2002/10/30 - Pl. ÚS 39/01: Sugar Quotas II

30 October 2002

HEADNOTES

Although

the right to own property and the freedom to conduct business are

classified by the Charter of Fundamental Rights and Freedoms and

perceived as rights of different categories, the first as fundamental,

in contrast to the second as economic and social, nonetheless they are

closely related to each other. The freedom to conduct business is even

usually described as a freedom derived from the right to property. This

opinion can be considered only partially correct. Conducting business

and other economic activity are certainly primarily activities aimed at

creating property values necessary to secure the necessities of life.

Their everyday result is property (in a modern economy, money) which is

protected by the fundamental right to property. Moreover, the ownership

of property (capital) is a prerequisite for beginning business and

continuing it. In addition, of course, conducting business is a way of

personal and group self-realization. The property right even, if it is

not to be a self-serving concept, itself leads to the exercise of other

fundamental and other rights.

 


CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT

IN THE NAME OF THE CZECH REPUBLIC

 

 

The

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

of deputies to annul § 13 of Act no. 256/2000 Coll., on the State

Agricultural Intervention Fund and Amending Certain Other Acts (the

State Agricultural Intervention Fund Act), and § 4 para. 3, § 5 para. 3,

§ 7 and § 13 of government directive no. 114/2001 Coll., on setting

sugar production quotas for the quota years 2001/2002 to 2004/2005, with

the participation of the Chamber of Deputies and the Senate of the

Parliament of the Czech Republic and the government of the Czech

Republic as parties to the proceedings and the ombudsman as a secondary

party to the proceedings, as follows:

The

provisions of § 4 para. 3, § 5 para. 3, § 7 and § 13 of government

directive no. 114/2001 Coll., on setting sugar production quotas for the

quota years 2001/2002 to 2004/2005, are annulled as of the day this

judgment is published in the Collection of Laws.

The petition to annul § 13 of Act no. 256/2000 Coll., on the State

Agricultural Intervention Fund and Amending Certain Other Acts (the

State Agricultural Intervention Fund Act), is denied.



REASONING
 

I.
 

In

its petition, submitted under Art. 87 para. 1 let. a) and b) of the

Constitution of the Czech Republic (the “Constitution”) and § 64 para. 1

let. b) and para. 2 let. b) of Act no. 182/1993 Coll., on the

Constitutional Court, the group of deputies claims that Act no. 256/2000

Coll., on the State Agricultural Intervention Fund and Amending Certain

Other Acts (the State Agricultural Intervention Fund Act), forbid the

manufacture of agricultural goods. They find its provisions to be

inconsistent with the freedom to conduct business under Art. 26 of the

Charter of Fundamental Rights and Freedoms (the “Charter”). Under the

Charter, the right to conduct business, like the conduct of certain

professions and activities, may only be limited by statute, or

conditions set for them; however, a complete ban is not possible.

According to the petitioner, the penalty levy of 115% of the minimum or

regulated price of an agricultural product imposed for exceeding an

individual production quota (§ 13 of the Agricultural Intervention Fund

Act) represents such a ban. This is a penalty that is applied to conduct

not expressly forbidden by law. Regulation through production quotas

led to the creation of a preferred category of “strategic” sugar

producers, without other producers being able to influence the

selection. When this differentiation is connected with the freedom to

conduct business, an inequality arises under Art. 1 and Art. 3 para.1 of

the Charter. This inequality is reflected in the payment-free

allocation of production quotas among current producers, and only a

small reserve remains for allocation among other potential producers.

According to the group of deputies, one may omit those producers, owners

of facilities, who renovated them at great expense in the period before

the Act went into effect and did not produce sugar in the reference

period. Those who purchased facilities are in a similar position.

Discrimination between entrepreneurs with an assigned production quota

and entrepreneurs without one creates discrimination in property rights.

Under Art. 11 of the Charter this has the same statutory content and

protection. The aforementioned owners of production facilities are de

facto legally forbidden to produce the commodity in question by a

decision of the state, and without compensation. Their property rights

are devalued by the application of production quotas, whereby they are

given different content and their protection is reduced. The group of

deputies points out that the government has previously tried to regulate

sugar production by directive no. 51/2000 Coll., which provides

measures and state participation in the creation of conditions to ensure

and maintain production of sugar beet  and sugar and stabilization of

the sugar market. Although the Constitutional Court annulled this

regulation by judgment no. 96/2001 Coll., it was nevertheless in effect

from 14 March 2000 to 12 March 2001. In that period it created

unfavorable conditions for any new applicants for beginning production

and subsequently for allocation of a quota under government directive

no. 114/2001 Coll.
 

The

group of deputies acknowledges that the legislature, in issuing ordinary

laws, is supposed to take into account the general interest in

regulating relationships in sectors of the economy, but on the other

hand it is supposed to consider the public interest. Of course, any

intervention must observe a balance between the general interest and

individual rights. There must be proportionality between the means used

and the aims pursued. Otherwise, as the Constitutional Court already

emphasized in its judgment of 15 February 1994, file no. Pl. ÚS 35/93

(promulgated under no. 49/1994 Coll.), the regulation in question comes

into conflict with Art. 4 para. 4 of the Charter. According to the group

of deputies, regulation of agricultural production is in the public

interest, and not only in connection with the preparations for entry

into the European Union. However, the State Agricultural Intervention

Fund Act restricts the freedom to conduct business in agriculture

through production quotas in a disproportionately general manner, as it

does not specify a range of agricultural products which can be subject

to regulation. Thus, it empowers the State Agricultural Intervention

Fund (the “Fund”) to interfere in producers’ rights without more

detailed statutory delimitation. This creates a danger of abuse. The

group of deputies reads the statutory reference to international

treaties (§ 1 para. 2) as a reference to European Community regulations,

in particular EC Council Directive no. 2038/1999. The regulation of

sugar production which they create applies for only a limited period,

whereas the State Agricultural Intervention Fund presumes the repeated,

and thereby unlimited application of quotas.
 

The

group of deputies concludes that there is a denial of judicial review

(Art. 36 of the Charter) in the express restriction (§ 5 para. 5 of the

Agricultural Intervention Fund Act) of application of the Administrative

Procedure Code only to applications for subsidies and not to other

decision making, including decision making on the allocation of quotas

or imposition of penalty levies.
 

The

group of deputies points out, that if the Fund specifies a reserve

level which is published in the Ministry of Agriculture Bulletin, this

must be considered unconstitutional sub-statutory delegation for the

creation of law (§ 4 para. 3 of government directive no. 114/2001

Coll.). It also considers unconstitutional the authorization of the

Ministry of Finance to set the minimum price of sugar. In both cases it

relies on Constitutional Court judgment no. 96/2001 Coll., under which

the legislature may not delegate to the executive branch an area of

regulation of relationships designated for statutory regulation, and

thereby actually resign from its legislative duty; no more can the

executive branch assume this right itself. Therefore, both provisions

are inconsistent with Art. 79 of the Constitution, the first also with §

12 para. 3 and the second with § 12 para. 4 of the Agricultural

Intervention Fund Act.
 

