2002/08/13 - Pl. ÚS 1/02: Region´s Management Property

13 August 2002

HEADNOTE
The contested,

valid, and still effective § 19 para. 1 of Act no. 129/2000 Coll., on

Regions, because it does not contain any statutory bounds for setting

conditions for regions’ management of property acquired from the state,

and thus establishes absolute discretion, or an opportunity for

arbitrariness by state bodies in setting them, is inconsistent with Art.

101 para. 4 of the Constitution, because it makes it possible for new

owners to be restricted in their rights, arising from Art. 11 of the

Charter of Fundamental Rights and Freedoms, in a manner which does not

preserve the essence and significance of these rights.


 

CZECH REPUBLIC

CONSTITUTIONAL COURT
JUDGMENT    

 

IN THE NAME OF THE CZECH REPUBLIC

 


The

Plenum of the Constitutional Court decided on a petition from the fifth

panel of the administrative section of the High Court in Prague to

annul § 19 para. 1 of Act no. 129/2000 Coll., on Regions (Regional

Establishment), as follows:

The

provision of § 19 para. 1 of Act no. 129/2000 Coll., on Regions

(Regional Establishment), is annulled as of the day this finding is

promulgated in the Collection of Laws.



REASONING

 

On

2 January 2002 the Constitutional Court received a petition from the

fifth panel of the administrative section of the High Court in Prague,

in which the petitioner, with reference to Art. 95 para. 2 of the

Constitution of the Czech Republic (the “Constitution”) seeks the

annulment of § 19 para. 1 of Act no. 129/2000 Coll., on Regions

(Regional Establishment), (also the “Act on Regions”), expressed in the

words, “The state has the right, in cases of uncompensated transfer or

devolution of personal property, rights and real estate to the region,

where there is financial participation in the obtaining of such property

by the region, to reserve to itself the setting of conditions for

further management or handling of this property.”
 

The

petitioner stated that it is conducting proceedings, under file no. 5 A

73/01, on an administrative complaint by the Pilsen Region (the

“Region”) against the defendant, the Ministry of Education, Youth, and

Sports (the “Ministry”). In the complaint, the Pilsen Region seeks

annulment of an administrative act issued under § 1 para. 1 and 2 of Act

no. 157/2000 Coll., on the Transfer of Certain Things, Rights and

Obligations from the Czech Republic to the Regions, by which the

Ministry transferred to the jurisdiction of the Pilsen Region things,

rights, and obligations which are managed by pre-school facilities,

schools and school facilities specified in appendix A1 of the cited

decision, including these pre-school facilities, schools and school

facilities, with effect as of 1 April 2001. This decision simultaneously

transferred to the Pilsen Region real estate listed in appendix B, part

I.A and parts B/1 and B/1b of the cited decision, and personal property

listed in appendix B, part I.B. of the decision. In the complaint, the

Pilsen Region protested, in particular, that in the cited decision, the

Ministry, with reference to § 19 of the Act on Regions, set four

conditions for further management and handling of the transferred real

estate, which restrict it, as the owner, and which it considers

unlawful. The conditions set by the Ministry are so broad and

restrictive that they exceed the authority given to the Ministry by the

Act, because they interfere in the rights of the region as owner so much

that they paralyze the full exercise of its ownership rights. This

simultaneously interferes with the Constitutionally guaranteed right to

the self-governance by the region, as a higher self-governing

territorial unit. In its response to the complaint, the Ministry stated

that the specified conditions are based on § 19 of the Act on Regions

and that the Ministry did not violate the Act or exceed its framework.

It recognizes that the conditions are restrictive, but says that the

state is responsible for creating appropriate conditions for the

fulfillment of the Constitutional right to education, and a change in

the use of properties allocated for education could cause serious

problems.
 

