INSOL VENCY OF PUBLIC ENTITIES OTHER THAN THE STATE UNDER DUTCH LAW Johannes A F. Peters and reinout D. Vriesendor IV DI Introduction The question of whether a govemment can go bankrupt in the Netherlands is not a new one. The Supreme Court, for example, was asked as early as 1922 whether a municipality(in this case, Wormerveer)could be decared bankrupt. Through the appeal in cassation, the court did not reach a principled verdict in this matter. Ever since, it has remained a vexed question that regularly kept rearing its head, both in the literature and in case-law. There were some striking cases in which bankruptcy proceedings were filed against a foreign state, such as the Republic of Zaire 2 and the Republic of Surinam In both cases, immunity was assumed on account of the infringement of sovereignty of the state in question. But the question of the position of Dutch public entities-leaving the State of the Netherlands aside-is certa inly still in order at the present time Does a bankruptcy belong to the possibilities for a lower govemment that finds itself in serious financial problems? hat could be done if the prelim inary financing of the Victory Boogie Woogie(more than EUR 36 million!) by the municipality of The Hague had gone awry? What was the situation like when the Dutch province of Zuid-Holland incurred a financial setback running into millions in the Ceteco affair?5 What would happen if the municipality of Enschede were held liable for the many victims of the fireworks disaster in May 2000?6 What will be the consequences of the millions lost in the Dutch province of Gelderland a result of actions by events organizer Gelderland Events?7 In this contribution, the issue is approached from two perspectives. First, the concept of government'is too vague and must be defined more closely( 2 ). The Johannes A. Peters s(university) lecturer of administrative law and Reinout D. Vriesendorp ofessor of civil and commercial law at the Faculty of Law, Center for Company Law, University of Tilburg. the netherlands. Hoge Raad [ Supreme Court]23 June, 1922, W.10933, NJ1922, P 1030 See Jacomin J. van Hof, Barbara Reinhartz, and Liwen Veraart De faillieterklaring van Zaire [The bankruptcy of Zaire), NB 1988, pp. 636-637, and Hof Den Haag [The Hague Court of Appeal18 February 1988, NJ1989, p 602 3 Hoge Raad [ Supreme Court 28 September, 1990, NJ1991, P 247 This concemed the md-1998 purchase of the famous Piet Mondriaan painting by De Nederlandsche BankNV'[The Dutch Central Bank]as a present to the Dutch people. This was a type of risk investment involv ing serious losses, of govemment funds by the ov ince in the commercial trade corporation bank Cetec N V. which was declared bankrupt. As to possible bankruptcy consequences for the province of Zuid-Holland nvolved, see B. Wessels, Kan en provincie faillietgaan? [ Can a province be declared bankrupt?]. NTBR 1999/9, pp. 289-291 On May 13, 2000, the SE Fireworks factory, in the centre of Enschede, exploded, killing 22 people and caus ng enormous damage in the city of Enschede. One of the causes seems t have been gligence on the part of the 7. Gelder land Event s a commercial company which, us ng govemment money supplied by the province of Gelderland, was ping to put the prov nce on the map, an adventure n whch the rovince invested, and possibly lost, several million of euros( November 2001)
INSOLVENCY OF PUBLIC ENTITIES OTHER THAN THE STATE UNDER DUTCH LAW Johannes A.F. Peters and Reinout D. Vriesendorp* IV D 1 1 Introduction The question of whether a government can go bankrupt in the Netherlands is not a new one. The Supreme Court, for example, was asked as early as 1922 whether a municipality (in this case, Wormerveer) could be declared bankrupt.1 Through the appeal in cassation, the court did not reach a principled verdict in this matter. Ever since, it has remained a vexed question that regularly kept rearing its head, both in the literature and in case-law. There were some striking cases in which bankruptcy proceedings were filed against a foreign state, such as the Republic of Zaire2 and the Republic of Surinam.3 In both cases, immunity was assumed on account of the infringement of sovereignty of the state in question. But the question of the position of Dutch public entities - leaving the State of the Netherlands aside - is certainly still in order at the present time. Does a bankruptcy belong to the possibilities for a lower government