2006/06/20 - Pl. ÚS 38/04: Expert Qualification

20 June 2006

HEADNOTES

The

question of whether agricultural production is possible only with

subsidies must be left to day-to-day reality, to the results of

activities resulting from the free decisions of individuals. It

necessarily follows that a decision as to whether entrepreneurs will do

business at all with the use of subsidies should, in terms of Art. 26 of

the Charter, be left to their choice. If they decide to apply for a

subsidy, it is conceivable for the legislature to tie the legally

positive decision to provide a subsidy to a clean criminal record in a

scope related to the legal use of public funds provided to the applicant

in the past.

The

legislature defined the possibilities for meeting the condition of

expert qualifications very strictly. It set the condition of secondary

education which must be supplemented with a mandatory re-qualification

course if “applicants for doing business in agriculture” do not have do

not have an education narrowly oriented at agriculture (or veterinary

medicine). An equivalent of that education is five years of practice in

an agriculture business. If practice obtained outside collective

agriculture entities were not considered practice under § 2f par. 2

point 2 of the Act on Agriculture, then such practice could not be

considered constitutional, because it would not be possible to determine

an objective and reasonable criterion establishing the preference for

expert efficiency of practice in a collective agriculture business

compared to practice in a business operated individually.

The

obligation to meet the condition of expert qualifications solely

personally appears excessively harsh and disproportionate; it applies to

all natural persons, who are thus barred from conducting business.

However, such a limitation can not stand when measured by the principle

of necessity, all the more so when measured by the criterion of

proportionality in the narrower sense.
However, the aim pursued by

setting the condition of expert qualifications could have been achieved

otherwise, for example, by using the practice of the established

institution of a responsible representative.

The

overall context of the Act on Agriculture and comparison of it with the

Trades Licensing Act indicates that the new conditions must be

considered stricter for all natural persons doing business in connection

with agriculture under the previous legal framework, because the Act

does not permit them to meet the statutory requirements through a

responsible representative, which the previous framework permitted.
The

Constitutional Court has consistently pointed out the connection

between the principle of predictable consequences of a legal regulation

with the principles of a law-based state.

The

legislature, when changing a legal regulation, must take into account

the previous legal status quo, and must make changes sensitively, and

only in the extent necessary for achieving the aim of the regulation.

Such conduct by the legislature must be insisted on, because it

guarantees the stability of the sphere of freedom of conduct. Statutes

define the basic structure within which free activities are realized. If

the limits of statutory requirements are uncertain, i.e. if the

legitimate expectations based on the law are not respected, then freedom

too is uncertain. That is why protection of legitimate expectations is

an integral party of the rule of law. The imperative to respect

legitimate expectations arising from the existing legal framework of

course can not be used to derive a ban on changes to the legal

framework. The point is that in choosing how to implement a change the

legislature must take these expectations into account, and not ignore

the fact that those affected by the norms have for a long time adapted

their conduct (and choices between various alternatives) to different

requirements.  

The

requirement to personally meet the conditions of expert qualifications

and a clean criminal record, together with a short deadline for the

termination of previous authorization, is very harsh. The manner in

which the change was implemented was not necessary, or was not required

by the aim pursued.

 


 

CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT


IN THE NAME OF THE CZECH REPUBLIC

 
The

Plenum of the Constitutional Court, composed of Stanislav Balík, Vlasta

Formánková, Vojen Güttler, Pavel Holländer, Ivana Janů, Vladimír Kůrka,

Jan Musil, Jiří Nykodým, Pavel Rychetský, Miloslav Výborný, Eliška

Wagnerová (Judge-Rapporteur) and Michaela Židlická  decided on 20 June

2006 with the participation of the Chamber of Deputies of the Parliament

of the CR and the Senate of the Parliament of the CR, as parties to the

proceedings, on a petition from a group of deputies and a group of

senators of the Parliament of the CR, seeking the annulment of certain

provisions of Act no. 252/1997 Coll., on Agriculture, in the wording in

effect on 22 July 2004, specifically the annulment of § 2e par. 1 let.

c) and d), and the annulment of the sentences “Fulfillment of the

conditions in letters a) to f) by a legal entity must be proved by its

responsible representative. For purposes of this Act the responsible

representative is a natural person appointed by the legal entity who is

responsible for the proper operation of the business and who is in an

employment relationship person to the agricultural entrepreneur.” in §

2e par. 1, annulment of the entire provisions of § 2e par. 3 and 5, § 2f

par. 2 let. b) and par. 3 let. c), annulment of the words “and c)” in §

2f par. 4 let. c), and annulment of the entire § 2f par. 8, as well as

on a petition to annul certain provisions of Act no. 85/2004 Coll., in

the wording in effect on 22 July 2004, specifically the annulment of the

sentence “A certification issued to an independently operating farmer

under Act no. 105/1990 Coll., on the Private Conduct of Business by

Citizens, as amended by Act no. 219/1991 Coll. and Act no. 455/1991

Coll., is valid for 5 years from the day this Act goes into effect” in

Art. II point 1., and the annulment of Article II point 2. of Act no.

85/2004 Coll., as follows:

 

I.

The provisions of § 2e par. 1 let. c), § 2e par. 5 of Act no. 252/1997

Coll., on Agriculture, as amended by later regulations, is annulled as

of the day this judgment is promulgated in the Collection of Laws.

 

II.

The provisions of § 2e par. 1 let. d), § 2f par. 2 let. b) a § 2f par. 3

let. c), the words “and c)” in § 2f par. 4 let. c) and § 2f par. 8, of

Act no. 252/1997 Coll., on Agriculture, as amended by later regulations,

are annulled as of 30 June 2007.

 

III.

Article II point 2. of Act no. 85/2004 Coll., is annulled as of the day

this judgment is promulgated in the Collection of Laws.

 

IV.

The petition for the annulment of the sentences “Fulfillment of the

conditions in letters a) to f) by a legal entity must be proved by its

responsible representative. For purposes of this Act the responsible

representative is a natural person appointed by the legal entity who is

responsible for the proper operation of the business and who is in an

employment relationship person to the agricultural entrepreneur.”

contained in § 2e par. 1 of Act no. 252/1997 Coll., on Agriculture, as

amended by later regulations, as well as the petition to annul § 2e par.

3 of that Act are denied.

 

V.

The petition to annul the sentence “A certification issued to an

independently operating farmer under Act no. 105/1990 Coll., on the

Private Conduct of Business by Citizens, as amended by Act no. 219/1991

Coll. and Act no. 455/1991 Coll., is valid for 5 years from the day this

Act goes into effect” in Article II point 1. of Act no. 85/2004 Coll.,

is denied.


REASONING


I. Recapitulation of the Petition
 

1.

A group of 55 deputies of the Chamber of Deputies of the Parliament of

the CR and 23 senators of the Senate of the Parliament of the CR, in a

proper petition (see Art. 87 par. 1 let. a) of the Constitution of the

CR and § 64 par. 1 let. b) of Act no. 182/1993 Coll., on the

Constitutional Court, as amended by later regulations (the “Act on the

Constitutional Court”), mailed on 22 July 2004, sought the annulment of

the abovementioned parts of Act no. 252/1997 Coll., on Agriculture, in

the wording then in effect (the “Act on Agriculture”), as well as the

annulment of parts of the transitional provisions of Act no. 85/2004

Coll., which amended the Act on Agriculture (the “Amendment of the Act

on Agriculture”).
 

