Article 155 is applied

On 27 October 2017 the Catalan Parliament approved a declaration of independence and the same day the Senate authorised the application of Article 155 of the Constitution. The government dismissed the Catalan executive and called Catalan elections for 21 December. It was a day of extraordinary political and institutional intensity, the details of which belong elsewhere; what matters here is what changed, in practice, for those who deal with the authorities. Everyday procedures of companies and individuals depend on there being clarity about who decides.

For companies and individuals, the immediate consequence was a change in the counterpart and in the decision-making framework for many administrative matters. When an administration’s chain of command is altered, doubts multiply about who signs, who resolves and within what deadlines. That is why it helps to understand what Article 155 is and how it affects, in practical terms, everyday procedures. The answer is not always the same for all matters.

What Article 155 is

Article 155 of the Constitution allows the government, with the authorisation of the Senate, to take measures to compel a region to meet its obligations when it fails to do so or seriously harms the general interest. It is an exceptional mechanism, provided for extreme situations, whose application requires the backing of the territorial chamber.

It is a constitutional provision of exceptional use, so its practical effects took shape as it was applied. That exceptional character explains the attention it drew and also the caution with which many companies and advisers followed events: there was little prior practice to turn to in order to anticipate how procedures would work in that framework.

What it means in practice

The powers of the Generalitat passed temporarily to the central government until new elections were held. For companies, the main implication was the decision-making framework: once again, who holds authority over each administrative, tax or grant matter. The ordinary activity of the administrations had to continue, but with other people at the head of decisions.

In practice, many routine procedures did not change: processing, paying and resolving continued as normal. But some matters that required high-level decisions may have been affected in timing or conditions. That is why it is important to confirm case by case who the responsible person or body is, and not to assume that the usual counterpart is still the same. A timely call or confirmation email saves weeks of waiting.

Dealing with the administration

Companies with procedures, grants or contracts with Catalan administrations should check with their advisers who the counterpart is now and what the deadlines are. Keeping documentation up to date and communication channels open avoids unnecessary blockages. It helps to keep written records of applications submitted and replies received, so that dates can be shown if any discrepancy arises. It is a simple practice that protects against misunderstandings.

It is also advisable to review the payment calendars of grants or public contracts and allow a cash margin in case of delays. When a procedure is critical for the business, it should be brought forward rather than left to the last day of the deadline. In an exceptional situation, the calm of having papers in order and cash well sized is the best guarantee. Deadlines keep running unless indicated otherwise, so it is best not to leave anything for the last moment.

In an exceptional situation, having papers in order is the best peace of mind.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.