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On the ownership rights of functionaries

Case No. 13/96

 

 

THE CONSTITUTIONAL COURT OF

THE REPUBLIC OF LITHUANIA

 

R U L I N G

 

On the compliance of Item 2 of Paragraph 1 of Article 16 of the Republic of Lithuania’s Law on Functionaries with the Constitution of the Republic of Lithuania

 

6 May 1997, 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, and Juozas Žilys

The court reporter—Daiva Pitrėnaitė

Assoc. Prof. Dr. Alfonsas Vileita, the adviser at the Legal Committee of the Seimas, acting as the representative of the Seimas 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 the Constitutional Court of the Republic of Lithuania, in its public hearing, on 10 April 1997, considered case No. 13/96 subsequent to the petition submitted to the Court by the Anykščiai District Local Court, the petitioner, requesting an investigation into whether Item 2 of Paragraph 1 of Article 16 of the Republic of Lithuania’s Law on Functionaries is in compliance with Paragraph 1 of Article 23, Paragraph 1 of Article 29 and Paragraph 1 of Article 33 of the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

On 15 August 1996, the Anykščiai District Local Court, the petitioner, was investigating a civil case subsequent to the complaint of V. Ponomariovas, the representative of the Government for the Utena county, in connection with the appointment of A. Dūda the chief executive of the Kurkliai neighbourhood in the Anykščiai district. By its ruling, the said court suspended the investigation of the aforesaid case and applied to the Constitutional Court with the petition requesting an investigation into whether Item 2 of Paragraph 1 of Article 16 of the Republic of Lithuania’s Law on Functionaries (Official Gazette Valstybės žinios, 1995, No. 33-759) is in compliance with Paragraph 1 of Article 23, Paragraph 1 of Article 29 and Paragraph 1 of Article 33 of the Constitution of the Republic of Lithuania.

II

In its ruling, the petitioner pointed out that, by his order No. 13p-k of 27 April 1995, the mayor of the Anykščiai district municipality appointed A. Dūda the chief executive of the Kurkliai neighbourhood. The representative of the Government for the Utena county lodged a complaint against the aforesaid order of the mayor in the Anykščiai District Regional Court stating that A. Dūda was not permitted to act as the chief executive as it had in his possession a private enterprise, which contradicted Item 2 of Paragraph 1 of Article 16 of the Republic of Lithuania’s Law on Functionaries stipulating that “Functionaries shall be prohibited from: <...> 2) being the owners of personal enterprises, or full members or silent partners of a partnership, acquiring or holding in trust more than 10% of securities of one enterprise”.

The mayor of the Anykščiai district municipality, when the case was being investigated in court, had doubts as to the compliance of Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries with the Constitution. He grounded his doubts on the fact that the prohibitions specified in Item 2 of Paragraph 1 of Article 16 of the said law meant that a person who has in his possession the property mentioned in the aforesaid item may not be a functionary, and, on the other hand, a person who acts as a functionary may not possess the specified property. Shares, a private enterprise, financial securities etc. are the same property as a house, a car etc. The Constitution gives priority to the right of private ownership, freedom of individual economic activity and initiative (Paragraph 1 of Article 46), freedom to choose an occupation or business (Paragraph 1 of Article 48). Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries contradicts the provisions of Article 23 of the Constitution which determine that property shall be inviolable; laws may establish only the protection of the rights to property but not any limitation on such rights, whereas property may be seized for the needs of society and must be adequately compensated for.

Besides, during the proceedings, the mayor of the Anykščiai district municipality maintained that the aforesaid item of the Law on Functionaries also contradicted the provisions of Paragraph 1 of Article 33 of the Constitution by which citizens shall have the right to participate in the government of their state both directly and their freely elected representatives, and shall have the equal opportunity to serve in a state office of the Republic of Lithuania. Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries established discriminatory limitations on different categories of persons for service in a state office. In the opinion of the mayor of the Anykščiai district municipality, this contradicted the stipulation of Paragraph 1 of Article 29 of the Constitution that all persons shall be equal before the law, the court, and other state institutions and officers.

Therefore, the Anykščiai District Regional Court had doubts whether Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries was in compliance with the Constitution.