The High Court in

Prague took into account the Supreme Court’s decision of 21 August 2001,

file no. II. ÚS 326/01, which rejected the Pilsen Region’s complaint as

inadmissible, because the Region, as complainant, did not exhaust all

the means of redress which the law provides for protection of rights,

that is, it filed a constitutional complaint when it was simultaneously

seeking review of the Ministry’s decision by a course of action under §

244 et seq. of Act no. 99/1963 Coll., the Civil Procedure Code (the

“CPC”). In evaluating the administrative complaint in the matter, the

High Court reached the conclusion that § 19 para. 1 of the Act on

Regions is inconsistent with the constitutional order of the Czech

Republic, insofar as it provides that, “The state has the right, in

cases of uncompensated transfer or devolution of personal property,

rights and real estate to the region, where there is financial

participation in the obtaining of such property by the region, to

reserve to itself the setting of conditions for further management or

handling of this property,” without also specifying the substantive

scope of this state authorization, i.e. the scope and manner of setting

conditions by which the state (a state body) will be bound. Therefore it

interrupted proceedings on the matter under § 109 para. 1 let. c) of

the CPC and submitted the matter to the Constitutional Court with a

petition to annul the provision in question.
 

The

petitioner, with reference to Art. 2 para. 3, Art. 8, Art. 99, Art. 101

para. 3 and 4 of the Constitution and Art. 2 para. 2 of the Charter of

Fundamental Rights and Freedoms (the “Charter”) argues that a region

manages its property independently, and it is precisely this management

on its own account and own responsibility which is the attribute of

self-government. Therefore, the state may interfere with the right to

self-government only if this is necessary to protect the law, and only

in a manner provided by law. The Act on Regions specifies a region’s

obligations in managing property and also specifies the manner of

inspection of management, in § 17 et seq. Moreover, in contrast to the

provision on inspection of management, the law, in § 19 of the cited

Act, establishes the right of the state to reserve to itself, in cases

of uncompensated transfer or devolution of personal property, rights and

real estate to the region, where there is financial participation in

the obtaining of such property by the region, conditions for further

management or handling of this property. The petitioner acknowledges the

state’s interest in securing education and the need to materially and

financially secure the cited interest, and also the possibility for the

state to intervene in the self-government of municipalities and regions

and impose on them binding obligations aimed at securing the right to

education. Of course, it must specify the cases, limits, and methods of

that intervention. In the petitioner’s opinion, § 19 of the Act on

Regions only specifies cases when the state can reserve to itself the

setting of conditions, but does not specify limits or methods for such

setting of conditions. Thus, the state may impose any obligations

whatsoever on a region, and, in addition, penalize failure to fulfill

them. The petitioner considers this situation to be inconsistent with

the constitutional order, in particular with Art. 2 para. 3 of the

Constitution of the CR, under which state authority is to serve all

citizens and may be asserted only in cases, within the bounds, and in a

manner provided by law, and with Art. 101 para. 4 of the Constitution of

the CR, under which the state may intervene in the affairs of

territorial self-governing units only if it is required to protect the

law, and in a manner specified by law.
 

The

petitioner further stated, with reference to the abovementioned

Constitutional Court decision, file no. II. ÚS 326/01, that in this

matter it is entitled to review the lawfulness of the decision contested

by the complaint, within the bounds given by the complaint, i.e.

