Source Of Liability For Publicly Owned Airport Directors: Does Misconduct Imply Public Or Private Law?

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Article by Anna Masutti and Alessandro Liardo

Airport managers are generally publicly owned companies that perform activities for the benefit of both public and private entities, concurrently.

The presence of public shareholders in airport management companies and the exercise of the functions of public bodies by them demonstrate that in the past the recognition of the private legal personality of such companies was doubtful. Scholars and case law superseded on the consequences — in terms of personal liability — that any mismanagement by the airport manager's directors entailed.

This article aims at examining the liability regime applicable to directors that cause damage or loss to the airport management company by way of their misconduct or mismanagement. Furthermore, it aims at establishing whether such a legal framework changes depending on whether the company was a public entity rather than private.

As a matter of fact, any such person employed by a public entity or acting in the capacity of a public official is held liable under civil, criminal, administrative and also accounting law, if he breaches the law or commits a crime. Subsequently, in case any damage occurs, the person will be called upon to compensate for the losses suffered. According to the latest Italian law reform to public employment (Law n. 15/2009), the liability regime has been enhanced now with a new title of responsibility: the employee's disciplinary responsibility. This responsibility originates from the lack of accomplishment of his/her tasks, as established under the contract with the employer. Two consequences arise from the court's recognition of such type of liability: firstly, loss of income in terms of a lower wage; and secondly, in worst-case scenarios of breach of law, a nonrenewal/termination of the employment contract.

The director's responsibility is grounded on article 28 of the Italian Constitution which establishes that «Officials of the State or public agencies shall be directly responsible under criminal, civil, and administrative law for acts committed in violation of rights. In such cases, civil liability shall extend to the State and to such public agency». Further measures have been laid out by article 23 of Presidential decree n. 3/1957, which delimitates the cases of damage attributable to the agent to those where there is violation of third-party rights caused by the agent's fraud or gross negligence.

With specific reference to the director's administrative responsibility, it should be differentiated from the so-called accounting responsibility; the former relates to the economic prejudice caused to the airport manager by an employee or public official, whereas the latter is triggered only in those cases where the person qualifies as an accounting agent. In order to better understand the discourse that follows hereunder, it is necessary to note that the economic prejudice suffered by the public administration and its entities («danno erariale») is evidenced by the deterioration and/or loss of goods or funds already suffered, or prospective losses. The definition of the losses recoverable by the public entity includes both the damage suffered and potential loss of profits or revenue.

The article will address the issue related to the liability regime applicable in such cases — either of civil or administrative law — triggered by the misconduct of the airport manager's directors, but leaving out the legal implications of such actions under criminal law.

In the following paragraphs, we will address judgments related to Aéroports de Paris and Mitteldeutsche Flughafen AG, in which the relevant court of justice recognizes the entrepreneurial nature of the activity pursued by the airport management company. Such an interpretation is also endorsed by Italian law.

SUMMARY —

  1. Introduction: public entity participation in airport management; historical background and current developments —

  2. The legal personality of airport management companies: private, public or a body governed by public law? —

    2.1. The definition and qualification of the airport management company by the European Court of Justice —

    2.2. Relevance of the interpretation of the airport charges —

    2.3. The notion of body governed by public law —

  3. Liability of public company directors under domestic law —

    3.1. The Italian case law —

    3.2. The damage to state-owned companies is not overspending of public funds —

    3.3. The civil action of the state company's shareholder —

    3.4. The differences between accounting and civil liability —

  4. Conclusions.

  5. Introduction: public entity participation in airport management; historical background and current developments —

    Scholars and case law dealing with the liability regime applicable to airport management companies often focuses on the relationship of such companies towards third parties (airlines, handling companies and passengers). However, responsibility stemming from mismanagement on the part of the directors (mala gestio episodes) has never stirred much interest.

    The problem arises as public entities or companies owned by private or public entities share management responsibilities in almost every airport management company1. The issue is at stake in cases where state-owned entities participate in airport management companies, which may appear, albeit formally, as private entities.

    The participation of public entities in private companies is a phenomenon that has its origins in Germany and dates back to the second half of the Nineteenth Century. Later, it spread all over Europe. The innovation proved helpful in making municipalities and the Lander provide essential services to the general public — such as water and electric energy — which were originally being provided exclusively by private companies. Eventually, the system was adopted in Austria, Belgium and France. In Italy, companies with major public participation in their management reached their zenith with the industrial development of the sixties and seventies.

    An examination of the historical evolution of this phenomenon leads us to the conclusion that states are inclined to provide services of general interest only by relying on the entrepreneurial and management skills of private legal entities, rather than providing it themselves2.

    In Italy, the number of private companies with public participation is particularly high. Over 5.000 Italian companies fall under this category, 400 of which are directly or indirectly participated in by the state.

    All said and done, it must be recalled that in public participation, a public entity is entitled to a share in limited responsibility companies. These companies operate in different sectors also in which the public administration delegates the exercise of managerial functions or subjects which perform entrepreneurial activity3. It is noteworthy that these types of companies are particularly relevant to the national economy due to their high gross turnover. Some of them are publicly traded companies.

    The publicly owned private companies can be classified along the lines of companies that have the direct participation...

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