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On the rent price of the territories of Klaipėda State Seaport

Case No. 26/2000

 

CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF ITEM 4.2 OF THE RESOLUTION OF THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA (NO. 608) “ON THE MANAGEMENT OF KLAIPĖDA STATE SEAPORT” OF 6 AUGUST 1993 WITH PARAGRAPH 1 OF ARTICLE 11 OF THE REPUBLIC OF LITHUANIA’S LAW ON THE LEASING OF LAND (WORDING OF 23 DECEMBER 1993)

 

19 February 2002

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas Sinkevičius, Stasys Sačiokas, and Teodora Staugaitienė

The court reporter—Daiva Pitrėnaitė

Jelena Antonevič, chief specialist of the Water Transport Department of the Ministry of Transport of the Republic of Lithuania; Modestas Girdzevičius, senior specialist of the Legal Division of the Law Department of the Ministry of Transport of the Republic of Lithuania; and Irena Bujavičienė, Deputy Head of the Land Reform Division of the National Land Service under the Ministry of Agriculture of the Republic of Lithuania, acting as the representatives 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 the Constitutional Court of the Republic of Lithuania, on 6 February 2002, in its public hearing, considered case No. 26/2000 subsequent to the petition of the Higher Administrative Court, the petitioner, requesting an investigation into whether Item 4.2 of the Resolution of the Government of the Republic of Lithuania (No. 608) “On the Management of Klaipėda Seaport” of 6 August 1993 was in conformity with Paragraph 1 of Article 11 of the Republic of Lithuania’s Law on the Leasing of Land (wording of 23 December 1993) and Paragraph 2 of Article 8 thereof (wording of 24 March 1998).

The Constitutional Court

has established:

I

The petitioner, the Higher Administrative Court, was considering the petition of the Klaipėda Regional Court requesting an investigation into whether the 22 May 1996 order (No. 176), the 29 September 1997 order (No. 369), and the 15 March 1999 order (No. 90) of the Minister of Transport of the Republic of Lithuania and appendices thereof, which establish rent coefficients for the territory of Klaipėda State Seaport, were in conformity with Paragraph 1 of Article 11 of the Republic of Lithuania’s Law on the Leasing of Land (wording of 23 December 1993; Official Gazette Valstybės žinios, 1994, No. 3-41) and Paragraph 2 of Article 8 thereof (wording of 24 March 1998; Official Gazette “Valstybės žinios, 1998, No. 35-855).

The Higher Administrative Court suspended the case by its ruling of 1 May 2000 and applied to the Constitutional Court with the petition requesting an investigation into whether Item 4.2 of the Resolution of the Government of the Republic of Lithuania (No. 608) “On the Management of Klaipėda State Seaport” of 6 August 1993 (hereinafter also referred to as the Resolution; Official Gazette Valstybės žinios, 1993, No. 36-813) was in conformity with Paragraph 1 of Article 11 of the Republic of Lithuania’s Law on the Leasing of Land (wording of 23 December 1993) (hereinafter also referred to as the Law) and Paragraph 2 of Article 8 thereof (wording of 24 March 1998).

II

The petitioner substantiates its petition by the following arguments.

1. Following Item 4.2 of the Government Resolution (No. 608) “On the Management of Klaipėda State Seaport” of 6 August 1993, the Ministry of Transport had to prepare and approve, by 1 September 1993, the rules for the lease of the territories of Klaipėda State Seaport, payment for the use of the port territory, water area and engineering facilities.

Paragraph 1 of Article 11 of the Law on the Leasing of Land prescribed that the payment of rent for leased state-owned land shall be established according to the procedure prescribed by means of laws and the Government of the Republic of Lithuania (wording of 23 December 1993). Paragraph 2 of Article 8 of the Law on the Leasing of Land prescribed that the payment of rent for leased state-owned land shall be established according to the procedure prescribed by means of laws and by the Government (wording of 24 March 1998).

2. In the opinion of the petitioner, the Republic of Lithuania’s Law on Klaipėda State Seaport of 16 May 1996 and the Law on the Leasing of Land do not establish either port land rent coefficients or land categories, or who and how assigns a land plot to a certain category of the port land, or who establishes the coefficients. Temporary land rent coefficients applicable to the price calculated following the procedure established by the Government are established by orders of the Minister of Transport.