2. The

petitioners themselves summarized the essence of their objections by

saying that the contested provisions violate both the principle of

equality, and, above all, the very essence of the freedom to conduct

business (Art. 26 par. 1 and Art. 4 par. 4 of the Charter of Fundamental

Rights and Freedoms, the “Charter”), as individual newly-introduced

limitations (namely, the requirements of a clean criminal record and

expert qualification) have no clear grounds in terms of the public

interest. From a general point of view they are thus disproportionate

limitations (Art. 26 par. 2 of the Charter).
 


I. A) Lack of Grounds and Disproportionateness of the Condition of a Clean Criminal Record
 

3.

According to the petitioners, § 2e par. 1 let. c) of the Act on

Agriculture violates the right to conduct business and engage in other

economic activity (Art. 26 of the Charter), because, when setting

conditions for the exercise of this right, it is not preserving its

essence and significance (Art. 4 par. 4 of the Charter). Here the

petitioners pointed to judgments in which the Constitutional Court

stated (file no. Pl. US 11/2000 and I. US 504/03) that even the

legislature’s relative freedom, arising from Art. 41 par. 1 of the

Charter, does not allow it to violate the essence and significance of a

right guaranteed by Art. 26 par. 1 of the Charter. The state may set

conditions for the performance of certain activities only to protect the

public interest, but proportionately. Under constitutional case law,

the positive aspects of the limitations must outweigh the negative ones

(judgment file no. Pl. US 25/97). However, a public interest can not be

identified in the relevant background report, and even if it were,

according to the petitioners the stricter regulation would not withstand

the test of proportionality, because the conditions of a clean criminal

record indirectly continues to punish the perpetrator of any

intentional crime or the perpetrator of a negligent crime committed in

connection with the conduct of business in agriculture. There are no

objective grounds for such a ban, and the blanket barrier to conducting

business is disproportionate. The commission of a crime in connection

with the conduct of business may be reflected in a specific case in a

ban (imposed individually) on the conduct of business. The regulation is

illogical. A natural person who can not meet the requirement of a clean

criminal record will not obtain authorization, but failure to meet the

condition of a clean criminal record will not affect a natural person

who already has that authorization. The differing regulation of

analogous cases is inconsistent with Art. 4 par. 3 of the Charter. The

condition of a clean criminal record (§ 2e par. 1 let. c) and the

related § 2e par. 5 of the Act on Agriculture) violates Art. 26 par. 1

and Art. 4 par. 3 and 4 of the Charter, and therefore these provisions

should be annulled.
 


I. B) Disproportionateness of the Condition of Expert Qualification
 

4.

According to the petitioners, the condition of expert qualification set

by § 2e par. 1, let. d), § 2f par. 2 let. b) of the Act on Agriculture

interferes in the very essence of the freedom to conduct business

guaranteed by Art. 26 par. 1 of the Charter, because, unlike the

condition of a clean criminal record, it does not even have a parallel

with the regulations contained in the Trades Licensing Act. A trade

license holder can meet the requirement of expert qualification/ability

by appointed a responsible representative (§ 11 of the Trades Licensing

Act). However, the stricter regulations of the Act on Agriculture gives

that possibility only to legal entities. Even compared with the

requirements for conduct of unregulated trades the requirement of expert

qualification is disproportionate (e.g., unregulated trades include the

manufacture of rail driving vehicles or the manufacture of electronic

components). Even with the highly qualified regulated trades (e.g.

construction), a trade license holder is not required to meet the expert

qualification requirement himself. Thus, the disproportionate

requirement makes access to conducting business more difficult, and the

selective condition also violates Art. 3 of the Charter. The petitioners

also sought the annulment of § 2f par. 3 let. c), § 2f par. 8 and the

words “and c)” in § 2f par. 4 let. c) of the Act on Agriculture, because

they are connected to § 2f par. 2 let. b) of the Act on Agriculture.
 


I.

C) Unconstitutionality of the Change in the Legal Regulation of the

Conduct of Business Exercised in Direct Connection with Agriculture
 

5.

According to the petitioners, the definition of the term “agricultural

production” in § 2e par. 3 of the Act on Agriculture markedly changed

and tightened the legal regime for businesspeople conducting activity in

direct connection with agriculture, because it takes them out of the

regime of the Trades Licensing Act, and the transitional provisions of

the Amendment of the Act on Agriculture also set a penalty, the

expiration of the authorization of businesspeople who do not meet the

conditions within one year after the Amendment of the Act on Agriculture

goes into effect (see Art. II. point 2. of the Amendment of the Act on

Agriculture). However, until the Amendment of the Act on Agriculture was

passed, a number of persons doing business in connection with

agriculture did so on the basis of a trade license, for various

unregulated trades, without being independent farmers under Act no.

105/1990 Coll.
 

6. The petitioners gave the following examples of fundamental defects in the contested provisions:

a) The address only generally and with unclear criteria which persons

doing business on the basis of a trade license will be subject to the

regime of the Act on Agriculture. They may be the unregulated trades of

services for agriculture, forestry, manufacture of food products,

breeding of domestic animals (see directive of the government of the CR

no. 140/2000 Coll., which provides the content of individual trades).

Dog breeding, unlike horse breeding, is apparently still meant to be an

unregulated trade, and not agricultural business.

b)

Under the contested provisions, the production and sale of one’s own

agricultural products, including the manufacture foods from it, are seen

as the activity of an agricultural entrepreneur. However, crafts

continue to exist, e.g. that of miller, butcher, or dairy farmer, and

the unregulated trade of manufacture of food products (see directive of

the Government of the CR 469/2000 Coll., which sets forth a list of

fields for unregulated trades). The subject matter of these trades is

the manufacture of foods, and it is not clear to what extent, or

whether, these existing trade license holders can be included under the

newly-defined concept of agricultural entrepreneur. The requirements for

expert qualification are stricter for crafts (§§ 20 and 21 of the

Trades Licensing Act), than in the Act on Agriculture, but they can be

met through a responsible representative.

c)

Holders of a trade license for “manufacture of food products” (§ 42 of

the Trades Licensing Act) newly included in the regime of the Act on

Agriculture will apparently now also need a trade license for retail

trade. Their existing authorization will terminate only partially.

d)

The new Act (unlike the Trades Licensing Act) does not cover a number

of situations which routinely occur in life (loss of qualification,

insufficient age) and which can not be overcome by appointing a

responsible representative. The Act does not address the fate of

entrepreneurs doing business through a responsible representative. Upon

the death of an agricultural entrepreneur it is not clear who conducts

the agricultural production until the end of probate proceedings, and

the probate trustee also has no obligation to appoint and “expert

representative.” The Act on Agriculture does not regulate barriers to

the conduct of business, and according to the petitioners filing for

bankruptcy or a criminal ban on the conduct of business will not have

any effect.
 

7. According to

the petitioners, the manner in which the change was made, or the shift

to the new legal framework, is inconsistent with the fundamental

requirements of a law-based state Art. 1 of the Constitution of the CR).

The change is an expression of arbitrariness, the framework is

internally inconsistent, unpredictable, and evokes many problems of

interpretation, which can, under the Constitutional Court’s judgments

(file no. Pl. US 9/95 a I. US 504/03), make the Act unconstitutional.

Such a law is also contrary to the case law of the European Court of

Human Rights (the “ECHR,” e.g. in the matter Heinrich v. France).