that finds itself in serious financial problems? What could be done if the preliminary financing of the Victory Boogie Woogie (more than EUR 36 million!) by the municipality of The Hague had gone awry?4 What was the situation like when the Dutch province of Zuid-Holland incurred a financial setback running into millions in the Ceteco affair?5 What would happen if the municipality of Enschede were held liable for the many victims of the fireworks disaster in May 2000?6 What will be the consequences of the millions lost in the Dutch province of Gelderland as a result of actions by events organizer Gelderland Events?7 In this contribution, the issue is approached from two perspectives. First, the concept of `government' is too vague and must be defined more closely ( 2). The * Johannes A.F. Peters is (university) lecturer of administrative law and Reinout D. Vriesendorp professor of civil and commercial law at the Faculty of Law, Center for Company Law, University of Tilburg, the Netherlands. 1. Hoge Raad [Supreme Court] 23 June, 1922, W.10933, NJ 1922, p. 1030. 2. See Jacomijn J. van Hof, Barbara Reinhartz, and Lidwien Veraart, De faillietverklaring van Zaïre [The bankruptcy of Zaire], NJB 1988, pp. 636-637, and Hof Den Haag [The Hague Court of Appeal] 18 February 1988, NJ 1989, p. 602. 3. Hoge Raad [Supreme Court] 28 September, 1990, NJ 1991, p. 247. 4. This concerned the mid-1998 purchase of the famous Piet Mondriaan painting by De Nederlandsche Bank NV [The Dutch Central Bank] as a present to the Dutch people. 5. This was a type of risk investment, involving serious losses, of government funds by the province in the commercial trade corporation bank Ceteco N.V. which was declared bankrupt. As to possible bankruptcy consequences for the province of Zuid-Holland involved, see B. Wessels, Kan een provincie failliet gaan? [Can a province be declared bankrupt?], NTBR 1999/9, pp. 289-291. 6. On May 13, 2000, the SE Fireworks factory, in the centre of Enschede, exploded, killing 22 people and causing enormous damage in the city of Enschede. One of the causes seems to have been negligence on the part of the municipal authority. 7. Gelderland Events is a commercial company which, using government money supplied by the province of Gelderland, was going to `put the province on the map', an adventure in which the province invested, and possibly lost, several million of euros (November 2001)
PETERS/VRIESENDORP second perspective concerns the aim, size, and working method in the case of bankruptcy( 3-4). By eventually making the perspectives converge, we can shed some light on the question of whether a government can go bankrupt in the Netherlands and respond to the questions posed in the Questionnaire( 5) Governments in sha pes and sizes If there has ever been a clearly defined idea of what government'is, in the present-day socal constellation, it is a vague concept. Not only new steering mechanisms like self-regulation and competition, but also socal ordering and role pattens like privatization and liberalization have caused a large number of actors to become involved in public tasks. Since these tasks, which concern the public interest, 8 are carried out by organization foms perta ining either to public or to private law, a clearly delim ited definition of govemment cannot be given, let alone in one form or another, an organogram That does not mean to say, however, that no kind of ordering can be applied with respect to the executors of public tasks. Three distinctions can be made which can be relevant in the framework of the problems under discussion 6 public-law and private-lawentities b. implementation of tasks and exercise of powers, c. exclusively public activ ities or also perfomance of other commercial activ ities 2.1 Public-law and private -law legalentities The first distinction that can be made has to do with the legal form ofan organization Private-law legal entities ha ve the legal forms regulated in Book 2 of the Dutch Civil Code(hereafter DCC), which means that their organization is regulated by the provisions set forth in Book 2 DCC. The legal forms in question are the Naamloze Vennootschap or B. Private company with limited liability the vereniging assocation], and the Stichting [foundation]. The organizational form of public-law legal entities are set out in special laws rather than in the Civil Code, although the latter does refer to them in Article 2: 1. This placement