III

In the course of preparation of the case for the court hearing, S. Stačiokas, Chairman of the Legal Committee of the Seimas, presented his explanation. It was pointed out therein that the impugned Item 2 of Paragraph 1 of Article 16 of the said law undoubtedly limited the rights of a functionary to property. The provision of the item in question contradicted Article 23 of the Constitution which determines that property shall be inviolable, and that the rights of ownership shall be protected by law. In the case at issue the legal norm requires not to possess certain property or, providing one wishes to act as a functionary in the civil service, to refuse a certain portion of the property possessed.

It is maintained in the explanation that the impugned Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries limits the legal capacity of functionaries and, furthermore, functionaries are singled out from other citizens of the Republic of Lithuania. Such a limitation on the rights of one group of people contradicts Article 29 of the Constitution (and not only its Paragraph 1, but also Paragraph 2) which determines that all persons shall be equal before the law and that a person may not have his rights restricted on the basis of his social status. Functionaries are a social group of the Lithuanian society, therefore, their rights may not be restricted.

In addition, in the explanation of the Chairman of the Legal Committee of the Seimas it is stated that the provision of the Law on Functionaries under investigation also contradicts Paragraph 1 of Article 33 by which citizens shall have the equal opportunity to serve in a state office of the Republic of Lithuania. The requirement for the said equal opportunities is groundlessly violated. A person who possesses a private enterprise or is a member of a partnership must not necessarily manage (supervise) these enterprises by himself. This may be done by hired managers, directors or other employees. The fact that a functionary possesses shares does not hamper the performance of his duties. A functionary who performs his duties inadequately because of the fact that he spends too much time in managing his property may be dismissed from work for negligent performance of duties. Functionaries who do not possess the property mentioned in Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries can also abuse their service position. Therefore, it could be possible to limit the right of a functionary to hold only such a position, or to perform only such functions which are contrary to his property interest and which may create a possibility of abusing his service position. For such an abuse functionaries may be dismissed from their positions.

During the investigation of the case in the court hearing, the representative of the party concerned virtually reiterated the arguments set forth in the explanation of the Chairman of the Legal Committee of the Seimas.

In the course of preparation of the case for judicial investigation, an explanation of G. Švedas, a secretary at the Ministry of Justice, and that of K. Skrebys, the Minister of Public Administration Reforms and Municipal Affairs, were received.

The Constitutional Court

holds that:

In an attempt to regulate the relations of the civil service, on 4 April 1995 the Seimas passed the Law on Functionaries wherein the objective of the civil service was determined, as well as state and municipal functionaries were defined. The said law established the procedure of employment in the civil service, as well as the rights, duties and responsibility of functionaries, along with the termination of service relations.

The said law specifies that the civil service is the performance of duties in the Seimas, the institutions of the President of the Republic, the Government, other state institutions, and structural municipal divisions in accordance with the list of offices of the civil service. According to the aforesaid law, state and municipal functionaries are held employees of the civil service the work of whose exerts influence on the activity of the institution according to the competence of the said institution. Thus functionaries stand out from other employees by the character of their link with the state: the functionary is a citizen who is in office relationship of an institution of public power, i.e. in that of the state or a municipality, and who, on the instructions of these institutions, performs the functions of public power. The service of a functionary is based on the fact that in his activity he must show preference to public but not personal interests or those of different persons, their groups, political parties or organisations, nor may he make himself bound to other persons if this is incompatible with the civil service.

Taking account of the nature of the civil service, the duties of functionaries have been specified. They must: implement government resolutions, other legal acts which regulate the functions of functionaries; implement the tasks and instructions given to them by their chiefs; take decisions provided for in the laws determining their competence and in office regulations, and insist that the decisions be timely and accurately carried out; comply with the established regulations of professional ethics; perform their duties faultlessly and in a cultured manner; improve their qualification; keep confidential the state and official secret established by normative acts; guarantee the open character of their work, present information on their work to the residents in the manner established by law; defend the lawful interests of the state and municipalities; declare their property and income in accordance with the procedure established by law; refrain from engaging in public and political activities within the office premises and during working hours. According to the Law on Functionaries, functionaries shall have the right to: refuse to fulfil a task or an instruction if, in their opinion, the given task or instruction is not in conformity with the law; at the expense of the institution improve their qualifications for 15 to 30 days in 2 years, etc.

