Functioning of Administrative Judiciary in the Context of Economic Changes

Dominik J. Gajewski (SGH Warsaw School of Economics)

Introduction

The claim about the key importance of the so-called institutional environment for the economic development of a state falls within the canons of modern economics.

On the theoretical level, the achievements of such trends as the new institutional economics or the economic analysis of law have contributed to the above; while their representatives – G. Becker, R.H. Coase, D.C. North, G.A. Akerlof, O.E. Williamson, O. Hart, and B. Holmström – have been awarded the Sveriges Riksbank Prizes in Economic Sciences in Memory of Alfred Nobel in economic sciences.

At the practical level, this consensus is reflected in the activity of international organisations, e.g., the World Bank, aimed at advancing institutional reforms in areas such as good governance and the rule of law.

However, the fact that the economics appreciated the importance of legal institutions in such a way and the jurisprudence developed the postulate of “external integration of legal sciences” has not eliminated the problems faced by multidisciplinary research projects at the interface of law and economics. In particular, the crucial issues are the level of detail of analyses and the preferred tools (i.e., qualitative versus quantitative).

In the approach characteristic of the economics, analyses are carried out from a bird’s eye view, on a significantly general level with attempts to quantify complex legal concepts (or, in fact, ideas drawn from the philosophy of law, such as the “rule of law” or “judicial independence”) in the form of indices. The key category seems to be the “typical” state that under given circumstances of time and place can be considered the norm.

On the other hand, the approach traditionally attributed to lawyers is dominated by focus on detail, e.g., on a specific legal institution functioning in a given branch of law. Qualitative tools are preferred, if the research problem defined in a such a way, including in empirical studies (e.g., case law analyses indented to answer the question of how a given institution functions in judicial practice). Exception becomes of immense significance in such an approach as even a single judgement deviating from the established line of case law calls for analysis precisely because it opens up previously undiscovered horizons of interpretation.

This study is a summary of a research project that was intended to overcome this type of “particularities” of both of these disciplines. At the heart of the project, there is an institution of great importance for both the citizens and the enterprises – and thus an important component of the institutional environment of the economy – namely, the administrative judiciary.¹

The history of the Polish administrative judiciary dates back to the times of the Congress Kingdom of Poland and 2022 marks the 100th anniversary of the establishment of the Supreme Administrative Tribunal (SAT) in the Second Polish Republic (SPR). The administrative judiciary has functioned within the framework of its modern system composed of sixteen Regional Administrative Courts (RACs) and the Supreme Administrative Court (SAC) for 18 years.

During this period, the administrative courts, which were exercising control over the legitimacy of public administration activities, including as regards collection of public levies, faced numerous challenges. Poland’s accession to the European Union (EU) and advancement of convergence processes have altered the Polish economy, which also affected the entities that were parties to court and administrative cases. The economy was subject to cyclical fluctuations as well. Public administration, including tax administration, underwent reforms in an attempt to solve problems such as the so-called VAT gap. Finally, the administrative judiciary itself has developed, for example as a result of computerisation.

This study attempts to analyse these processes from an interdisciplinary perspective. Its purpose is to present the administrative court system as a public institution in a specific economic context. Namely, the analysis is performed against the background of the economy, which serves as an environment for the entities interacting with administrative bodies to operate in (while the interactions sometimes take the form of disputes settled by the courts).

The starting point is inquiry into the history and reforms of administrative courts. It presents the administrative judiciary in terms of its dynamics and evolution as an institution created and transformed under specific social and political conditions, which was charged with particular tasks and designed in accordance with the current scientific trends.

In this context, the publication provides a statistical picture of the operation of administrative courts, which is organised around two categories that can be equated with the economic categories of “supply” of and “demand” for judicial settlement of disputes with public administration. The measure of “demand” is, obviously, the number of cases brought before administrative courts, which fall within different categories. The measure of “supply” – or rather the administrative judiciary’s organisational capacity to exercise the right to trial expressed in Article 45 of the Constitution of the Republic of Poland of 1997 – is the effectiveness of the courts. The study uses aggregated statistical data from the period 2004 to 2021. Therefore, it presents findings affected by the first period of the COVID-19 pandemic and its impact on the functioning of administrative courts.

The next chapter analyses selected tax cases² based on individual data: details collected at the level of individual court judgements. The aim is to outline the course of an administrative court dispute starting from the strictly economic domain (i.e., an event that has occurred within the framework of economic trade) through interaction with public administration (i.e., issuing a tax decision) to the stage of a court dispute. Thus, the functioning of administrative courts as a component of the institutional environment of the economy is illustrated. The analysis is complemented by another chapter that attempts to move from the level of the number of cases on to their monetary “value” (i.e., the amount of the challenged claim) based on the example of VAT cases.

The study ends with three chapters devoted to the administrative courts’ interpretation of the law. The first one analyses interpretative strategies adopted in the so-called difficult cases. Based on the selected examples, the chapter shows how the dialogue between the SAC and the Constitutional Court shapes resolution of complex tax law issues. The second chapter describes the use of information available in the so-called Regulatory Impact Assessments (RIAs) – which have been introduced into the Polish law-making process in order to improve its rationality (among others, with economic tools) in accordance with the paradigm of evidence-based public policymaking – in the process of purposeful and functional interpretation of the law. The next and final chapter contains an analysis of the impact of the preliminary ruling procedure applied by administrative courts on the consideration of economic reality in the process of interpreting tax law. It made it possible to answer whether and how the dialogue with the CJEU shapes the jurisprudence of administrative courts in relation to changing economic realities.

1 The project carried out under the direction of Professor D.J. Gajewski, which is entitled “Organy podatkowe i sądy administracyjne a zmiany koniunktury gospodarczej – perspektywa ekonomicznej analizy prawa” [Tax Authorities and Administrative Courts versus Economic Changes – the Perspective of Economic Analysis of Law], was financed with the funds provided by the National Science Centre, grant No. 2018/29/B/HS5/00260.

2 They are concerned with excise duty and VAT due to the number of cases and its fluctuations over the period under examination.

Roman Hauser (Adam Mickiewicz University, Poznan)
Marta Szustkiewicz

1. Judicial Control of Public Administration as a Component of the Institutional Environment of the Economy

Abstract: Independent administrative courts control the public administration and assess lawfulness of operation of the authorities responsible for i.a. crucial issues concerning the economy (fiscal policy, economic activity, and customs control). In Poland, the administrative judiciary has undergone transformations which is a consequence of historical conditions. After World War II, the administrative judiciary did not exist. In the 1970s, due to an increasingly difficult economic climate, the preparation of regulations establishing judicial review of administrative decisions has started. It resulted in the adoption of the Act of 31 January 1980 on the Supreme Administrative Court and Amendments to the Act on Code of Administrative Procedure. This law led to the establishment of the Supreme Administrative Court. Another turning point for defining the role of the administrative judiciary was year 1997, which is the year of adoption of the Constitution. As a result of implementation of the constitutional provisions, Regional Administrative Courts were established (as first-instance courts) as well as the Supreme Administrative Court.

(…) A State governed by the rule of law is inextricably welded with the institution of the administrative judiciary as there is no rule of law without administrative judiciary just as there is no administrative judiciary without the rule of law, therefore, it is in the most vital interest of the science of both political and administrative law to instil this awareness into the society for what follows from it – what has to follow – is not just knowledge, but also understanding of the law.¹

J. Langrod