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Insight Into Regulatory Crisis Instruments to Solve Crises in Austria

Insight Into Regulatory Crisis Instruments to Solve Crises in Austria

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The first article in this series looked at the background to energy crisis law and its implication for the proposed single market emergency instrument (SMEI) (for further details, see "Insight into regulatory crisis instruments to solve crises in European Union").

This article looks at the implications of crisis law in Austria, with a focus on:

  • the recently proposed Federal Crisis Security Act (B-KSG)1, which is likely to be further amended as the parliamentary process unfolds;
  • crisis instruments in private and public law;
  • requirements for plant owners in crisis; and
  • requirements under the Public Liability Act for a successful action against state crisis measures.

Can a blackout cause the federal government to declare a federal crisis under the proposed B-KSG?

Section 2 of the B-KSG lays down the following requirements for the existence of a (federal) crisis:

A crisis exists if an event, a development or other circumstances in areas in which the federal state2 is competent to legislate and execute pose an imminent or emerging danger of exceptional magnitude to the life and health of the population, to public order and internal security, to national security, to the environment or to economic well-being, the prevention or management of which urgently requires the immediate ordering, implementation and coordination of measures in the area of federal competence. Cases of military national defence are not affected.

An energy crisis (ie, a blackout, power shortage or energy supply bottleneck) is an ideal application for a future legally standardised federal crisis. This is confirmed by the explanatory memorandum to the present ministerial draft.3 In deciding on the existence of an energy crisis, the federal government will be advised by the future coordination body, which will be informed by the future federal situation centre (ie, the permanent interdepartmental crisis coordination centre).4

If the conditions pursuant to article 2 of the B-KSG are met, the federal government is authorised, in agreement with the main committee of the national council, to declare the existence of a crisis by ordinance on a case-by-case basis (in the event of imminent danger, subsequent agreement is sufficient). The federal government will publish the ordinance in a form appropriate to the crisis situation.5

What are the consequences for an individual faced with an energy crisis under the B-KSG?
The B-KSG has no direct impact on those subject to the law; the respective material legislature should regulate crises appropriately and as flexibly as possible.6 Only a material crisis law can directly bind those subject to the law. However, the application of a material crisis law requires an activated crisis mode on the basis of a federal government's ordinance declaring a federal crisis.7

As soon as the conditions for a crisis no longer exist, the federal government must immediately declare the crisis to be over by means of a repealing ordinance. After six weeks (at the latest), the ordinance on a crisis lapses as a matter of law. The repeated declaration of a crisis and thus its prolongation is permissible with the consent of the national council, as it applies to an initial declaration of a crisis.

How will federal energy crisis management work under the B-KSG?

Under the leadership of the environment minister, expert committees for the energy or the climate and the environment will be established as part of the planned federal situation centre. These committees will regularly and comprehensively monitor developments in the energy sector and climate and environmental policy and assess the current situations.8

The members of the expert committees will be part of the advisory body to be set up in the Federal Chancellery, along with the government advisor for crises – who will in future be appointed by the federal government for five years – and a representative of the Federal President's Chancellery.9 The advisory body will advise the federal government comprehensively and strategically on crisis issues. Neither the advisory body nor the government advisor have any decision-making powers. Thus, they do not affect the departmental responsibilities and the ultimate responsibility of the federal ministers.

To advise the federal government on the decision on the existence of a crisis and to coordinate measures to minimise the risk of an imminent crisis, a coordination body will be established by decision of the federal government. At the request of the coordination body, the federal situation centre will provide information to the public or to operators of critical infrastructure.10

As a crisis preparedness measure, energy self-sufficient barracks will support the operational capability of security authorities and civil rescue organisations in the event of a breakdown in the supra-local energy supply.

Representatives of the federal provinces (beyond the so-called "indirect federal administration") and operational organisations may participate on a voluntary and advisory basis.11

How can or should a business react to the energy and other crises in Austria?

The term "crisis" is understood here to mean an unforeseen, serious emergency with a lack of resources such that legal action becomes (factually and, therefore, economically) unreasonable for the person subject to the law. Depending on the nature of the crisis-related burden on a business, and thus on the underlying legal relationship, solutions are to be determined on a case-by-case basis.

Deviations from civil law contracts may, for example, be based on unilateral rights to influence legal relationships,12 extraordinary termination or force-majeure clauses. In this context, attention should be paid to the limitation of claims and other objections depending on the case (eg, breach of duty to mitigate damages or fault).

In administrative proceedings, the crisis is to be asserted as a new fact. This may be done in different ways, depending on the progress of the proceedings:

Until a decision has become final, the authority or the administrative court must consider the crisis as an unreasonable factor for the business.

With the entry into force of res judicata, the continued existence of the decision becomes more important, so that only very narrow exceptions allow the crisis to be regarded as a substantial change of the facts. Instruments13 for breaking res judicata are facts which, in the case of new facts and, at most, according to special provisions of substantive law,14 grant a right to a decision on the resumption of proceedings that have been legally concluded (by a decision) or to other changes in decisions in its written application,15 the business must conclusively state the date on which it became aware of the crisis only after a decision had become final, that it was not at fault, and the material changes. In addition, an application deadline of two weeks from the date of knowledge of the crisis applies.16
If the crisis occurs after a decision has become formally final and is not covered by the case already decided, a new decision on the merits is possible.

What do power plant owners need to consider?

The type of plant determines the requirements for its construction or operation or the restrictions applicable to it. In this context, various material regulations of the federal state apply, for example:

  • trade according to the Trade Regulation;
  • waste management according to Waste Management Act;
  • gas industry according to the Gas Industry Act;
  • electricity industry according to the Electricity Industry and Organisation Act;
  • mineral raw materials according to the Mineral Resources Act;
  • steam boiler plant or gas turbines according to the Emission Protection Act; and
  • water law according to the Water Rights Act.

However, material regulations of the provinces also come into question. This reflects the fragmentation of competences. Some of the substantive laws regulate operational obligations (and forms of their exemption).17 In provincial law, special features of the pertinent province must be considered (eg, in electricity law, building law or nature conservation law). Besides missed deadlines, the risks to a business of failing to comply with operational obligations or unlawfully interrupting operations include fines, withdrawal or automatic expiry of business licences or plant permits.

Does the state have more freedom to act against businesses in times of crisis?

Given the recent case law of the Austrian Supreme Court18 on public liability, it can be assumed that there is greater scope for state action in times of crisis. In this respect, the more exceptional the factual, temporal and legal framework conditions are, the lower the requirements for an administrative or judicial body to act in a way that may be unlawful ex post, but is ex ante justifiable and not subjectively objectionable.

Crisis law is not an independent area of law with autonomous crisis mechanisms. An analysis of the legal framework for solving energy crises (here in the sense of resource scarcity as a reason for de facto unreasonable performance) shows that there is a lack of legal definitions of a crisis in Austrian law and thus a lack of crisis law. Procedural and substantive rules, however, offer appropriate crisis instruments.

Looking to the near future, recent global crises have prompted decision makers to introduce horizontal crisis instruments (eg, the SMEI or the B-KSG) to provide legal certainty in future crises. The recently proposed B-KSG is a rather controversial discussed ministerial draft in domestic politics, so the current bill is likely to be amended in the future legislative procedure. However, for the first time, the current bill provides for a definition of a crisis in the federal affairs. It thus applies to energy crises and blackouts and regulates a multi-level federal crisis management.

By Andreas Lopatka-Sint, Associate, Schoenherr

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