The petitioner points out that the Minister of Transport and the Directorate of Klaipėda State Seaport consider the land rent coefficient to be one of the elements of the procedure for land lease. The Ministry of Transport, in applying the coefficient, does not establish the amount of rent for land, but rather changes it in a corresponding manner. However, increasing coefficients mean higher rent for land. The coefficient (also a preferential one) is included in the total rent and it is one of the regulators of the land rent rates. Thus, in the opinion of the petitioner, the Ministry of Transport establishes the amount of rent for the port land independently.

The petition specifies that the right to establish coefficients applicable to land rent was granted by Item 4.2 of the Resolution. The petitioner is of the opinion that if the concept of the rules for the lease of and payment for the use of port territory, water area and engineering facilities encompasses the establishment of the amount of land rent (which includes the coefficient), then Item 4.2 of the Resolution contradicted Paragraph 1 of Article 11 of the Law (wording of 23 December 1993) and Paragraph 2 of Article 8 thereof (wording of 24 March 1998), which established an explicit provision that the amount of rent to be paid for leased state-owned land shall be established according to the procedure prescribed by means of laws and by the Government. The petitioner asserts that the Government was not given the right to delegate the establishment of the amount of land rent to another institution. While adopting the said Resolution, the Government exceeded its powers. Therefore, the petitioner doubts whether Item 4.2 of the Resolution was in conformity with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993) and Paragraph 2 of Article 8 thereof (wording of 24 March 1998).

III

1. In the course of the preparation of the case for the Constitutional Court hearing, written explanations were received from the representatives of the party concerned, the Government, J. Antonevič, the chief specialist of the Water Transport Department of the Ministry of Transport, M. Girdzevičius, a senior specialist of the Legal Division of the Law Department of the same ministry, as well as I. Bujavičienė, Deputy Head of the Land Reform Division of the National Land Service under the Ministry of Agriculture.

2. The representatives of the party concerned J. Antonevič and M. Girdzevičius maintain in their explanations that the Seimas, while deciding the affairs of the leasing of state-owned land, had confirmed the procedure valid until then by Paragraph 1 of Article 11 of the Law (23 December 1993) whereby the Government shall dispose of state-owned land and, implementing this right, it shall adopt relevant resolutions. In the opinion of J. Antonevič and M. Girdzevičius, after the Law had gone into effect, neither the Seimas nor the Government needed to adopt substatutory acts in order to implement the provisions of the Law on the procedure on establishment of land rent.

The representatives of the party concerned maintain that the Seimas delegated the right to the Government by the Law to establish the procedure on establishment of land rent. The Government, while adopting the Resolution, delegated the right to the Ministry of Transport to establish the procedure on establishment of land rent of Klaipėda State Seaport.

J. Antonevič and M. Girdzevičius note that Item 4.2 of the Resolution is in compliance with Paragraph 1 of Article 11 of the Law since Paragraph 1 of Article 5 of this Law provides: “The lessor of land shall be <…> the possessor of the state-owned land appointed according to the procedure established by law <…>.” The Government provided in Item 3 of its Resolution (No. 676) “On the Legal Status of Klaipėda Seaport” of 16 September 1992 that the possessor of the port shall be the Ministry of Transport, while in other government resolutions it is established that the procedure of the leasing of Klaipėda State Seaport land and the calculation of rent shall be approved by the Ministry of Transport.

3. In her explanations, the representative of the party concerned I. Bujavičienė points out that Item 4.2 of the Resolution had been adopted and implemented before the date of the Law going into effect (12 January 1994), therefore, at the moment of its adoption the former could not be in conflict with Paragraph 1 of Article 11 of the Law in its initial wording. After the Law had gone into effect, no new rules were approved.

The representative of the party concerned also points out that the Ministry of Transport, while approving the method of the rules for the lease of the territories of Klaipėda State Seaport and the method of calculation of the rent price of the port territory, was obligated to determine peculiarities of the rates and payment procedure of the rent of Klaipėda State Seaport land. The procedure itself was established in the Government Resolution (No. 602) “On the Rent Payment for State Land and State-owned Water Bodies Leased for the Purposes of Commercial or Sport Fishing” of 3 August 1993.