Thus, functionaries constitute such a social group of society the general legal status whereof is determined by the purpose of the civil service and its public significance. Therefore, not incidentally, along with immediate duties of functionaries, some prohibitions against and limitations on their activity have been established. They are set down in Paragraph 1 of Article 16 of the Law on Functionaries. Therein it is stipulated that functionaries shall be prohibited from:

(1) being employed in other enterprises, offices and organisations, being members of their managing bodies (unless the law provides otherwise), being employed in another elective or appointive post, receiving any other salary with the exception of payment of creative activities <...>;

(2) being the owners of personal enterprises, or full members or silent partners of a partnership, acquiring or holding in trust more than 10% of securities of one enterprise;

(3) representing the interests of other domestic and foreign enterprises, offices and organisations, and going abroad on their invitation;

(4) going on strike;

(5) using the office property for other than service duties;

(6) using working hours and the opportunities provided by the office for other than official purposes;

(7) receiving presents for the performance of service duties, unless this is provided for by international protocol.”

1. On the compliance of Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries with Article 23 of the Constitution.

1.1. The petitioner states that the prohibitions established in Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries contradict the provisions of Article 23 of the Constitution by which property shall be inviolable; laws may establish only the protection of the rights to property but not any limitation on such rights, whereas property may be seized for the needs of society and must be adequately compensated for. The statement of the petitioner is grounded on the fact that shares, a private enterprise, financial securities etc. are the same property as a house, a car etc. In his opinion, the Constitution gives priority to the right of private ownership, freedom of individual economic activity and initiative, as well as freedom to choose an occupation or business.

1.2. Article 23 of the Constitution stipulates:

Property shall be inviolable.

The rights of ownership shall be protected by law.

Property may only be seized for the needs of society according to the procedure established by law and must be adequately compensated for.”

To implement the constitutional provisions “Property shall be inviolable” and “The rights of ownership shall be protected by law”, an entire legal system of civil, administrative, criminal and other branches of law has been created. Not only do legal norms consolidate the right of the owner to manage, use and dispose of his property, but they also safeguard the said subjective rights and legitimate interests.

By emphasising the constitutional protection of property, one should also bear in mind the fact that the principle of inviolability of property should not be treated as being absolute. It was noted in the Constitutional Court’s ruling of 13 December 1993 that “neither Constitution nor valid system of other laws, nor universally recognised norms of international law deny the opportunity under conditions and procedure prescribed by law to alienate the property or limit its possession, use or disposal”. The necessity to limit the subjective rights of owners may ensue either from actions of the persons themselves, or from the agreements or international obligations of the state. Such a limitation may also be conditioned by the nature of property or an interest important to society. The specific status of the civil service and that of the functionary may also be a precondition for certain limitations. However, the limitations must be established by law, and they are allowed only when they are in compliance with the Constitution.

It is possible to presume that by means of the prohibitions established in Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries by which functionaries were prohibited from being the owners of personal enterprises, or full members or silent partners of a partnership, acquiring or holding in trust more than 10% of securities of one enterprise, a publicly important preventive objective was sought which was to put an end to the fact of using working hours and the opportunities provided by the office for other than official purposes by the functionaries.

The implementation of the interest of society which is recognised by the state and is protected by law is one of the most important conditions of existence and evolution of society itself. However, noting that the public interest is a dominating one in civil service relations, one should take account of the fact that, from the social standpoint, the public interest, as well as the person’s rights to property, is a constitutional value. Therefore, in the case of the collision of these values in the relations of the state service and, in order to satisfy the public interest, limitations are imposed on the property rights of persons, it is not sufficient to recognise the limitations on property rights only. It is also important to assess the extent of the influence of these limitations exerted on the aforementioned values. In other words, one must take account of the nature and extent of the limitations themselves and assess their validity from such a standpoint.

The Constitutional Court, on the grounds of the Convention for the Protection of Human Rights and Fundamental Freedoms and the case-law of the European Court of Human Rights, in its 13 February 1997 ruling held that limitations on human rights and freedoms are possible, i.e. they are regarded as grounded if they meet two conditions: (1) they are legitimate, and (2) they are indispensable in a democratic society. The requirement of legitimacy indicates that the limitations have to be set only by means of a law that is publicly declared; the norms of the law must be formulated clearly enough. Legally defining the limits of the implementation of laws, it is necessary to take account of the purpose and meaning of a corresponding right (or freedom) and the possibilities and conditions of its limitation established in the Constitution. Looking for the answer to the question whether a concrete limitation is indispensable in a democratic society, firstly, one must find out the aims and purpose of the limitation, and, secondly, find out whether the means of the limitation are proportionate to the legitimate objective sought.

