| The Law of Administrative Contracts Teaching Material Prepared by: Wondwossen Wakene (University of Gondar, Faculty of Law) Prepared under the Sponsorship of the Justice and Legal System Research Institute |
Administrative contracts, a specialized area within public law, are agreements where at least one party is an administrative authority acting in its public capacity. This branch of law is particularly significant in countries like Ethiopia, where specific legal provisions are dedicated to governing these unique contractual relationships.
The Genesis and Peculiarities of Administrative Contracts
The concept of administrative contracts evolved as states moved from a “laissez-faire” approach, where government intervention in the market was minimal, to a “welfare state” model, necessitating greater state involvement in providing public services like education, health, and infrastructure. This expanded role led governments to increasingly enter into contracts to fulfill their growing functions, giving rise to administrative contracts.
A key distinguishing feature of administrative contracts is the inherent inequality between the contracting parties. Unlike typical private contracts where parties are generally considered equal, administrative agencies, acting on behalf of the public interest, often hold a more dominant position. This allows the administrative authority to enjoy certain prerogatives, even overriding basic legal principles at times, to serve the public good.
Defining an Administrative Contract
According to Ethiopian Civil Code, a contract is deemed administrative if:
- It is explicitly designated as such by law or by the parties involved.
- It is connected to a public service activity and involves the permanent participation of the private contracting party in the execution of that service.
The “public service” aspect is crucial, defined as any activity a public community deems necessary for the general interest, especially when private initiative is insufficient, often due to financial constraints. “Permanent participation” implies continuous, uninterrupted, regular, and normal involvement of the contractor in providing the public service, rather than an indefinite or perpetual relationship.
Formation of Administrative Contracts
The formation of administrative contracts shares general validity requirements with other contracts, such as consent, capacity, and a defined, lawful, and possible object. However, there are specific peculiarities:
- Formality: Administrative contracts must be in written form and registered, serving to provide permanence, certainty, and transparency. This written form also helps ascertain contract content given that public officials may leave office.
- Consent: While consent is paramount, in administrative contracts, mere conclusion of the contract by an administrative body implies its consent. Importantly, silence from a competent authority does not generally equate to approval.
- Capacity: For administrative agencies, capacity is tied to their legal establishment (through proclamation or regulation), their authorized functions, and importantly, their financial capacity. Ethiopia’s Proclamation No. 430/2005, for instance, mandates procuring entities to certify fund availability before signing a contract. Notably, a contract concluded by an administrative authority can remain valid even if the necessary credits for performance have not yet been received.
- Object: While parties have a say in defining the object, administrative agencies often pre-determine model specifications, general clauses, and common directives.
Types and Effects of Administrative Contracts
The document delves into specific types of administrative contracts, including:
- Concession Contracts: These involve granting a private party the right to operate a public service. Such contracts may include clauses for variation , and revision based on significant economic changes affecting service provision. Termination can occur prematurely through mechanisms like sequestration or redemption.
- Contracts of Public Works: These govern construction projects undertaken by the government. Their performance involves aspects like the administrative authority’s right to supervise, direct, and even demolish , as well as the contractor’s rights and duties, payment modalities, and contract acceptance.
When it comes to non-performance, remedies can include forced performance, which is ordered by a court if it’s of special interest to the creditor and doesn’t affect the debtor’s personal liberty. Substituted performance is another available remedy.
Dispute Resolution in Administrative Contracts
Disputes in administrative contracts can sometimes be resolved through arbitration, an alternative to court proceedings. Arbitration offers flexibility, efficiency, and can reduce court congestion. However, not all disputes are arbitrable, as states may exclude certain categories based on public policy. International bodies like the ICC also facilitate arbitration and other alternative dispute resolution (ADR) mechanisms for international commercial contracts.
This teaching material provides a robust foundation for understanding the unique legal landscape of administrative contracts, highlighting their essential role in public administration and governance.