Although the Charter, in Art. 26 par. 2, permits conditions and

limitations to be set for the exercise of certain professions or

activities, these conditions must be transparent and predictable, and

the persons affected must have an opportunity to defend themselves. The

Act on Agriculture can not meet these requirements. The petitioners

pointed out that according to the Constitutional Court (file no. Pl. US

2/02) legislative interference with manifests strong signs of

arbitrariness violates the confidence in the law which is one of the

fundamental attributes of a law-based state.
 

8.

The petitioners emphasized that they are not contesting the idea of a

joint regime for independent farmers and entrepreneurs doing business in

direct connection with agriculture, but the unconstitutional manner in

which this change was made. According to the petitioners, the

legislature, as a result of an amending proposal (allegedly the draft

Act originally did not anticipate changes in the field of trades)

removed a certain group out of a stable business environment, which was

regulated with a certain degree of flexibility, and shifted them into a

regime with an incomplete framework, which does not take into account

the various previously existing possibilities for the conduct of

business. This is arbitrariness by the legislature, which did not

realize what all the consequences of its steps would be. Such a

procedure is unacceptable in a law-based state, even if the

legislature’s discretion in choice of legal regulations is respected,

because the legislature, by an unjustified, unpredictable,

disproportionate and internally inconsistent change exceed its

constitutional limitations. Therefore, the petition, in addition to

seeking the annulment of § 2e par. 3 of the Act on Agriculture, also

sought the annulment of Art. II. point 2. of the Amendment of the Act on

Agriculture.
 


I. D) Unjustifiable Inequality in the Termination of Existing Authorizations
 

9.

In connection with the abovementioned arguments, the petitioners also

contested the inequality established by the Amendment of the Act on

Agriculture in Art. II. point 1 of the transitional provisions, which

regulate the regime for persons previously doing business on the basis

of the Act on the Private Conduct of Business by Citizens (specifically,

the sentence “A certification issued to an independently operating

farmer under Act no. 105/1990 Coll., on the Private Conduct of Business

by Citizens, as amended by Act no. 219/1991 Coll. and Act no. 455/1991

Coll., is valid for 5 years from the day this Act goes into effect”).

The difference in the period for termination of existing authorizations

unjustifiably advantages one group of businesspeople (independent

farmers) compared to another group (those doing business on the basis of

the Trades Licensing Act), although their positions are analogous,

which is inconsistent with Art. 4 par. 3 of the Charter. Here the Act

violates equality of rights (Art. 1, Art. 3 and Art. 4 par. 3 of the

Charter) and the termination of authorization and obligation for new

registration undoubtedly limit the freedom to conduct business, yet the

disadvantage is unjustified (see judgment Pl. US 38/01). Setting

different regimes for analogous cases can not be tolerated, even taking

into account a certain freedom on the part of the legislature when

setting new conditions for the practice of certain provisions which had

been practiced under existing regulations (see, e.g., judgment file no.

Pl. US 4/95). There are no objective reasons for different regimes for

the transfer of similar activities (which is why they are governed by

the same statute). In addition, trade license holders, unlike farmers,

must meet certain newly-specified conditions already, which should lead

to making the transitional regime milder (if we take the purpose of the

change into account). That is why the legislature’s approach is also

disproportionate. For these reasons the petitioners requested the

deletion of the sentence specified above. The petitioners pointed out

that if the change in the regime for conducting business is pronounced

unconstitutional (see par. 5 to 8), this part of the petition is

groundless.
 


I. E) Inequality between legal entities and natural persons in meeting the conditions for expert qualification
 

10.

The petitioners also requested the annulment of the clause of the first

paragraph of § 2e par. 1 of the Act on Agriculture, which established

the inequality, and thereby also violated Art. 1 and Art. 4 par. 3 of

the Charter, because legal entities were permitted to meet the

conditions in the Act through any person in an employment relationship,

whereas natural person do not have this possibility. Natural persons

will be forced to establish legal entities for that purpose, but there

is no public interest (as with banks of securities traders), which would

justify limiting the access of natural persons to doing business. The

petitioners stated that they are aware that annulment of this advantage

for legal entities will require legislative changes to the Act on

Agriculture (a differentiation of the conditions which an agricultural

entrepreneur must meet, introduction of a general framework for a

responsible representative, or the manner in which a legal entity is to

prove that it has met the statutory conditions).
 


II. Recapitulation of the Statements by the Parties to the Proceedings
II. A) Statement from the Chamber of Deputies of the Parliament of the CR
 

11.

In its statement of 10 September 2004, the Chamber of Deputies of the

Parliament of the CR, represented by its Chairman, PhDr. Lubomír

Zaorálek, said that the conditions for doing business provided in the

Act on Agriculture ensure the appropriate protection of the public

interest and do not establish inequality between various subjects in

their ability to do business. The petitioners’ legal opinion is

self-serving and superficial. According to the background report, the

aim of the Amendment of the Act on Agriculture was to remove certain

shortcomings in the existing framework: to define the terms

“agricultural production,” agricultural entrepreneur,” and to set

conditions and obligations fro person who want to do business in

agriculture.
 

12. The

requirement of expert qualification arises from the fact that

agricultural products become part of the food chain. The method of land

management, production of ecological foods, use of biochemical

substances, fertilizers, feedstuffs, herbal medical care and the

development of non-productive functions of agriculture “undoubtedly

require a certain expert qualification.”
 

13.

The requirement of a clean criminal record (not affecting offenses

removed from the record and of lesser social danger) is justified by the

possibility to receive subsidies from the state budget and from EU

funds. The entrepreneur would not be competitive without subsidies. The

state is required to ensure responsible and purposeful management of

subsidies. And the state also guarantees the safety of foods (§ 1 of the

Act on Agriculture).
 

14.

The definition of agricultural production in § 2e par. 3 of the Act on

Agriculture, which transfers some activities from the regime of the

Trades Licensing Act to the Act on Agriculture, is also not inconsistent

with the principles of a law-based state, because it only unifies the

legal regime for persons doing business in agriculture and removes the

lack of definitions of the terms “agricultural production” and

“agricultural entrepreneur.”
 

15.

The transitional provisions of the Amendment of the Act on Agriculture

also do not violate equality of rights, because the deadline for

registration is the same for both groups of persons who wish to

(continue to) do business in the field.
 


II. B) statement from the Senate of the Parliament of the CR
 

16.

in its statement of 9 September 2004, the Senate of the Parliament of

the CR, represented by its then-chairman, doc. JUDr. P. P., stated that

the committees recommending passing the draft of the Amendment of the

Act on Agriculture. However, during debate in the senate, a number of

comments of a constitutional nature appeared – e.g., the Act creates an

environment which could prevent landowners (if they wanted to) from

doing business on their land. Some senators pointed out the

constitutional requirement that, in the event of a conflict between the

right of an individual and the public interest, it must be reviewed

whether the public interest legitimizes limiting the private sphere, and

whether the aim really pursues a public interest. Otherwise the

limitation is unconstitutional. Therefore, a number of amending

proposals were submitted, the aim of which was to delete all provisions

concerning the clean criminal record and expert qualification. However,

despite the cited concern, the result of the voting was only to shorten

the minimum length of a mandatory re-qualification course from 300 to

150 hours (§ 2f par. 2 let. b) point 1 of the Act on Agriculture); the

Chamber of Deputies of the Parliament of the CR also subsequently agreed

with that, and approved the Act in the wording returned by the Senate.
 

17.

