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Invalidity of the Rates Order

The Judgment by the Administrative Chamber of the Supreme Court no. 508/2018 of March 22, 2018 (appeal 458/2016) has rendered null and void Order ECD/2574/2015, de December 2, 2015 (Rates Order). This Order set out the methodology that collecting societies had to follow when drawing up their rates for the use of copyright.

Why has the Rates Order been held null and void?

This Order was contested by the Conferencia de Rectores de Universidades de España (more commonly known by its acronym CRUE) on various grounds, which the Supreme Court does not enter into. The Order has basically been held null and void because various procedural requirements were not met in the procedure for its preparation.

In the eyes of the Suprme Court, the Regulatory Impact Analysis Report—a procedural requirement that this type of legislation must meet—did not analyze its impact on the “family”, as provided in the applicable legislation.

This defect had already been pointed out by the Council of State, but was not corrected as required. For the Supreme Court, although the “family” does not in principle pursue an economic activity that involves the need to hold a copyright, a potential impact cannot be ruled out to justify no reference being made to the “family” in the Report.

Effects of the decision

The consequence of this decision holding the Rates Order null and void is that it is deemed never to have existed. This places users and collecting societies in a situation of uncertainty regarding the amount of the rates which had been approved on the basis of the methodology set out in the Order.