Defining Legal Basis

What Constitutes Legal Basis?

The concept of legal basis relates to sources of authority in law. A legal basis sets out the conditions in which coercion is imposed on people with respect to the issue at hand, and provides an explanation or justification for why the issue is being treated in that way. Legal basis is applied in many contexts in the law, including in its most simple form, through a legal basis for arrest, where it is applied to justify an instruction to submit to an arrest. It can also be applied in very complex contexts, where the extension of the legal basis can have a significant impact on the outcome of litigation.
Legal basis represents a "gate" or bar to relief or to other legal consequences. It determines whether or not the issue at hand is binding on one party or another, or whether the issue at hand will have legal consequences. Legal basis is examined in many contexts in the law, but can be useful in administrative law, international human rights law, and general civil litigation contexts.
Legal basis is practically often something that does not need explanation . If a piece of legislation provides that a person cannot undertake a certain action, and such person undertakes the action (say, enters into a contract), then the legal basis of that piece of legislation is clear and unquestionable.
Legal basis does tend to be confused with "legal authority", and sometimes the two are used somewhat synonymously. In actuality, legal authority means the power to do a certain thing, whereas legal basis simply means that the issue at hand is binding on the party.
Legal basis is often used when the underlying action is uncontentious. For example, it can be the use of "legal basis" to refer to the regime of damages for trespass in the tort of nuisance. It also is used to refer to the Defence of Necessity, where the act or statute is emergency in nature, and hence, does not require prior authority.
The issue with legal basis is that it presupposes that there is a binding authority in the first place. The binding authority can be a piece of legislation, or it can be a legal decision that is binding on the parties due to a previous binding authority.

Elements of Legal Basis

The key components that make up what is considered a legal basis include applicable statutes, regulations, and case law. When combined together or alone, the components form the legal basis for a legal principle, statutory interpretation, or question in law. Statutes have the broadest application and serve as the latest expression of the law by Congress. Case law, while binding on the Court for a specific case, could be set aside by a statutory change or interpretation. Since the authority for rules and regulations comes from statutes passed by legislative bodies and executive agencies and administrative rule makes often rely on case law to develop the rules, there may be a myriad of case law and codes that serve as the legal basis for the rule or regulation.

Legal Basis in Various Legal Contexts

Legal basis can differ significantly between jurisdictions, and this divergence extends to its interpretation and application. Indeed, an examination of notably abstract legal language reveals a remarkable degree of variation in the understanding of this common concept. From the outset, it is important to stress that certain jurisdictions do not utilise the concept of legal basis as a threshold criterion to the validity of an act. Although legal bases are most commonly encountered in the context of EU law, which provides for a comprehensive list of specific legal bases for the validity of a legal act of the Union, other jurisdictions do not accord legal basis the same prominence.
In the US, federalism has engendered a highly legalistic approach to the delineation of competences. It is against this background that the concept of legal basis regularly arises across different areas of law and policy. The constitutional division of powers between the states and the federal level is reflected in the fact that the US constitution lists over twenty federal legislative powers. A law passed without a legal basis is therefore unconstitutional if that law is challenged and struck down by the judiciary. Subsequently, both the Judiciary and Congress ascribe the last word on the meaning and scope of a given legal basis. Architects of policy may also have their own ideas on what a legal basis suggests. Taken together, these factors render legal bases as something of a national sport in the United States.
The common law has likewise engendered an approach to legal basis that focuses on the legality of the action rather than the purpose for which it was taken. As a consequence, a somewhat arcane interpretation of legal basis is widespread. Attempts to inject a sense of pragmatism onto the concept have met with some resistance. The concern appears to be that the absence of an organic link between the legal basis and the executive act might undermine its validity.
The situation is rather different in Europe. Traditionally, the validity of legislation has been through the prism of the internal balance of powers between the institutions. Despite fears that the social context variable of the norm would threaten the objectivity of the validity test, legality within the EU has evolved to be intertwined with the validity of substantive policy-making. In consequence, there is a sense of organic link between the existence of a legal basis and the validity of legislation. At the abstract level, the EU Treaties reflect a continuum of rights and obligations across all areas of policy, and legislate for a different set of competences to attain an unavoidable measure of coherence.

Importance of Legal Basis in Agreement Frameworks

The legal basis is a key component for contracts, with its main objective being to provide the legal foundations for contractual agreements. Without a clear definition of legal basis, contracts may be considered invalid or unenforceable. For instance, it has been held that, "In order for an assignee to recover on a contract in his or her own name arising out of a gratuitous promise , the agreement must have created a legally enforceable obligation in favor of the obligor." A legal basis is generally either in the form of a contract or "other" legal act. Conventionally, a court, or arbitrator, will determine whether the contract involved can be considered valid and enforceable.

Implications for Litigation and Conflict Resolution

The delineation of the legal basis not only has an immediate impact on commercial arrangements, but also it can have impact on ongoing litigation and dispute resolution processes. The legal basis often determines the starting point of litigation or arbitration proceedings: it may be a subject matter that has been determined as falling within the exclusive jurisdiction of the courts of the reference country, or it may be subject to foreign laws and gives rise to international arbitration awards. Having a legal basis clearly defined is essential in litigation and arbitral proceedings, and it will guide the parties and the courts. The later changes to the contractual framework and wording may not be directly and easily relevant to changes to disputes or ongoing litigation (although this depends on how the contractual framework is drafted, as a matter of law). While the legal basis can be a last of its kind, a simple mistake in the legal basis can lead to adverse results and wrong interpretations.
Examples: The language of the loan agreement may be English, but the legal basis may be defined as Turkish law. The choice of legal basis may change interpretation of the arbitral award, even though the loan agreement was prepared in English. For instance, in an English language loan agreement, the term "international level" may refer to international standards, but when the legal basis is the Republic of Turkey, the Turkish Electricity Market Regulation can cause an interpretation that is substantially different from the interpretation in another jurisdiction.

Legal Basis and Industry Regulations

Businesses and organizations of all sizes are heavily reliant on legal basis in their compliance activities. A legal basis is defined in law and it is considered as an independent basis of lawfulness. The exact text of a legal basis may, as with many things in the privacy landscape, be subject to interpretation. This then places the onus on a business or organization to determine if their interpretation is correct and does not conflict with the text of the legal basis.
When using the legal basis for ‘consent’, businesses and organizations must ensure that they can demonstrate that the consent was validly obtained from the data subject. It is possible that a business or organization may believe they have the requisite legal basis for a processing purpose, only to find that they will be required to bear the responsibility for the initial collection of consent. Where personal data is collected from one source but shared with another , the sharing business or organization should be very careful to determine if it has a legal basis for having received the personal data. There could be a legal basis for processing (e.g. consent) but it will not help the receiving business or organization if the initial collection of the personal data without consent was unlawful. Moreover, there may be evidence that the collection of the personal data was not on an informed basis. This means no reliance can be placed on consent as a legal basis.
It is with the above in mind that any business or organization considering a processing activity that is based on legal basis should audit its processing operations as they relate to the relevant laws and regulations. A business or organization must have adequate records to demonstrate its compliance with law and regulation. Privacy law enforcement agencies have the ability to make public allegations that a business or organization is in breach of law or regulation (e.g. the ICO in the U.K.) and this may lead to prepared statements of defence being needed. Some infringement notices can be very costly to a business or organization. Having adequate records to demonstrate compliance can go a long way to avoiding expensive actions by enforcement agencies.