Above and beyond the foregoing, the Senate Chairman stated that a

provision which permits legal entities to meet the conditions of § 2e

par. 1 of the Act on Agriculture through a responsible representative is

necessary in the framework of this Act, because if it were deleted

legal entities would not be able to met the conditions of expert

qualification and a clean criminal record. Therefore, removing any

doubts about the unequal position of natural persons and legal entities

would be a positive legal framework, permitting natural persons to also

meet the statutory conditions through a responsible representative.
 

18.

The Constitutional Court asked the parties to the proceedings for

consent to omit a hearing (§ 44 par. 2 of Act no. 182/1993 Coll., on the

Constitutional Court, as amended by later regulations), because a

hearing could not be expected to clarify the matter further. The parties

consented. The Court could then proceed to considering the matter on

the merits.
 


III. Formal prerequisites for considering the petition
III. A) The Text of the Contested Provisions of the Act on Agriculture
 

19.

The contested provisions of Act no. 252/1997 Coll. read as follows (the

contested parts are highlighted in bold; if the text is not written in

italics, that means that it was amended or expanded in the interim

between the filing of the petition and the Constitutional Court’s

decision – see below):
Ҥ 2e The Conduct of Business in Agriculture
(1)

An agricultural entrepreneur under this Act is a natural person or

legal entity which intends to conduct agricultural production as a

consistent and independent activity under its own name, on its own

responsibility, for the purpose of earning profits, under conditions

provided by this Act, and who, if a natural person
c) has a clean criminal record,
d) has expert qualifications (§ 2f par. 2),
 

Fulfillment

of the conditions in letters a) to f) by a legal entity must be proved

by its responsible representative. For purposes of this Act the

responsible representative is a natural person appointed by the legal

entity who is responsible for the proper operation of the business and

who is in an employment relationship person to the agricultural

entrepreneur. No one may be appointed to the position of responsible

representative for more than two agricultural entrepreneurs. The

responsible representative for a legal entity may not be a member of the

supervisory board or other inspection body of that legal entity. If the

responsible representative ceases to exercise his position or does not

meet the conditions, the agricultural entrepreneur must appoint a new

responsible representative no later than within 15 days.
 

(3) Agricultural production, including economic activity in forests 4i) and on water means
a)

plant production, including growing hops, fruit, vineyards, winemaking

and cultivating vegetables, mushrooms, decorative plants, healing and

aromatic plants, plants for technical and energy use, on land owned,

leased, or used on the basis of another legal entitlement, or conducted

without land,
b) animal production, including the breeding of

economic and other animals or living beings for purposes of obtaining

and producing animal products, the breeding of draft animals and

breeding sport and racing horses,
c) production of breeding animals and use of the genetic material, in the case of animals listed in letter b),
d) production of seeds and seedlings, nursery plants and plant genetic material,
e) the growing, processing and sale of one’s own agricultural production, including foods 4j) made from it,
f)

breeding of fish, water animals and the cultivation of plants on water

surfaces on land owned, leased, or used on the basis of another legal

entitlement.
g) economic activity in forests 4i), on land owned, leased, or used on the basis of another legal entitlement,
h) economic activity with water for agricultural and forestry purposes.
(5)

A person with a clean criminal record for purposes of this Act is

considered to be one who has not been convicted with legal effect or who

is regarded as not having been convicted 4k)
a) of an intentional crime, for a non-suspended prison sentence of at least one year,
b) of an intentional crime, which he committed in connection with doing business and which is not a crime under letter a), or
c) of a negligent crime committed in connection with doing business in agriculture.

§ 2f Register of Agricultural Entrepreneurs
(2)

The appropriate municipal office with expanded jurisdiction (the

“municipal office” shall register an agricultural entrepreneur if an

applicant
b) meets the expert qualification requirement
1. by

achieving an education at least at the level of secondary expert

education 4l) in an agricultural field, veterinary medicine and

veterinary prevention, or at the level of full secondary education

focused on agriculture, or by completing an accredited re-qualification

course aimed at the performance of general agricultural activities in a

scope of at least 150 hours, or
2. by proving that he has at least 5 years of agricultural practice in an agricultural business
The

appropriate municipal office for register an applicant for agricultural

entrepreneurship is the municipal office with expanded jurisdiction in

whose territorial jurisdiction the place of business or address of the

agricultural entrepreneur is located. For purposes of this Act the place

of business means the place from which the agricultural entrepreneur

directs his business activity.

 

(3) An application for registration as an agricultural entrepreneur filed by a natural person shall state
c) information about his expert qualifications, if he has them,
 

(4) An application for registration as an agricultural application, if filed by a legal entity shall state
c) the information set forth in paragraph 3 let. a), b) and c) concerning its responsible representative,
 

(8)

When evaluating the expert qualifications of an applicant for

registration, the procedures in a special legal regulation shall be

followed. 4m) When evaluating expert qualifications, disputed cases

shall be decided by the regional office.”
4i) Act no. 289/1995 Coll., the Forestry Act, as amended by later regulations.
4j)

Act no. 110/1997 Coll., on Foods and Tobacco Products, and Amending and

Supplementing Certain Related Acts, as amended by later regulations.
4k) For example, § 60 , 60a and 70 of the Criminal code.
4l) Act no. 29/1984 Coll., the Schools Act, as amended by later regulations.
4m) Act no. 18/2004 Coll., the Act on Recognition of Expert Qualifications.
 

20.

in the interim since the petition was filed, Act no. 441/2005 Coll.

amended some of the contested provisions, but their essence has not been

affected in any way from the point of the view of the substantive

content of the petitioner’s objections, because the only changes were

(the end of par. 1 § 2e), that the responsible representative of a legal

entity may have a contractual, not employment, relationship, and the

same provision formulated barriers to the performance of the position of

a responsible representative on grounds of incompatibility (conflict of

interest, single representation). Also, items were added concerning the

statutory definition of the term “agricultural production”(§ 2e par. 3

let. g) and h)).
 


III. B) The Text of the Contested Provisions of the Amendment of the Act on Agriculture
 

21. The contested provisions of Act no. 85/2004 Coll. read as follows:
“Art. II transitional Provisions
1.

A person conducting, as of the day this Act goes into effect,

agricultural production under Act no. 105/1990 Coll., on the Private

Conduct of Business by Citizens, as amended by Act no. 219/1991 Coll.

and Act no. 455/1991 Coll., is considered to be an agricultural

entrepreneur for conducting agricultural production under this Act, if

he registers within 1 year from the day this Act goes into effect at the

appropriate municipal office of a municipality with expanded

jurisdiction under § 2f of Act no. 252/1997 Coll., on Agriculture, as

amended by that Act. A certification issued to an independently

operating farmer under Act no. 105/1990 Coll., on the Private Condut of

Business by Citizens, as amended by Act no. 219/1991 Coll. and Act no.