The

contested government directive also does not delineate any quality

characteristics of the sugar to which production quotas are applied. The

footnote reference to decree no. 334/1997 Coll., which implements § 18

let. a), d), j) and k) of Act no. 110/1997 Coll., on Foodstuffs and

Tobacco Products and Amending and Supplementing Certain Related Acts,

for natural sweeteners, honey, non-chocolate sweets, cocoa powder or

cocoa-sugar mixture, chocolate and chocolate sweets, as amended by

decree no. 94/2000 Coll. cannot be considered such delineation. The

Constitutional Court has ruled that the purpose of footnotes is only to

clarify regulations and that they have no legal significance. The

description of the system of production quotas, being incomplete, does

not meet statutory requirements.
 

In

the expansion of the petition, which the Constitutional Court

permitted, the group of deputies also requests the annulment of § 7 of

government directive no. 114/2001 Coll. The petitioner cites as grounds

the inadequate statutory authorization for delegating the allocation of

sugar production quotas and reserves from the government to the Fund,

without the State Agriculture Intervention Fund Act giving express

authorization for it. Clear authorization is only contained in § 4, 7

and 16 of government directive no. 114/2001 Coll. The petitioner

considers the Fund’s authorization to make use of the quota system

inadequate under § 1 para. 2. let. d) of the Agricultural Intervention

Fund Act. On the contrary, in relation to production quotas, various

areas of jurisdiction are entrusted to the government [§ 3 para. 3 let.

a), § 12 of the Agricultural Intervention Fund Act]. The provisions of §

4, 6 and 7 of government directive no. 114/2001 Coll. are

unconstitutional, as they establish illegal delegation of the exercise

of state power. Moreover, the status of a state administration body is

expressly given to the Fund only for decision making about subsidies (§ 5

of the Agricultural Intervention Fund Act). The group of deputies

proposed annulment of § 13 of government directive no. 114/2001 Coll.

due to its inconsistency with Art. 79 of the Constitution, as the

government delegated its statutory duty to another body when it

authorized the Ministry of Finance to set a minimum price for sugar

introduced into the market in the Czech Republic, which violated § 12

para. 4 of the Agricultural Intervention Fund Act.
 


II.
 

The

Chamber of Deputies and the Senate, as parties to the proceedings,

submitted position statements concerning the petition of the group of

deputies, (§ 69 of Act no. 182/1993 Coll., as amended by later

regulations). Statements concerning the petition were also submitted by

the government of the Czech Republic, the Ministry of Agriculture, the

State Agricultural Intervention Fund and the ombudsman.
 


III.


The procedural requirements for proceedings before the Constitutional Court have been met.
…..
 

 


IV.
 

The

Plenum of the Constitutional Court has twice addressed the issue of

agricultural production quotas in its judgments on petitions for the

annulment of legal regulations.
 

In

judgment no. 96/2001 Coll. (file no. Pl. ÚS 45/2000 of 14 February

2001), it granted the petition of Cukrovar V., s.r.o. to annul

government directive no. 51/2000 Coll. In the Constitutional Court’s

opinion, the government did not issue the directive for implementation

of and within the bounds of Act no. 252/1997 Coll., on Agriculture, as

it is required to do by Art. 78 of the Constitution. The introductory

provisions of the Act (§ 1 to 2) do not presume restrictions on doing

business in agriculture (Art. 26 and 41 of the Charter) in the form of

production quotas. The Constitutional Court did so with the knowledge

that the Parliament of the Czech Republic had, in the meantime, passed

Act no. 256/2000 Coll., which allows production quotas, but the reviewed

government directive had not been passed in order to implement that.
 

In

its judgment no. 410/2001 Coll. (file no. Pl. ÚS 5/01 of 16 October

2001) the Constitutional Court decided on a petition from a group of

deputies to annul government directive no. 445/2000 Coll., on setting

milk production quotas for the years 2001 to 2005. It partially granted

the petition, and annulled § 4 para. 2 of the directive due to

inadequate statutory authorization to restrict the allocation of

production quotes from the reserve to agriculture operators, farmers

doing business in ecological cattle farming and § 14 para. 2 due to

unconstitutionality and the illegality of delegating decision making on

the amount of the reserve to the Ministry (Minister) of Agriculture.

However, the Constitutional Court did not find milk production quotas

themselves to be unconstitutional or illegal. In the judgment’s

reasoning of the Constitutional Court found penalty levies under § 13 of

Act no. 256/2000 Coll. to be constitutional, but it emphasized that the

group of deputies described it as unconstitutional in the reasoning of

its petition, but did not propose that it be annulled (nor, in view of

the size of the group of deputies, could it have successfully done so).
 

In

these proceedings, the Constitutional Court will evaluate a legal

regulation which is similar to a regulation which it already considered.

The arguments of the present group of deputies are similar. Of course,

they do not request the annulment of the entire implementing government

directive, but only selected provisions. In addition, annulment of

provisions of the Agricultural Intervention Fund Act is proposed.

Therefore, the Constitutional Court should rely on its earlier

evaluation, unless it finds a fundamental distinction or changes its

legal opinion. The evaluation of the adjudicated matter will therefore

relate to the reasoning of judgment no. 410/2001 Coll.
 

The

purpose of applying production quotas is to limit non-monopoly

production to a desired volume. The motivation for it is an attempt to

stabilize prices in the markets without implementing price regulation or

imposing a contractual obligation on customers. Market forces do not

lead to market stabilization if they are crippled by massive state

subsidies and protectionism. The basis of the regulation is a national

(state) production quota, which is allocated among current producers

according to a certain key. These producers are then banned from

manufacture (purchase, processing) of production over the quota, or they

are discouraged from it by penalty levies. New quotas are not allocated

at all, or only a little, and existing ones may be reduced. The use of

quotas in a modern democratic state with a market economy is rare. In

western Europe they are applied in agriculture and part of the food

industry which is affected by customs protectionism and extensive

subsidizing, which is caused by both political recognition of the

general interest in its prosperity and by the activities of farmers and

agricultural businesses, as strong interest groups. Within the European

Community (European Union) common agricultural policy, this is used

today only for dairy products and sugar. The aims and effects of a ban

on cultivating land or spreading cultivation cultures, for example of

wine, are similar to those of production quotas.
 

A

key issue in the adjudicated matter, as in the matter decided by

judgment no. 410/2001 Coll., is the constitutional permissibility of a

restriction on the amount of agricultural production implemented by a

penalty levy for overproduction. The evaluation in light of fundamental

(constitutional) legal principles and fundamental human rights

necessarily slides toward a separate search for answers to individual

questions, as indicated by the petition from the group of deputies and

the cited judgment.
 

In its

case law, the Constitutional Court refuses to tear the fundamental

principles of a state governed by the rule of law, such as equality

(Art. 1 of the Charter) and the proportionality of legal regulation

(Art. 4 of the Charter) away from individual human rights and freedoms,

such as, here, the fundamental right to property (Art. 11 of the

Charter) and freedom to conduct business (Art. 26 of the Charter). It

found violation of fundamental principles to be grounds for its

intervention only if they were not respected in the regulation of the

exercise of fundamental rights and freedoms.
 

