Supreme Court • The system for authorising the exercise of an economic activity in the absence of specific regulations (property loan brokerage)

Action for ultra vires (recours pour excès de pouvoir) • Objection of unconstitutionality • Insufficient statement of reasons • Annulment

Tribunal Suprême, 23 mai 2023, Monsieur P. D., Monsieur F-X. F., Monsieur J-M. F., Monsieur C. N. et Société L. L. SA c/ État de Monaco, Décisions TS 2022-18 à 22

The action

The applicants, of foreign nationality, brought an action for annulment of the decision of the Minister of State rejecting their application for authorisation to carry on independently the principal activity of property loan brokerage as well as various ancillary activities. None of the activities covered by the application were linked to a regulated sector in the Principality.

The Minister of State rejected their application on the grounds that "it appears that the activity of property loan brokerage is similar to the activity of intermediary in banking transactions, for which there are no specific regulations in Monaco. Furthermore, this activity does not fall within the scope of the Franco-Monegasque banking agreements and French regulations in this area are therefore not applicable in Monaco".

The applicants objected that the reasons given for the contested decision were inadequate pursuant to Article 1 of Law no. 1.312 of 29 June 2006 on giving reasons for administrative acts, as the Minister of State referred to the fact that there are no specific regulations governing the activity of property loan broker, without indicating that this activity is prohibited in the Principality and without specifying the reasons of general interest that would prevent the authorisation requested.

They also challenged, by way of exception, the unconstitutionality of article 5 of Law no. 1.144 of 26 July 1991 concerning the exercise of certain economic and legal activities, which gives the Minister of State the power to grant or refuse authorisation to exercise an activity but does not indicate what grounds may justify a refusal of authorisation, thereby infringing the constitutional principle of equal treatment and equal rights guaranteed by article 32 of the Constitution and the constitutional principle of legal certainty.

The decision of the Supreme Court

The Supreme Court first of all ruled that "no provision of the Constitution enshrines a principle of freedom to create an economic activity and freedom of establishment in the Principality",.

From which it deduced that "it is therefore up to the State authorities to define the legal regime applicable to the exercise of any economic activity and establishment, taking into account the particular characteristics, particularly geographical and demographic, of the Principality ; that it is in particular open to them to make the exercise of an economic activity or the establishment of an economic entity subject to a system of authorisation and to limit the beneficiaries thereof".

It then recalled, in reference to Articles 1 and 5 of Law no. 1. 144 of 26 July 1991 concerning the exercise of certain economic and legal activities, "that in the absence of specific regulation of an activity, it is therefore for the administrative authority to assess, under the control of the judge for ultra vires, whether there are grounds for issuing an individual authorisation by checking whether the applicant has sufficient professional skills and financial and moral guarantees, and by assessing the impact of any such authorisation with regard to the sector of activity concerned".

On this basis, the Supreme Court finally :

• rejected the plea of unconstitutionality, holding that Law no. 1.144, "by granting the Administration a discretionary power, does not infringe the constitutional principles of equality and legal certainty";

• annulled the contested decision, upholding the plea of inadequate reasoning, holding that the authorities "stated that no authorisation was issued for this activity in the Principality on the grounds that it was not subject to specific regulations" and in so doing "misinterpreted the scope of the provisions of the Law of 26 July 1991".

In other words, a decision to refuse authorisation to carry on an activity that is not specifically regulated must be justified in the light of the particular circumstances of the case, the person and guarantees of the applicant, the economic public policy of the Principality or other objectives in the general interest.

Regulation is at the heart of economic public policy, and the Monegasque administration may in any event limit the number of authorised professionals in order to ensure the proper functioning and safeguarding of the sector of activity in question (saturation).