1.3. Pursuant to the prohibitions established in Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries, a functionary may not be the owner of a private enterprise. This means that he, while being in the relations of the civil service, is prohibited from not only possessing a private enterprise as private property (i.e. being its owner) but also from buying, inheriting or acquiring otherwise a private enterprise. Also a functionary is prohibited from being a full member or a silent partner in a partnership. This means that he may have a share of possessions in neither a general partnership nor in a commandite (limited) partnership. Thus, the said prohibitions violate in fact the right to property, to objects of certain kind of particular persons. Besides a functionary is prohibited from acquiring more than 10% of securities (shares, etc.) of one enterprise. This provision also limits the property right in essence.

In view of the arguments set forth, the conclusion should be drawn that the prohibition prescribed by Item 2 Paragraph 1 of Article 16 of the Law on Functionaries stipulating that functionaries shall be prohibited from being the owners of personal enterprises, or full members or silent partners of a partnership, acquiring more than 10% of securities of one enterprise contradicts Article 23 of the Constitution.

Alongside, the Constitutional Court notes that the prohibition for functionaries against holding in trust more than 10% of securities of one enterprise which is established in Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries is, in principle, of a different character. In this particular case a functionary is prohibited from holding on trust certain property, i.e. certain possessions of another person, which does not mean any denial of the right to property of functionaries. Therefore, the said prohibition is in compliance with Article 23 of the Constitution.

2. On the compliance of Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries with Paragraph 1 of Article 29 and Paragraph 1 of Article 33 of the Constitution.

2.1. The petitioner alleges that Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries contradicts the provisions of Paragraph 1 of Article 33 of the Constitution by which citizens shall have the right to participate in the government of their State both directly and through their freely elected representatives, and shall have the equal opportunity to serve in a State office of the Republic of Lithuania. The petitioner is of the opinion that the said item of the Law on Functionaries establishes discriminatory limitations on certain categories of persons to serve in a State office, which is incompatible with the stipulation of Paragraph 1 of Article 29 of the Constitution by which all persons shall be equal before the law, the court, and other State institutions and officers.

2.2. Article 29 of the Constitution sets down a common principle of the equality of persons:

All persons shall be equal before the law, the court, and other State institutions and officers.

A human being may not have his rights restricted in any way, or granted any privileges, on the basis of his or her sex, race, nationality, language, origin, social status, religion, convictions, or opinions.”

The principle of the equality of persons may be defined as non-discrimination. This principle is reflected in Paragraph 1 of Article 33 which prescribes the right of citizens to equal opportunity to serve in a State office of the Republic of Lithuania.

As a rule, discrimination is understood as a change of a situation of a person or group of persons with respect to other persons without any objective justification. However, in certain cases, providing there exists a sufficiently reasoned and grounded cause, it is possible to establish by law a legal status for different groups of subjects and to consolidate certain particularities of legal situation. This means that the constitutional principle of the equality of persons does not deny a possibility of a different treatment of people as to their status.

Limitations on a person or a group of persons are varied and, as a rule, established due to two reasons: due to objective differences (sex, age, etc.) or because of the fact that this is required by public interests (e.g., citizenship). It must be noted that the notion “public interests”, thus, the conditions of the civil service, too, are understood differently in various states. It was noted in the judgments of the European Court of Human Rights that the notion “in the public interest” is inevitably broad. The said Court, bearing in mind that the opportunity of choice granted to the legislature that implements social and economic policy must be broad enough, takes into consideration the decisions of the legislature in defining “public interests”, unless the said decisions are not substantially grounded. The seizure of property, when implemented for the success of legal-social and economic policy, may be justified by “public interests” even when the whole society does not make direct use of the seized property (the cases James and others against the United Kingdom (1986), Lithgow and others against the United Kingdom (1987)). This means that the legislative power is entitled to establish the limits of the public interest in particular relations, while decisions concerning the definition of the public interest and the manner its satisfaction must be realistically grounded and legitimate.