Although

the affected fundamental rights are classified by the Charter and

perceived as rights of different categories (the first as fundamental,

in contrast to the second as economic and social), nonetheless they are

closely related to each other. The freedom to conduct business is even

usually described as a freedom derived from the right to property. This

opinion can be considered only partially correct. Conducting business

and other economic activity are certainly primarily activities aimed at

creating property values necessary to secure the necessities of life.

Their everyday result is property (in a modern economy, money) which is

protected at the constitutional and international European level by the

right to property. Moreover, the ownership of property (capital) is a

prerequisite for beginning business and continuing it. In addition, of

course, conducting business is a way of personal and group

self-realization. The property right even, if it is not to be a

self-serving concept, itself leads to the exercise of other fundamental

and other rights.
 


V.
 

In

evaluating the system of sugar production quotas as a regulation which

affects the freedom to do business we can begin with the evaluation in

judgment no. 410/2001 Coll. Under Art. 26 para. 1 of the Charter

everyone has the right to free choice of profession and training for it,

as well as the right to do business and conduct other economic

activity. Under paragraph 2, a statute may provide conditions and

restrictions for the exercise of certain professions or activities. The

Constitutional Court also emphasized that neither the constitutional

order nor international treaties on human rights and fundamental

freedoms forbid the legislature to limit the amount of production,

distribution, or consumption of values. Therefore, the legislature may

(within the bounds given by constitutionally guaranteed fundamental

principles, human rights and freedoms) in its discretion, implement

price or quantity regulation of production in a particular sector of the

economy, delineate or influence the kind and number of entities active

in it, or limit contractual freedom in bringing production to the market

or in the purchase of raw materials and production facilities. It found

the claim of the group of deputies, that restrictions may be only

qualification and similar prerequisites, to be a disproportionately

narrow interpretation of this provision. Moreover, it is evident from

Art. 41 para. 1 of the Charter that economic, social and cultural

rights, which include the freedom to do business, can be exercised only

within the limits of the law. The Constitutional Court did not find a

free market free of all regulation to be a value of constitutional

importance. It pointed to the limits on the freedom to do business in

the European Union, where a market economy is directly declared to be a

constitutional principle in the establishment agreement. It also

rejected the opinion that every restriction of the freedom to conduct

business can only be implemented by statute. For practical reasons, the

Constitution permits sub-statutory regulations to be passed for the

implementation of statutes, if the rules they provide are within the

bounds of the statutes. The Constitutional Court pointed out that

production quotas are applied in the agriculture sector of the

democratic states of western Europe, and in the European Union countries

according to a common model, and they were not found to be incompatible

with world-wide or European international, or, in state systems, with a

domestic constitutional standard of human rights.
 

World-wide

international pacts on human rights are silent on the subject of the

freedom to conduct business as a fundamental right. Nor does the

European post-war standard of the Convention for the Protection of Human

Rights and Fundamental Freedoms, with its protocols, recognize it. Its

derivation from the guarantee of property rights and personal freedom is

a disproportionately broad interpretation, which finds no basis in the

case law of the European Court of Human Rights. In any case, the Court

never considered similar legal regulation of economic activities in this

branch. It is only the Charter of Fundamental Rights of the European

Union which recognizes freedom to conduct business (economic activity),

but it assumes that it will be restricted by European and national laws.

Moreover, the Charter did not acquire the character of an international

treaty; it is only a political declaration. Thus, only the

Constitutional Court is qualified to delineate the concept of the Czech

guarantee of the freedom to conduct business under Art.26 of the

Charter.
 

Current foreign

models tend to confirm the Constitutional Court’s restricted concept of

the freedom to do business as a right which the legislature may restrict

fairly widely.
 

In Germany

the Constitutional Court does not reject references to the free choice

of profession (Art. 12 of the Grundgesetz) in connection with the manner

of regulation the exercise of a profession; nevertheless it recognizes a

wide range given for regulation by the legislature. It takes a stricter

stance, in light of which Czech legislative practice would probably

frequently not hold up, only with regard to many restrictions and

entitlements connected with entry to a field. Of course, the German

Constitutional court did not concern itself with regulation of

agricultural or other production through production quotas or similar

measures, as they are regulated by the primary and directly applicable

law of the European Community.
 

A

concept of the constitutionally expressed freedom to do business on

which the group of deputies could rely, might be sought in the case law

of the Supreme Court of the United States until the 1930s. Its concept

of contractual freedom and the right to property basically did not

permit any economic-political measures. Of course, since the time of the

Great Depression the Supreme Court stopped interfering against

non-discriminatory political intervention in relationships in individual

economic sectors.
 

In

judgment no. 410/2001 Coll., the Constitutional Court already stated,

peripherally, that a penalty levy under § 13 of the Agricultural

Intervention Fund Act in the amount of 115% of the minimum or regulated

price is a necessary component of the production quota system. It is a

proportionate penalty for production exceeding an individual quota. It

may be added that a possible, substantially less effective penalty for

overproduction is mere refusal of public subsidy.
 

In

response to the objection from the group of deputies that production of

sugar over the production quota is not forbidden, we can say that the

legal framework does not expressly forbid many activities, but

nevertheless makes them disadvantageous and thus discourages people from

them. We can point to the fees imposed on operation of lottery machines

or consumption taxes. Disadvantaging a certain activity is a routine

legal instrument, especially when a direct ban implemented by

administrative or criminal sanctions (fines, a ban on the practice of a

profession or a prison sentence) would be excessive. In the cited

judgment, the Constitutional Court stated that if a ban on

over-production is possible, that of course means that there is room to

disadvantage it. Finally, we can state that even the standard

formulation of provisions on the elements of crimes (“Anyone who … will

be punished …”) in the Criminal Code does not literally ban crimes.

However, there is no doubt that they are banned. Thus, the reference to

unconstitutionality of a penalty levy without an express ban of the

activity which is discouraged by the penalty levy, can be rejected.

 

VI.
 

In

judgment no. 410/2001 Coll. the Constitutional Court recapitulated the

European and domestic concept of the fundamental right to property. It

rejected the position that limiting production is an uncompensated

expropriation which is not justified by the public interest. It stated

that the petitioner is not denied ownership of milk produced above the

production quota. The penalty levy supporting the production quota

system of course makes it less easy or even impossible to sell the

overproduction. The Constitutional Court emphasized that an entitlement

to achieve a certain price on the market is not, however, a fundamental

right. It pointed out that the production quota system is a form of

control on the use of property, which is implemented due to the public

interest. The Constitutional Court emphasized that the restrictive means

used should be proportionate to the aims pursued. It accepted that

there is a public interest in stabilizing the market for milk and found

the instruments used to be proportionate. It pointed out, that other

measures regulating the conduct of business or other economic activity

also have fundamental effects on its profitability. It rejected the

opinion that the production quota system makes entry into sectors

completely impossible, pointing out the possibility of acquiring them

through purchase or allocation from the reserve. The Constitutional

Court did not feel called upon to evaluate whether the production quota

system is an optimal or economically most advantageous solution. It

pointed out that the production quota system is supposed to prevent

overproduction which is caused by extensive state agricultural

subsidies. The Constitutional Court emphasized that applying a

production quota system (restricting the amount of production) pursues

the public interest in discouraging investment in branches with

overproduction. In its arguments, the Constitutional Court pointed out

that the European Court of Justice (a body of the EC) also did not find a

similar Community measure – a ban on planting vineyards – to be a

violation of the European standard of ownership under Art.1 of the

Protocol to the Convention on the Protection of Human Rights and

Fundamental Freedoms.
 

