Lt

On the privatisation of the property of consumer cooperation

Case No. 14/95

 THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA

 R U L I N G

On the compliance of the Resolution of the Government of the Republic of Lithuania (No. 14) “On the Portion of the State Property Currently Managed by Consumer Cooperation” of 20 January 1993 as well as the Ordinance of the Government of the Republic of Lithuania (No. 186p) “On the Property Relations Between the State and Consumer Cooperation” of 10 March 1993 with Articles 1 and 2 of the Law on the Privatisation of Apartments

 22 May 1996, Vilnius

The Constitutional Court of the Republic of Lithuania, composed of the justices of the Constitutional Court: Egidijus Jarašiūnas, Kęstutis Lapinskas, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Pranas Vytautas Rasimavičius, Teodora Staugaitienė, and Juozas Žilys

The court reporter—Daiva Pitrėnaitė

Vitoldas Kumpa, the Head of the Legal Division of the Secretary Office of the Government, acting as the representative of the Government of the Republic of Lithuania, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on Constitutional Court of the Republic of Lithuania, in its public hearing, on 30 April 1996, considered case No. 14/95 subsequent to the petition submitted to the Court by the First Vilnius City Local Court requesting an investigation into whether the Resolution of the Government of the Republic of Lithuania (No. 14) “On the Portion of the State Property Currently Managed by Consumer Cooperation” of 20 January 1993 and the Ordinance of the Government of the Republic of Lithuania (No. 186p) “On the Property Relations Between the State and Consumer Cooperation” of 10 March 1993 are in conformity with Articles 1 and 2 of the Law on the Privatisation of Apartments.

The Constitutional Court

has established:

I

On 10 May 1995, the First Vilnius City Local Court, the petitioner, was investigating a civil case pursuant to the action of the plaintiff K. Džiovalaitė against the respondent Vilnius Cooperation School of Further Education of the Lithuanian Union of Consumer Cooperatives. The plaintiff indicated the Board of the Lithuanian Union of Consumer Cooperatives as the third party in her 21 April 1995 supplementary petition of the action. The said court in its ruling by which it appealed to the Constitutional Court formulated that the request of the plaintiff concerns the obligation to allocate to her and sell her an emptied room which is in a hostel (the address: 38a-12, Lvovo Street, Vilnius) and which belongs to the Board of the Lithuanian Union of Consumer Cooperatives.

By its ruling, the local court suspended the investigation of the case and applied to the Constitutional Court with a petition requesting an investigation into whether the Government Resolution (No. 14) “On the Portion of the State Property Currently Managed by Consumer Cooperation” of 20 January 1993 (Official Gazette Valstybės žinios, 1993, No. 5-96; hereinafter referred to as the impugned resolution) and the Government Ordinance (No. 186p) “On the Property Relations Between the State and Consumer Cooperation” of 10 March 1993 (received together with the petition of the First Vilnius City Local Court; hereinafter referred to as the impugned ordinance) are in conformity with Articles 1 and 2 of the Law on the Privatisation of Apartments, and whether the Law on the Privatisation of Apartments shall be applied when dwelling-houses and hostels belonging to the Lithuanian Union of Consumer Cooperatives are privatised.

II

In its ruling, the petitioner points out that the respondents at the local court explained that the said building is property of the Lithuanian Union of Consumer Cooperatives. It is established in Item 5.1 of the impugned resolution that a cooperative, after it has settled its accounts with the State, shall independently dispose of the property that belongs to it. It is held in the impugned ordinance that Lithuanian organisations and enterprises of consumer cooperatives completely settled their accounts with the State until 1 February 1993. It is indicated in the Republic of Lithuania’s Cooperative Law that a cooperative society is entitled to manage, utilise, and dispose of its property.

The petitioner grounds its opinion on the fact that it is established in Articles 1 and 2 of the Law on the Privatisation of Apartments which went into effect on 30 June 1991 that dwelling-houses and buildings belonging to cooperative organisations shall constitute the public housing fund. The petitioner concedes that these lodgings are the object of the Law on the Privatisation of Apartments.