whether the conditions no. 2-4 have been imposed in accordance with the

law [2) the requirement of prior written consent from the Ministry for

changing the purpose of use of real estate, or parts or components

thereof, outside the framework of the first condition, for their sale,

exchange, giving as a gift, contribution to the assets of another

person, or burdening by a lien, or for lending or renting the real

estate, or parts or components thereof, for a period greater than one

year; 3) the obligation to return as a gift to the state, i.e. if it is

impossible to use the real estate according to condition no. 1 and if

consent is refused for a change in its use, or for the sale, exchange,

giving as a gift, or contribution to the assets of another person, the

region’s obligation to submit to the Ministry, within 90 days from the

refusal of consent, a draft gift agreement giving such real estate to

the state; 4) if consent to lending or renting under condition no. 2 is

not given, the region’s obligation to submit, within 90 days after the

refusal of consent, a draft agreement, confirmed by the region as the

lender, on the lending of this real estate to the benefit of the

Ministry or another person specified by it]. With regard to the

abovementioned text of § 19 para. 1 of the Act on Regions, the

petitioner concluded that a statutory provision under which the court

could decide on the lawfulness of the specifically provided conditions

is lacking. In this situation the administrative office has no statutory

boundaries for setting conditions, and thus, logically, does not

violate the law by setting any kind of conditions at all, except cases

where conditions are absurd, outside the logic of the matter, and so on.

The administrative office’s absolute discretion, understood thus, is,

in the petitioner’s opinion, inconsistent with the Constitution. Of

course, if the petitioner, as a judicial body, in the absence of a

statutory framework for the limits and manner of setting conditions,

agreed to review the lawfulness of a decision, found it only in relation

to the Act’s general provisions, the aim and purpose of establishing

regions, and the grounds for the transfer or devolution of state

property to these public law corporations, and attempted by

interpretation to replace something the legislature did not expressly

incorporate in the Act and by which it did not bind the executive power,

it would, in this case, appropriate for itself a role which does not

belong to it, the role of the legislature, whereby it would also violate

the principle of separation of powers.
 

In

conclusion, the petitioner states that the current framework, which

permits the discretionary setting of quite different conditions for

managing transferred property, or in connection with the devolution of

property or financial participation in the obtaining of such property,

is not only inconsistent with the “foreseeability of a decision,” but,

above all, inconsistent with the principle of equality. With regard to

Art. 100 para. 1, 101 para. 3 and 4 of the Constitution, a statutory

framework may not establish an opportunity for non-uniform, unlimited

intervention by the estate or arbitrariness in setting conditions, but

there must be a statutory framework for the limits and manner of such

intervention which is equally valid for all cases of the same kind and

ensures the same conditions for handling the property in question in all

regions, and all regions will be equal in terms of the limitations

placed on their activities by the state.
 

The

Constitutional Court requested, under § 69 para. 1 of Act no. 182/1993

Coll., on the Constitutional Court, as amended by later regulations,

position statements on the petition from the Chamber of Deputies and the

Senate of the Parliament of the Czech Republic, as parties.
 

The

Chairman of the Chamber of Deputies of the Parliament of the Czech

Republic (the “Chamber of Deputies”), Václav Klaus, stated about the

petition, that the legislative assembly acted in the belief that the

statute passed was consistent with the Constitution, the constitutional

order and the legal order. He referred to the background report to the

government’s proposed draft of the Act on Regions, under which “the Act

shall also provide conditions under which it will be possible to dispose

of property acquired with state participation. The jurisdiction of the

Ministry of Finance will make it possible to inspect the handling of

state funds provided to the region for the exercise of state

administration.” He considers the petitioner’s interpretation to be

self-serving. The petitioner is not taking into account the state’s

tasks in the area of securing education, nor the fact that the state

must take care to materially and financially secure the right to

education. Therefore, it is entitled by the Act to intervene in the

sphere of self-government decision making by municipalities and regions.

The state is also required to take into account the specific conditions

and needs of individual regions. The original government draft required

the acquisition of property by regions to have the prior consent of the

state. The version passed by the Chamber of Deputies gives regions the

guarantee that, if the specified conditions are fulfilled, no further

state consent will be necessary to manage and handle the property. He

also points out that the petition to annul § 19 para. 1 of the Act on

Regions must be considered unjustified also because § 19 para. 2 and 3

are expressly bound to it, and would be ineffective in practice. He

believes that the legal situation would not be improved by annulling the

cited provision. In conclusion he adds that the Act on Regions was

approved, signed by the appropriate constitutionally-specified bodies,

and duly promulgated.
 