The

arguments used in judgment no. 410/2001 Coll. at a general level also

apply for evaluating the sugar production quota system under of

government directive no. 114/2001 Coll. In the present matter, the group

of deputies does not emphasize, in contrast to the preceding petition,

denial of ownership of sugar produced above the limit. With regard to

the Constitutional Court’s rejection, in the cited judgment, of

arguments about the denial of ownership to the milk produced, we can

only add that in sectors where the volume of production is regulated by

production quota systems, production exceeding the limits occurs only to

a minimal extent, as sales are made basically impossible by the

imposition of a penalty levy.
 

The

present objection of the group of deputies is only a reference to

discrimination between those owners of sugar refinery facilities who

obtain a production quota and can produce without actual restrictions

and those who do not have one at their disposal and for whom production

is made impossible as a result of the application of a penalty levy.

Therefore, the issue of inequality in property must be addressed in

connection with the issue of general equality in the application of the

sugar production quota system.
 

Therefore,

one can refer to the case law of the European Court of Justice only

peripherally, and in the form of further development of the

Constitutional Court’s arguments in judgment no. 410/2001 Coll. In its

verdict on the complaint Metallurgiki Halyps v. the Commission (258/81),

the European Court of Justice emphasized that Community restrictions on

steel production in the public interest, although they can endanger the

profitability of an enterprise, do not represent any violation of the

right to own property. We can also emphasize, that the European Court of

Human Rights never evaluated the general legal provisions of the member

states of the Council of Europe, which regulated the volume of economic

production in view of their compatibility with the European standard of

the fundamental right to own property.
 

A

limited application of production quota systems, particularly in

agriculture, is usual in the European Union and in some other developed

countries with a social market economy. The current case law of the

constitutional and supreme courts of European Union member states and

other democratic countries governed by the rule of law does not

indicated that restricting production for reasons of stabilizing market

prices at a certain level, if fairly imposed on all existing producers,

would be considered incompatible with the national standard of property.

Of course, this statement does not rule out political criticism of

them, which is strong. The use of this form of managing the economy is

rare. Of course, there is no reason for the Constitutional Court to

interpret Art. 11 of the Charter otherwise. It cannot be overlooked that

one of the main motivations for introducing a production quota system

for some agricultural and food products was the creation of a framework

which is applied in the European Union. Radical intervention by the

Constitutional Court against production quota systems would be a step

toward a conception of domestically guaranteed fundamental rights which

would not hold up after the Czech Republic’s entry into the European

Union, which is being prepared.
 

It

must be emphasized that it is not appropriate to compare the sugar

(milk) production quota system, or a penalty levy for overproduction

which implements it, with price regulation to the benefit of purchasers,

if it is connected with a contractual obligation or forced preservation

of existing contractual relationships.  In judgment no. 231/2000 Coll.

(file no. Pl. ÚS 3/2000 of 21 June 2000), the Constitutional Court

declared regulation of apartment rent under decree no. 176/1993 Coll.,

on rent from apartments and compensation for services provided with the

use of an apartment, as amended by later regulations, to be incompatible

with the fundamental right to property, with reference to the fact that

the rent paid now does not make it possible for apartment owners even

to maintain them, and thus their ownership is devalued. In the case of

agricultural production quotas, no one is forced to produce in a manner

so that he would have to pay the penalty levy. On the contrary, the

purpose of the penalty levy is to discourage producers from socially

undesirable overproduction. Therefore, the penalty levy can be better

compared to taxes and fees whose purpose is to raise the price of

particular goods or services and to lower their consumption (consumption

taxes on alcoholic beverages, cigarettes or hydrocarbon fuels, or

payments for the operation of lottery game machines). Relying on

constitutional and international guarantees of property ownership in

these cases, where, after the implementation or increase of these taxes,

part of the facilities used will not be able to be used as before and

will lose value, because demand will fall after price increases, would

certainly be considered unjustified. Evaluation of agricultural

regulation can not take the opposite direction, even if it is socially

based and the legal evaluation of agricultural overproduction it leads

to is not as strict.
 

It

must also be pointed out that the decrease in the usability of

production facilities – as well as in their price – is not considerable,

if the production restrictions introduced do not force existing

producers to reduce their present production. This also applies

generally to the sugar production quotas under evaluation.
 


VII.
 

In

judgment no. 410/2001 Coll., the Constitutional Court rejected the

opinion that the differing legal positions of those producers who

receive a quota and those who do not apply for one represents

unconstitutional discrimination. Differentiation is a matter of choice.

The requirement for a quota application is administrative registration

of producers.
 

The

Constitutional Court also did not agree with the claim of

unconstitutional inequality between existing and new producers. It

pointed out that the disadvantaging of new entrepreneurs (who must

purchase quotas from existing producers or rely on the uncertain hope

that they will be allocated to them from the reserve, while they are, of

course, competing with existing producers) is an inseparable part of

any restriction of the amount of production. The aim of disadvantaging

entry to a sector is the interest in making undesirable expansion of

production capacity impossible.
 

Of

course, one can not rule out discrimination between producers who apply

for a quota and receive it in the full amount and producers to whom it

is denied or allocated only partially. The Agricultural Intervention

Fund Act § 12 para. 6 requires that the manner of initial allocation of

production quotas among applicants be governed by the principle of

equality and an objective calculation method. The government must keep

in mind this general instruction, which is no more than a reflection of

the principle of equality under Art. 1 of the Charter and Art. 1 of the

Constitution, when determining the method of initial allocation of

quotas within individual production quota systems with regard to the

features and special characteristics of the production of commodities,

the manufacture of which is subject to restriction. Therefore, the

Constitutional Court can evaluate the key used in the original

allocation of quotas.
 

In

judgment no. 410/2001 Coll., the Constitutional Court recognized the one

year reference period, together with generally specified component

regulations, as proportionate. It also acknowledged that even a

thoroughly detailed key, which keeps in mind the regular causes of

fluctuations in the volume of production, can not take all circumstances

into account. Therefore, in individual circumstances, injustice may

occur which, however, does not reach a level of constitutional gravity.

In view of possible abuse, it took a restrained position toward

alleviating severity on the basis of administrative discretion.
 

