Clifford Chance secures a landmark Spanish Constitutional Court ruling on urban mobility sector legislation
Clifford Chance has won a landmark victory in defending leading private hire vehicles (PHV) group Moove Cars in its appeal before the Spanish Constitutional Court, challenging legislation that imposes a 30 minute minimum waiting time for the provision of PHV services through Uber and other urban mobility apps.
The Constitutional Court ruled that the legal provision establishing this operational limitation exceeds what would be considered reasonable to avoid unfair competition with the taxi sector, acting as a deterrent for potential customers in need of immediate transportation and effectively impeding such activity, which violates the principle of free enterprise enshrined in article 38 of the Spanish Constitution.
This ruling constitutes a milestone for PHV businesses in Spain and, as a result, for the mobility apps through which they operate, which had previously been banned from operating in certain regions, following the enactment of legislation establishing these types of limitations. Thanks to this ruling, our client and other PHV companies will now be able to resume normal operations in major cities such as Barcelona, Valencia, and Palma de Mallorca, where there is high customer demand for these services.
The Clifford Chance team advising on this case was led by Public Law partner José Luis Zamarro and senior associate Octavio Canseco.
In analysing the repercussions of this case, José Luis Zamarro and Octavio Canseco said: “This Constitutional Court judgment entirely corroborates our views, declaring this provision of Balearic legislation that requires a minimum of half an hour to elapse between the time of hiring a PHV service and the effective start of its provision, to violate freedom of enterprise (article 38 of the Constitution), and to therefore be unconstitutional and null and void. This is because the Court has understood that, as we defended throughout these proceedings, although the regional legislator structured it as a limit on the exercise of the activity and not on access thereto, in practice it represents a disproportionate obstacle clearly acting as a deterrent that leads to the elimination of PHV operators from the market. The Court considers that, in addition to not justifying the way in which the limitation serves the declared purposes, the restriction is, in any event, not suited to those purposes. Especially when there are already other ways to ensure that private hire vehicle services are arranged in advance, thereby avoiding intruding on those market segments that are specific and exclusive to taxis.”
José Luis and Octavio highlight: “The relevance of this judgment, in our opinion, is twofold: on the one hand, for the PHV sector, it definitively ends the debate on the possibility of establishing minimum waiting times, with all that this implies in the form of refunds of penalties imposed, the return to the normal provision of services, or claiming compensation due to losses (loss of profit) caused as a result of this type of limitation. But, on the other hand, more generally, it establishes a clear limit on legislative excesses with regard to freedom of enterprise, preserving its fundamental core, following a series of Constitutional Court decisions that seemed to have begun to reflect a laxer view in this regard.”