian law, a public institution may grant a concession with regard to state or public land instead of a hereditary building lease (superÞcies) or a hereditary land lease (emphyteusis).9 Public institutions enjoy contractual freedom to shape the concession according to their needs, including the right to terminate or alter such concession in the public interest. The Belgian and French reports contain details of recent legislation on Public Private Partnerships to facilitate the provision of public services and the construction of houses.

Austria

As a contractual solution, A and B can conclude an income-producing (usufructuary) lease. If the building already exists, the ownership of the building follows the ownership of the land. The landowner therefore owns the building. Legal separation of such a building is possible only by creating a hereditary building lease. An existing building cannot be converted into a right of superstructure.10

Before 1990, a building right could only be created on land owned by the State or the church.11 The fact that A is a public institution is today relevant only as far as approval provisions of public law are applicable.

Belgium

The hereditary building lease and the hereditary land lease both provide the means to achieve the same objective. From a conceptual point of view, the hereditary building lease will ordinarily involve construction, which is not the case in the current scenario: the hereditary land lease or a usufruct will be more suitable. This structure is more in line with the original rationale of both legal structures, namely to allow a third party to exploit the land economically. The same result can also be achieved by entering into a management contract or a lease.

As regards the second question, although they will also require mandatory public approval, the same legal structures will be available to a public institution. Recently, some academics seem to accept that such legal structures may also be granted over property that is part of the

9In Italy, it is disputed whether the rights of the concessionaire are genuine hereditary building rights (superÞcies) or sui generis rights modelled on superÞcies.

103 Ob 158/93; JBl (1994), p. 250; Kletecka, in Kletecka, Rechberger and Zitta, Bauten, para. 33; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 434.

11BaurechtsG 1912; wichtige Nov: BGBl 1990/258.

public domain, in so far as they do not materially affect the public purpose of the property. The Belgian Supreme Court has expressly confirmed this view in the case of a hereditary building lease.12

A public authority may also grant the developer a concession to use the state property. Such a concession will leave the developer with rights similar to those he/she would have had if he/she were the holder of the hereditary building lease or the hereditary lease of land (though such rights are often more restricted). Yet again, the contractual freedom of the public institution to agree on specific conditions with the concession holder is important. If the concession is granted with regard to land owned by public authorities, the latter will always have the right to terminate or alter such concession in the public interest, subject to liability for damages flowing from such an alteration or termination.

On 9 July 2003, the Flemish Parliament adopted the Decree regarding Public Private Partnership, which was published on 19 September 2003.13 In a Public Private Partnership (hereafter PPP), government14 and industry – the public and private sectors – work together in the implementation of investment projects, each retaining their own identity and responsibilities. They collaborate on the basis of a clearly defined division of tasks and risks. The aim of PPP, a format which has become quite widespread in recent years, is to facilitate smoother cooperation between the government and private partners in a more flexible, efficient and commercial manner. PPP is therefore not a new legal institution, such as a joint stock corporation, an inter-municipal body or a non-profit organisation. PPP projects must be implemented within the existing statutory and legal framework, using existing legal institutions. The rights granted over public domain property may not be manifestly incompatible with its intended public purpose. One must also bear in mind that the government is not a normal contract party and is bound by certain rules regarding the choice of a private partner.

12Supreme Court of 18 May 2007; RW (2007–8), p. 736 n. Sagaert.

13On regional level this legislation has been followed by municipal and provincial regulations providing for the same concept in creating autonomous municipal and provincial companies. See the Municipality Decree of 15 July 2005, art. 191 and the Province Decree of 9 Dec. 2005 art. 185.

14The Flemish decree provides for the possibility of the Flemish Government (art. 10) and internally autonomous agencies with legal personality or publicly or privately formed externally autonomous agencies making use of the PPP format. These are complicated variations with some differences in gradation as to the public or private character and the more or less autonomy of the agency.

452 c a s e s t u d i e s

Under Belgian law, the following must be taken into account:

(a)the public approval legislation (which is, of course, in each case dictated by Community rules);

(b)the principles of good governance, such as the equality principle, which requires the government to give ‘equal opportunities’ to the market players; and

(c)the principle of transparency, forbidding the government from covertly entering into partnerships with private partners that evade any form of control.

From a European Union law point of view, one must also consider the various directives in the area of government contracts (the scope of which is ever expanding) and competition law. At present, Belgium does not have specific PPP legislation.

Denmark

In Denmark, only two solutions are possible where A owns an existing building, namely those described in the answer to Case 10. A is not allowed to choose the procedure mentioned to sell the existing building separately, as land and buildings owned by the same person cannot be subdivided.15

If A is a public institution, the same rules as applied in the answers to Cases 10 and 11, apply here. Municipalities frequently sell land on terms that give them the right to buy back the land and buildings on a later date and they only very seldom choose the schemes described in the answer to Case 10.

England

In variation one, this will be a case for an ordinary lease. In the second variation, I see no difference between lettings by a public or a private body.

France

If A owns an already existing building, a commercial lease will achieve the envisaged result.

15See Willumsen, Tinglysningsloven, p. 215; Mortensen, Tinglysning, pp. 48 ff.; Supreme Court decision of 1 Feb. 1985 (UfR (1985), p. 305).

Certain legal persons recognised under public law, namely the State, local authorities and public institutions, may enter into a Public Private Partnership contract (Ordinance of 17 June 2004). The purpose of such a contract is to entrust a private partner with the task of obtaining financing for the planning and operation of public services, equipment and building constructions.

Germany

A hereditary building lease (Erbbaurecht), as a ‘right to have a structure above or below the surface of a piece of land’ (Regulations on Hereditary Building Rights, § 1(1)), can also be created with regard to an already existing building. The creation of an Erbbaurecht in respect of an existing building is in no way different from the situation where the structure is still to be built.

As stated above, public institutions very often make use of the hereditary building lease (Erbbaurecht) to promote the public interest while retaining some control over the property.

There are no material differences regarding the answers to Cases 10 and 11. Public institutions must obviously comply with national and EU public procurement provisions and other public law requirements.

Greece

A can conclude a lease with B in terms of which A will be obliged to provide B with the use of the building as a shopping centre against payment of the rent agreed upon. During the period of the lease, A’s ownership on the land and the building will be retained.

Public legal persons like city councils16 are governed by the rules of public law, except when they act as Þscus for tax purposes.17 As long as public law requirements are complied with (for example, the provisions applying to public tender), the answers to Cases 10 and 11 will also apply in this case.

16Legal persons of public law are those established by the State for the promotion of a public or governmental purpose.

17Dagtoglou, General Administrative Law, pp. 8–10; Spiliotopoulos, Greek Administrative Law, p. 37.