has to do with the closed system of legal entities that the Civil Code was origina lly intended to be: it is only the legislator that can confer legal persona lity on organization forms In this respect Article 2: 1, first paragraph, DCC, explicitly provides that: "The State, the provinces, the municipalities, the water control authorities, as well as all bodies on which, by virtue of the constitution, regulatory authority is conferred, possess legal persona lity. The second pa of this Article again empha system:"Other bodies to which part of a public task is assigned only possess lega personality if this follows from what has been laid down in the law. Article 2: 1 DCC confers legal personality on public-law organization forms. As 8. Definition by C.A. Schreuder, Publiekrechtelipke taken, priate rechtspersonen [Tasks pertaining to pubhc law, legal entities pertaining to private lawl Deventer. Kluwer 1994, p 33 See, for example, IA. F. Peters, Publiekrechtlijike rechtspersonen [Legal entities pertaining to public law], Deventer. W.EJ. Tjeenk Willink 1997, pp 15ff
PETERS/VRIESENDORP 2 second perspective concerns the aim, size, and working method in the case of bankruptcy ( 3-4). By eventually making the perspectives converge, we can shed some light on the question of whether a government can go bankrupt in the Netherlands and respond to the questions posed in the Questionnaire ( 5). 2 Governments in shapes and sizes If there has ever been a clearly defined idea of what `government' is, in the present-day social constellation, it is a vague concept. Not only new steering mechanisms like self-regulation and competition, but also social ordering and role patterns like privatization and liberalization have caused a large number of actors to become involved in public tasks. Since these tasks, which concern the public interest,8 are carried out by organization forms pertaining either to public or to private law, a clearly delimited definition of `government' cannot be given, let alone, in one form or another, an organogram. That does not mean to say, however, that no kind of ordering can be applied with respect to the executors of public tasks. Three distinctions can be made which can be relevant in the framework of the problems under discussion: a. public-law and private-law entities; b. implementation of tasks and exercise of powers; c. exclusively public activities or also performance of other commercial activities. 2.1 Public-law and private-law legal entities The first distinction that can be made has to do with the legal form of an organization. Private-law legal entities have the legal forms regulated in Book 2 of the Dutch Civil Code (hereafter DCC), which means that their organization is regulated by the provisions set forth in Book 2 DCC. The legal forms in question are the Naamloze Vennootschap or N.V. [public company limited by shares], the Besloten Vennootschap or B.V. [private company with limited liability], the Vereniging [association], and the Stichting [foundation]. The organizational form of public-law legal entities are set out in special laws rather than in the Civil Code, although the latter does refer to them in Article 2:1. This placement has to do with the closed system of legal entities that the Civil Code was originally intended to be: it is only the legislator that can confer legal personality on organization forms.9 In this respect, Article 2:1, first paragraph, DCC, explicitly provides that: "The State, the provinces, the municipalities, the water control authorities, as well as all bodies on which, by virtue of the constitution, regulatory authority is conferred, possess legal personality." The second paragraph of this Article again emphasizes the closed system: "Other bodies to which part of a public task is assigned only possess legal personality if this follows from what has been laid down in the law." Article 2:1 DCC confers legal personality on public-law organization forms. As 8. Definition by C.A. Schreuder, Publiekrechtelijke taken, private rechtspersonen [Tasks pertaining to public law, legal entities pertaining to private law], Deventer: Kluwer 1994, p. 33. 9. See, for example, J.A.F. Peters, Publiekrechtelijke rechtspersonen [Legal entities pertaining to public law], Deventer: W.E.J. Tjeenk Willink 1997, pp. 15 ff
