Proactive Transparency for Public Services: the Berlin Model

21 October 2011

By Alexander Dix

Berlin Commissioner for Data Protection and Freedom of Information

This is a translation of an article originally published in the German Yearbook on Freedom of Information and Information Law.

Resources: The Berlin  FOI Act as amended 2010  and The Act for the Full Disclosure of Secret Contracts for the Partial Privatization of the Berlin Water Utilities (as adopted by Referendum 2011): 

http://www.datenschutz-berlin.de/content/informationsfreiheit/berlin 

look for “Engl. Fassung“ 

 

I. Introduction

On July 23rd, 2010, the amendment of the Freedom of Information Act of the State of Berlin was adopted.[1] It is a change of law which consequently increased the transparency of measures being taken by public authorities of the State of Berlin and which will hopefully have a positive effect on the development of the right to information more generally in Germany. The primary subject of this piece of legislation is the access to contracts on the delivery of basic public services to which the State of Berlin and private investors are parties (so-called public-private partnerships).

 II. Legislative History

The story of this memorable piece of legislation started in May 1999 when the state legislator of Berlin created the legal framework of the partial privatization of the public agency which owned the city’s water supply system and water works (Berlin Water Utility / Berliner Wasserbetriebe). Subsequently the State Government (Berliner Senat) entered into a contract with private investors with the consent of the Berlin City Parliament (Berliner Abgeordnetenhaus). In the following the agency was able to offer dormant partnerships to any legal person irrespective whether corporate or public. The State of Berlin still remained the majority stakeholder with 50.1 % and agreed with the private investors to observe ‘absolute secrecy’ about the content of the respective privatization contracts.[2] Later the actual law authorizing a partial privatization had to be changed after Berlin’s Constitutional Court had held that several provisions, especially those about cost accounting, were unconstitutional.[3]It was not to be the last time Berlin’s Constitutional Court had to deal with the matter.

The partial privatization of the Berlin Water Utility was from the very beginning a matter of utmost controversy within the population and remained a focal point. The conflict concerns on the one hand the question whether the State of Berlin could guarantee annual returns to the shareholders even if those returns rely on interest rates set by the city’s authorities themselves.[4] On the other hand the quarrel touches upon the principle question whether it is at all feasible to make profits with such basic resources like water.[5]

On October 15, 1999, Berlin’s parliament signed into law the first Freedom of Information Act of Berlin,[6] the second of its kind in all German states. It came into effect on October 30, 1999, without a transitional period and has been applicable ever since for all public records maintained by the public authorities of Berlin. In June 2007 a member of Berlin’s parliament made in the first instance a request to the Berlin Water Utility to inspect all available records dealing with the partial privatization including the entire contract on the syndicate.

After the consortium of investors had disagreed with the inspection of the records, the State Government authorized the withholding of the extensive records (all in all 119 binders entailing 60.000 pages), at least in parts. The State Government argued indeed very generally that otherwise business and industrial secrets were to be revealed and additionally core governmental policies of the State Government were at stake.

Thereupon the requester, a member of Berlin’s parliament, filed a complaint with Berlin’s Constitutional Court to have the Court determine whether an organ of the state was obliged to disclose requested information to a member of another organ of the state under Article 45 Section 2 of the Constitution of Berlin (Organstreitverfahren).

The Court ruled on July 14, 2010, that the requested information had been improperly withheld from the complainant.[7] In its reasoning the Court held that a denial of a request for records as part of the parliamentary right to control could have only been justified provided that compelling confidentiality reasons had been raised by the State Government. In absence of such a statement of grounds the denial of access to records has been a violation of the State’s constitutional law. The State Government should have made a reasonable effort of an explanatory statement. And finally the State Government could not justify the denial of access to records towards the member of parliament on the basis of confidentiality agreed upon during negotiations with private investors, as this was done under the explicit condition that no legal duty to disclosure exists. The information given to the government and to the parliament should insofar be excluded.

III. The Initiative ‘Berlin Water Roundtable’

In the meantime, a Berlin-based citizens’ initiative had been launched. The initiative called “Berlin Water Roundtable” instigated in February 2008 a referendum to pass a law that requires the disclosure of all contracts and agreements related to the partial privatization of the Berlin Water Utilities. The proposed law would apply to all previously signed agreements unconditionally given that these agreements dealt with the core of water economy as value pricing or price calculation. The bill also suggested that if agreements were not disclosed they would be rendered invalid.

