Limitations and benefits of public trusts in state administration in the Dominican Republic

DMK Abogados - Comments to Law No. 28-23 on Public Trusts.
There are several alternatives to manage works, projects or services of collective interest, one of them being the public trust, whose regulation is already a reality. The logic behind the public trust is that the State, under a lawful purpose and in the public interest, contributes as trustor, certain assets or rights to an autonomous patrimony called trust patrimony, with the purpose that a trust company administers it in favour of a trustee or public beneficiary that ends up being the State itself and, consequently, procures the satisfaction of a collective interest objective.

Thus, under the modality contemplated by Law No. 28-23 on Public Trusts (hereinafter "the Law"), there are several elements that should be pointed out with respect to the subjects that make up the public trust. The Law states that only public entities that are part of the Executive Branch can be settlors (arts. 2.2, 5). In addition, it is established that there may be adherent settlors, but these, as with the original public, must be a public entity of the executive branch or, failing that, a company with fully public capital that will become part of the public trust with the prior approval of the original settlor (arts. 4.5 and 6, paragraph II).

With regard to the trustees or beneficiaries, a differentiation is made between these subjects in the sense that the former is a sort of final recipient of the assets or rights of the trust and the latter may receive the benefits of the trust management without necessarily being the final recipient. In any case, only public bodies could have this status according to the Law (Art. 4.6).

On the other hand, the trustee is configured in a way that, in our opinion, violates the principles of equal treatment and free competition contemplated in Articles 221 and 50.1 of the Dominican Constitution, since only legal persons "controlled by an entity with public capital or belonging to the public administration" (Article 4.7) can act as trustees.

In our opinion, it does not make sense that the Law limits the participation within the public trust only to entities that are part of the public administration itself, whether as original settlor, adherent or even trustee. However, the ’beneficial’ side of this is that the argument as to whether this figure, more than a legal vehicle aimed at achieving a social interest objective, is a tool that exacerbates the "risks" of privatisation of State assets, is destroyed, given that, according to the Law, all the subjects that make up the public trust, in one way or another, are public entities.

In line with the above, although it has been contemplated that all public trusts must be subject to the public procurement and contracting regime established in Law No. 340-06, its amendments and provisions, all public trusts must be subject to the public procurement and contracting regime established in Law No. 340-06, its amendments and provisions. 340-06, its amendments and regulatory provisions, for the "(...) processes for the selection of suppliers, the awarding of contracts related to the execution of works, the provision of services, the acquisition of goods charged to the trust assets (...)", among other actions of the trust (art. 14), the assumption of these same public procurement processes for the selection of the legal person to act as trustee has been completely left aside.