Judge and jury: privileges afforded to the public administration in Spain to determine their own liability

The peculiarities of Spanish administrative proceedings often baffle people whose own countries do not afford public authorities/administrations special privileges to investigate and determine their own liability. Here we aim to provide a brief overview of the system and point out some practical impacts for insurers.

These laws are applied in five different jurisdictions: civil, criminal, contentious-administrative, labour and military.

The contentious-administrative proceedings are divided in to two stages: the administrative proceedings and the contentious - administrative proceedings.

The administrative proceedings are not judicial and usually start with an administrative action/resolution/law that causes a loss. Common examples include claims for medical malpractice within the public health sector, compulsory purchase orders and construction authorisations. An injured or affected party can make a claim to the same public administration that caused the loss. It is also this same administration that assesses the arguments and rules on liability.

For people unfamiliar with the system, it appears somewhat surprising that an administration has this capacity to act as “judge and jury” in determining its own liability. How is this possible? By way of “administrative privilege” - a legacy of the origins of this jurisdiction within the framework of an absolutist monarchy. Of course nowadays, even though “administrative privilege” continues to exist, it is limited and exercised in accordance with the values of transparency, rule of law and equity.

Administrative proceedings are a compulsory step before a claimant can progress to the judicial phase, known as the contentious-administrative proceedings. Following administrative proceedings, if the affected party disagrees with the final resolution issued by the corresponding administration, they can file an administrative appeal in the contentious-administrative jurisdiction. The appeal has to be filed within a two month period from the resolution issued in the administrative proceedings. Consequently, it will be judges that will determine the administrative action, to decide its legality or not.

Once this is clear, how do such proceedings affect insurers that cover the liability of the administration?

Firstly, administrative proceedings are very often a third party’s first manifestation of their claim against the administration. It is an important reference to take into account when determining coverage under claims made policies.

Secondly, the affected party can choose one of two routes when the civil liability of the administration is in question:

• Fight exclusively against the Insurer in the civil jurisdiction in accordance with Article 76 of the Spanish Insurance Contract Act (SICA). In this case, the affected party can by-pass administrative proceedings. This, however, can lead to problems regarding the standing of the insurer. Coverage issues may also need to be resolved by the court, bearing in mind that the insurer’s potential liability is dependent on the underlying liability of their insured but only to the extent guaranteed by the insurance contract.
• Challenge the administration in the administrative jurisdiction (administrative and contentious-administrative proceeding). In the administrative appeal, the insurer is regarded as a co-defendant to be summonsed into the proceedings by the administration itself.

Is it possible to initiate administrative proceedings and then to file a suit before the civil courts when the administration declines a claim?

Judgments of the Supreme Court in recent years dictate that a claimant has to decide carefully whether to pursue their claim via the administrative or civil route.

Supreme Court (Civil Division) judgment 358/2021 [25.05.21] establishes that if administrative proceedings reject the administration’s liability, the affected party cannot subsequently combat such a decision before the civil courts by way of a direct action against the insurer.

Similarly, Supreme Court (Civil Division) judgment 579/2019 [05.11.19] ruled that a direct action before the civil courts against the administration’s insurer was not permitted to combat the quantum awarded in administrative proceedings.

In both cases, it can be appreciated that the claimant’s failure to appeal the administrative proceedings before the administrative track, gave rise to the administrative resolution acquiring the characteristic of a “full and final decision”, thus preventing the civil courts from questioning either the liability or quantum in question.

Supreme Court (Civil Division) judgment 501/2020 [05.10.2020] breaks down three options for claimants:

• A successful administrative claim giving rise to the payment of the corresponding indemnity
• An unsuccessful administrative claim, either by virtue of denial of liability or reduction in quantum, which requires challenging by way of an administrative appeal to the contentious-administrative courts or
• A direct civil claim against the administration’s insurer without the prior need for administrative proceedings.

Comment

Whilst at first glance the system of administrative claims may seem difficult to comprehend due to the administration’s privileged position as judge and jury, claimants do have the option to subject the administration’s acts and omissions to judicial control by way of either the contentious-administrative courts or a direct action against the civil liability insurer of the authority.

Montesquieu also deemed that liberty only exists when there is no abuse of power and whilst the judicial involvement in the administrative appeal certainly reduces the possibility of the abuse of power, defeating the administration is not a simple matter.