The State Government of Berlin refused a referendum arguing that the current draft version of law would be unconstitutional. Berlin’s Constitutional Court overruled this decision and rebuked the State Government’s position in its landmark judgment from October 6, 2009.[8] The Court held that at this initial state of a referendum the government had neither legal obligation nor any right to consider the compliance of the proposed law with the constitution. And furthermore the court ruled that any obligation of public authorities under private law could not erode any of its primary public obligations.[9] 

Hereupon the initiative announced to continue promoting its referendum. [10] This caused the parliamentary Green Party[11] together with the parliamentary Social Democrats and the Leftists[12] (both parties form the State Government) to produce proposals for an extension of Berlin’s FOI Act which should have taken into account what the Roundtable was fighting for.

IV. The Parliamentary Initiatives

The Green Party’s bill included for the first time an obligation to disclose contracts on the delivery of basic public services.[13] The duty to disclose should include agreements by the State of Berlin through which public interests are usually shifted from public to private entities through various legal forms like public-private partnerships or publicly owned enterprises. Under the bill public interests are water supply utilities, waste disposal management, public transportation, energy supply, processing of personal data connected to sovereign tasks and comparable services. Contracts on the delivery of basic public services should have been leveled with contracts through which Berlin as State sells off shares it held within public housing companies to other private investors.

The bill proposed a general publication duty for this special kind of contracts as well as a simplified right to access to information. Publication as well as access to information could have been refused by any party to the agreement. Furthermore, if any of the exceptions of the FOI Act (as data protection, official interests or business secrets) had been affirmed, the disclosure could have been denied.

The bill furthermore ruled that the protection of business secrets should have priority only if a severe damage arises by disclosing the information and these circumstances extensively outweigh the public interest in disclosure. The Berlin Commissioner for Data Protection and Freedom of Information would have been assigned to finally decide about the disclosure of the contract. The proposed law would have also been applied to previously signed contracts with the addendum that every person could file a suit to the Higher Administrative Court for failure to act, if the State Government did not decide on the publication within six months after the amendment.

In contrast, the proposed version of the bill of the coalition partners of the Social Democrats and the Leftists provided a general accessibility (disclosure upon request) and – given a sufficient public interest – the duty to publication of contracts through which private investors are entitled to deliver public services. Concerning the range of public services included, the coalition’s bill was narrower as processing of private data was not considered a public service […] and in the coalition’s consideration the Berlin Commissioner for Data Protection and Freedom of Information played no active role as far as the right to final decisions was concerned. This proposed amendment also did not include an immediate application to already existing contracts but a duty to renegotiations if requests of disclosure were made. The protection of business secrets was restrained in the same way as it was in the Green Party’s bill. If negotiating did not lead to a success within three months, access to information would have been granted if the interest in information had prevailed considerably the interest in secrecy.

As both bills related to each other a great deal and actually resembled each other, a commission between the parties was formed which prepared a joint draft the House of Representatives agreed upon on July 1st, 2010, with the votes of the Social Democrats, the Leftists and the Green Party and vote abstentions of the Christian Democrats and the Liberals.

V. The Agreed Extension of Berlin’s Freedom of Information Act

The enacted amendment of Berlin’s Freedom of Information Act is a product of compromise as its history shows, and despite its defects it still constitutes a substantial enhancement of the level of transparency in the federal capital.

The various propositions aiming at a special provision regarding public-private partnerships bore from the start the threat of unintended decrease of availability in a reversed application of the adjusted provision. This is especially true with regard to the question of whether the FOI Act is subject to the disposition of the parties. While the Federal Data Protection Act declares the rights of data subjects as indispensable, such an explicit regulation is missing in all FOI Acts on federal and states level. But even without such a regulation a confidentiality agreement between public agencies and private investors is deemed to be invalid as a breach of a legal prohibition.[14] If the original bill of the Green Party had been signed into law unaltered, there would have been the danger of assuming that the special treatment of public-private partnerships could be interpreted as the exception from the rule.

 

This assumption could have meant that only agreements of public-private partnerships in the domain of basic public supplies could be made public whereas contracts between public agencies and private investors in other fields could have stayed classified information as subject to the disposition of the parties. For these reasons the Berlin Commissioner for Data Protection and Freedom of Information suggested the adoption of a new legal rule which was incorporated in a slightly modified version into § 4 FOI Act during the committee’s debates. Accordingly, public authorities have to ensure at the time of concluding contracts that these are not opposed to the right of access to information. With this new rule, a quite recent resolution of parliament concerning the annual report 2008 of the Berlin Commissioner had been cast in law. If public authorities miss to guarantee the application of the FOI Act while concluding contracts, these contractual clauses should be deemed invalid.