INSOL VENCY OF PUBLIC ENTITIES OTHER THAN THE STATE regards the aw on public organizations, the first paragraph regulates the legal persona lity (in addition to that of the State, which henceforward will be left out of consideration)of the official decentralized elements of our polity: the so-called public bodies. A public body' is a term pertaining to public law that refers to a community with members, which may include a regulatory authority, but in which in any case public-law powers play a role that can be influenced by the members 0 Some of the public bodies are explicitly mentioned in Art. 134 of the Dutch Constitution, which deals with the creation and discontinuation of public bodies. It is not always equally clear whether a govemment body should be considered a public body II This is why this is often detemined in a specific act. In addition, in pursuance of Article 2: 1, first para graph, DCC, any regulating authority a body may have must be taken into account. In practice, this means that, for qualification,a two-sta ged test applies. Some examples The Nederlands Instituut van register-accountants NIVRA [Dutch institute of chartered accountants] is a public-law legal entity, because it is a public body in accordance with Article l, second paragraph, Registered Accountants Act, and because, in pursuanceof Article 19 of the same statute, the members'meeting The Nederlandse Loodsencorporutie [Netherlands ( Maritime) Pilots Organization] is a public-law legal entity beca use it is a public body on the basis of Article 6, first paragraph, Dutch Pilots Act, and because the members meeting has regulatory powers pursuant to Article 15 of the same statute; The Nederlandse Orde van Advocaten[Dutch Bar Association] possesses leg persona lity because it is a public body on the basis of Article 17 of the Counsel Act, and because the council of representatives possesses regulatory powers in accordance with article 28 of the same statute The Koninklijke notariele beroepsorganisatie [Royal Netherlands assocation of civil law notaries] possesses legal personality because it is a public body on the basis of Article 56 of the Notaries Act, and because the general meeting possesses regulatory powers in accordance with Article 65 of the same statute 2.2 implementation of tasks and exercise of powers The second paragraph of Article 1, Book 2 DCC provides the possibility to confer legal personality on other organization forms. What we are dea ling with in this case is a motley collection of divergent governmentalorganizations. A random selection Compare HD. van Wijk/willem Koninenbelt/Ron. M. van Mal, Hoofdsnukken var bestuursrecht [Topics of adminstrative law, The Hague, Ekevier 1999, p. 122, C. P.J. Goorder Rechtsbenoegdheid n het bestuaursrecht Legal authority in adminstrative law l Zwolle: W.E.J Tjeenk willink 1990, P. 27, as well as P. de Haan/Th. G Drupsteen/R Femhout, Besharsrecht in de sociale redhtstat Dee/ 1. Ontwikkeling, Organisatie Instnimentarian [Administrative law in the socal, law-gowerned state. Part 1. Development Organization, Instruments], Deventer: Klwer 2000,p.184 See the example of the Sociaal Economische Raad Social Economic Council] in J.A. F. Peters
INSOLVENCY OF PUBLIC ENTITIES OTHER THAN THE STATE 3 regards the law on public organizations, the first paragraph regulates the legal personality (in addition to that of the State, which henceforward will be left out of consideration) of the official decentralized elements of our polity: the so-called public bodies. A `public body' is a term pertaining to public law that refers to a `community with members', which may include a regulatory authority, but in which in any case public-law powers play a role that can be influenced by the members.10 Some of the public bodies are explicitly mentioned in Art. 134 of the Dutch Constitution, which deals with the creation and discontinuation of public bodies. It is not always equally clear whether a government body should be considered a public body.11 This is why this is often determined in a specific act. In addition, in pursuance of Article 2:1, first paragraph, DCC, any regulating authority a body may have must be taken into account. In practice, this means that, for qualification, a two-staged test applies. Some examples: - The Nederlands Instituut van register-accountants NIVRA [Dutch institute of chartered accountants] is a public-law legal entity, because it is a public body in accordance with Article 1, second paragraph, Registered Accountants Act, and because, in pursuanceof Article 19 of the same statute, the