455/1991 Coll., is valid for 5 years from the day this Act goes into

effect; for purposes of sickness and pension insurance the holder of

such a certification is considered an agricultural entrepreneur for

conduct of agricultural production under this Act. If an independently

operating farmer does not intend to conduct agricultural production

under this Act, he shall ask the municipal office of the municipality

with expanded jurisdiction to issue a confirmation that he has been

removed from the register of persons maintained under Act no. 105/1990

Coll., on the Private Conduct of Business by Citizens, as amended by Act

no. 219/1991 Coll. and by Act no. 455/1991 Coll.
2. A person who,

as of the day this Act goes into effect, conducts, on the basis of a

trade license obtained before this Act went into effect, activities

which are agricultural production under this and which were trades until

that date under Act no. 455/1991 Coll., on Trades Licensing (the Trades

Licensing Act), as amended by later regulations, is considered an

agricultural entrepreneur under this Act. A person named in the first

sentence is required to register within 1 year from the day this Act

goes into effect at the appropriate municipal office of a municipality

with expanded jurisdiction under § 2f of Act no. 252/1997 Coll., on

Agriculture, as amended by that Act. If that person does not meet the

obligation to register by the stated deadline, the authorization to

conduct these activities terminates. Until the time when the obligation

to register under § 2f of this Act is met, the trade licensed issued

according to the first sentence is a certificate of authorization of the

relevant agricultural entrepreneur to conduct agricultural production

under this Act.”
 

22. In the

interim, point 1. of the transitional provisions of Act no. 85/2004

Coll. was subject to legislative-technical changes passed by Act no.

441/2005 Coll., which, however, left the essence of the contested

provisions unchanged. In accordance with the purpose of the Act on

Agriculture and the rules of formal logic, the narrowing of the legal

presumption, which gave independently operating farmers the status of

agricultural entrepreneurs under the Act on Agriculture for 5 years, but

only “for purposes of sickness and pension insurance and health

insurance,” was annulled. The narrowing was annulled, and the terms

“agricultural entrepreneur under this Act” and “a person doing business

in agriculture” were standardized into “agricultural entrepreneur

[authorized] for conducting agricultural production under this Act.” At

the end of point 1. the following text was added: “If an independently

operating farmer does not intend to conduct agricultural production

under this Act, he shall ask the municipal office of the municipality

with expanded jurisdiction to issue a confirmation that he has been

removed from the register of persons maintained under Act no. 105/1990

Coll., on the Private Conduct of Business by Citizens, as amended by Act

no. 219/1991 Coll. and by Act no. 455/1991 Coll.”
 

23.

Even here, however, the essence of the contested provisions was not

changed in terms of the substance of the petitioners’ objections. From

the point of view of § 66 par. 1 of the Act on the Constitutional Court

there were thus no grounds for the impermissibility of the petition, or

grounds to suspend the proceeding (see, similarly, par. 3, part VII. c)

of the judgment of 31 October 2001, file no. Pl. US 15/01 in Coll. of

Decisions, vol. 24, p. 201 or no. 424/2001 Coll.).
 


III. C) Permissibility of the Petition to Annul the Amendment
 

24.

The petition was also permissible in the part which proposed the

annulment of the transitional provisions of the Amendment of the Act on

Agriculture, because those provisions are only part of that Amendment.

They do not appear in the Act on Agriculture itself, and are not a

component of it (see part III. of the judgment of 12 March 2002, file

no. Pl. US 33/01, in Coll. of Decisions, vol. 25, p. 215 or no. 145/2002

Coll. of Laws). Thus, this was not a case identical with the matter

decided by judgment of 12 February 2002, file no. Pl. US 21/01 (in Coll.

of Decisions, vol. 25, p. 97, or no. 95/2002 Coll.), where the

Constitutional Court found that a petition could not be addressed in the

part which contested an amending provision reflected in an amended

text.
 


III. D) Constitutionality of the Legislative Process
 

25.

Before evaluating the content of the contested provisions in terms of

their consistency with constitutional laws, the Constitutional Court had

to (under § 68 par. 2 in fine, of the Act on the Constitutional Court)

evaluate the fulfillment of the formal conditions for enactment of the

contested Act. The parties to the proceedings did not cast doubt n the

legislative process. The relevant documents published in the Digital

Library of the Chamber of Deputies of the Parliament of the CR, and on

the webpage of the Senate of the Parliament of the CR (www.psp.cz and

www.senat.cz) indicate that the draft Act approved on 4 November 2003 By

the Chamber of Deputies of the Parliament of the CR (116 votes in

favor) was, based on resolution of the Senate of the Parliament of the

CR of 10 December 2003, returned to the Chamber (33 votes in favor out

of 64 present) with amending proposal which the Chamber accepted, and

the draft as amended by the senate was passed on 14 January 2004 (134

votes in favor). the Chamber of Deputies of the Parliament of the CR

took the same position on 10 February 2004, when, by 133 votes in favor

of the draft Act, it overrode the veto of the president, who had

returned the Act (Art. 50 par. 1 of the Constitution of the CR) on 29

January 2004. After that the Act was published on 19 February 2004 as

number 85/2004 Coll. in the Collection of Laws. The Constitutional Court

states that Act no. 85/2004 Coll., which inserted the contested

provisions into Act no. 252/1997 Coll., on Agriculture, was passed in a

constitutionally prescribed manner.
 


IV. The Review
 

A) Aim Pursued by the Condition of a Clean Criminal Record
 

26.

The petitioners first contested the condition of a clean criminal

record for an agricultural entrepreneur (§ 2e par. 1 let. c) and the

related § 2e par. 5 of the Act on Agriculture) as a disproportionate

condition which unconstitutionally bars access to doing business without

that limitation of a fundamental right being necessary and justifiable

in terms of the public interest.
 

27.

In such a situation the Constitutional Court normally reviews the

constitutionality of limitations on fundamental rights using the test of

proportionality. In its judgment of 13 August 2002, file no. Pl. US

3/02, the Constitutional Court, with reference to the preamble and first

Article of the Constitution of the CR, stated that in cases of

conflicts between a fundamental right or freedom and the public

interest, or other fundamental rights or freedoms: “… necessary to

evaluate the purpose (aim) of such interference in relation to the means

used, and the measure for this evaluation is the principle of

proportionality (in the wider sense), which can also be called a ban on

excessive interference with rights and freedoms. This general principle

contains three principles, or criteria, for evaluating the admissibility

of interference. The first of these is the principle of capability of

meeting the purpose (or suitability), under which the relevant measure

must be capable of achieving the intended aim, which is the protection

of another fundamental right or public good. Next is the principle of

necessity, under which it is permitted to use, out of several possible

ones, only the means which most preserve the affected fundamental rights

and freedoms. The third principle is the principle of proportionality

(in the narrower sense), under which detriment in a fundamental right

may not be disproportionate in relation to the intended aim, i.e.

measures restricting fundamental human rights and freedoms may not, in

the event of conflict between a fundamental right or freedom with the

public interest, by their negative consequences exceed the positive

elements represented by the public interest in these measures” (in

Collection of Decisions of the Constitutional Court of the CR, Coll.

Dec., 27, p. 177 and 183, or the Collection of Laws, no. 405/2002). The

proportionality test is among the standard legal instruments both of

European constitutional courts and of international or supranational

courts (cf. numerous ECHR decisions; the European Court of Justice

(“ECJ”) also uses its variation of the proportionality test – see

judgment of the Constitutional Court pf 8 March 2006, file no. Pl. US

50/04 published on 26 April 2006 as no. 154/2006 in the Collection of

Laws and the ECJ case law cited here).
 

28.

