The Supreme Court has ruled in favour of the Municipality of Slagelse that Forsyningssekretariatet's decisions concerning road charges were invalid.

On 5 February 2016, the Supreme Court upheld the Eastern High Court ruling in the so-called road charge case. The question was whether Forsyningssekretariatet could decide that a municipal road charge for a waste water disposal had been fixed at a too low level thereby constituting a distribution. Distributions result in set-off against the block grant based on the 40/60 rules. The matter was a trial case, and the ruling is therefore very important for municipalities and waste water companies.

The Supreme Court ruled in favour of the Municipality of Slagelse that Forsyningssekretariatet's decisions concerning road charges were not authorised. As Forsyningssekretariatet did not have authority to make the decisions, there were no grounds for setting off against the block grants with reference to how the road charge was fixed. In the grounds of the ruling, a majority of seven judges state, based on the municipalities' wide discretionary powers when fixing road charges under the Payment Services Act, that "there is no sufficient basis for assuming that it was the intention of the subsequent general act (to counter distributions from waste water companies) to depart from the special statutory rules laid down prior to the act on municipal road charges for the waste water connection, which are contained in the Payment Services Act and still apply."

The Supreme Court ascertains that the act does not apply to the municipalities' fixing of road charges under the Payment Services Act, and that the supervision of the municipalities in this area is performed by the general municipal supervisor, meaning the State Administration.

A minority of two judges agreed with the the High Court ruling, however, with different grounds.

Many municipalities have paid the remaining road charges to the waste water companies instead of a set-off being made against the block grant. They will now be able to claim repayment from the waste water companies.

In the light of the ruling, we recommend that municipalities and waste water companies evaluate the basis of the municipality's payment of road charges.

Horten has represented a large number of municipalities that have received decisions from Forsyningssekretariatet on the fixing of road charges. You are welcome to contact us if you need more information on the Supreme Court ruling.

contacts

Rikke Søgaard Berth

Partner

Line Markert

Partner

Malene Graff

Specialist Attorney

Rene Frisdahl Jensen

Specialist Attorney