members' meeting possesses regulatory powers; - The Nederlandse Loodsencorporatie [Netherlands (Maritime) Pilots Organization] is a public-law legal entity because it is a public body on the basis of Article 6, first paragraph, Dutch Pilots Act, and because the members' meeting has regulatory powers pursuant to Article 15 of the same statute; - The Nederlandse Orde van Advocaten [Dutch Bar Association] possesses legal personality because it is a public body on the basis of Article 17 of the Counsel Act, and because the council of representatives possesses regulatory powers in accordance with Article 28 of the same statute; - The Koninklijke notariële beroepsorganisatie [Royal Netherlands association of civil law notaries] possesses legal personality because it is a public body on the basis of Article 56 of the Notaries Act, and because the general meeting possesses regulatory powers in accordance with Article 65 of the same statute. 2.2 Implementation of tasks and exercise of powers The second paragraph of Article 1, Book 2 DCC provides the possibility to confer legal personality on other organization forms. What we are dea ling with in this case is a motley collection of divergent governmental organizations. A random selection: 10. Compare H.D. van Wijk/Willem Konijnenbelt/Ron. M. van Male, Hoofdstukken van bestuursrecht [Topics of administrative law], The Hague, Elsevier 1999, p. 122, C.P.J. Goorden, Rechtsbevoegdheid in het bestuursrecht [Legal authority in administrative law], Zwolle: W.E.J. Tjeenk Willink 1990, p. 27, as well as P. de Haan/Th.G. Drupsteen/R. Fernhout, Bestuursrecht in de sociale rechtstaat. Deel 1. Ontwikkeling, Organisatie, Instrumentarium [Administrative law in the social, law-governed state. Part 1. Development, Organization, Instruments], Deventer: Kluwer 2000, p. 184. 11. See the example of the Sociaal Economische Raad [Social Economic Council] in J.A.F. Peters, o.c., p. 90
PETERS/VRIESENDORP Bedriifsfonds voorde pers[Press fund Article 123, first paragraph, Meda Act; Centraal Fonds voor de volkhuisvesting [Social Housing Guarantee Fund Article 71, first paragraph, Housing Act; entraal Orgaan opvang Asielzoekers [ Central body for the reception of asylum seekers]: Article 2, first paragraph, Central Organ for the Reception of Asylum Seekers Act College wan Toezicht Sociale verzekeringen [Social Security Supervisory Board]: Article 2, second paragraph, Social Security Organization Act; Commissariat voor de Media[Public Broadcasting Commission ] Article 9, first paragraph, Media Act; Dienst voor het cadaster en de openbare registers [Land and Public Registry Agency]: Article 2, first paragraph, Land Registry Organization Act; Rijksdienst voor het Wegverkeer[Department of Road Transport]: Article 4a, Road Traffic act. Instituut voor Toetsontwikkeling [National Institute for Educational Measure ment]: Article 38, first paragraph, Educational Support Structures Act; Koninklijke Bibliotheek [National Library of the Netherlands]: Article 1. 16 Higher Education and Research Act Koninklijke Nederlandse Akademie van Wetenschappen Royal Dutch Academy of Arts and Sciences]: Article 1. 16 Higher Education and Research Act Landelj ke selectie-en opleidingsinstituut politie [National Police Selection and Training Institute] Article 2, second paragraph, National Police Selection and Training Institute Act Luchtverkeersbeveiligingsorganisatie [Air Traffic Control]: Article 22Air Nederlands instituut voor brandweer en rampenbestrijding [Nether Institute for Fire Service and Disaster Management): Article 18a, first paragraph Fire Services Act 1985 Nederlandse Organisatie voor toegepast-wetenschappeliik onderzoek TNO Dutch Organization for Applied Scientific Research]: Article 3, second paragraph, TNO Act; Politieregio[ Police region ]: Article 21, fourth paragraph, Police Act of 1993 Schadefonds geweldsmisdnijven [Criminal Injuries Compensation Fund] Article 2, second paragraph, Crim inalInjuries Compensation Fund Act; Sociale verzekeringsbank [Social Security Bank ] Article 21, second paragraph Social Security Organization Act In govemment activ ities, tasks and powers can be distinguished, although these two are obviously connected By powers' we mean the typically public authority, i.e., the public-law power to unilaterally determ ine the legal relations with another person(a citizen). The legality principle-one of the fundamental principles of our democratic state under the rule of law-entails that such authority must be based on the law. Not only is that authority defined, it is also indicated to which adm inistrative Compare Van Wijk/Konijnenbelt/Van Male, o.c., p 202