Application of the proportionality test requires seeking and

identifying the aim of the provision that limits a fundamental right. it

is not prima facie clear what aim the condition of a clean criminal

record for an agricultural entrepreneur is mean to pursue, and the

background report to the government draft of the Amendment of the Act on

Agriculture does not state an aim (cf. Chamber of Deputies publication

no. 305/0 distributed to the deputies on 12 June 2003 in the Digital

Library of the Chamber of Deputies of the Parliament of the CR at

www.psp.cz). In the first debate in the Chamber of Deputies the

proponents of the draft did not explain any justification for the

condition of a criminal record (id.). On 10 February 2004 (in debate

concerning the Act vetoed by the president) the Minister of Agriculture

of the CR, Jaroslav Palas, stated in the Chamber of Deputies: “The

required clean criminal is applied in the draft Act very narrowly, for

natural persons, agricultural entrepreneurs, and responsible

representatives of a legal entity, with the aim of preventing these

persons, exclusively in doing business in agriculture, from committing

repeated criminal activity. We must emphasize, first of all, existing

experience with criminal activity which persons doing business in

agriculture have committed in connection with improperly obtained or

used subsidies, i.e. funds from the state budget. The requirement of a

clean criminal record, provided in § 2e) paragraph 5 of the draft, in no

way limits person who have an entry in the criminal register but the

criminal entry was of a lesser social danger, or is not connected to the

conduct of business in agriculture. This does not prevent an owner or

user of agricultural land who does not have a clean criminal record

under this draft Act from making a living for himself or his family, but

outside the regime of entrepreneurial activity.” Therefore, the

Constitutional Court considers the legislature’s aim to be ensuring

proper management of agricultural subsidies (cf. also the statement by

the Chairman of the Chamber of Deputies).
 

29.

Article 26 par. 2 of the Charter presumes the possibility of limiting

the practice of certain professions or activities by law, without

specifying the purpose of the limitation. However, legal norms issued

based on that Article must meet the proportionality test. First, it is

necessary to evaluate the nature of the aims pursued by the limitation.

The legislature justified the condition of a clean criminal record by

the public interest in proper management of public funds, the intensity

and nature of which can (in the legislature’s opinion) justify a blanket

limitation on entry into the field only for those agricultural

entrepreneurs who meet the conditions necessary for drawing subsidies.

The aim pursued by this provision appears to be legitimate.
 

30.

However, it is also necessary to review the necessity of the means

selected in terms of its preservation of a fundamental right,- i.e. the

freedom to do business. It can not be overlooked that the purpose of

agriculture is not to draw subsidies, but plant and animal production.

The question of whether agricultural production is possible only with

subsidies must be left to day-to-day reality, to the results of

activities resulting from the free decisions of individuals. It

necessarily follows that a decision as to whether entrepreneurs will do

business at all with the use of subsidies should, in terms of Art. 26 of

the Charter, be left to their choice. If they decide to apply for a

subsidy, it is conceivable for the legislature to tie the legally

positive decision to provide a subsidy to a clean criminal record in a

scope related to the legal use of public funds provided to the applicant

in the past. The foregoing indicates that the chosen solution is not

the one which best preserves a conflicting fundamental right. Therefore,

it was not necessary to continue evaluation using the proportionality

test, because the condition of a clean criminal record did not withstand

in terms of the necessity of the means selected, because the desired

state of affairs (the aim pursued) can be achieved through other means

(e.g. during the process of allocating and inspecting management of

subsidies, as stated above).
 

31.

For these reasons the Constitutional Court decided to annul § 2e par. 1

let. c) of the Act on Agriculture, which defines the condition of a

clean criminal record. It annulled, as a related provision, § 2e par. 5

of the Act on Agriculture, which defines the term “clean criminal

record” for purposes of the Act on Agriculture (regarding this, cf. part

VII. d) of the judgment in the matter file no. Pl. US 15/01 published

as no. 424/2001 Coll., or in Coll. Dec., vol. 24, p. 201).
 


B) Necessity and Proportionality of the Condition of Expert Qualifications
 

32.

The aim pursued by the condition of expert qualifications (§ 2e par. 1,

let. d) a § 2f par. 2 let. b) of the Act on Agriculture and the related

§ 2f par. 3 let. c), the words “and c)” in § 2f par. 4 let. c) and § 2f

par. 8 of the Act on Agriculture) is obvious and understandable, and

also corresponds to the purpose of the Act on Agriculture, which is: “a)

to create conditions to ensure the capability of Czech agriculture to

ensure the basic nourishment of the population, food safety, and

necessary non-food raw materials; b) to create the prerequisites to

support non-production functions of agriculture, which contribute to the

protection of components of the environment such as the land, water and

air, and to the maintenance of the settled and cultural landscape; c)

to create conditions for implementing the EU’s joint agricultural policy

and rural development policy.” (cf. § 1 of the Act on Agriculture in

the version in effect until 9 November 2005; after that date another

purpose was added to the Act, which is “d) to create conditions for the

development of various economic activities and improving the quality of

life in rural areas and for the development of villages.”).
 

33.

In the first reading of the Amendment of the Act on Agriculture in the

Chamber of Deputies on 11 June 2003 the Minister of Agriculture stated:

“[I] discussed the amendment with a wide range of persons in agriculture

in various meetings, including, farmers. They understood that the

fundamental thing for everyone working in agriculture is not only to

work on the assets entrusted to him, but also to continue to educate

himself. They take this as a natural need, because development is moving

forward, including in agriculture. There is more and more new

information in science and research, so farmers too feel the need to

educate themselves, and new farmers all the more so. I discussed this

matter, as I said, with a wide range of people working in agriculture,

and they fully respect and understand the minimum requirement of 300

hours. So, I consider these paths and concerns to be more or less

unfounded.” (cf. transcript to publication 350/0 in the Digital Library

of the Chamber of Deputies). On 14 January 2004, in debate concerning

the Act returned by the Senate, senator Jan Fencl stated: “only farmers

and agriculture entrepreneurs who are highly competent in the field can

guarantee the competitiveness and society-wide prestige of the sector,

which society-wide public opinion ranks at the bottom today. Unless our

agriculture workers undergo professional training, they are not capable –

and I agree with this – to draw the necessary subsidy funds from the

European Union, which they are waiting for so eagerly. These, and

perhaps other arguments apparently prevailed, because amending proposals

aimed at deleting the clean criminal record and expert qualifications

were not passed” (id., transcript in publication 350/3).
 

34.

The Constitutional Court had to again evaluate the proportionality of

limitation imposed on the right to conduct business by the condition of

expert qualifications. The petitioners here pointed to the judgment of

25 November 2003, where the Constitutional Court stated that: “to a

certain degree it is also the state which positively forms and provides

conditions for the practice of a profession and economic activities, and

thus creates the prerequisites for the performance of these activities

(status positivus). The essence of the right under Art. 26 par. 1 of the

Charter must necessarily lead to differentiating economic activities

according to the various degree of interference, or participation of the

public element, even in the very constituting of that economic

activity. The state sets conditions and limitations on the practice of a

particular profession and certain economic activities in the public

interest, which is primarily the interest in the quality of performance

of these activities. One of th prerequisites … is, for example,

attaining an adequate degree of education and the appropriate length of

practice in a given field. In such cases it is always necessary to

consider whether the limitation of a right by such a public interest is

still proportional, or whether the limitation interferes with or denies

the essence and significance of the fundamental right (the right to free

choice of profession).” (Cf. judgment file no. I. US 504/03 in Coll.

Dec., vol. 31, p. 227).
 

35.

The condition of expert qualifications for an agricultural entrepreneur,

which limits the freedom to do business, must be reviewed in terms of

evaluating the legitimacy of the aim it pursues. That aim is, first of

all, the quality of agricultural business, which does not function in

and of itself, but is supposed to guarantee defect-free products for

consumers.
 

