Lt

On the privatisation of apartments

Case No. 2/96

THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA

R U L I N G

On the compliance of Article 5 of the Republic of Lithuania’s Law on the Privatisation of Apartments with the Constitution of the Republic of Lithuania

20 November 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, Teodora Staugaitienė, and Juozas Žilys

The court reporter—Daiva Pitrėnaitė

Alfonsas Vileita, the adviser of the Seimas Committee of State and Law, acting as the representative of the Seimas, 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 13 November 1995, considered case No. 2/96 subsequent to the petition submitted to the Court by the Šiauliai City Local Court, the petitioner, requesting an investigation into whether Article 5 of the Republic of Lithuania’s Law on the Privatisation of Apartments is in compliance with the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

On 22 January 1996, the Šiauliai City Local Court, the petitioner, was investigating a civil case subsequent to the complaint of the plaintiffs J. Gabrijolaitienė, E. Žindulienė and S. Žindulis against the respondents K. Kaminskas, E. Kaminskienė, and the Šiauliai Town Board regarding the protection of violated rights and recognition of the transactions null and void. The financial stock-broker enterprise “Bufina” of the non-profit organisation “Šiaulių vaivorykštė”, the Privatisation Commission of Šiauliai City, and the Šiauliai Branch of the Lithuanian Savings Bank participate in the case as the third party.

By its ruling the said court suspended the investigation of this civil case and applied to the Constitutional Court with the petition requesting an investigation into whether Article 5 of the Republic of Lithuania’s Law on the Privatisation of Apartments (Official Gazette Valstybės žinios, 1991, Nos. 17-449, 22-576; 1992, Nos. 3-36, 30-920; 1993, Nos. 12-296, 32-722, 70-1308; 1994, Nos. 14-231, 40-717, 85-1606; 1995, No. 59-1472; 1996, Nos. 30-733, 68-1643; hereinafter referred to as the Law) is in compliance with Article 18 of the Constitution.

The petition of the petitioner requesting an investigation into whether this legal norm is in compliance with the Constitution is based on its opinion that conforming to the said article of the Law the apartment purchase agreement must be concluded in the name of one person as, providing there is no agreement to purchase the apartment, then the agreement may not be concluded altogether. Thereby other persons are deprived of the right to become the owners of the apartment which is under privatisation. Under such circumstances, there arises a doubt whether Article 5 of the Law is in compliance with the Constitution.

II

While replying to the Constitutional Court paper for the party concerned, Pranciškus Vitkevičius, Chairman of the Seimas Committee of State and Law, when the case was being prepared for the court hearing, explained in writing: Article 18 of the Constitution establishes that human rights and freedoms shall be innate, however, the Constitution does not provide with the notion of an innate right. Whatever notion of innate right is considered, it is impossible to objectively establish a contradiction between Article 18 of the Constitution and Article 5 of the Law on the Privatisation of Apartments.

In the opinion of the Chairman of the Committee of State and Law, if we recognised that the right to property is innate, then the state’s right to property would be innate, too. The state has the right to manage, use, and dispose of its property of its own will. Thus, the Law on the Privatisation of Apartments is the act concerning disposal of state property. This act, and, to be more precise, its Article 5 does not restrict the freedom of the tenants of the apartments as well as that of their family members. They may purchase the apartment, and they may refuse to do that. They are granted the right to agree of their own free will in whose name the flat will be purchased. The apartment may be purchased by one person who lives therein, or several persons, or all the persons who live therein and have the right to dwelling space. Providing there is no agreement, it is not permitted to purchase the apartment because all the tenant family members have equal rights to dwelling place. Therefore, providing an argument arises among the tenant family members in whose name the apartment must be purchased, the court cannot decide such an argument. Any decision of the court in favour of one or several members of the family of the tenant would violate the right to a dwelling place, i.e., the innate right, of the other members of the family of the tenant. Any coercive purchase of apartments is not permitted.

During the process of the judicial investigation, A. Vileita, the representative of the party concerned, additionally explained that the state, as the owner, shall decide the issue of disposal of its property. It was entitled to legally regulate the privatisation of the state and public housing fund. The Law on the Privatisation of Apartments had to co-ordinate the interests of all persons who live in state apartments and have the right to dwelling space because the rights to dwelling space of the tenant and those of his family members are equal. The law has justly phrased that all these persons have equal rights while privatising apartments and concluding agreements. Providing the tenant family members did not agree with each other, the apartment purchase agreement would not be concluded altogether. In such a case, they would be tenants as before. According to the Law, the tenant, his family members shall also agree on who will become the owner, the joint proprietor of the purchased house or apartment. The apartment may belong to the person under age, too, as the owner may be a person irrespective of his legal capacity. When privatising apartments, the rights of persons under age shall be implemented by their parents or guardians. The Republic of Lithuania’s Code of Marriage and Family (hereinafter referred to as the CMF) provides that certain transactions require the consent of the body of guardianship and custody. The impugned law has not resolved this issue.