PETERS/VRIESENDORP 4 - Bedrijfsfonds voor de pers [Press fund]: Article 123, first paragraph, Media Act; - Centraal Fonds voor de Volkhuisvesting [Social Housing Guarantee Fund]: Article 71, first paragraph, Housing Act; - Centraal Orgaan opvang Asielzoekers [Central body for the reception of asylum seekers]: Article 2, first paragraph, Central Organ for the Reception of Asylum Seekers Act; - College van Toezicht Sociale Verzekeringen [Social Security Supervisory Board]: Article 2, second paragraph, Social Security Organization Act; - Commissariaat voor de Media [Public Broadcasting Commission]: Article 9, first paragraph, Media Act; - Dienst voor het kadaster en de openbare registers [Land and Public Registry Agency]: Article 2, first paragraph, Land Registry Organization Act; - Rijksdienst voor het Wegverkeer [Department of Road Transport]: Article 4a, Road Traffic Act; - Instituut voor Toetsontwikkeling [National Institute for Educational Measurement]: Article 38, first paragraph, Educational Support Structures Act; - Koninklijke Bibliotheek [National Library of the Netherlands]: Article 1.16 Higher Education and Research Act; - Koninklijke Nederlandse Akademie van Wetenschappen [Royal Dutch Academy of Arts and Sciences]: Article 1.16 Higher Education and Research Act; - Landelijke selectie- en opleidingsinstituut politie [National Police Selection and Training Institute] Article 2, second paragraph, National Police Selection and Training Institute Act; - Luchtverkeersbeveiligingsorganisatie [Air Traffic Control]: Article 22 Air Traffic Act; - Nederlands instituut voor brandweer en rampenbestrijding [Netherlands Institute for Fire Service and Disaster Management]: Article 18a, first paragraph, Fire Services Act 1985; - Nederlandse Organisatie voor toegepast-wetenschappelijk onderzoek TNO [Dutch Organization for Applied Scientific Research]: Article 3, second paragraph, TNO Act; - Politieregio [Police region]: Article 21, fourth paragraph, Police Act of 1993; - Schadefonds geweldsmisdrijven [Criminal Injuries Compensation Fund]: Article 2, second paragraph, Criminal Injuries Compensation Fund Act; - Sociale verzekeringsbank [Social Security Bank]: Article 21, second paragraph, Social Security Organization Act. In government activities, tasks and powers can be distinguished, although these two are obviously connected. By `powers' we mean the typically public authority, i.e., the public-law power to unilaterally determine the legal relations with another person (a citizen). 12 The legality principle - one of the fundamental principles of our democratic state under the rule of law - entails that such authority must be based on the law. Not only is that authority defined, it is also indicated to which administrative 12. Compare Van Wijk/Konijnenbelt/Van Male, o.c., p. 202
NSOL VENCY OF PUBLIC ENTITIES OTHER THAN THE STATE body the authority is assigned The fact that a public-law power is assigned implies that the task in question belongs to the govemment. If the government had no task to carry out, no assignment of authority would be necessary. However, this line of reasoningcannot be reversed: a task does not imply a public-law power. 3 What must be seen as a public task depends on politico-ideological views. 14 In general, it may be pointed out that tasks are mostly covered by related public-law rules. Cases in point are the provision of drinking water and energy. No matter how private' the purveyors may be-the shares are mostly in govemment hands-the fact that rules are laid down makes it quite clear that we are dealing with an activ ity that the government considers to be among its tasks legal n the light of the preceding dist inction between public-law and private-law entities, it can be established that, in both legal forms, it is possible not only to carry out public tasks but also to exercise public-law powers. It should be noted that in view of their public-law background - public-law legal entities always deal with public tasks, without this necessarily having to imply public authority. A combined example of both organization fom and power to carry out a task is education Undoubtedly, this is a task the govemment has set itself and which involves both public-law legal entities-for example, public universities such as Utrecht University or Leyden University (Article 1. 