III

During the preparation of the case for the Constitutional Court hearing, as well as during the judicial investigation, the representative of the party concerned explained that the Government by the impugned resolution recognised that the shares of the former union of cooperatives (cooperative societies) “Lietūkis” and those of the former and existing members of Lithuanian consumer cooperation, as well as the corresponding value’s portion of the newly created property, shall be ownership of Lithuanian consumer cooperation. That was done while taking account of the conclusions of both the International Alliance of Cooperation and scientists, and implementing the Resolution of the Supreme Council of the Republic of Lithuania “On Commissioning the Government of the Republic of Lithuania to Decide Certain Problems” of 6 October 1992.

The Government established by the impugned resolution that the portion of State property currently managed by consumer cooperation is constituted of the property granted by the State (except for those transferred to the State) for no consideration, as well as of the corresponding value’s portion of the newly created property.

The representative of the party concerned indicated that Lithuanian organisations and enterprises of consumer cooperatives transferred the portion of State property until 1 February 1993, therefore, the Government by the impugned ordinance recognised that they fulfilled the impugned resolution of the Government and completely settled their accounts with the State.

It is established in Article 5 of the Code of Apartments what dwelling-houses or lodgings constitute the state and public housing fund. In the opinion of the party concerned, this fund is to be held as belonging to the trade unions. Other organisations did not possess any residential lodgings of the public housing fund. It is impossible to draw the conclusion on the basis of Article 5 of the Code of Apartments that public organisations belong to cooperation or vice versa. The said law was passed in a different period of time, therefore, it is doubtful if it is applicable at present.

The hostel, situated in 38a, Lvovo Street, Vilnius, belongs to the Lithuanian Union of Consumer Cooperatives, which, according to Article 21 of the Cooperative Law, shall function as a cooperative society. These societies may not be identified with public organisations. The Supreme Court of Lithuania also had no doubts if a cooperative is an economic entity. According to Article 7 of the Cooperative Law, a cooperative society shall have the right to manage the property belonging to it, utilise and dispose of it. Therefore, the Presidium of the Supreme Court judged this question fairly and did not doubt whether the impugned acts of the Government contradict the Law on the Privatisation of Apartments or other laws.

The representative of the party concerned alleged that a question arose at the time of the separation of the property whether cooperation could survive at all if all property were recognised as State property. When it was clear while separating the property that relevant dwelling-houses had been built from a portion of State funds, these houses were transferred to municipalities and later privatised.

In the opinion of the representative of the party concerned, the Government, when deciding the property’s separation question, did not violate people’s rights as all conditions were created for people residing in hostels to buy the dwelling space on easy terms. There are no significant disputes concerning this and the Government has not received any complaints. The Government has not violate its jurisdiction. Life itself confirmed that the right decisions have been passed.

The Constitutional Court

holds that:

The Government, while implementing the Resolution of the Supreme Council of the Republic of Lithuania “On the Property of Consumer Cooperatives of the Republic of Lithuania” of 14 December 1990, established in Item 5.1 of its Resolution (No. 14) “On the Portion of the State Property Currently Managed by Consumer Cooperation” of 20 January 1993 that “upon settling its accounts with the State, consumer cooperation shall independently dispose of its property”. The Government established in Item 1 of the Ordinance (No. 186p) “On the Property Relations Between the State and Consumer Cooperation” of 10 March 1993 that the organisations and enterprises of Lithuanian consumer cooperation had transferred to the State the portion of property that belongs to the State until 1 February 1993 and that they completely settled their accounts with the State. Following the said legal acts of the Government, when separating the portion of the property belonging to the State, hostels, together with other property, were received by consumer cooperation as its own property.

The petitioner doubts if these acts of the Government are in conformity with the law. In its opinion, it is prescribed in Articles 1 and 2 of the Law on the Privatisation of Apartments that the public housing fund shall consist of dwelling-houses and buildings which belong to cooperative organisations, therefore, these lodgings are objects of the Law on the Privatisation of Apartments.

