Exceptional Clauses Alone Do Not Make a Contracting Agreement an Administrative Contract in 2025
Some contractors are concerned when dealing with state-owned public sector companies, and many questions arise in their minds. The most important question is whether the fact that a state-owned public sector company is a party to a contracting agreement makes it an administrative contract, giving the administrative body the right to amend or terminate the contract unilaterally, or whether it remains a civil contract that may only be amended or terminated by agreement of both parties.
The Supreme Constitutional Court addressed this question, ruling that public sector companies are not considered public law persons, but remain private law persons despite state ownership. It also emphasized that the fact that the contracting agreement contains some exceptional conditions that are unusual in private law contracts does not alone serve as a basis for considering the contract as an administrative one.
In a recent ruling issued by the Supreme Constitutional Court in Case No. 20 of the Judicial Year 43, Session of January 4, 2025, regarding the resolution of a positive conflict of jurisdiction between the administrative and civil courts.
This ruling stemmed from a jurisdictional dispute arising from a Contracting Agreement dated 16 / 01 / 2008, between a private individual and a public sector company, “The General Nile Company for Road Construction of the Holding Company for Roads, Bridges, and Land Transport.” Such dispute was over the extent of their right to claim each other for the financial amounts indicated in their statement of claim due to the alleged breach of obligations.
In this ruling, the Court determined the legal nature of the Contracting Agreement concluded between a natural person and a public company, and whether the dispute fell under the jurisdiction of administrative or civil courts.
Therefore, the Constitutional Court concluded that the civil courts had jurisdiction over the dispute since public sector companies are not considered public law persons but remain private law persons despite state ownership. In this regard, the subject matter was a civil contract governed by private law. As a consequence, the dispute regarding the rights and obligations resulting from such dispute shall fall within the jurisdiction of the civil judiciary, which has general jurisdiction over disputes that arise from the contracting agreements.
Moreover, the Court emphasized that “while certain exceptional conditions may exist within such contracts, these conditions alone do not automatically transform a contract into an administrative one.”
The Supreme Constitutional Court also emphasized the well-established principle that “A contract is not considered administrative unless one of its parties is a public law person and fulfills the stipulated conditions of an administrative contract. Moreover, the inclusion of such conditions in the contract shall be only an expression of the characteristics of the public authority and the adoption of public law means. Therefore, the interests of the parties are not equal in such contracts, and are intended to protect the public interest.”
The Court also concluded that “Contracts are inherently civil in nature except for exceptional circumstances in which the administration expresses its intention to adopt the means of public law, and in particular through exercising the privileges before the contracting party, or by authorizing the contracting party to utilize some of its powers for the operation and organization of the public facilities since the administrative body should have been originally operated and organized such facilities.”
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