8, second paragraph, Higher Education and Scientific Research Act)-and private-law legal entities- for example, the Stichting Katholieke Universiteit Brabant [Tilburg Univers ity Foundation. Both posses public-law powers such as the issuing of legally recognized diplomas With respect to public-law powers, a final remark must be made concerning decentralization. In view of their pace in the polity, public bodies possess the autonomy to regulate their own households. This means that, to a certa n extent, they can use their own discretion when acting as regulators and administrators, obviously within the restrictive parameters set at the decentralized level, whether territorially or functionally. > In the framework of this contribution, it is important to note that n this respect these public bodies have an authority to regulate a variety of subjects with matching powers This i a point of criticsm of the so-called publc-task case law in which the administrative judge applies public-law noms to private-lawexecutors of public tasks See, for example, HJ. de Ru, Stat, markt en recht [State, market, and law, Zwolle: W.EJ Tjeenk Willink 1987 See, for example, M C. Buskens/HRB.M. Kummelng/BP. Vermeulen/RJ..M widdershoven, Beginselen nan de depcnatishe rechtsstaat [Princples of the democratic state under the ruleof law, Deventer: W.EJ. Tjeenk Willink 2001, Pp. 284
INSOLVENCY OF PUBLIC ENTITIES OTHER THAN THE STATE 5 body the authority is assigned. The fact that a public-law power is assigned implies that the task in question belongs to the government. If the government had no task to carry out, no assignment of authority would be necessary. However, this line of reasoning cannot be reversed: a task does not imply a public-law power.13 What must be seen as a public task depends on politico-ideological views.14 In general, it may be pointed out that tasks are mostly covered by related public-law rules. Cases in point are the provision of drinking water and energy. No matter how `private' the purveyors may be - the shares are mostly in government hands - the fact that rules are laid down makes it quite clear that we are dealing with an activity that the government considers to be among its tasks. In the light of the preceding distinction between public-law and private-law legal entities, it can be established that, in both legal forms, it is possible not only to carry out public tasks but also to exercise public-law powers. It should be noted that - in view of their public-law background - public-law legal entities always deal with public tasks, without this necessarily having to imply public authority. A combined example of both organization form and power to carry out a task is education. Undoubtedly, this is a task the government has set itself and which involves both public-law legal entities - for example, public universities such as Utrecht University or Leyden University (Article 1.8, second paragraph, Higher Education and Scientific Research Act) - and private-law legal entities - for example, the Stichting Katholieke Universiteit Brabant [Tilburg University Foundation]. Both possess public-law powers such as the issuing of legally recognized diplomas. With respect to public-law powers, a final remark must be made concerning decentralization. In view of their place in the polity, public bodies possess the autonomy to regulate their own households. This means that, to a certain extent, they can use their own discretion when acting as regulators and administrators, obviously within the restrictive parameters set at the decentralized level, whether territorially or functionally.15 In the framework of this contribution, it is important to note that in this respect these public bodies have an `open' authority to regulate a variety of subjects with `matching' powers. 13. This is a point of criticism of the so-called `public-task case law' in which the administrative judge applies public-law norms to private-law executors of public tasks. 14. See, for example, H.J. de Ru, Staat, markt en recht [State, market, and law], Zwolle: W.E.J. Tjeenk Willink 1987. 15. See, for example, M.C. Buskens/H.R.B.M. Kummeling/B.P. Vermeulen/R.J.G.M. Widdershoven, Beginselen van de democratische rechtsstaat [Principles of the democratic state under the rule of law], Deventer: W.E.J. Tjeenk Willink 2001, pp. 284 ff