  1. The cooperative movement and activity are grounded on private ownership. A cooperative enterprise (a cooperative) is a subject of private ownership law.

While assessing the possibility, which has been raised by the petitioner, to privatise hostels which were received by the consumer cooperation, it is impossible not to take account of the specific Lithuanian historical conditions which influenced the legal status of cooperative property and its accumulation. The ownership of cooperatives was private until the 1940 Soviet occupation. The Soviet of People’s Commissars of the Lithuanian Soviet Socialist Republic by its Resolution (No. 262) “On the Organisation of State and Cooperative Trade in the Lithuanian Soviet Socialist Republic” of 25 October 1940 established the Union of Consumer Cooperatives of the Republic by transferring to it the property of the “Lietūkis”. During the period of Soviet occupation, state and collective-cooperative ownership was proclaimed as the basis of the state-economic system. Attempts were made to bring cooperative ownership and state ownership closer. This was established in normative acts of that time and it was implemented by means of various ways. Among such ways, there existed the transfer of some of state property to consumer cooperation for no consideration. Thus, the cooperative property during the period of Soviet occupation became of a dual character, viz., the transferred and nationalised property of the “Lietūkis” functioned together with the state property transferred to it.

The dual character of the cooperative property was ascertained in the Resolution of the Supreme Council of the Republic of Lithuania “On the Property of Consumer Cooperatives” of 14 December 1990 by which it was prohibited to sell, divide or transfer in any manner the property of the Lithuanian Union of Consumer Cooperatives and its organisations, except for those meant for trade, until the procedure of the utilisation of the state property held in the said organisations was established. Thus, legal preconditions were created by this resolution of the Supreme Council to separate the portions of property belonging to the State and to consumer cooperation.

Upon the reinstatement of the constitutional institute of private ownership in the legal system of the Republic of Lithuania, the creation of legal pre-requisites for restoring and further developing the economic system based on the right of private ownership began. To achieve this goal, while carrying out the economic reform, the Law on Initial Privatisation of State Property, the Law “On the Procedure and Conditions of the Restoration of the Rights of Ownership of Citizens to the Existing Real Property”, the Law on Land Reform, the Law on the Privatisation of Property of Agricultural Enterprises, and other laws and legal acts were passed. A distinct Law on the Privatisation of Apartments is devoted for the privatisation of the state and public housing fund. The privatisation of apartments has become one of the main directions of the State social policy. It has sought to achieve a situation where dwelling lodgings would become private ownership, i.e., where their owner was the person residing in the said lodgings.

  1. It was established in Paragraph 2 of Article 1 of the Law on Initial Privatisation of State Property that “the procedure and conditions of the privatisation of the apartments from the state and public housing fund shall be established by means of other laws of the Republic of Lithuania”. The said procedure and conditions are established in the Law on the Privatisation of Apartments that came into force on 30 June 1991 and Paragraph 1 of Article 2 whereof stipulates: “<...> the procedure of sale and purchase of the state and public housing fund shall be established by this law <...>”. It is established in Paragraph 1 of Article 2 of the said law that the entities of sale and purchase shall be corresponding dwelling-houses and apartments of the state and public housing fund.

When judging what residential lodgings shall be subject to privatisation pursuant to the Law on the Privatisation of Apartments, it is necessary to elucidate the content of the notion the state and public housing fund which is used in this law from its very coming into force, as well as later, after the law had been amended and supplemented.

During the period of the adoption of the Law on the Privatisation of Apartments, according to Paragraph 1 of Article 4 of the Code of Apartments, all dwelling-houses, as well as other residential lodgings in other buildings, belonged to the housing fund. Only non-residential lodgings of dwelling-houses which were devoted to the matters of trade, private life, and those of a non-industrial character, did not belong to the housing fund. Hostels, according to their purpose, were residential lodgings (Paragraph 1 of Article 7 of the Code of Apartments).