The

government presumes that individual production quotas for sugar

production will be determined on the basis of the volume of three of the

most successful (in terms of amount) production seasons of the last

five (§ 7 para. 1 of government directive no. 114/2001 Coll.), and if

production did not take place for more than three seasons, based on the

seasons when production did take place. In this regard we can not ignore

the circumstance which the group of deputies points out. The position

of individual sugar refinery operators was influenced by the legal

framework of government directive no. 51/2000 Coll. before it was

annulled by the Constitutional Court. It was annulled due to lack of

statutory foundation. One can state additionally that the legal

framework’s anticipated differentiation between strategic and

non-strategic sugar refineries, including an exhaustive enumeration

directly in the text of the former, whose operators enjoy immediate

direct allocation of a production quota, can justifiably be considered a

suspect qualification (following the methods of the United States

Supreme Court). It is an arbitrary and difficult to justify

differentiation between individual sugar refinery operators. However, we

must here deny the claim of the group of deputies that the current

legal framework also introduces such differentiation.
 

The

method of calculating individual production quotas only mitigates

undesirable effects under the former legal framework, which are both

unconstitutional for formal reasons and factually discriminatory, by not

deriving the decisive average annual quota from the volume of

production from all five seasons, which must be reported in the

application under § 5 para. 3 of government directive no.114/2001 Coll.,

but presumes that some sugar refineries were not in operation during

all the seasons, and takes into account the three seasons with the

highest production, or those seasons when production took place, if

production took place in three or fewer seasons.
 

It

is clear, of course, that this does not remove the inequality. It

results just from the fact that certain producers could, on the basis of

a measure which is unconstitutional for formal reasons and factually

discriminatory, increase production, because they were protected from

the competition, which did not have a production quota and thus could

not produce without the burden of a penalty levy. Through the present

formally correct legal framework, the government preserves for the

future the undesirable condition which it caused by its previous

formally and materially unconstitutional framework.
 

We

also can not ignore the circumstance to which the group of deputies

points in passing in the already rejected argument on discrimination

between existing and new producers. The regulation of the price of sugar

implemented by government directive no. 114/2001 Coll. does not in any

way take into account cases where one sugar factor was operated in the

past by a different entity than it is today. It does not take into

consideration the production of a factory which was transferred during

the decisive period. However, sales of enterprises and factories and

company mergers can not be ruled out.
 

The

key selected for allocation individual production quotas thus finds

itself in conflict with the statutory requirement of an objection method

of calculation (§ 12 para. 6 of the Agricultural Intervention Fund

Act), and, in particular, with the constitutional requirement of

equality under Art. 1 of the Charter, which at the same time establishes

a constitutionally impermissible different statutory concept of

ownership of production facilities under Art. 11 para.1 of the Charter

and unjustifiable differentiation between individual enterprises which

enjoy the same (i.e. equally governed) freedom to conduct business under

Art. 26 of the Charter.
 

Of

course, it would be difficult to consider unconstitutional, in and of

itself, the obligation of applicants to state in their production

application the amount of the sugar production in the sugar production

seasons 1996/97 to 2000/01 under § 5 para. 3 of government directive no.

114/2001 Coll.
 


VIII.
 

In

judgment no. 410/2001 Coll., the Constitutional Court found that the

introduction of milk production quotas is justified because it serves

the public interest. This interest is a guarantee of a minimum price in

an environment where state subsidies contribute to increases in

production which demand would not cause. State interventions in

agriculture are motivated by its social, economic and ecological

characteristics. The Constitutional Court recognized that production

quota systems for agricultural products exist in the European Union and

rejected the proposition that a domestic standard of human rights would

require a pure market economy, free of state intervention. It responded

with restraint to the demand that it subject to strict inspection, with

regard to its necessity and true need, the legal framework under which

the state intervenes in the economy. It emphasized that the Parliament

of the Czech Republic, as the political body which bears political

responsibility toward voters for recognizing problems in the economy and

for selecting instruments to solve them, has jurisdiction to select

economic policy.
 

The United

States Supreme Court took a similar view of the priority role of

political bodies in creating production quota systems for the

cultivation of wheat in the case Wickard v. Filburn [317 U.S 111

(1942)]. Its decision is an example of judicial restraint.
 

With

these arguments, which can also basically be applied to the evaluation

of sugar production quotas, the Constitutional Court signed on to the

approach taken by, for example, the United States Supreme Court since

the 1930s, when it ended the practice of describing economic and social

regulations as incompatible with an absolute contractual freedom and

right to property and recognized that the general formation of economic

policy, including restrictions on doing business, is primarily a matter

for political bodies. In evaluating the legal framework it is sufficient

to apply the rational basis test, a routine verification of whether the

measure introduced can lead to the goal pursued. The production quota

system pursues restriction of production which is distorted by state

subsidy policy. This also applies in the case of measures which are

necessary only for preparations for entry into the European Union, where

such conditions exist.
 

An

inclination to strict evaluation of the production quota system would

force the Constitutional Court to evaluate the necessity and usefulness

of the state policy of subsidizing and giving privileges to agriculture.

In that case, the Constitutional Court would have to incline toward

some economic-political doctrine, in this case to liberalism. However,

such a step does not correspond to the relative political neutrality of

the Charter and of the Constitution.
 


IX.
 

Consideration

of the justifiability and proportionality of applying a sugar

production quota system cannot be done without comparison with the model

uniformly applied in the European Union, especially with regard to the

Czech Republic’s preparation for entry into it. Restriction of the

amount of sugar production has a long tradition in the European

Community. It was first introduced as a response to overproduction in

the 1960s. By this common measure, exceptionally strict even in

agriculture, the European Community responded to overproduction which,

of course, was caused partly by the common agricultural policy and

intervention by member states including subsidies, appropriations, and

market intervention, and partly by the intensification and concentration

of sugar refining, which led to the closing of sugar refineries. The

basis of the legal framework is EC Council directives on the single

market rules, passed for a period of several years. Related to them are

the European Commission implementing directives. For the 2001/2002 to

2005/2006 seasons, the basic regulation is EC Council directive no.

1260/2001 on common organization of markets in the sugar sector. It was

passed as part of a partial reform of the common agricultural policy.

Its aim is to reduce its fiscal burden and restrict overproduction. It

includes a reduction in sugar production quotas.
 

The

directive determines national quotas for individual member states. For

purposes of the production quotas, the sugar produced is divided into

groups. Sugar A and sugar B may be produced, even through they too are

burdened by penalty levies. With sugar A they are a negligible 2% of the

intervention price. The production of sugar B is burdened by a more

marked penalty levy, which can certainly influence production, in the

amount of 30-37.5% of the intervention price. Sugar B production does

not enjoy the same support and protection as sugar A production, but in

contrast it is not affected by the fate of overproduction. That is

labeled as sugar C. Sugar C may be produced, but may not be sold in the

EC market. Thus, the only legal use of sugar C is export. Any failure to

export is punished by a penalty levy. The amount and method of

determining the penalty levy is regulated by the permanent implementing

Commission directive no. 2670/81 such that sugar C the production of

which has been documented but which lacks documentation of export to

third countries is burdened by a penalty levy equal to the highest

customs burden on imports from third countries. This customs burden is

high, because the EC’s unified external trade policy, in conjunction

with the common agricultural policy, despite the liberalization steps of

the WTO (the World Trade Organisation), remains protectionist. Just as

import of sugar to the Community is generally not worth it, neither is

overproduction of sugar. In addition, the different approach to sugar A,

B and C is reflected in the opposing subsidy and intervention policy.