36. In terms of

the principle of necessity the situation is not so clear, because the

legislature defined the possibilities for meeting the condition of

expert qualifications very strictly. For new entrepreneurs it set the

condition of secondary education which must be supplemented with a

mandatory re-qualification course if “applicants for doing business in

agriculture” do not have an education narrowly oriented at agriculture

(or veterinary medicine). An equivalent of that education is five years

of practice in an agriculture business, where it is not clarified

whether the term business also applies to previously independently

operating farmers or individual trade license holders. If practice

obtained outside collective agriculture entities were not considered

practice under § 2f par. 2 point 2 of the Act on Agriculture, then such

practice could not be considered constitutional, because it would not be

possible to determine an objective and reasonable criterion

establishing the preference for expert efficiency of practice in a

collective agriculture business compared to practice in a business

operated individually. A constitutional interpretation must, of course,

be given precedence.
 

37.

Thus, it remained to evaluate the situation from the point of view of

person who do not have the appropriate secondary expert education and do

not have five years of practice in agriculture. The Act on Agriculture

does not permit such persons to do business. They are forced to either

establish a legal entity and find a responsible representative, or to

postpone doing business until they meet the condition of practice, or to

acquire secondary expert education in agriculture (or a related field)

or to complete a re-qualification course (after obtaining any other

secondary expert education).
 

38.

The Constitutional Court has stated in the past that: “when

interpreting Art. 26 of the Charter … it is necessary to keep in mind

that under Art. 41 par. 1 of the Charter one can seek to exercise the

rights established in Art. 26 ‘only within the bounds of the statutes

which implement these provisions.” Therefore, the legislature has

relatively wide discretion to specifically define the content and manner

of implementation of this Article, Nonetheless, even in this case it is

bound by constitutional maxims, the main one here being Art. 4 par. 4

of the Charter. … In other words, even the cited relative discretion of

the legislature, arising from Art. 41 par. 1, can not lead to the

legislature, in the form of a statute, violating the essence and

significance of Art. 26 of the Charter, which, in par. 1 guarantees

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

as well as the right to do business and engage in other economic

activity.” (judgment of 12 July 2001, file no. Pl. US 11/2000 published

as no. 322/2001 Coll., or in Coll. Dec., vol. 23, p. 105). In the sense

of the cited legal opinion the obligation to meet the condition of

expert qualifications solely personally appears excessively harsh and

disproportionate; in view of the wording of the clause in § 2e par. 1 of

the Act on Agriculture it applies to all natural persons, who are thus

barred from conducting business. However, such a limitation can not

stand when measured by the principle of necessity, all the more so when

measured by the criterion of proportionality in the narrower sense (see

above). Although agriculture products become part of the food chain, and

although agriculture is irrefutably connected with management of land

(or the production of ecological foods, use of biochemical preparations,

fertilizers, feedstuffs, herbal medical care and the development of

non-product functions of agriculture), it is not clear why ensuring the

public interest in these field should require that someone who does not

have the necessary education or practice not be allowed to do business

in the field at all. The Constitutional Court is forced to reject the

requirement of expert qualifications for an agriculture entrepreneur at

the general level, applying to all forms of agriculture business.

However, it is aware that, in view of the very widely framed definition

of agricultural production, including management of forests and on

water, in the newly inserted § 2e par. 3, after this amendment there may

be activities for which the requirement of increased expert

qualifications is undoubtedly justified, and proportionate to the nature

of these activities (for example, the production and use of genetic

material of breeding animals or plants), but the legislature erred when

it did not apply the requirement of increased expert qualifications

exclusively to those forms of agriculture activity for which it would be

justified, but instead applied it in a blanket fashion to all forms of

agricultural production.
 

39.

However, the aim pursued by setting the condition of expert

qualifications could have been achieved otherwise, for example, by using

the practice of the established institution of a responsible

representative. However, this institution can be used only by legal

entities (cf. the clause in to § 2e par. 1 of the Act on Agriculture).

Therefore, the provisions imposing the obligation to personally meet the

condition of expert qualifications will not stand up to the criterion

of necessity, because they are not the manner for achieving the aim

pursued by the public interest which best preserves other rights or

freedoms (Art. 4 par. 4 in light of Art. 26 par. 1 of the Charter).
 

40.

Therefore, the Constitutional Court annulled both § 2e par. 1, let. d)

and § 2f par. 2 let. b) of the Act on Agriculture, and the related § 2f

par. 3 let. c), the words “and c)” in § 2f par. 4 let. c) and § 2f par. 8

of the Act on Agriculture. The moment for annulment of these provisions

was set as 30 June 2007. The legislature is thus given time to state

the condition of expert qualifications in a constitutionally conforming

manner, taking into account the current customs in the field of public

law regulation of the conduct of business. In the interim between the

promulgation of the judgment in the Collection of Laws and the annulment

of these provisions the Act on Agriculture must be applied in a

constitutionally consistent manner.
 


C) The Manner of Changing Regulation of the Conduct of Business Conducted in Direct Connection with Agriculture
 

41.

The petitioners described the change of legal regulation of

entrepreneurs doing business in direct connection with agriculture

(“secondary agriculture entrepreneurs”) as violation of the freedom to

do business(Art. 26 par. 1 of the Charter). The main argument was that

removing these persons from the stable legal framework into an uncertain

legal framework was unjustified. Therefore, they sought the annulment

of § 2e par. 3 of the Act on Agriculture, which defines the term

“agricultural production,” and the annulment of Art. II. point 2 of the

Amendment of the Act on Agriculture, which provides for the termination

of an existing trade license. Due to the construction of the Act, these

two provisions must be evaluated together.
 

42.

The overall context of the Act on Agriculture and comparison of it with

the Trades Licensing Act indicates that the new conditions must be

considered stricter for all natural persons doing business in connection

with agriculture under the previous legal framework, because the Act

does not permit them to meet the statutory requirements through a

responsible representative, which the previous framework permitted (the

Act on Agriculture does not contain a provision analogous to §§ 11-15 of

the Trades Licensing Act or § 7 par. 4 of the repealed Act on the

Private Conduct of Business by Citizens, no. 105/1990 Coll.). Natural

persons doing business in direct connection with agriculture must meet

the requirements of the Act on Agriculture personally, otherwise their

authorization to do business will terminate, under point 2., Art. II. of

the Amendment of the Act on Agriculture.
 

43.

The amending proposal to the Amendment of the Act on Agriculture

clearly provided for the termination of existing trade license

authorizations (Art. II. point 2 of the Amendment of the Act on

Agriculture), and stated that doing business in agriculture is possible

only upon meeting the conditions in the Act on Agriculture (heading § 2e

par. 1 of the Act on Agriculture; cf. resolution of the Agriculture

Committee of 1 October 2003 in the Digital Library of the Chamber of

Deputies, publication 350/1). The aim of the Chamber of Deputies

proposal was to unify the legal regime for all persons doing business in

agriculture. This is clear from the debate in the second reading in the

Chamber on 22 October 2003, when the deputies in the Agriculture

Committee justified the changes proposed saying that the requirement of

expert qualifications and the requirements of the EU were obvious.