The public interest is defined in its most general sense by the provision “State institutions shall serve the people” of Paragraph 3 of Article 5 of the Constitution. This means that state and municipal servants perform specific functions depending upon the purpose of the civil service. In order to implement these functions properly, a citizen, taking office in the civil service, must conform to the conditions prescribed by law. Under Article 9 of the Law on Functionaries, persons who are citizens of the Republic of Lithuania, have a good command of state language and meet other requirements as regards qualification prescribed as necessary for the office shall be employed in the civil service. The law also establishes that persons tried for grave crimes, crimes against the civil service, as well as persons who are close relatives or are related by marriage if their service is connected with direct subordination between the relatives or with the right of one of them to control the other may not be employed in the civil service.

Paragraph 1 of Article 16 of the Law on Functionaries sets down special prohibitions which differ by their character from the aforementioned general requirements and prohibitions. The prohibitions consolidated in the impugned Item 2 of Paragraph 1 of Article 16 of the aforesaid law allow the presumption that the owner of a private enterprise, a full member or a silent partner of a partnership, as well as a person who has acquired more than 10% of securities of one enterprise and who wishes to take office in the civil service, must limit his ownership rights. Thus, by the impugned legal norm citizens are differentiated into: (1) those who do not have possessions indicated in Item 2 of Paragraph 1 of Article 16 of the said law and who may take office in the civil service of the Republic of Lithuania (providing they meet other requirements of the law), and (2) those who have possessions specified in said Item 2 of Paragraph 1 of Article 16. The latter citizens acquire equal opportunities to take office in the civil service of the Republic of Lithuania only when they refuse the aforementioned possessions or limit them within the size provided by law.

The norm of Paragraph 1 of Article 33 of the Constitution, by which citizens shall have the equal opportunity to serve in a State office of the Republic of Lithuania, may not be denied by legal norms contrary to the Constitution. Meanwhile, citizens seeking to implement the right granted to them by Paragraph 1 of Article 33 of the Constitution must, due to the prohibitions established by Item 2 of Paragraph 1 of Article 16 (except for the prohibition of the said item against holding securities on trust), deny their another constitutional right—the right to property.

The Constitutional Court has already held in this ruling that the prohibition prescribed in Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries stipulating that functionaries shall be prohibited from being owners of personal enterprises, or full members or silent partners of a partnership, acquiring or holding in trust more than 10% of securities of one enterprise contradicts Article 23 of the Constitution.

In view of these circumstances and the arguments set forth, as well as the fact that the Constitution is an integral and directly applicable act, the Constitutional Court has concluded that the prohibition prescribed by Item 2 Paragraph 1 of Article 16 of the Law on Functionaries stipulating that functionaries shall be prohibited from being the owners of personal enterprises, or full members or silent partners of a partnership, acquiring more than 10% of securities of one enterprise contradicts Paragraph 1 of Article 29 and Paragraph 1 of Article 33 of the Constitution.

The Constitutional Court has also noted in the present ruling that the prohibition for functionaries against holding in trust more than 10% of securities of one enterprise which is established in Item 2 of Paragraph 1 of Article 16 of the Law on Functionaries is in compliance with Article 23 of the Constitution as in this particular case a functionary manages not his property but that of another person. The legislature, on the grounds of the public interest, may establish conditions for the civil service which must be in conformity with the Constitution. Thus, the conclusion should be made that the said prohibition is in compliance with Paragraph 1 of Article 29 and Paragraph 1 of Article 33 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:

1. To recognise that the prohibition prescribed by Item 2 of Paragraph 1 of Article 16 of the Republic of Lithuania’s Law on Functionaries stipulating that functionaries shall be prohibited from being the owners of personal enterprises, or full members or silent partners of a partnership, acquiring more than 10% of securities of one enterprise contradicts Article 23, Paragraph 1 of Article 29 and Paragraph 1 of Article 33 of the Constitution.

2. To recognise that the prohibition for functionaries against holding in trust more than 10% of securities of one enterprise which is established in Item 2 of Paragraph 1 of Article 16 of the Republic of Lithuania’s Law on Functionaries is in compliance with the Constitution.

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      Juozas Žilys