Summary

In recent decades, several countries have started to pay more attention to the economics of public administration and the components of private economy. One of the objectives of the administrative reform being carried out in Estonia is the delegation of public administrative functions and thereby the reduction of costs on the condition that the quality of implementing the functions and public access do not suffer. One of the most important aspects is the transfer of public functions to persons in private law. The article focuses on the delineation of legal limitations to the transfer of public functions to persons in private law, its risks and legal implications.
The author stresses that, based on the Constitution, the state must perform its essential functions itself. The transfer of public functions related to the exercise of authority to persons in private law is only possible to a certain extent. However, social functions need not, as a rule, be performed by the state or local governments, who may transfer such functions to persons in private law although they must ensure their performance. The legality principle provided for in subsection 3 (1) of the Constitution presumes that the authority of formal law is required in order to transfer the state functions and this may be effected either by or on the basis of an Act. The same applies to the transfer of state functions imposed on local governments by the legislator. Where functions are transferred, state supervision thereof and, if necessary, state involvement should be ensured.