Concept and Basics of the Two-Stage Theory
Die Two-Stage Theory is a significant concept in German administrative law. It describes the legal structuring of governmental measures with respect to subjective rights by systematically dividing the administrative procedure into two stages. The theory is particularly applied in connection with the award of public services and in granting rights subject to capacity restrictions (e.g., permits, concessions, licenses, subsidies). The aim of the two-stage theory is to separate the respective decision-making processes of the administration, clarify the legal basis of each stage, and systematically structure judicial review procedures.
Scope and Areas of Significance
The two-stage theory is mainly applied in situations where governmental action is based on a formalized allocation procedure. Its significance in public law is particularly found in the following areas:
- Awarding of concessions and permits
- Allocation of state or municipal resources (e.g., market approvals, site permits)
- Provision of public services under capacity restrictions (e.g., training places, kindergarten places, scholarships)
Examples of Practical Relevance
Award of public spaces or licenses
The municipality allocates site permits, for example, for weekly or Christmas markets. Since there are often more applicants than available spots, the two-stage theory regulates here how legal recourse and judicial review are to proceed.
Access to public funding
The theory is also applied to the granting of public subsidies within a limited scope in order to ensure the legal reviewability of administrative actions.
Structure of the Two-Stage Theory
The theory divides administrative action into two legal levels (stages):
1st Stage: Decision on access to the legal relationship
The first stage concerns sovereign access to a public-law legal position. Here, the authority decides whether the applicant can obtain authorization within the meaning of public law.Example: Granting a market approval, permit, or concession.
Legal basis and review
The decision on the first stage is legally constituted as an administrative act or real act. It is subject primarily to public-law provisions (e.g., Trade Law, Road Law, Administrative Procedure Act). Judicial review is carried out in the administrative court procedure, § 40 VwGO.
2nd Stage: Structuring the private law (or public law) user relationship
Once access is granted, the second stage covers the structuring and execution of the concrete usage relationship. Here, the actual or legal contractual arrangements or performance relationships—often of private law, sometimes also public law nature—are in the foreground.Example: Conclusion of a lease or tenancy agreement for the allocated market stall.
Legal basis and review
The second stage is often subject to the provisions of civil law (e.g., BGB) or special public-law regulations on the user relationship. Legal remedies and possibilities for action depend on the applicable legal recourse (ordinary courts or administrative courts).
Systematic Distinction
The core function of the two-stage theory is to differentiate between the various legal recourses (public and civil courts). While disputes over selection and allocation (first stage) are regularly tried before administrative courts, for subsequent civil law relations (second stage), the ordinary legal recourse is often available.
Significance for Fundamental Rights and Actual Legal Protection
The two-stage theory ensures effective legal protection against state intervention and secures fundamental rights such as freedom of occupation (Art. 12 GG) and the principle of equal treatment (Art. 3 GG). It emphasizes that any discrimination or selection decisions at the first stage must be publicly reviewable. At the second stage, contractual freedom and the obligation to equality of state entities in private law dealings become particularly significant.
Critical Assessment and Distinction from Related Theories
The two-stage theory is a simplification of complex administrative law processes. Literature and case law recognize that strict twofold division is not applicable in all cases, as mixed forms and public-law user relationships often exist. As an alternative to the two-stage theory, the one-stage theory is sometimes advocated, which treats the entire measure as a uniform process with a single legal recourse. Ultimately, however, the two-stage theory remains the model for typical cases of concentration in governmental selection decisions.
Additional Legal Aspects and Further Development
Relation to the subjective legal status of the individual concerned
The two-stage theory is significant for clarifying whether and to what extent a specific claim to access a public service is legally enforceable. This also affects the existence of a subjective right within the meaning of § 42 Abs. 2 VwGO.
Embedding into the system of the guarantee of legal protection
By clearly separating the two stages, the theory contributes to legal certainty and transparency in administrative court proceedings and avoids conflicts of competence between different courts.
European Law Connections
Within the framework of the principles of public procurement law guaranteed by the European Union, as well as the requirements for equal treatment and transparency, the two-stage theory can supplement the interpretation of national law.