The

Chairman of the Senate of the Parliament of the Czech Republic (the

“Senate”), Petr Pithart, in his position statement described the course

of the Senate approval proceedings on the Act on Regions. He stated

about the content of the bill that § 19 para. 1 of the Act on Regions

was incorporated into the Act so that the state, in an uncompensated

transfer or devolution of property, would ensure the use of the property

for “publicly beneficial” purposes, i.e., in particular where the state

has an obligation to secure some of its responsibilities. Of course, in

exercising these powers, the state should see to it that the

limitations applied were not inconsistent with Art. 1 and 4 of the

Charter, i.e. that the essence and significance of the right to property

were preserved and that the restrictions were not used for purposes

other than those for which they were provided. He pointed out that,

vis-à-vis the party acquiring the property, this is a one-sided act

which that party can not influence through its own will. In conclusion

the Chairman of the Senate stated that the petition filed by the High

Court in Prague indicates that the Pilsen Region filed a petition to

annul the “entire” decision. In the even of its annulment, the state

will again become the owner of the property cited in the decision, and

it can not be ruled out that the region’s subsidized organizations

would, as a consequence of § 2 para. 1 of Act no. 157/2000 Coll., on the

Transfer of Certain Rights and Obligations from the Czech Republic to

the Regions, again become state subsidized organizations, with all the

related consequences.
 

The

Constitutional Court first, in accordance with § 68 para. 2 of the Act

on the Constitutional Court, reviewed whether the statute whose

provisions are claimed to be unconstitutional by the petitioner was

passed and issued within the bounds of constitutionally provided

jurisdiction and in a constitutionally prescribed manner. From the

position statements of the Chamber of Deputies and the Senate, as well

as from relevant Chamber of Deputies documents received and from

information about the course of the voting, the Constitutional Court

determined that the Chamber of Deputies approved the draft of the Act on

Regions at its 22nd session on 8 March 2000, when, out of the 183

deputies present, 118 voted in favor and 59 were against. The Senate

approved the bill at its 18th session on 12 April 2000. Out of the 73

senators present, 45 voted in favor and 22 were against. The president

of the CR signed the Act on Regions on 4 May 2000. The Act was

promulgated on 15 May 2000 in the Collection of Laws, in part 38 under

number 129/2000 Coll. The Act on Regions was thus passed and issued in

the constitutionally prescribed manner and within the bounds of

constitutionally provided jurisdiction, and the rules provided in Art.

39 para. 1 and 2 of the Constitution were observed.
 

In

the submitted petition, the petitioner seeks the annulment of § 19

para. 1 of the Act on Regions. Under that provision the state has the

right, in cases of uncompensated transfer or devolution of personal

property, rights and real estate to the region, where there is financial

participation in the obtaining of such property by the region, to

reserve to itself the setting of conditions for further management or

handling of this property.
 

In

decision making under Art. 87 para. 1 let. a) of the Constitution, the

Constitutional court determines – on the substantive side – whether the

contested provisions are in accordance with the constitutional order (so

that their annulment is not necessary) or whether these provisions do

not conform to the Constitution. However, it considers a petition to

annul a statute, other legal regulation, or its individual provisions

only on the assumption that the statute, other legal regulation, or

their individual provisions did not cease to be valid before the end of

the proceedings before the Constitutional Court. If such a situation

arises and the statute, other legal regulation, or its individual

provisions ceased to be valid, the Constitutional Court, in accordance

with § 67 para. 1 of the Act on the Constitutional Court, stops the

proceedings.
 