The production, processing, storage, sale and export of sugar C,

compared to sugars A and B, does not enjoy any intervention for

maintaining a desirable high intervention price, or subsidies for

ensuring sufficient income for farmers and processors.
 

In

the Czech Republic, the uniform model of penalizing overproduction in

the amount of 115% of the minimum price (equivalent to the intervention

price) is used for sugar. The model for this method of determining the

penalty levy for overproduction was the framework of milk production

quotas in the Community under Council directive no. 3950/92. Imposing

fees on sugar overproduction in the EC is, in its results, comparable

with measures applied today in the Czech republic, even if the manner of

penalizing overproduction is not the same. For example, the Czech

Republic today, unlike Poland, does not implement a comparable

production quota system, but the EC aim to restrict sugar production on

protectionist grounds is pursued and the results are comparable. Sugar

production over the set quotas is not worth it, and therefore is not

done.
 

If the Czech Republic

enters the European Union in the next few years, then, unless there is

fundamental reform of the common agricultural policy in the area of

sugar, the community standard with comparable effects will gradually (in

view of a number of anticipated transition periods) be applied to it as

well. In the present months negotiations on entry are begin completed.

One of the most difficult chapters in the negotiations is no. 7

“Agriculture”. So far, none of the candidate countries has entered into a

preliminary agreement on the manner and budget of incorporating its

agriculture into the common agriculture market and introducing the

common agriculture policy. The main dispute concerns the amount of

direct subsidies to farmers in the candidate countries. Of course,

agreement is also lacking with agricultural commodities whose production

is restricted by production quotas. The candidate countries want their

agriculture to be able, without sanctions, to produce more than the

European Community and current member states want to allow.
 

In

the case of sugar production, the difference in the Czech Republic is

not a multiple, but neither is it negligible. The Czech Republic wants

505 thousand tons of a national sugar production quota, which

corresponds to the present aggregate production quota and reserve under

government directive no.114/2001. The European Community is offering 441

thousand tons for sugar A and ca. 4 thousand tons for sugar B.

Agriculture is undoubtedly politically sensitive both in Western and

Eastern Europe. Sugar production in the Czech Republic and elsewhere

shows not insignificant seasonal deviations (in thousands of tons: in

1996/7, 610; in 1997/8, 532; in 1998/9, 470; in 1999/2000, 395; in

2000/1, 434; in 2001/2, 491). Yet, in the last two seasons, production

was already dampened by production quota systems. Excess sugar is

produced in the Czech Republic. The volume of exported sugar

consistently exceeds the volume of imported sugar (including sugar in

foods and beverages). Yet, sugar imports into the Czech Republic are

restricted by import duties and quotas; in contrast, export is

supported.
 

The sugar

production quota system now existing in the Czech Republic, despite its

special features, is not incommensurable with the EC system. Pressure

from the EC for the reduction of sugar production in the Czech Republic

continues, which provides a reason for introducing and applying Czech

sugar production quotas.
 

Therefore,

we must reject the opinion that every sugar production quota system

based on the State Agricultural Intervention Fund Act and ensured by

penalty levies under § 13 of that Act is an unusual provision in terms

of international and European comparison.
 

In

addition, on the basis of provisions common to all production quota

systems in Czech agriculture, a milk production quota system is

established; here the penalty levy is determined and imposed the same

way as in the European Community. Therefore, there is no reason to annul

§ 13 of the Act.
 


X.
 

In

its judgment no. 410/2001 Coll., the Constitutional Court did not

permit further sub-statutory delegation, under which, according to the

adjudicated directive’s provisions on publication, the amounts of the

reserve for subsequent years in the Bulletin of the Ministry of

Agriculture shall be set by the Ministry (minister). The present

situation is similar. The provisions of § 4 para. 3 of government

directive no.114/2001 Coll. authorize the Fund to determine the amount

of reserve for allocation. The Constitutional Court’s opinion can not be

opposite. The amount of reserve for allocation is an requirement of the

production quota system under § 12 para. 3 a 4 of the Agricultural

Intervention Fund Act, which the government is to create by directive.
 

The

claim of some parties to the proceedings that the Ministry of Finance

has jurisdiction to determine the minimum price of sugar on the basis of

Act no. 526/1990 Coll., as amended by later regulations, is incorrect.

It overlooks the express provision of § 12 para. 4 of the Agricultural

Intervention Fund Act. This jurisdictional norm is unambiguously a lex

specialis for general price regulations. Jurisdiction to determine the

minimum price belongs to the government, which is to do so by directive.

A reference to the unsuitability of such a method of setting a price by

a directive applied for a period of several years is groundless. The

effort to transfer jurisdiction to a different body, which uses a

legally problematic form of price setting, is only the result of

unwillingness to observe the recommendation of § 12 para. 5 of the

Agricultural Intervention Fund Act that directives on production quota

systems be “generally” passed for a one year period.
 

Evaluation

of the Fund’s jurisdiction is not unambiguous, in light of the

Agricultural Intervention Fund Act. Although it does not authorize the

Fund to allocate quotas, it provides that it shall make use of the

production quota system [§ 1 para. 2 let. d)], through which it

implements measures and introduces market regulations for stabilizing

the market in agricultural and food products (§ 1 para. 2). The

authorization to allocate production quotas arises at least from the

context of the Act and general provisions on the Fund’s activities. The

provision of § 7 of government directive no. 114/2001 Coll., which is

proposed to be annulled on the basis of the claimed lack of

jurisdiction, appears unconstitutional primarily due to preservation of

unjustifiable differentiation between individual producers.
 


XI.
 

The

group of deputies casts doubt on the model where the government can, by

directive, introduce production quota systems in a scope which markedly

exceeds their use in the European Union. We can confirm that the State

Agricultural Intervention Fund Act does not specify in detail the

agricultural and food products whose production can be restricted by

production quota systems. The extent of room for applying serious

restrictions, such as production quotas, reaches the very limit of

acceptability in terms of the constitutional principles of the

separation of powers. The reference to commitments arising from

negotiations on accession to the European Union under § 12 para. 3 of

the Agricultural Intervention Fund Act is merely a legally indistinct

restriction. Comparison with other countries also testifies to an

excessive inclination toward regulation by sub-statutory regulations.

For example, Poland, which also seeks to join the European Union,

introduces production quota systems for agricultural production and does

so through a special law (Ustawa o regulacji rynku cukru from 2001).

However, the group of deputies does not propose annulment of the

relevant provisions of the Agricultural Intervention Fund Act on the

substantive jurisdiction of the Act (the range of economic sectors

subject to regulation).
 


XII.
 

