Courts and regulators: Who decides administrative sanctions?

Some time ago in this newspaper I listed various questions that I firmly believe need to be addressed in relation to the imposition of administrative sanctions. One key question I asked was: Who should be empowered to impose such sanctions, which in some instances include hefty punitive financial penalties or the suspension or withdrawal of the authorisation to operate in the regulated sector?

The issues relating to the imposition of administrative sanctions by regulators are a thorn in the overall effectiveness of regulation given legal contestations, especially when the sanctions consisted of substantial financial penalties. As things stand there is considerable uncertainty whether administrative sanctions can be imposed by regulators or conversely, if regulators should apply for a court order imposing such sanctions. Under ordinary law, various regulators are empowered to impose substantial punitive sanctions. This notwithstanding, in the past decade, various constitutional lawsuits contesting the ordinary law allowing such sanctions have been lodged with success. 

Significantly, the courts have not always taken a uniform stand in this regard. In the majority of cases, the First of Hall of the Civil Court (Constitutional) and the Constitutional Court presided by different judges have determined that powers under ordinary law allowing a public regulator to impose hefty punitive penalties, are tantamount to sanctions of a criminal nature and therefore in breach of Article 39(1) of the Constitution. This article requires that a person accused of a criminal offence should be afforded a fair hearing before an independent and impartial court.

However, there have been some singular instances where the courts took a different approach and ruled that the imposition of such penalties was not in breach of Article 39(1). Whilst each case has its own particulars, the fact that the courts presided by different members of the judiciary have not always been uniform in their interpretation and application of Article 39(1) of the Constitution, means that some degree of uncertainty will continue. What is needed is a clear and unequivocal legislative intervention revising the applicable constitutional norms.

Matters need to be addressed on two levels: The first is to amend the Constitution, and the second is amending ordinary legislation and ensuring some degree of procedural uniformity by regulators when determing sanctions. This is easier said than done. Amending the relevant norms of the Constitution requires a two-thirds majority of the House of Representatives. In doing so, the right balance between safeguarding a person’s rights and the need for effective regulation needs to be identified.

My proposal is that regulators should be empowered to impose punitive sanctions subject to basic safeguards included within the context of the amendments to the Constitution. Regulators empowered to take such measures should by law be guaranteed independence from all other persons. The manner in which the headship of a regulator is appointed and removed from office should be reflective of such independence. Decisions imposing punitive sanctions should be subject to transparent procedures whereby a person who is investigated is afforded ample opportunity to defend himself or herself prior to the final decision is taken. If a sanction is imposed, the aggrieved person must have the right to contest the decision before a court within a given timeframe. The decision imposing the sanction must be suspended pending a final court judgment.

The first step in taking matters forward is for government to issue a public consultation with its proposed solutions, listing the arguments for and against. Whatever measures are proposed should endeavour to provide for some uniformity across the regulatory landscape. If exceptions for the application of some of the proposed measures are to be made for certain regulators, then plausible reasons should be provided.