The

Constitutional Court verified that the Act on Regions was repeatedly

amended. The amendment implemented by Act no. 231/2002 Coll. is relevant

for the adjudicated petition. This amendment annulled, among other

things, the entire § 19 (point 30). The petitioner’s submitted petition

seeks the annulment of the first paragraph of § 19. This Act was duly

approved by the Chamber of Deputies on 26 March 2002. The Senate did not

discuss the bill. On 17 May 2002 the Act was delivered to the president

of the CR, who signed it on 23 May 2002. It was promulgated in the

Collection of Laws, in part 87, distributed 4 June 2002, with the

provision that it was to go into effect on 1 January 2003, with the

exception of points 26 and 79, which, however, do not relate to the

contested provision.
 

In this

situation the Constitutional Court was forced to ask whether it can

make a decision in the matter, or whether the procedure under § 67 para.

1 of Act no. 182/1993 Coll., on the Constitutional Court, comes into

consideration, that is, stopping the proceedings, i.e. whether the

statutory provision which is proposed to be annulled ceased to be valid

before the end of the proceedings before the Constitutional Court.
 

The

reason for inadmissibility of a petition in proceedings to review of

norms, or the reason for stopping such proceedings, is, according to the

valid legal framework, that a legal regulation is not valid, not that

it is not in effect. In this regard, the contested § 19 para. 1 of Act

no. 129/2000 Coll. (the “Act on Regions”) must be viewed as a provision

which is, as of the date of the Constitutional Court’s decision making,

valid and in effect, and part of which is to be repealed as of 1 January

2003. Therefore, the High Court’s petition must be considered

admissible, all the more so because in finding Pl. ÚS 33/2000 the

Constitutional Court expressed the opinion that if a court, pursuant to

Art. 95 para. 2 of the Constitution, submits for evaluation a statute

which is no longer valid, it is appropriate to give a verdict on the

constitutionality of that statute.
 

After

taking into account the consent of the parties to the proceedings that

the petition be decided without oral proceedings, the Constitutional

Court, deliberated on the matter as follows:
 

One

of the basic attributes of self-government is the right of

self-governing units to manage their property independently, on their

own account and their own responsibility. The content of the ownership

right is the owner’s authority to hold a thing, use it, use its fruits

and income, as well as authority to dispose of a thing. The right to

dispose of a thing is considered central. However, as is indicated by

this particular case, during the review of which the High Court in

Prague stopped the proceedings and submitted § 19 para. 1 of the Act on

Regions to the Constitutional Court for review, on the basis of that

provision, in some cases, or by some Ministries, this right to the

acquired property is restricted in such a manner as makes the

self-governing regions more the administrators of someone else’s

property than owners. One must agree with the petitioner that a

situation where the state feels authorized to impose obligations on

self-governing regions through any conditions whatsoever, and, moreover,

penalizes the failure to fulfill them with considerable fines, is

inconsistent with Art. 101 para. 4 of the Constitution, under which the

state may state may interfere with the activities of territorial

self-governing units only if it is required to protect the law, and only

in a manner provided by law. However, the contested, valid, and

effective § 19 para. 1 of the Act on Regions does not contain any

statutory boundaries for setting conditions for managing the acquired

property, and thus establishes absolute discretion, or rather an

opportunity for arbitrariness by state bodies in setting them. This

state of affairs makes it possible that in cases which are the same, the

same procedures need not be followed, the possible future decision by

state bodies is unforeseeable, and its consequences may seriously

violated the equality of self-governing entities to which property is

transferred or to which it devolves. In that case the steps taken by the

state are fundamentally different from the steps when transferring

property to municipalities which acquired it by devolution directly from

Act no. 172/1991 Coll., and that Act did not specify any further

conditions for the municipalities’ management of the property thus

acquired, nor did it subject the devolution to any decision by central

state government bodies with the ability to set conditions.
 

Apart

from the abovementioned reservations, the valid and effective text of §

19 para. 1 of the Act on Regions also raises doubts in terms of legal

theory and accepted legal terminology, when it places under the same

regime both the transfer and the devolution of property. The devolution

of property happens on the basis of a legal fact, in this case Act no.