In

contrast to government directive no.445/2000 Coll., which specifies the

qualitative elements of cow’s milk, government directive no. 114/2001

Coll. refers, in a footnote, to a different legal regulation. We can not

share the position of the group of deputies on the absence of a

definition of sugar, as this legal regulation specifies, in a

constitutionally fully acceptable manner (Ministry of Agriculture decree

no. 334/1997 Coll., issued on the basis and within the limits of Act

no. 110/1997 Coll.), the qualitative elements of sugar, naturally sugar

produced in volumes determined by production quotas.
 

We

can not agree with the position that § 5 para. 5 of the Agricultural

Intervention Fund Act rules out application of the Administrative

Procedure Code for the Fund’s decision making on quotas because it

limits its use only to deciding on applications for support under § 1

para. 2. The group of deputies overlooks the systemic placement of this

provision, which is applied only to the provision of support. The

exclusion of the Administrative Procedure Code in and of itself in no

way makes room for administrative discretion and the impossibility of

judicial review derived from it. The Constitutional Court has already

stated that in cases of unclear interpretation, administrative and

judicial bodies should select an interpretation which ensures greater

respect for the fundamental rights and freedoms, which also include the

right to proper administrative proceedings and a fair trial.

As

already stated, in drafting government directive no. 114/2001 Coll.,

the government overlooked the statutory recommendation to issue a

directive for one year. Of course, it is not important whether a

production quota system can be introduced by government directive

repeatedly or not without the intervention of the legislature.
 

Nor

does the group of deputies ask the Constitutional Court to annul those

provisions of the Agricultural Intervention Fund Act or of government

directive no. 114/2001 Coll., which, according to the group, establish

an unacceptable form of defining sugar, ruling out judicial review, or

inadequate time limits for the application of production quota systems.

Even if the Constitutional Court recognized these objections, it could

not make a decision within that scope.
 


XIII.
 

For

the cited reasons, the Plenum of the Constitutional Court decided,

under § 70 para. 1 of Act no. 182/1993 Coll., as amended by Act no.

48/2002 Coll., to annul § 4 para. 3, § 5 para. 3, § 7 and § 13 of

government directive no. 114/2001 Coll.: § 4 para. 3 for inconsistency

with Art. 78 of the Constitution; § 7 for inconsistency with Art. 1 of

the Charter, Art. 11 para. 1 of the Charter and Art. 26 para. 1 and 2 of

the Charter as well as § 12 para. 6 of the Agricultural Intervention

Fund Act; § 13 for inconsistency with Art. 79 para. 3 of the

Constitution as well as with § 12 para. 4 of the Agricultural

Intervention Fund Act.
 

Although

§ 5 para. 3 of government directive no. 114/2001 Coll., in and of

itself, is not necessarily inconsistent with the Constitutional Act or

statues, the Constitutional Court annulled it as well, because it is

closely related to the other cited provisions. A number of other

provisions of government directive no. 114/2001 Coll. could meet this

fate, but they were not proposed to be annulled, and the Constitutional

Court is bound by the petition in its decision making.
 

The

petition to annul § 13 of the Agricultural Intervention Fund Act was,

for reasons cited in the reasoning of the judgment, denied under § 70

para. 2 of Act no. 182/1993 Coll.

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

Brno, 30 October, 2002
 



Dissenting Opinion
of

judges JUDr. P. H. and JUDr. V. J. to the verdict in Constitutional

Court judgment file no. Pl. ÚS 39/01, which denies the petition from a

group of deputies to annul § 13 of Act no. 256/2000 Coll., on the State

Agricultural Intervention Fund and Amending Certain Other Acts (the

State Agricultural Intervention Fund Act).

This dissenting

opinion, submitted to the verdict in Constitutional Court judgment file

no. Pl. ÚS 39/01, which denies the petition from a group of deputies to §

13 of the State Agricultural Fund, is based on these reasons:
 

In

its judgment in the matter of setting the value of a point in health

insurance (file no. Pl. ÚS 24/99) the Constitutional Court expressed the

constitutional law qualification of price regulation in a restrictive

manner: “A necessary component of a democratic state governed by the

rule of law is protection of the freedom of contract, which is a

derivative of the constitutional protection of property rights under

Art. 11 para. 1 of the Charter (whose basic component is ius

disponendi). Therefore, price regulation is an exceptional measure, and

acceptable only under quite limited conditions.”
 

In

its judgment file no. Pl. ÚS 3/2000, the Constitutional Court

repeatedly addressed the issue of price regulation, this time in

connection with evaluation of the constitutionality of legal regulation

of rent. In doing so, it relied, in particular, on Art. 1 para. 2 of

Protocol no. 1 to the Convention on the Protection of Human Rights and

Fundamental Freedoms, which provides states the right to pass such laws

as they consider necessary to regulate the use of property in accordance

with the general interest, and from the case law of the European Court

of Human Rights. According to this, such laws are especially necessary

and usual in the field of housing, which, in modern societies, is

becoming a central issue of social and economic policy; for this purpose

legislation must have a wide scope for consideration (evaluation)

(“margin of appreciation”), both in determining whether a public

interest authorizing the application of regulatory measures exists, and

also concerning the selection of detailed rules for implementing such

measures. As the European Court for Human Rights emphasized in the case

James et al., state intervention must observe the principle of “fair

balance” between the demands of the society’s public interest and the

demands for protection of an individual’s fundamental rights. There must

be a reasonable (justified) proportionality between the means used and

the aims pursued.
 

Thus, in

this matter the Constitutional Court accepted possible price regulation

of rent, but on condition of applying the principle of proportionality

(for a comprehensive discussion of all components of the principle of

proportionality see Constitutional Court judgments file nos. Pl. ÚS

4/94, Pl. ÚS 15/96, and Pl. ÚS 16/98). Although the Constitutional Court

acknowledged the presence of the first component, i.e. suitability of

the means used in relation to the aim pursued, it found a failure to

observe the principle of necessity, i.e. subsidiarity of the means used

in relation to other possible means, in terms of the fundamental right

restricted thereby (in the given matter, the right to property): “In

order for the owners of rental buildings to be able to meet their

previously stated obligations and in order for the right of the

individual to proper housing under Art. 11 of the International Covenant

on Economic and Social Rights to also be realistically considered, the

route could have been chosen, for example, which was previously taken by

the legislature of the first republic, which, in § 9 para. 4 of Act no.

32/1934 Coll., as amended by later regulations, permitted rent to be

raised for reasons of payment of expenses incurred for occasional or

exceptionally necessary repairs and renovations of a building.” On the

basis of this argument, the Constitutional Court concluded that there

was violation of Art. 4 para. 3 a 4 of the Charter, in connection with

Art. 11 para. 1 of the Charter.
 

From

a general viewpoint, in the judgment in question the Constitutional

Court also formulated another criterion for evaluation the

constitutionality of price regulation: “Price regulation, if it is not

to exceed the bounds of constitutionality, clearly may not reduce the

price so much that the price, in view of all documented and necessarily

incurred expenses, would eliminate the possibility at least of

reimbursing them, because in that case it would actually imply a denial

of the purpose and all functions of ownership.” Insofar as the

Constitutional Court decided on the issue of sugar production quotas,

while evaluating the constitutionality of government directive no.