 

The core of the amendment is the restricted protection of business secrets in contracts for basic public services in a new § 7a Berlin FOI Act. The amendment contains in its section 1 a clarification of applicability of the FOI Act for contracts which delegate a public shareholding to the private sector in the field of water utilities, water (waste) management, public transport, energy supply and data processing in connection with sovereign activities. Beyond the original bills the amendment is further applicable to all future contracts in the hospital environment which could be of high importance if the Charité hospital was to be privatized. Despite the opposition of the Green Party, the housing sectorwas excluded from the scope of the new law as well as a general rule (Auffangklausel) for similar contracts.[15] 

 

The mentioned catalogue of basic services also excludes contracts on privatizations of the road network. The fact that the transfer of big stretches of highways had been kept secret on federal level has been disclosed only recently.[16] To avoid this in future, the federal legislator has to act. In contrast, the new adjusted Freedom of Information Act in Berlin contains the provision that the transfer of property, possession, hereditary building right (Erbbaurecht) and easement (Dienstbarkeit an einer Sache) belongs to the mentioned contracts of basic services if the object is part of the infrastucture of the basic service and if the transfer of these rights “shall render possible the permanent provision of infrastructural services by the private body”.[17] The legal practice will show which constellations will constitute a matter under Berlin’s Freedom of Information Act. The public administration fears voiced during the legislative hearings that the lease of land to a private person in order to build a compost heap could be such a relevant infrastructural contract for waste management with all consequences (i. a. a duty to publication) are certainly unfounded.

 

The legislator has facilitated the access to information with regard to the enumerated contracts on the delivery of basic public services considerably compared to the accessibility of other basic contracts as the withholding of this specific piece of information is not simply justifiable by producing the argument of business secrets. Access to any other records of the administration of the State of Berlin can be otherwise denied whenever a business secret is to be revealed or the disclosure can cause a substantial economic damage except when the interest in the availability of the requested information outweighs the interest in safekeeping.[18] When it comes to contracts on the delivery of basic public services the withholding of the complete set of provisions or specific parts of provisions is only justifiable if business secrets are concerned and the disclosure implicates a substantial economic damage. Even if both requirements are fulfilled the requested information shall according to the amendment still be provided if the public interest into the terms of the contract prevails over the interest to safeguard business secrets.

 

The public interest regularly prevails whenever the private party to a contract on the delivery of basic public services holds the monopoly position or does not face any competition in that specific field. The respective private party has to promulgate the existence of this precondition which is borrowed from antitrust law (Kartellrecht).[19]

 

The question of a possible retrospective application of the amendment was highly controversial and debated during the legislative process, as the City of Berlin had already entered into contracts on the delivery of basic public services with private investors before the amendment had been enacted. As the Berlin FOI Act, like the respective Federal Act and the FOI Acts of other German States, was enacted directly without any transition period, it was unquestionable that all available records still deriving from a period before the (first) enactment of the law are eligible for publication.

 

In cases where the city entered into contracts with private investors at a time before the Berlin FOI Act had been enacted (as it was the case with the contract on partial privatizations of the Berlin Water Utilities), the amendment to the FOI Act is taking into account that the private parties trusted in the clauses which guaranteed confidentiality, as opposed to the later amendment.[20] It provides the obligation for public authorities to request post-negotiations with private investors in order to adjust the previous agreement to the consecutive FOI Act.

 

Following these rules the contracting parties have to reach a settlement within six months (the coalition initially reckoned three months were sufficient for the re-negotiations), otherwise the contract has to be (partially) disclosed if the public interest in the access to information outweighs in the manner mentioned above (monopoly position or no relevant competition) the confidentiality interest of the private party considerably. Thus, different from new contracts agreed upon after the enactment of the FOI Act, for older ones a simple overbalance of public interest is not sufficient. Also the private party to an old contract still has to promulgate whether a disclosure would cause a significant economic harm, otherwise the publication is compulsory without considering the balance-test between the interest in confidentiality and the public interest in disclosure. Otherwise the same rules on notification of subjects and legal remedies are applicable for public-private partnerships agreed upon before the enactment of the FOI Act. [21] 

 

The exceptions in the FOI Act (i. a. as to Data Protection) are equally relevant for new and old contracts.[22] 

 

After all, the amendment of the Berlin FOI Act enhances proactive transparency substantially. The basic concept of most FOI Acts in Germany is to provide information upon the request of a natural

person, so to speak passive transparency, as the information has to be collected after application (Information als Holschuld). The FOI Act of the City of Bremen alone provides legally binding access to information beyond the traditional reach by establishing a central on-line record on government information.[23]

 

The Berlin FOI Act contained in its § 17 already certain elements of “proactive transparency” (Information als Bringschuld) restricted though to record indexes, emission records and maps of environmental friendly areas. Through the recent amendment contracts on the delivery of basic public services must be proactively published if access to information can be requested and a general public interest can be assumed.[24] The additional requirement of a public interest seems to be redundant especially in cases where the balance-test has already been done under § 7a. For the interest of the requestor (who wants to “pick up” the information) is also recognized as public interest which – following the basic principle of the FOI Act – is worthwhile being protected.[25] Also, an “exceeded” public interest in the publication of contracts on the delivery of basic public services is not required under the new law.