The apartment may be acquired either in the name of all family members, then they will all be co-owners, or in the name of one of them. The Law provides for all this. However, the problem is that, on the basis of tradition, the CMF regulates the property relations of spouses differently. Article 21 of the CMF stipulates that all the property which has been acquired during the marriage shall be the common property of both spouses irrespective of the fact in whose name it is registered. This should be said as regards the dwelling-houses and apartments which are under privatisation. When purchasing the apartment which was undergoing privatisation, the spouses sometimes registered it in the name of one of them but later a dispute would arise that the interests of the other spouse or those of the children were violated. This was not taken account of when passing the Law.

In the opinion of the party concerned, the deficiency of the Law may be linked with Article 21 of the CMF and the prevailing tradition because if conformed to the Law, it would appear that the person in whose name the agreement is concluded is the owner. However, this does not contradict Article 18 of the Constitution.

The Constitutional Court

holds that:

The Law on the Privatisation of Apartments establishes the procedure of sale and purchase of the state and public housing fund, defines what dwelling place of the state and public housing fund may be sold in pursuance of this law and who is entitled to purchase them. Paragraph 1 of Article 5 of this Law titled “The Conditions of the Conclusion of a Sale and Purchase Agreement” prescribes: “The tenant of the dwelling-house, his family members as well as those who have temporarily moved shall agree on the purchase of the dwelling-house (apartment), and on the matter concerning in whose name the sale and purchase agreement will be concluded, and on who will become the owner (co-owners) of the purchased house or apartment. Such an agreement must be notarised. Providing there is no agreement among the tenant family members to purchase the dwelling-house (apartment), the agreement of sale and purchase shall not be concluded.”

The request of the petitioner is based on the fact that the norm of the Law which provides for the conditions of the agreement of sale and purchase in the case that there are more than one of the persons who have the right to purchase a particular dwelling place, partially deprives the said persons of the right to become the owners of the apartment which is under privatisation. Therefore, the petitioner has some doubts whether Article 5 of the Law is in compliance with Article 18 of the Constitution which consolidates: “Human rights and freedoms shall be innate.”

  1. When resolving the issue raised by the petitioner, it should be noted that the doctrine of law has not formulated any uniform concept of innate human rights and freedoms. Most recent humanistic theories usually ground themselves on the premise that the human being from the very birth has fundamental and permanent rights and freedoms which are not separable from his/her person. Human nature is the initial source of the innate human rights and freedoms.

In international and national law, innate human rights and freedoms are consolidated, as well as the standards of their protection are established. For instance, the preamble of the Universal Declaration of Human Rights, the major international document on human rights adopted on 10 December 1948, reads: “Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world <...>, the General Assembly proclaims this Universal Declaration of Human Rights <...>”. The Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950 provides that the High Contracting Parties shall secure to everyone within their jurisdiction the rights and freedoms defined while taking account of the Universal Declaration of Human Rights.

Article 18 of the Constitution which is the first in the Chapter “The Human Being and the State” of the Constitution consolidates the fundamental norm on the grounds of which innate human rights and freedoms are guaranteed and protected. Other articles of the Constitution proclaim the inviolability of respective innate human rights and freedoms and provide for the ways of their protection.

Human rights and freedoms as consolidated in the norms of objective law (the Constitution, other laws) are the basis of arising and implementation of subjective individual rights. It goes without saying, neither Article 18 of the Constitution, which is of a universal character, nor other articles of the Constitution guaranteeing innate human rights and freedoms mention the right of a person to privatise items of public property as it is not an innate human right. The right of a person to privatise state property arises only on the basis of a respective legal act (in the case under investigation it is the Law on the Privatisation of Apartments). However, regardless of the positivist nature of the right of a person to privatise dwelling place, the assessment whether the norm of Article 5 of the Law regulating the implementation of this right is in compliance with the Constitution may be linked with the constitutional principle of protection of human rights and freedoms the content of which is revealed in a great many of norms of the Constitution. Taking account of the arguments of the petitioner which have been mentioned in the ruling, the compliance of the said norm of the Law with the Constitution as an integral act should be assessed while considering these aspects: whether the principle of the equality of rights of all persons is not violated; whether the freedom of a person (the freedom of making transactions in particular) is not restricted.

  1. The innate human right to be treated equally with others protects the sphere of human freedom as virtually a human being is free to the extent that he is free with the others. This fundamental human right is guaranteed by Article 29 of the Constitution, Paragraph 1 whereof prescribes: “All persons shall be equal before the law, the court, and other State institutions and officers.”

Article 4 of the Law on the Privatisation of Apartments consolidates the principal provision that the tenant and his family members shall have equal rights as regards the purchasing of their rented dwelling place subject to privatisation, whereas the impugned Article 5 establishes the conditions for implementing this right. When assessing whether this norm of the Law is in compliance with the constitutional principle of the equality of all persons before the law, it should be noted that this principle is violated when a certain group of persons to which the legal norm is applied, if compared to other addressees of the same legal norm, is treated differently, even though there are not any differences in their character and the extent between these groups that such an uneven treatment could be objectively justified.