157/2000 Coll., on the Transfer of Certain Things, Rights and

Obligations from the CR to the Regions, that is, independently of the

will of the entity. In that case, conditions for managing such property

can be set only by law, and not by an administrative office. However,

the cited Act on the transfer of property does not set any conditions

connected with this devolution. It regulates only the formal requisites

of future administrative decisions, and § 4 is the only provision which

can be considered ex lege to restrict future owners to a certain extent;

under § 4, where a restitution claim was or will be made, the region

becomes the obligated party under special regulations. On the other

hand, the transfer of ownership happens by agreement, and in this

two-sided act one can undoubtedly also agree on other conditions. This

confusion of concepts then continues in § 19 para. 2 and 3 of the Act on

Regions, which penalize the violation of obligations imposed under

para. 1 without differentiation, although such penalizing would only

come into consideration with the violation of obligations or conditions

provided with a transfer of ownership ex lege, whereas such penalties

can hardly stand if the region, as a public law corporation, entered

into a contract on the transfer of property with the state. In such a

case, penalties can only be agreed upon in the contract.
 

The

abovementioned problems were apparently known to the government, which,

in the proposed amendment of the Act on Regions proposed a different

text of § 19, which, however, was ultimately not accepted by the

legislative assembly, and that section was deleted from the final

version of the Act (with effect as of 1 January 2003). However, the

general section of the background report indicates that the purpose of

the amendment of the Act on Regions (no. 231/2002 Coll.) is, among other

things, to expand the jurisdiction of the regions, which is necessary

so that the regions to can completely fulfill the mission which belongs

to them, as significant bodies of territorial self-government, under the

Constitution of the CR. Insofar as the legislature, by Act no. 231/2002

Coll., annulled the entire § 19 of the Act on Regions, in view of the

circumstances this can be considered an expression of its recognition

that the construction of § 19 did not meet the constitutional

requirements arising from Art. 101 para. 4 of the Constitution, and that

its generality and uncertainty did not meet the elements of

foreseeability, sufficient precision, and clarity which define the

concept of a “statute” in a state governed by the rule of law. By not

meeting the cited elements, § 19 clearly did not provide the affected

parties (the regions) sufficient protection against the caprice or

arbitrariness of the state power. Thus, the contested provision made it

possible for new owners to be restricted in their rights, arising from

Art. 11 of the Charter of Fundamental Rights and Freedoms, in a manner

which does not preserve the essence and significance of these rights,

and is therefore inconsistent with Art. 4 para. 4 of the Charter. This

situation would also not be consistent with the European Charter of

Local Self-Government, which was included in the legal order of the CR

by notification of the Ministry of Foreign Affairs, no. 181/1999 Coll.,

with effect as of 1 September 1999. Under Art. 8 of the European

Charter, any administrative review of self-governing societies can only

be conducted as prescribed by the Constitution or a statue.
 

For

all the abovementioned reasons, the Constitutional Court granted the

petition of the High Court in Prague, and annulled § 19 para. 1 of the

Act on Regions as of the day this finding is promulgated in the

Collection of Laws.

 

The

Constitutional Court also considered annulling the related para. 2 a 3 §

19 of the Act on Regions, aware of the fact that in finding Pl. ÚS

15/01, published under no. 424/2001 Coll., it expressed an opinion which

would permit such a step even without a petition. In that finding the

Constitutional Court said that in a situation where, as a consequence of

annulling a certain statutory provision another provision, separate in

content from the one annulled, loses reasonable purpose, i.e. loses the

justification for its normative existence, grounds exist for also

annulling that provision, without this being a procedure ultra petitum.

In view of the fact that this basically technical derogation occurred

through the abovementioned amendment of the Act on Regions, which will

go into effect on 1 January 2003, the Constitutional Court limited

itself in this specific case only to annulling the key provision which

was expressly contested, that is, § 19 para. 1 of the Act on Regions.

Notice: Decisions of the Constitutional Court can not be appealed.

Brno, 13 August 2002