 

Public agencies entering into contracts with private investors on the delivery of basic public services have to indicate their duty to disclosure.[26] Prior to a decision on publication, the Berlin Commissioner for Data Protection and Freedom of Information must be given the opportunity to comment on the matter[27], but there is no obligation for him to do so. Rightfully so, the legislator has not given the Commissioner the right to decide at last instance as such right would have been incompatible with the Commissioner’s status.

 

 

VI. Conclusion

 

Altogether, the facilitation of access to information in cases of contracts on the delivery of basic public services through the legislator of Berlin is an important step towards more transparency in this increasingly important domain of governmental actions. The public authorities cannot elude their public responsibilities through contracts with private parties – this has now been put straight by the legislator of Berlin and was noted beforehand by Berlin’s Constitutional Court.

 

The very first version of Berlin’s FOI Act of 1999 had already been among the most transparency friendly laws in Germany as it contained (and still contains) a catalogue with rules on limited data protection. The amended version is again a model for the whole Federal Republic. Hopefully, this example will be followed on federal and on states level, especially where FOI Acts are not yet in force.

 

 

 


* Dr. Alexander Dix is the Berlin Commissioner for Data Protection and Freedom of Information.

[1] Second amendment of Berlin’s Freedom of Information Act, July 8th, 2010, GVBl., 358.

[2] Public Statement of the Berlin Government to the referendum “Stop Secret Contracts – We, the People of Berlin want our water back”, Abghs-Drs. 16/2723 from October 29, 2009, 3.

[3] Judgment from October 21, 1999, VerfGH 42/99 – LVerfGE 10, 96

[4] This aspect was rendered constitutional by the Supreme Court by decision of Juli 14, 2010, VerfGH 39/09.

[5] Another aspect the Supreme Court rendered constitutional, see footnote 4

[6] GVBl., 561.

[7] VerfGH 57/08. The court mainly referred to judgments of the constitutional courts of Brandenburg and of Hamburg.

[8] VerfGH 63/08; see Neubauer/Lörincz, Neue Justiz 2009, 466 f.

[9] See fn. 8, 15 f.

[10] When the referendum had been successful after gathering 280 887 valid signatures, Berlin’s Government disclosed on November 10, 2010 all contracts with annexes and amendments (more than 700 pages) on the internet.

[11] Drs. 16/2928

[12] Drs. 16/2939

[13] The term “basic public services” was chosen intentionally as the traditionally applicable term “Daseinsvorsorge” is discredited.

[14] § 134 BGB or § 54 S. 1 VwVfG, accordingly also the application notes of the Federal Commissioner for DP and FOI to § 1 (1) Federal for Act.

[15] This narrow version does not change anything regarding the application of the FOI Act to the contracts which are not mentioned (§ 4 Abs. 3 Berlin FOI Act).

[16] Vgl. Kirbach, Deutschlands gefährlichste Straße (Germany’s Most Dangerous Street”), Dossier in Die ZEIT, 19.7.2010.

[17] § 7a Abs. 1 S. 2 Berlin FOI Act

[18] § 7 S. 1 Berlin FOI Act

[19] § 7a Abs. 2, 3 Berlin FOI Act

[20] This confidence is not legitimate without limitations as the Social Democratic Party and the Leftists Party pointed out in their joint bill, Drs. 16/2939, 4.

[21] Under § 7a Abs. 3 S. 5 Berlin FOI Act § 14 remains “untouched”; however this is perceived as reference to its legal consequences as the balance-test in § 14 is different from the one in § 7a.

[22] § 7a Abs. 4 Berlin FOI Act

[23] § 11 Abs. 5 Bremen FOI Act

[24] § 17 Abs. 3 S. 1 Berlin FOI Act

[25] § 3 Abs. 1 Berlin FOI Act

[26] § 4 Abs. 2 S. 2 Berlin FOI Act

[27] § 17 Abs. 3 S. 2 Berlin FOI Act

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