The (in)applicability of the law on commitments and delayed payments to municipalized services of a commercial nature (commentary on the Constitutional Court judgment no. 109/2015)

João Pacheco de Amorim / Fausto Ferreira / Frédéric Teixeira

Keywords

Local autonomy; financial autonomy; organizational autonomy; local business activity.

Abstract

At the beginning of the second decade of this century, the sustainability of the national public financial system and the assumption of new international commitments by the State, within the scope of the Economic and Financial Assistance Programme signed with the European Union, the International Monetary Fund and the European Central Bank, imposed the creation of mechanisms to control budget execution and public expenditure capable of ensuring compliance with the international obligations to which the country had been linked.
In this sense, Law No. 8/2012 of 17 March was approved, called the Law on Commitments and Delayed Payments (LCPA), which "establishes the rules applicable to the assumption of commitments and late payments of public entities", and consequently also approved the diploma that develops the general foundations and principles of the LPCA - Decree-Law No. 127/2012, of 21 June. The LCPA considerably restricts the public financial decision-making capacity and, as far as municipalities are concerned, their financial autonomy - enshrined in articles 6, no. 1 and 235 et seq. of the Constitution. It is in this context that our work is developed, in which we analyze the Constitutional Court Ruling no. 109/2015, as well as the Court of Auditors' contested judgment - No. 2/2013, 1st S/SS.
The fundamental question is whether or not municipal services of a commercial nature fall within the subjective scope of application of the LCPA and the diploma that regulates it. As a second question, there is also the need to assess the unconstitutionality or not of the norms of articles 2 of the LPCA and Decree-Law 127/2012, when interpreted in the sense of including municipal services with a mercantile nature in the respective scope of application. The Court of Auditors and Constitutional Court rulings (under notation) maintain that the LCA and the law that regulates it, cover municipal services of a commercial nature. Our position is contrary to this understanding, as we understand that it is not constitutionally admissible, as we seek to substantiate below.