Yesterday, the Berlin House of Representatives passed the Socialization Framework Act with the votes of the governing coalition. The law is a political response to the 2021 referendum. The text defines conditions under which socialisation under Article 15 of the Basic Law (GG) would be possible for areas of public services such as housing, energy or water. The law expressly does not allow expropriations under Article 14 of the Basic Law. However, the framework law sets guardrails for potential socializations. Specific individual cases are to be regulated separately in application laws.
The schedule is remarkable: the law is not to come into force until two years after promulgation. “The fact that it only comes into force 24 months after promulgation deliberately opens up a window of opportunity in which constitutional admissibility, in particular via abstract judicial review, can be clarified before practical application,” says Uwe Bottermann, lawyer and partner at the law firm Bottermann::Khorrami. “This possibility of preliminary clarification is an important step towards legal peace and planning security.”
Such a preliminary clarification could prevent a large number of parallel disputes before different courts after entry into force and bundle complex fundamental questions in one place. In addition, experience has shown that the Federal Constitutional Court formulates guardrails and standards that increase the quality and legal certainty of subsequent application laws.
The focus of abstract judicial review will be primarily on the legislative competence of the state of Berlin. Berlin derives its power from the concurrent legislation (Art. 74 sec. 1 no. 15 GG). The federal government has not yet made any conclusive regulation in this area.
However, the constitutional permissibility of socializations is also problematic in terms of content. “This is precisely why early judicial clarification is advisable. However, it would be desirable to have some substantive starting points that could already offer the Federal Constitutional Court more material for examination,” says Bottermann.
Specifically, there is a need for clarification in four areas:
- Interest in supply: Criteria for determining when there is a “general interest in supply” and how the imbalance between need and reality to be eliminated is determined.
- Forms of public service: So far, there are no binding standards for the design of the new sponsoring structures – such as institutions under public law, cooperatives or mixed-economy models.
- Compensation framework: The law names the market value as the starting point, but leaves open which valuation methods and in which ranges the specific compensation is to be determined.
- Fiscal guardrails: There is a lack of concrete indicators and sustainability ratios that ensure that socialisation does not permanently jeopardise the country’s budgetary capacity – beyond the existing general budget clause.
The framework law deliberately leaves the detailed regulations to the sector-specific legislature and postpones their review until later. If the framework law were more specific in this respect, the Federal Constitutional Court could substantively examine not only questions of competence and specificity, but also the content of the regulation – and thus provide more comprehensive guidelines for later application.
As a result, Bottermann sees the framework law as being correctly designed: “It creates the prerequisites for a preliminary clarification by the Constitutional Court and thus for reliable legal and planning certainty. With a few targeted substantive details, the scope of the review could be expanded so that later application laws can be launched more quickly and with more legal certainty,” says the lawyer.