51/2000 Coll., in judgment file no. Pl. ÚS 45/2000 it restricted its

arguments only to the question of observing safeguard contained in Art.

78 of the Constitution, and in another judgment, in the matter under

file no. Pl. ÚS 5/01, as a result of the lack of an appropriate

petition, the unconstitutionality of § 13 of the State Agricultural Fund

was not evaluated.
 

The

system of milk production quotas under Act no. 256/2000 Coll. and

government directive no. 445/200Coll. is based on a penalizing price

regulation under § 13 of the cited Act, applicable to that part of

production by which the producer exceeds the set quotas. From a general

perspective the Act on Prices considers acceptable reasons for

introducing price regulation to be the endangering of a market through

the effects of restriction of economic competition or an extraordinary

market situation (§ 1 para. 6 Act no. 526/1990 Coll., on Prices, as

amended by later regulations). In this regard it also fully corresponds

to the paradigms of democratic economic thought (see P. A. Samuelson, W.

Nordhaus, Ekonomie, Praha 1991). The Act on the State Agricultural

Intervention Fund, insofar as it establishes the possibility of price

regulation in agriculture, is a lex specialis to the Act on Prices. In

terms of the Constitutional Court’s case law thus far, the reasoning

contained in the majority vote did not observe all safeguards which

arise from the principle of proportionality. It did not analyze, in

particular, the fulfillment of the condition of subsidiarity to possible

alternative means permitting the aim pursued to be achieved, as the

Constitutional Court did, for example, in the matter under file no. Pl.

ÚS 3/2000. In the matter under file no. III. ÚS 31/97, the

Constitutional Court applied European Community law as an interpretative

tool for domestic law when it stated that it takes as its starting

point the same values and principles on which the constitutional order

of the Czech Republic is based, and thus represents the expression of

European standards of democratic legal thought.
 

In

judgment no. Pl. ÚS 5/01 the Constitutional Court, on condition of

observing constitutional safeguard, recognized the possibility of price

regulation in the system of freedom of ownership and a market economy.

However, the price regulation contained in § 13 of the State

Agricultural Fund Act enshrines a markedly more intensive penalty

system, and thus represents a markedly more serious interference with

the right to property than does the comparable European framework, which

is given by EC Council directive no. 1260/2001. The foregoing indicates

that there are multiple alternative means of price regulation, and the

Czech legislature, without giving grounds for its steps in a transparent

way, did not accept the requirement of subsidiarity, according to

which, if the purpose sought by the legislature can be achieved by

alternative normative means, then the constitutional one is that which

limits a given constitutionally protected right to the smallest degree.

In the opinion of the author of this dissenting opinion this, i.e.

violation of the principle of proportionality, is grounds for annulment

of § 13 of the Act on the State Intervention Fund due to conflict with

Art. 11 Of the Charter of Fundamental Rights and Freedoms and with Art. 1

of the Protocol to the Convention on the Protection of Human Rights and

Fundamental Freedoms.

Brno, 30 October, 2001
 


 


Dissenting Opinion
of

judges JUDr. E. W., JUDr. V. Č. and JUDr. E. Z. to the part of the

verdict in Constitutional Court judgment file no. Pl. ÚS 39/01, which

denies the petition of the group of deputies to annul § 13 of Act no.

256/2000 Coll., on the State Agricultural Intervention Fund and Amending

Certain Other Acts (the State Agricultural Intervention Fund Act)

We

dissent from the part of the verdict of the abovementioned judgment

which denies the petition to annul § 13 of the Agricultural Intervention

Fund Act.
 

We grant that

the quota system is, by its nature and effect, an instrument different

from simple price regulation, which is related to necessary interference

with the content of contractual relationships.
 

The

Constitutional Court already ruled, in judgment file no. Pl. ÚS 5/01,

that the penalty levy, in the amount set, derived from the minimum price

of milk for production in an amount exceeding an individual production

quota under § 13 of Act no. 256/2000 Coll., in and of itself, is a

necessary instrument which the state must have at its disposal in

implementing any – including quantitative – regulation of economic life.


 

Nonetheless, we believe

that the chosen method, and in particular the degree of penalizing

production over the level of an allocated quota or without an allocated

quota under § 13 violates the principle of proportionality, especially

in comparative perspective with the legal framework implemented in

European law (EC Council directive no. 1260/2001). If the main argument

for preserving the production quota system and penalizing instances of

exceeding them is the fact that a similar system is applied in European

Community law, then we consider it necessary for the legal framework in

the CR to preserve the same degree and intensity of intervention in

ownership rights.
 

In view

of this, we also can not accept the opinion that a radical intervention

by the Constitutional Court would represent, in the case at hand, a step

toward a concept of domestically guaranteed fundamental rights which

would not stand after the entry of the CR into the European Union. The

approximation of Czech law is supposed to be conducted in such a manner

so that the same principles which are applied in European law are

preserved. This also applies in the case of preserving the

proportionality of the legal framework, i.e. aligning both the purposes

and the means which are used. In any case, the commitment to

approximation and reception of European law itself is built on the

principle of approaching and gradual aligning, not creation of stricter

regimes which interfere to a greater degree in individuals’ fundamental

rights and freedoms. Moreover, in such a case, we consider the reference

to the European framework to be, at a minimum, not earnest, and, for

example, also politically counter-productive.
 

The

reference to the regulation of production quotas in European law in and

of itself demonstrates that the legislature had a different, more

commensurate alternative.
 

The

failure to observe the principle of proportionality in the given matter

is all the more serious because the legislature left the selection of

commodities for which a quota system is established up to bodies of the

executive branch. In my opinion, the legislature thereby abandoned its

jurisdiction, which it unjustifiably left to the executive branch. A

situation where the system of penalty levies is directly tied to a

system of quotas for one or another product, where this is justified by

the public interest in stabilization of a given market sector, also

corresponds to the postulate of proportionality. However, in the current

legislative state, a uniform and blanket system of penalty levies can

be applied to any commodity for which the executive branch imposes

quotas. The system applied in EC law is likewise not reflected in this

aspect of the legal framework.
 

The

principle of proportionality was derived as a public law principle by

the Court of Justice of the European Communities from the principle of a

state governed by the rule of law for the purpose of protecting persons

from intervention by EC state bodies and national public bodies. The EC

Court (decision no. 4/73 Nold v. Commission /1974/) based this

primarily on German and French case law, whose development can be

described as a judicial response to the increase in power held by

administrative bodies and as a means of moderating administrative

discretion (T. Tridimas, The General Principles of EC Law, Oxford

University Press, 2000).
 

In

interpreting the principle of proportionality, and taken

comprehensively, above all the principle of a stated governed by the

rule of law, the Constitutional Court of the CR cannot overlook the

European dimension of these principles, if its case law is also to

perform an integrative role.
 

In

view of the abovementioned facts, we believe that there were grounds

for the Constitutional Court to also annul § 13 of Act no. 256/2000

Coll., as proposed by the petitioner, due to conflict with Art. 1 para. 1

of the Constitution and Art. 11 of the Charter of Fundamental Rights

and Freedoms.

In Brno, 30 October, 2002