It is prescribed in Paragraph 1 of Article 5 of the Code of Apartments that the housing fund shall comprise of: 1) dwelling-houses as well as residential lodgings which are in buildings belonging to the State (the State housing fund); 2) dwelling-houses as well as residential lodgings in other buildings belonging to collective farms and other cooperative organisations, unions thereof, trade unions, and other public organisations (the public housing fund); 3) dwelling-houses belonging to dwelling-houses’ construction cooperatives (the fund of the dwelling-houses’ construction cooperatives); 4) dwelling-houses and apartments which are private ownership of citizens (the private housing fund). It was established in Paragraph 2 of the said article that the rules prescribed for the public housing fund shall be applied to dwelling-houses belonging to state-collective and other state-cooperative unions, enterprises, as well as organisations.

Thus, the legislature, passing the Law on the Privatisation of Apartments, consolidated in Paragraph 1 of Article 1, and Paragraph 1 of Article 2 of the said law that the entire state and public housing fund shall be subject to privatisation. Only Article 3 of the Law on the Privatisation of Apartments formulated exceptions to this general rule. In the process of the amending and supplementing of this law, the number of exceptions was decreased. Pursuant to the systematic analysis of the law’s content, this means that providing there is not an exception provided for by law, all remaining residential lodgings of the aforementioned housing funds shall be entities subject to privatisation.

  1. Upon adoption of the Law on the Privatisation of Apartments, the right of the population of Lithuania was consolidated to acquire the rented dwelling-houses, and apartments in apartment buildings and hostels as private ownership. It was established in Item 2 of the Resolution of the Supreme Council “On the Entry into Force of the Law on the Privatisation of Apartments” of 30 May 1991 that “the apartments in hostels indicated in Paragraph 1 of Article 2 shall be privatised in case that:

1) individual apartments are reorganised into hostels;

2) residential lodgings used as hostels meet the requirements for the individual apartment: there exists a separate entry, as well as dwelling rooms, the kitchen, and other facilities conforming to the conditions of that locality”.

Thus, during that time a part of the people of Lithuania who lived in hostels was not entitled to privatise residential lodgings which did not meet the requirements for the individual apartment.

The 15 July 1993 amendments and supplements of the Law on the Privatisation of Apartments attempted, first of all, to retain a unanimous provision in the sphere of residential lodgings’ privatisation, i.e., to transfer as many as possible of them into the ownership of natural persons. In the norm of Paragraph 1 of Article 2 of this law, wherein it is established that rooms in hostels shall also be an object of sale and purchase, the scope of entities subject to privatisation from the state and public housing fund was enlarged.

The Law on the Privatisation of Apartments enlarged the circle of persons entitled to privatise lodgings of the state and public housing fund. It is established in Item 2 of Paragraph 1 of the aforesaid article that only such rooms shall not be subject to privatisation “which are allotted pursuant to the procedure established by the Government for the purpose of tenanting pupils, students, post-graduate students of secondary, vocational, further education schools as well as universities, and also the rooms in the hostels of the Lithuanian Union of the Blind and Weak-Sighted, and those of the Lithuanian Society of the Deaf, and of the Lithuanian Society of the Disabled”. This norm prescribes that only such rooms in hostels shall not be sold which are either allocated for the purpose of tenanting learners, i.e., for such persons who live there transiently, i.e., who live there not on the grounds of their employment contracts, or those belonging to the hostels of the aforementioned union and both societies. The persons who were allocated rooms in hostels on the grounds of employment relations save for the aforesaid unions and societies acquired the right to buy residential lodgings pursuant to the Law on the Privatisation of Apartments. In this respect, the rights of the employees of consumer cooperation residing in hostels to privatise residential lodgings were equalised with those of the employees of other enterprises, offices, and organisations.

The Republic of Lithuania’s Law “On the Determination of the Ownership of the Sanatorium-Resort Institutions and Rest Centres Which Were Run by Former State Trade Unions of the Lithuanian Soviet Socialist Republic” of 8 June 1995 also confirms a general aim of the Law on the Privatisation of Apartments to transfer as many as possible of residential lodgings into the ownership of natural persons. It is prescribed by the former law that individual hostels recognised as state ownership and belonging to the public housing fund shall be privatised pursuant to the procedure established by law.