IV

In the course of the preparation of the case for the Constitutional Court hearing, a conclusion was received from the specialist R. Vainienė, Vice-president of the Lithuanian Free Market Institute, wherein it is stated that the tax1 of the lease of state-owned land is not a typical one as the Law which has established it does not define all the elements necessary for taxation (base, tariff etc.). This tax was established in the Law whose entire content and essence indicate not an intention to introduce a tax as a source of state budget revenue or as a means to limit leasing and using state-owned land, which is, as a rule, done in special taxation laws, but an intention to establish the same requirements for the leasing of state-owned land and payment for it. According to the content and essence of the Law, one established not a source of tax revenue but payment for rent based on agreements which should not be considered a tax under the provisions of Articles 67 and 127 of the Constitution.

In the opinion of R. Vainienė, due to the imprecision of the provisions and notions used in the legal acts, there appeared confusion in state institutions which knew neither how to apply the tax of leasing state-owned land established by the Law and the Resolution, nor who would be responsible, in line of a logical sequence, for the administration of this tax and the revenues, nor whether it was permitted to take additional payment for rent.

On the basis of the provision that the “rent for land lease” mentioned in the Law must be considered to be not a state tax but payment for the leased land, the requirements of the Law on the procedure on the establishment on the rent for land lease (either by means of a law or a substatutory act) obligate to provide for rules and procedures on the basis whereof agreements on leasing state-owned land might be concluded. In particular, the latter might determine the procedure for establishment of the minimal price of state-owned land rent, the terms of payment, maturity etc.

V

In the course of the preparation of the case for the Constitutional Court hearing, written explanations were received from D. Barakauskas, Minister of Transport of the Republic of Lithuania, K. Kristinaitis, Minister of Agriculture of the Republic of Lithuania, E. Gentvilas, Minister of Economy of the Republic of Lithuania, P. Koverovas, Vice-minister of Justice, G. Rimša, the secretary of the Ministry of Finance, U. Labutis, Deputy Director of the Water Transport Department of the Ministry of Transport, V. Lukošienė, Chief of the Klaipėda County, Assoc. Prof. Dr. A. Katkus, Head of Law Department of the Faculty of Social Sciences, Klaipėda University, and H. Butkus, a member of the International Maritime Law Association.

VI

At the Constitutional Court hearing, the representatives of the party concerned J. Antonevič, M. Girdzevičius and I. Bujavičienė virtually reiterated the statements set down in their written explanations for the Constitutional Court. The specialist K. Lukšėnienė also spoke at the Constitutional Court hearing.

The Constitutional Court

holds that:

I

1. The petitioner, the Higher Administrative Court, requests the Constitutional Court to investigate whether Item 4.2 of the Government Resolution (No. 608) “On the Management of Klaipėda Seaport” of 6 August 1993 was in conformity with Paragraph 1 of Article 11 of the Law on the Leasing of Land (wording of 23 December 1993) and Paragraph 2 of Article 8 thereof (wording of 24 March 1998).

At the time of the appeal to the Constitutional Court the Resolution was no longer valid. By means of its decision of 30 June 2000, the Constitutional Court accepted the petition of the petitioner, the Higher Administrative Court, for consideration at the Constitutional Court since in case of not consideration of the compliance of Item 4.2 of the Resolution with the Law by the Constitutional Court, the doubts of the petitioner whether the Ruling had been in conformity to the Law would not have been removed.

2. The matter of the consideration by the Constitutional Court in this case should be defined in view of the time and scope.

2.1. The petitioner requests the Constitutional Court to investigate whether Item 4.2 of Resolution was in conformity with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993) and Paragraph 2 of Article 8 thereof (i.e. the new 24 March 1998 wording of former Paragraph 1 of Article 11). The impugned Item 4.2 of the Resolution (together with the entire Resolution) became voided as of 22 May 1999; during the time of its validity, Item 4.2 of the Resolution had not been amended or supplemented.

