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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
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
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
In Brno, 30 October, 2002