  1. By its Resolution “On the Property of the Lithuanian Union of Consumer Cooperatives” of 14 December 1990, the Supreme Council commissioned the Government to determine the amount of the State property used by consumer cooperation as well as that of cooperative (private) property. This must have been performed until 30 January 1991. The Government did not accomplish the commission during the time fixed by the legislature. Before State and cooperative property were separated, the Law on the Privatisation of Apartments was passed on 28 May 1991 wherein the privatisation of State and public housing fund was regulated. Following this law, the apartments were privatised which were at the disposal of consumer cooperation. When separating State and cooperative property, and deciding to whom hostels must belong, the Government had to take account of it, i.e., it had to reckon with the aim of the Law on the Privatisation of Apartments, moreover, of the fact that Article 3 entitled “Dwelling Houses and Apartments Which Are Not Subject to Privatisation” of the said law did not provide for any exception prohibiting the privatisation of the rooms in hostels transferred to consumer cooperation.

At the time of the separation of the property, the rooms in hostels tenanted by employees which, according to valid laws, belonged to the public housing fund subject to privatisation pursuant to the Law on the Privatisation of Apartments were transferred to consumer cooperation by means of legal acts of the executive power. Thus, the impugned resolution and ordinance of the Government do not correspond to the aim and content of this Law, therefore, the arguments stating that the rules established in the Law on the Privatisation of Apartments shall not be applied to the rooms in hostels which were transferred to the consumer cooperation by the Government are groundless.

Alongside, it should be noted that the impugned legal acts have, in fact, limited the rights of persons of one social group to privatise residential lodgings possessed on the grounds of employment contracts and lease agreements. This may be judged to be a disregard of the principle of all persons’ equality before the law.

Taking account of these arguments and those set forth above, the conclusion should be drawn that the impugned resolution and the impugned ordinance, to the extent that the transfer of rooms in hostels to consumer cooperation is decided, contradict Paragraph 1 of Article 1 and Paragraph 1 of Article 2 of the Law on the Privatisation of Apartments.

  1. The petitioner also requests the Constitutional Court to decide whether the Law on the Privatisation of Apartments should be applied in the privatisation of dwelling-houses and hostels belonging to the Lithuanian Union of Consumer Cooperation.

It is established in Paragraph 1 of Article 102 of the Constitution, as well as in Paragraph 1 of Article 1 of the Law on the Constitutional Court, that the Constitutional Court shall decide whether the laws and other legal acts adopted by the Seimas are in conformity with the Constitution, and if legal acts adopted by the President of the Republic and the Government do not violate the Constitution or laws. Thus, the Constitutional Court decides on the questions of constitutionality of corresponding legal acts, meanwhile, the application of a law or a legal norm is a prerogative of the court which is investigating the case, therefore, the aforesaid petition of the petitioner is not to be investigated in the Constitutional Court.

Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55 and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

To recognise that the Resolution of the Government of the Republic of Lithuania (No. 14) “On the Portion of the State Property Currently Managed by Consumer Cooperation” of 20 January 1993 and the Ordinance of the Government of the Republic of Lithuania (No. 186p) “On the Property Relations Between the State and Consumer Cooperation” of 10 March 1993, to the extent that the transfer of rooms in hostels to consumer cooperation is decided, contradict Paragraph 1 of Article 1, and Paragraph 1 of Article 2 of the Law on the Privatisation of Apartments.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling is pronounced in the name of the Republic of Lithuania.

Justices of the Constitutional Court:

 Egidijus Jarašiūnas                        Kęstutis Lapinskas                           Zigmas Levickis

 Augustinas Normantas                  Vladas Pavilonis                              Jonas Prapiestis

 Pranas Vytautas Rasimavičius       Teodora Staugaitienė                       Juozas Žilys