Deputy Jan Grůza said: “The European Union wants three basic things from

us. It wants us to have a clear register of animals, a clear land

register, and a clear register of entrepreneurs in agricultural

production. if we do not have these three things in order, we will not

be able to draw, and the entrepreneur also will not be able to draw,

European Union funds. For that reason alone we need to maintain a clear

register of agriculture entrepreneurs. No one is preventing a private

entrepreneur from taking land and stArting to operate a business with

it. Friends, he can do it immediately – take some land under the Act on

Land, and other land of his own, and stArt a business. But if he wants

to have access to European Union money, under this Act he will have to

register properly, and under this Act he will be able to apply for

European Union money. Only that is the purpose of this Act.” Another

member of the Agriculture Committee, Deputy Ladislav Skopal, said in the

Chamber of Deputies debate: “… five years of practice is in the event

that he does not meet the qualification requirements, basically what was

said. That means 300 hours to take a certain course. Every trade must

have some qualification prerequisites. I think that agriculture is not

the kind of trade where we don’t have to know anything at all. I regret

that Deputy Kučera considers agricultural activity to be on such a low

level that anyone who knows nothing can do business.” – cf. id.,

transcripts of the general and detailed debate concerning publication

no. 350).
 

44. The

Constitutional Court has consistently pointed out the connection between

the principle of predictable consequences of a legal regulation with

the principles of a law-based state (e.g. file no. Pl. US 6/2000,

published as no. 77/2001 Coll., or in Coll. Dec., vol. 21, p. 195, also

file no. Pl. US 40/02, published as no. 199/2003 Coll. or in Coll. Dec.,

vol. 30, p. 327). The predictability of a legal regulation must also be

evaluated from a dynamic point of view. As the petitioners pointed out,

the Constitutional Court has previously evaluated the constitutionality

of a change in conditions for the practice of a profession in the

matter decided by judgment of 7 June 1995, file no. Pl. US 4/95 (in

Coll. Dec., vol. 3, p. 209 or no. 168/1995 Coll.), where the matter was

weighed in terms of the category of equality. Without diverging from

that case law, the Constitutional Court could not overlook the fact that

its case law has developed further in the meantime. A change in

regulation naturally also has effects in the sphere of legitimate

expectations. As was pointed out in the judgment of 13 December 2005: “…

the viewpoints of contextual evaluation of the constitutionality of the

deadline under the existing case law of the Constitutional Court are …

arbitrariness by the legislature in setting the deadline. The Court

acted from that viewpoint for evaluating the constitutionality of a

deadline in the matter file no. Pl. US 2/02, in which it pronounced

unconstitutional the annulment of a provision … in the Civil Code …

whereby the legislature interfered in the legitimate expectations … of

subjects a mere day before expiration of the deadline by which ownership

rights would have been acquired, as a result of which the subjects who

had acted in good faith in the conditions previously set by the state

had been confronted, a mere day before the deadline expired, with the

arbitrary procedure followed by the state, which the Court found to be

inconsistent with Art. 1 of the Supplement to the Convention (with

reference to the case law of the European Court of Human Rights in the

matters Broniowski v. Poland of 2002, Gratzinger and Gratzingerová v.

the Czech Republic of 2002, Zvolský and Zvolská v. the Czech Republic of

2001).“ (Cf. judgment file no. Pl. US 6/05 in 531/2005 Coll., or at

www.judikatura.cz).
 

45.

These principle indicate that the legislature, when changing a legal

regulation, must take into account the previous legal status quo, and

must make changes sensitively, and only in the extent necessary for

achieving the aim of the regulation. Such conduct by the legislature

must be insisted on, because it guarantees the stability of the sphere

of freedom of conduct. Statutes define the basic structure within which

free activities are realized. If the limits of statutory requirements

are uncertain, i.e. if the legitimate expectations based on the law are

not respected, then freedom to is uncertain. That is why protection of

legitimate expectations is an integral party of the rule of law (cf. as

appropriate judgment of 26 April 2005 file no. IV. US 167/05 at

www.judikatura.cz). Taking legitimate expectations into account is an

indispensable dimension of legality (cf. Rawls, J., Teorie

spravedlnosti, [The Theory of Justice] Prague, Victoria Publishing,

1995, p. 145). The imperative to respect legitimate expectations arising

from the existing legal framework of course can not be used to derive a

ban on changes to the legal framework. The point is that in choosing

how to implement a change the legislature must take these expectations

into account, and not ignore the fact that those affected by the norms

have for a long time adapted their conduct (and choices between various

alternatives) to different requirements.
 

46.

The requirement to personally meet the conditions of expert

qualifications and a clean criminal record, together with a short

deadline for the termination of previous authorization, is very harsh.

The manner in which the change was implemented was not necessary, or was

not required by the aim pursued. In any case, even if unification of

the framework can be recognized as a legitimate legislative aim, because

it aims to make the legal order more understandable, there is a

question whether the Act on Agriculture should be the statute to whose

application the regulation of agricultural business should be subject,

because the public law conditions for conducting business are already

regulated by the Trades Licensing Act; there are many years of

experience in applying it, and therefore the institutions contained in

it must be considered to have proved themselves in practice.
 

47.

It is undisputed that the definition of the term “agriculture

production” contained in § 2e par. 3 of the Act on Agriculture, changed

the regulatory framework for secondary agriculture entrepreneurs (as

also confirmed by the Chamber of Deputies), but the reach of this

provision exceeds the framework defined by the present petition. The

petition sought annulment of that provision, but insofar as the

arguments contested in particular the manner which the legislature chose

in the shift to the new framework, then the primary error must be seen

in  Art. II. point 2 of the Amendment of the Act on Agriculture, which

gives secondary entrepreneurs the obligation to register under new

conditions and sets the termination of existing authorizations, because

it is primarily this provision that is an expression of the

unconstitutional change of regulation objected to by the petitioners.

Therefore, the Constitutional Court granted the petition to annul Art.

II. point 2 of the Amendment of the Act on Agriculture and denied the

petition to annul § 2e par. 3 of the Act on Agriculture.
 

48.

The petitioners also sought annulment of the clause in § 2e par. 1 of

the Act on Agriculture that permits legal entities to meet the

conditions of a clean criminal record and expert qualifications through a

responsible representative, but annulling this provision would make it

impossible for legal entities to do business in agriculture, which is an

interference that can not be justified by the argument that other

subjects are also barred from doing business. Such an understanding of

the principle of equality lacks the attributes of reasonable

interpretation of the law, and therefore this petition was denied. In

any case, the petitioners themselves stated (p. 13 of the petition),

that if the regime for doing business is found to be defective, this

part of the petition is irrelevant. The petitioners also considered the

longer deadline for the termination of authorization of independently

operating farmers (the abovementioned part of Art. II. point 1. of the

Amendment of the Act on Agriculture) to be unconstitutional. here too

the Constitutional Court could not grant the petition. The actual

situation of these persons (and their consequent arising ability to

respond to changes) is very different from that of secondary agriculture

entrepreneurs, and one can find prima facie reasonable grounds for a

different regime. Therefore, providing an “advantage” could not be

considered an expression of constitutionally unacceptable arbitrariness

(cf. judgment Pl. US 16/93 in Coll. Dec., vol. 1, p. 189 or no. 131/1994

Coll. and other judgments). Therefore, the Constitutional Court denied

these parts of the petition (cf. above, par. 9 and 10).
 

49. For all the foregoing reasons the Constitutional Court decided as is stated in the verdicts.

Notice: Decisions of the Constitutional Court can not be appealed (§ 54 par. 2 of the Act on the Constitutional Court).

 

Brno, 20 June 2006