Hidden Decisions of Local Oversight Committees
In a landmark ruling, the Federal Administrative Court of Germany has outlined the balance between corporate confidentiality and the public interest in effective local authority participation. The ruling, which addresses conflicts between these two competing interests, emphasizes the need for a proper legal balancing test but stops short of declaring that public interest always overrides confidentiality.
The court's approach mirrors a case-dependent, legally grounded balancing approach rather than a simple hierarchy favoring either confidentiality or public transparency. This was evident in a recent Swiss case involving the Federal Statistical Office, where the court annulled the authority's refusal to provide data to the public, citing it as a "material denial of justice" and "contrary to federal law."
In Germany, corporate trade secrets are strongly protected, as reflected in German Federal Court of Justice rulings. However, transparency can be required when justified by overriding public interests, though such exceptions are narrowly construed and not generally recognized as a blanket right to disclose trade secrets for public participation purposes.
The German courts often apply the General Data Protection Regulation's (GDPR) legitimate interest provisions to balance privacy/data confidentiality against societal interests such as fraud prevention or creditworthiness assessment. This is particularly relevant when corporate information may affect public governance and local participation.
The dispute in the city council of Mönchengladbach revolves around several factions' request for access to documents related to a supervisory board meeting. The case has reached the Federal Administrative Court due to a subsequent legal dispute. The Mayor of Mönchengladbach, who is involved in a stock exchange-listed company as a member of the supervisory board, has refused access, citing his corporate obligation to confidentiality.
However, the German Stock Corporation Act states that supervisory board members elected or sent to the supervisory board at the initiative of a public authority are not subject to any confidentiality obligation regarding reports they have to submit to the public authority. The court found that neither the historical intention of the legislature, nor the systematics or purpose of the law, spoke in favor of this view.
This ruling is relevant for municipal supervisory boards in Baden-Württemberg, as reporting obligations can be based on law, statute, or legal transaction. The court's decision provides clarity, drawing the boundaries of legal interpretation and resolving the contradiction between corporate and municipal law experienced in this case.
Christian Bischoff, a lawyer at Menold Bezler, stated that the Federal Administrative Court has now provided clarity on the matter, requiring authorities to perform a thorough examination and weighing of confidentiality versus public interest. Disclosure may be ordered if the public interest outweighs confidentiality and is legal under applicable frameworks. However, corporate confidentiality, especially trade secrets, remains strongly protected but is not absolute if overriding public interest and legal criteria justify disclosure.
- The ruling by the Federal Administrative Court of Germany highlights the need for a case-by-case, legally grounded balancing approach between economic and social policy, policy-and-legislation, and politics, as shown in the dispute over access to city council documents in Mönchengladbach.
- General news outlets should note the Federal Administrative Court's decision regarding the balance between corporate confidentiality and public interest, which addresses conflicts between these two competing interests and sets a precedent for similar cases involving transparency in municipal supervisory boards, particularly in Baden-Württemberg.
