Step 3 - Analyze the legal environment

From Municipal Cooperation

Establishing IMC
PHASE 1: Initiating cooperation
PHASE 2: Establishing cooperation
PHASE 3: Implementing IMC
PHASE 4: Evaluating IMC

Municipalities, like any other administrative authority, can decide on legal affairs only as far as there is a legal basis. IMC needs a solid legal basis to ensure the validity of the management decisions (contracts, establishment of legal entities) or the financial decisions (spending, billing or taxation).

Each mayor should designate relevant municipal officials to explore the legal possibility of establishing IMC. If legislation does not allow IMC, then clearly the attempts to cooperate should be abandoned or IMC activities should be constrained to “handshake agreements”, which limit the possible areas of cooperation.

If legislation allows IMC, then there are two options:

  1. The legislation is permissive but not specific about the forms and modalities of IMC.
  2. The legislation has specific provisions for IMC.

If IMC is legally allowed but there is no specific IMC legislation, then it should be implemented under private law. If the option of establishing IMC under a private law organization is chosen (association, commercial company), then there will be no special requirements for the drafting the statutes of the institution (unless the law stipulates that the participation of public entities in private law associations or enterprises is subject to special rules), although the details of the internal rules and procedures should be discussed and agreed upon.

If IMC is legally allowed and regulated through specific legislative provisions, then these should be carefully considered. In some countries, these specific provisions are contained in the law on local self-government, mostly as general guidelines. In others, the law on local self-government is only permissive and it is specific legislation that regulates IMC. Sometimes, this specific legislation goes into considerable detail on the contractual modalities for IMC and the statutes of IMC institutions.

The designated municipal representatives should study the IMC legislative provisions in detail and be in a position to accurately report to top municipal officials, since some of these provisions may not be acceptable to the parties and can actually compromise the IMC initiative. It must be noted that legislative provisions often vary from one service area to another, and good knowledge of the technical rules and the overall regulatory framework for each service area is essential for successful IMC.

Box 14: Examples of areas covered by IMC legislation in Western Europe

Possible legal conditions for the establishment of IMC
  • Is there a need for a legally binding referendum?
  • Are there criteria for a rational/optimal perimeter for IMC: geography, number of inhabitants, minimal budget?
  • Is there a requirement for a central or regional government institution to officially endorse the IMC?
  • Is there a list of minimal compulsory competences for certain forms of IMC, particularly for the most integrated ones: economic development, town planning, public transport, etc.?
  • Is the transfer of certain municipal functions to an IMC authority prohibited (e.g. civil status and electoral registers)?

Possible legal conditions related to contracts, legal status and organization

  • Does the law provide the key elements of an IMC contract?
  • Does the law envisage a specific legal status for certain areas of IMC, including the elements of the statutes of the institution?
  • Are the members of the IMC council elected by citizens, by municipal councils or designated by the municipal administration?
  • How many representatives does each municipality have in the IMC council? An equal number proportional to the population of the partner municipality or any other criteria?
  • What is the status of the members of the IMC council? Must they come from the partner municipalities?
  • Is the IMC executive elected by the IMC council? Can he/she be a mayor or is the plurality of offices prohibited? Does the IMC executive receive an additional salary or compensation for the IMC tasks?
  • What court – administrative, civil or commercial – will have competence when there is litigation over the decisions taken by the IMC authorities?
  • What may be the liability of the managers of the IMC entity: civil, criminal?
  • What are the audit rules and control mechanisms?
  • What enforcement mechanisms can be used in case of non-compliance?

Possible legal conditions related to budget and financial system

  • Is the IMC entity budget a transposition of the municipal budget rules and nomenclature, is it a public budget with special rules or it based on private or non-profit sector regulation?
  • Will public procurement legislation apply or not?
  • How are the municipal financial contributions to IMC determined? Are they proportional to population, service users (e.g. number of pupils) and fiscal capacities, or are they based on physical criteria (such as length of roads)?
  • Can the IMC entity raise additional municipal taxes, fees, user charges or will it rely on transfers from the members?
  • Can the IMC entity borrow from the banking system?
  • What is the status of joint assets and liabilities?
Source: Union of Nova Scotia Municipalities (2002)