Literature, Jurisprudence, and References
- BVerwG, judgement of 17 October 1989 – 1 C 27/87
- Administrative Court Code (VwGO)
- Administrative Procedure Act (VwVfG)
- Sachs, Basic Law Commentary, Art. 12
- Drews/Wacke/Vogel/Martens, Police and Public Order Law, 11th edition
- Pieroth/Schlink/Kniesel, Fundamental Rights – Constitutional Law II
Die Two-Stage Theory thus remains a central criterion for differentiating various administrative acts, provides clarity in the legal protection system, and contributes significantly to the effectiveness of judicial control in public law.
Frequently Asked Questions
How is the two-stage theory applied in public law?
The two-stage theory is mainly applied in the area of special administrative law, especially when it comes to the award of governmental services, the use of public assets, or so-called administrative concessions. It distinguishes between the first stage—the authorization to use a public institution or service (right of access)—and the second stage—the conditions and terms of use. Legally, this means that access to a public service generally constitutes a sovereign act (administrative act), whereas the terms of use can be structured under private law. The two-stage theory thus helps to systematically distinguish when administrative law and private law apply, which is of fundamental importance especially for determining judicial jurisdiction and applicable law.
What is the significance of the two-stage theory for legal protection?
With regard to legal protection, the distinction between stages is crucial, as challenges to measures at the first stage (authorization, refusal, withdrawal) fall under the jurisdiction of administrative courts. In contrast, disputes regarding the structuring of the user relationship at the second stage are regularly governed by civil law norms and adjudicated by civil courts. The two-stage theory therefore has significant consequences for the choice of legal recourse under § 40 para. 1 VwGO. Only if a sovereign act is concerned does the jurisdiction of administrative courts come into play; for private law usage relationships, the ordinary courts have jurisdiction.
Are there exceptions to the two-stage theory?
Although the two-stage theory is established in practice, there are various exceptions. In particular, where the law expressly provides for (also for the user relationship) public-law rules or prescribes a uniformly sovereign user regulation, it does not apply. A classic example is the higher education law of some federal states, where both admission and the terms of use are of public law nature. Furthermore, there are areas where the entire user relationship (for example, in sovereign contract administration or in the exercise of fundamental rights in public law institutions) remains uniformly governed by public law.
How does the two-stage theory affect contract structuring in the public sector?
The two-stage theory decisively influences contract structuring in public institutions and services. While access is generally granted by administrative act (unilateral, not contractual), the subsequent user relationship is often structured by private law contracts, such as leases or tenancy agreements (for public buildings), transport contracts (in local public transport), or general terms and conditions. As a result, even within a single legal relationship, different types of contracts and bases for claims may arise. In addition, different options for termination and cessation are available, since administrative acts may be withdrawn, revoked or otherwise resolved, while private law contracts may be terminated under civil law provisions and declarations.
What role does the two-stage theory play in determining judicial jurisdiction?
The differentiation according to the two-stage theory is crucial for determining the legal recourse and thus the competent court. The decisive factor is the legal nature of the disputed measure: If the dispute concerns initial authorization for use—such as admission to use a swimming pool or a street market—the administrative court decides. If, on the other hand, claims concern the execution, payment, or settlement of specific services based on an already existing usage relationship, the civil court may have jurisdiction. In case of overlap, there may also be a single public-law dispute, which must be assessed separately.
Is there criticism or further developments of the two-stage theory in case law?
The two-stage theory has been widely criticized, in particular due to its formal separation, which does not always account for the specifics of individual cases. As a result, case law has developed differentiated approaches, often based on the precise legal framework and considering the protective purpose of each rule. Especially in the area of public services or the use of public facilities, the nature of the activity, the organizational form, and the requirements of public authorities are often considered when distinguishing between public and private law. There are also approaches that give greater weight to the protection of the public good and the binding effect of fundamental rights. Nevertheless, the two-stage theory remains a central instrument for structuring public-law service relationships.
