Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.
In Iceland, inter-municipal co-operation plays a growing role in the attempts to strengthen local government capacities to manage their own affairs and to get more competences from the central government.
According to many interlocutors, inter-municipal cooperation has been seen recently as a replacement for large scale merging, although this raises important questions on democracy. Since there is no formal elected intermediate stage between state government and municipalities, this would mean transfer of power from the elected representatives at the local level to a cooperative organ – not elected but under a board of directors comprising representatives from the municipalities involved. A delegation or endorsement of power of that kind could weaken local democracy rather than strengthen it.
In the new Local Government Act, Chapter IX is dedicated to “Collaboration between municipalities on the execution of functions”. It provides co-owned agencies (byggðasamlag), the possibility that a municipality undertakes tasks for other municipalities, regional municipal associations.
Co-owned agencies are legal entities that municipalities may establish to undertake the execution of specific tasks of municiplities, such as the operation of schools or fire-prevention measures. They are subject to the provisions of Local Government Act, as regards procedure, the rights and obligations of board members, their employees, finances, budgets and the auditing of annual accounts, administrative supervision and other general rules applying to the functions of the municipalities and other public authorities (Article 94). Provisions on the election of the board, quorum at the meetings, the board’s authority to bind the municipalities, the cases in which the approval of the municipal councils is required for the board’s decisions to be valid etc. shall be included in the agreement.
Another form of collaboration directly provided by the Law 138/2011 is the agreement by which one municipality undertakes tasks for other municipalities. When one municipality undertakes tasks for one or more other municipalities, it may be decided that those municipalities which are regarded as purchasers of services may nominate observers to attend meetings of the relevant committee in the municipality which is regarded as the service provider, with the right to address meetings and propose motions when matters covered by the joint task are under discussion. All the details shall be covered by an agreement of collaboration (Article 96).
Regional Associations of Municipalities, established in each region of the country, may, by agreement or in accordance with authorisations in separate legislation, undertake tasks or other activities connected with their role as defined in the first paragraph, such as tasks related to regional development or other common interests of the municipalities (Article 97).
Additional forms of collaboration may be established by agreements between municipalities on the execution of specific functions that must be approved by the municipal councils in question (Article 92). Those If a collaboration agreement between municipalities involves the assignment of final decision-making authority regarding individuals’ rights and obligations, the collaboration may only proceed within the framework of a co-owned agency or in such a way that one municipality takes over tasks for another municipality or other municipalities, unless provisions in law grant special authorisation for some other form of collaboration. In that case, the approbation of the Ministry is required for those agreements to become valid (Article 93).
An especially important role is played by the Icelandic Association of Local Authorities, founded in 1945: under the Local Government Act (Article 98), “the Association of Local Authorities in Iceland is the common representative of the municipalities in Iceland”. It defends their interests in dealings with the government and other parties both in Iceland and abroad. It formulates common policy on individual issues and therefore works closely with the government and the Althing. A special co-operation agreement is in force between the association and the government, containing formal provisions covering relations between them. According to Article 98.3, The Association shall be consulted by the central government when issuing government edicts on the basis of the Local Government Act. All municipalities may be members of the Association of Local Authorities in Iceland. All municipalities now belong to the Association, but their participation in its activities is voluntary.
As for Article 10, para 3, of the Charter, local authorities may set up international and European collaborations: the Icelandic Association of Local Authorities plays an important role in international collaboration, specifically on the basis of the EEA Agreement.
In conclusion, rapporteurs consider that Article 10 is fully respected in Iceland.