The analysis of the content of Paragraph 1 of Article 5 of the Law does not provide with the grounds to assert that this norm of the Law, which provides for the conditions of concluding sale and purchase agreements, treats exceptionally and unevenly any person or a group of persons who have the right to purchase their rented dwelling place subject to privatisation in pursuance of the Law. The provision “The tenant of the dwelling-house, his family members as well as those who have temporarily moved shall agree on the purchase of the dwelling-house (apartment) <...>” of Article 5 of the Law just exactly consolidates equal treatment of all persons who have the right to the purchase in pursuance of the Law because when the issue of privatisation of the rented dwelling place is decided all the tenants are considered.

The rights of the tenants and his family members to dwelling place shall be equal. This equality is guaranteed by law. Therefore, the impugned Article 5 of the Law also provides that the legal status of the tenant of particular dwelling place or his family members may be changed only on the grounds of common agreement. According to the Law, the tenant, as well as his family members, has the right to purchase the dwelling place subject to privatisation, however, no one of them is compelled to do so by the Law. It is evident that privatisation against the will of any of the aforesaid person would mean arbitrariness in regard to him and this would contradict the equality of rights of this person. To prevent such a possible arbitrariness, the provision of Article 5 of the Law was designed that providing there is no agreement to purchase the dwelling-house, then the agreement of sale and purchase shall not be concluded.

Thus, according to the impugned norm of the Law, no one from the family members of the tenant (the tenant included) has the priority in respect with the others: the privatisation of the dwelling place happens on the grounds of the agreement of all family members of the tenant.

  1. According to the Law, the privatisation of apartments is accomplished by concluding sale and purchase agreements. Therefore, when assessing the impugned norm of the law which requires for the agreement of the tenants on certain issues of the sale and purchase agreement, the constitutional principle of the equality of rights of persons is tightly connected with the principle of freedom to conclude agreements. The freedom to conclude agreements is a particularised manifestation of such values which are consolidated in the Constitution as freedom of a person (Article 21), the inviolability of property (Article 23), freedom of individual economic activity (Article 46). Thus, the freedom to conclude agreements may be deemed to be a guarantee on the constitutional level.

The freedom to conclude agreements is, first of all, a free expression of the willpower of its parties in an attempt to conclude an agreement. It is the freedom to independently decide, together with the other party to an agreement, the issues of the agreement’s content by not violating respective imperative requirements of the law, and by not restricting the rights and freedoms of other persons.

The provision “The tenant of the dwelling-house, his family members as well as those who have temporarily moved shall agree on the purchase of the dwelling-house (apartment) <...>” of Article 5 of the Law secures free expression of the will of aforesaid persons in an attempt to conclude a sale and purchase agreement.

Article 5 also establishes that the tenant of the dwelling-house (apartment), his family members shall “<...> agree <...> on the matter concerning in whose name the sale and purchase agreement will be concluded, and on who will become the owner (co-owners) of the purchased house or apartment”. This means that upon fulfilling the first condition—after the said persons have agreed on the purchase of the dwelling place in principle—it shall be agreed on the concrete legal status of the legal subjects in the purchaser’s party both while it is concluded and, it goes without saying, upon its entering into force. Furthermore, the rights of the tenant and his family members who have not acquired ownership rights to the privatised dwelling place are defined by Article 12 of the Law.

The impugned provision of the law establishes as to what issues must be agreed upon (the manner of such an agreement), however, it contains no indication as to the content of such an agreement, i.e., it contains no requirement establishing in the name of what person the sale and purchase agreement must be concluded and who must become the owner of the purchased dwelling place. On the grounds of the logic and verbal interpretation of the text “<...> agree <...> on the matter concerning in whose name the sale and purchase agreement will be concluded, and on who will become the owner (co-owners) of the purchased house or apartment” of the Law, it is impossible to hold that the statement, as if here it is required for the agreement upon the purchase of the dwelling place in the name of only one person and that only one person would become the owner of the privatised dwelling place, is a correct one. On the contrary, the Law consolidates the opportunity to agree permits the tenant and his family members to freely negotiate on the legal status of each of them. On the grounds of such a free agreement, the sale and purchase agreement may be concluded in the name of not necessarily one person; one person may become the owner while one or all persons having equal rights to their rented dwelling place subject to privatisation may become the co-owners, and, the important thing is that this was conditioned by free agreement of all persons. The disputes regarding violations of this fundamental rule of the conclusion of agreements are decided in court.

In view of the arguments set forth, the conclusion should be drawn that Article 5 does not deny the right of the tenant or that of any other of his family member to privatise their rented dwelling place and become the owner or joint proprietor of this dwelling place in pursuance of this Law. The law establishes the implementation conditions of this right so as the rights and freedoms of any of the aforesaid persons should not be restricted while concluding sale and purchase agreements, therefore, the impugned norm of the Law is in compliance with Article 18 of the Constitution.

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 Article 5 of the Republic of Lithuania’s Law on the Privatisation of Apartments is in compliance with the Constitution of the Republic of Lithuania.

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

 Teodora Staugaitienė                       Juozas Žilys