As it has been mentioned, the Resolution was adopted on 6 August 1993, it went into effect on 11 August 1993. The Law was adopted on 23 December 1993 and it came into force on 12 January 1994. Thus, the problem of the compliance of Item 4.2 of the Resolution with the Law might arise from 12 January 1994, i.e. from the date after the Law had come into force.

It is also noteworthy that on 16 May 1996 the Law on Klaipėda State Seaport was enacted. On 16 May 1996, by means of Article 1 of the Republic of Lithuania’s Law on the Supplement of Article 1 of the Law on the Leasing of Land, Article 1 of the Law on the Leasing of Land was supplemented with Paragraph 5 wherein it was established that peculiarities of the leasing of land in the territory of the state seaport shall be established by the Law on Klaipėda State Seaport. Thus, as of 16 May 1996, the legal regulation of land lease of Klaipėda State Seaport and the rent for lease of this land was established by means of a special Law on Klaipėda State Seaport. Therefore, in the context of the case at issue at the Constitutional Court, the question of the lawfulness, i.e. compliance of Item 4.2 of the Resolution with the Law on the Leasing of Land, is grounded and is meaningful only as regards the period from 12 January 1994 till 16 May 1996.

Taking account of the fact that as of 16 May 1996 the Law on Klaipėda State Seaport established the legal regulation of land lease of Klaipėda State Seaport and the rent for lease of this land, the Constitutional Court will consider the compliance of Item 4.2 of the Resolution with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993). The Constitutional Court will not consider the compliance of Item 4.2 of the Resolution with Paragraph 2 of Article 8 of the Law (wording of 24 March 1998).

2.2. Item 4.2 of the Resolution established: “To commission the Ministry of Transport to prepare and approve, by 1 September 1993, the rules for the lease of the territories of Klaipėda State Seaport, payment for the use of the port territory, water area and engineering facilities.”

The petitioner requests the Constitutional Court to investigate the compliance of entire Item 4.2 of the Resolution with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993), meanwhile, in the petition only the legal arguments as to the compliance of the provision of Item 4.2 of the Resolution whereby the Ministry of Transport was commissioned to prepare and approve the rules for the lease of the territories of Klaipėda State Seaport, which created legal pre-conditions for establishing the norms in the said rules regulating the establishment of the amount of payment for the lease of land in the territory of Klaipėda State Seaport, with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993).

Therefore, the Constitutional Court will consider the compliance of Item 4.2 of the Resolution with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993) to the extent that the provision of Item 4.2 of the Resolution, after it had commissioned the Ministry of Transport to prepare and approve the rules for the lease of the territories of Klaipėda State Seaport, created legal pre-conditions for establishing the norms in the said rules regulating the establishment of the amount of payment for the lease of land in the territory of Klaipėda State Seaport.

II

1. Paragraph 1 of Article 11 of the Law on the Leasing of Land (wording of 23 December 1993) provided: “The payment of rent for leased State-owned land shall be established according to the procedure prescribed by means of laws and by the Government of the Republic of Lithuania.”

The purpose of the Law was to establish the procedure for the leasing of land in the Republic of Lithuania and to regulate the relations between the lessee and the lessor of land (Paragraph 1 of Article 1 of the Law). The Law established the legal regulation of the lease of state-owned land, thus, including that of Klaipėda State Seaport.

Article 11 of the Law was entitled Land Rent (wording of 23 December 1993), therefore, the notion “payment of rent” employed in Paragraph 1 of this article should be construed as establishment of the amount of rent payment for state-owned land. The Law had established the procedure for calculation of the amount of rent payment for state-owned land. The Law did not contain any norms providing for any special procedure for calculation of the amount of rent payment for state-owned land in Klaipėda State Seaport.

