Public Sector

There has been a marked rise in areas where public sector regulations are becoming relevant for companies. In summer 2017, the Air Berlin insolvency showed how multifaceted the situation is: the take-off and landing permits under public law account for the largest part of the insolvency assets. The investors interested in buying thus sought public law advice as well.

In addition, competitor Germania turned against the bridging loan granted by the German federal government with a state aid law argument and complained that the approval of the EU Commission should have been waited for. The fact that the public sector loan had to be granted quickly also shows the importance of public law in the heavily regulated air traffic sector – because an airline normally loses its operating license when it is found to be insolvent.

A similar example was delivered by the energy sector. The sale of Vattenfall’s lignite division to the Czech EPH Group in mid-2016 was dominated by public law advice. Some 70 percent of advice was provided by public lawyers, the experts report.

Sector-specific steering

The amendment to the Foreign Trade Ordinance, which places foreign direct investments under more comprehensive monitoring and farther-reaching veto rights by the Federal Ministry of Economic Affairs, demonstrates how closely related public law and politics often are.

The public sector is far more conscientious in performing its task of steering the economy than it was a few years ago. In certain sectors, public authorities set specific limits for action. This not only applies to the fields of transport, energy and infrastructure, but also to environmental protection: the importance of public law is also booming because environmental associations have been allowed by German legislators to take action at the administrative courts against state involvement under the Environmental Appeals Act, which has just come into force.

Deutsche Umwelthilfe is particularly active here. In the wake of the diesel scandal (which also highlights the growing importance of the public sector), it is attacking the enforcement of municipal clean air plans in large German cities. These have been adopted on the basis of a European directive on clean air and the Federal Emission Control Act. The central argument of the proceedings pending before the Federal Administrative Court (Bundesverwaltungsgericht) is that bans on diesel vehicles alone help to achieve the limits specified in the plans.

A close look at limits

Part of the rise in significance of public law also follows the stricter enforcement of European and national rules. Recently it was announced that the ECB had imposed a fine on a bank for the first time because it had not complied with the applicable liquidity rules. Limits were also sharpened in chemicals law and within the framework of the Biocide Regulation, causing companies to step up adaptation efforts, which led to the establishment of compliance structures.

The economy is not fundamentally questioning the increasing regulation and tightening of limits. Companies are registering that a serious performance of tasks by the public sector, whether in regulating or enforcing the rules, ultimately serves an overriding purpose: political stability. The industrial policy responses observed in the wake of the Air Berlin bankruptcy, specifically to protect so-called national champions, are also gaining in relevance in preserving a functioning European internal market through state aid law.

Sector experience trump card for public lawyers

Firms hoping to advise on public law cannot get around regulatory sector experience. This experience does not lie with the large international firms per se, rather it is often found in Mittelstand firms and boutiques. This is especially the case when it comes to skilled litigation. The advantage of the large national and, in particular, international firms is that they can also accompany companies into other countries.

In the above-mentioned sale of Vattenfall’s lignite division to Czech provider EPH, large firms like Hengeler Mueller, Freshfields Bruckhaus Deringer, White & Case and Clifford Chance advised with interdisciplinary teams, where their most notable public law partners took on key roles in steering the deal. Construction and public procurement specialist Leinemann & Partner was in action for ailing private highway operator A1 Mobil, which is claiming damages from its PPP contractual partner, the Federal Republic of Germany. A renowned public lawyer from Linklaters had advised on the upstream arbitration. Both had advised in a dispute over a section of the A8 in southern Germany some years ago. In infrastructure projects and planning law, regional firms regularly get a chance to throw their strong local ties into the balance.

One example of a smaller firm positioning itself with a pronounced sector focus is BBG und Partner. The Bremen firm often takes on larger outfits with its in-depth specialty in the local public transport and railway sectors.

State Aid Law

Environmental and Planning Law

Public Procurement

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