Paragraph 1 of Article 11 of the Law (wording of 23 December 1993) provided that the payment of rent for leased state-owned land shall be established according to the procedure prescribed by means of laws and by the Government. The norm that the payment of rent for leased state-owned land shall be established according to the procedure prescribed by means of laws and by the Government means that the legal relations of the leasing of state-owned land were to be regulated by the Seimas by means of passing laws as well as the Government by means of adopting resolutions. The Law did not establish directly as to what issues of the payment of rent for leased state-owned land were to be decided by law and which issues—by government resolution. The relations of the payment of rent for leased state-owned land pointed out in Paragraph 1 of Article 11 of the Law (wording of 23 December 1993) were to be regulated only by means of laws and government resolutions. Thus, this legal regulation meant that the Government had to establish the procedure of determination of the amount of payment for state-owned land rent, including the land of Klaipėda State Seaport, by itself and it was not permitted to transfer its powers to any other institution, concerning the establishment of the procedure of determination of the amount of payment for state-owned land rent.

2. The Government, by means of Item 4.2 of the Resolution, commissioned the Ministry of Transport to prepare and approve the rules for the lease of the territories (i.e. of the land and water area of the port) of Klaipėda State Seaport as well as of payment for the use of the port territory, water area and engineering facilities. Such a provision of Item 4.2 of the Resolution implies that the Ministry of Transport is granted the powers to decide all issues of the leasing of the port land in the rules of the lease of the territories of Klaipėda State Seaport, thus, including the determination of the amount of payment of port land rent (establishment of rent). As it has been mentioned, under Paragraph 1 of Article 11 of the Law (wording of 23 December 1993), the establishment of the amount of payment of rent for the land of Klaipėda State Seaport was within the competence of the Seimas and the Government but not that of the Ministry of Transport.

3. The law is a legal act of supreme legal power. The government resolution is a substatutory legal act, therefore, it may not be in conflict with the law, it may not contain any provisions competing with those of the law. The Constitutional Court has held that in cases when a government resolution containing the norms conflicting with a law is adopted prior to the adoption of the law, such a government resolution must be harmonised with the norms of the subsequently adopted law (the Constitutional Court’s ruling of 5 April 2000).

4. Under Paragraph 1 of Article 11 of the Law (wording of 23 December 1993), the payment of rent for leased land of Klaipėda State Seaport was established according to the procedure prescribed by means of laws and by the Government. Therefore, after the Law had been adopted, the impugned provision of Item 4.2 of the Resolution whereby the Ministry of Transport was commissioned to prepare and approve, along with the other rules, those for the lease of the land of Klaipėda State Seaport, should have been harmonised with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993). However, Item 4.2 of the Resolution was not amended and harmonised with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993). This created legal pre-conditions for the Ministry of Transport, on the basis of Item 4.2 of the Resolution, to establish rent coefficients for the land of Klaipėda State Seaport and thereby to change the amount of the land rent the establishment of which, as it has been mentioned, according to Paragraph 1 of Article 11 of the Law (wording of 23 December 1993), had been within the competence of the Seimas and the Government but not the Ministry of Transport.

Taking account of the arguments set forth, it should be concluded that the impugned provision of Item 4.2 of the Resolution which created legal preconditions for the Ministry of Transport to establish the norms in the rules for the lease of the territories of Klaipėda State Seaport regulating the establishment of the amount of rent for land in Klaipėda State Seaport was in conflict with Paragraph 1 of Article 11 of the Law (wording of 23 December 1993).

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 provision “to commission the Ministry of Transport to prepare and approve <…> the rules for the lease of the territories of Klaipėda State Seaport” of Item 4.2 of the Resolution of the Government of the Republic of Lithuania (No. 608) “On the Management of Klaipėda Seaport” of 6 August 1993 to the extent that it created legal preconditions for the Ministry of Transport to establish norms in the rules for the lease of the territories of Klaipėda State Seaport regulating the establishment of the amount of rent for land in Klaipėda State Seaport conflicted with Paragraph 1 of Article 11 of the Republic of Lithuania’s Law on the Leasing of Land (wording of 23 December 1993).

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

Zigmas Levickis

Augustinas Normantas

Vladas Pavilonis

Jonas Prapiestis

Vytautas Sinkevičius

Stasys Stačiokas

Teodora Staugaitienė

_______________________________________________________________________________________________________________________________
1
The Lithuanian word “mokestis” may be translated into English as (1) “tax” and (2) “any payment”. In this Ruling of the Constitutional Court of the Republic of Lithuania the Lithuanian word “mokestis” is translated according to the context in which it occurs (Translator’s note).