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On the restoration of ownership rights to leased land

Case No. 28/2010

 THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

IN THE NAME OF THE REPUBLIC OF LITHUANIA

 RULING

ON THE COMPLIANCE OF PARAGRAPH 11 (WORDING OF 3 AUGUST 2001) OF ARTICLE 4 OF THE REPUBLIC OF LITHUANIA’S LAW ON THE RESTORATION OF THE RIGHTS OF OWNERSHIP OF CITIZENS TO THE EXISTING REAL PROPERTY, AS WELL AS THE COMPLIANCE OF THE FIRST PARAGRAPH (WORDINGS OF 12 NOVEMBER 2001 AND 7 APRIL 2004) OF ITEM 18 OF THE PROCEDURE FOR THE IMPLEMENTATION OF THE REPUBLIC OF LITHUANIA’S LAW ON THE RESTORATION OF THE RIGHTS OF OWNERSHIP OF CITIZENS TO THE EXISTING REAL PROPERTY (WORDING OF 11 NOVEMBER 1999), AS APPROVED BY RESOLUTION OF THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA NO. 1057 OF 29 SEPTEMBER 1997, WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 9 October 2013

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Toma Birmontienė, Pranas Kuconis, Gediminas Mesonis, Ramutė Ruškytė, Egidijus Šileikis, Algirdas Taminskas, Romualdas Kęstutis Urbaitis, and Dainius Žalimas

The court reporter—Daiva Pitrėnaitė

The Constitutional Court of the Republic of Lithuania, pursuant to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1 and 531 of the Law on the Constitutional Court of the Republic of Lithuania, on 30 September 2013, at the Court’s sitting, considered, under written procedure, constitutional justice case No. 28/2010 subsequent to the petition (No. 1B-33/2010) of the Supreme Court of Lithuania, the petitioner, requesting an investigation into whether the provision “[t]he rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the new owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 10 December 2009) of Article 4 of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, as well as the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wordings of 12 November 2001 and 7 April 2004) of Item 18 of the Procedure for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, as approved by the Resolution of the Government of the Republic of Lithuania (No. 1057) “On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property” of 29 September 1997, is not in conflict with Article 23 and Paragraph 1 of Article 46 of the Constitution of the Republic of Lithuania and the constitutional principles of justice and a state under the rule of law.

The Constitutional Court

has established:

I

The petition of the Supreme Court of Lithuania, the petitioner, is substantiated by the following arguments.

The impugned legal regulation, under which the rights and duties assumed under the contract for the lease of state-owned land are transferred to the new owner of the land unless the parties agree otherwise, is aimed at reconciling the interests of the persons whose rights of ownership have been restored by returning to them the respective land in kind in a rural location and the interests of the persons to whom that land has been leased and has been necessary for the exploitation of the buildings and structures owned by them by right of ownership. It is doubtful, however, whether the said legal regulation has reconciled the rights and interests of the indicated groups of persons in a fair and proportionate manner, as well as whether the lessees of the said land have not been given an unjustified priority, thus, denying the interests of the persons whose rights of ownership to land have been restored and limiting the rights of ownership of the latter persons and their freedom of economic activity and initiative in a disproportionate and unjustified manner.

As a result of the impugned legal regulation, the actual restitution of land to lawful owners has not been ensured. The actual restitution of land to a lawful owner is not, however, denied by the possibility, as provided for in the impugned legal norms, for the parties—the lawful owner of the land and the lessee of that land—to agree in a manner different from that stipulated in the contract for the lease of the state-owned land concerned, since the position of the lawful owner of the land depends on the will of the lessee of that land and on the reconciliation of the will of the lessee of the land with the will of the lawful owner of the land, and such reconciliation is difficult to reach where the interests of the parties differ and no concessions are made.

The impugned legal regulation is dissonant with the principle of the freedom of contract and the right of the parties to determine, at their own discretion, their reciprocal rights and duties. In fact, the legal regulation in question eliminates the freedom and initiative of the economic activity of a lawful land owner towards the land that is the object of the contract for the lease of state-owned land and to which the right of ownership of the lawful owner has been restored, since, in the absence of the reconciled will between the parties or in the event of conflict, the parties are bound by the rights and duties stipulated in the contract for the lease of the state-owned land concerned.

The arbitrary acts of the occupation government could not lead to legitimate state ownership, and the land expropriated from persons as a result of the said acts should be considered only as the property factually owned by the state. Thus, the state may hold at its disposal the said land for only as long as that land remains under its possession, and, upon the expiry of such a right of the state, a contract for the lease of state-owned land entered into by the state must be terminated prior to the expiry of the validity of the contract without any resulting transfer of the obligations assumed by the state under the contract to the lawful owner of the land concerned. In this way, the interests of the persons whose rights of ownership to land have been restored by returning to them the respective land in kind and those of the persons to whom that land has been leased and has been necessary for the exploitation of the buildings and structures owned by them by right of ownership would be reconciled by applying the norms of material law and law related to obligations, which are consolidated in the Civil Code of the Republic of Lithuania.

II

In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Vytautas Kurpuvesas, the former Chairperson of the Committee on State Administration and Local Authorities of the Seimas, acting as the representative of the Seimas of the Republic of Lithuania, a party concerned, and Jelena Liaskovskaja, the Director of the Law Department of the National Land Service under the Ministry of Agriculture, acting as the representative of the Government of the Republic of Lithuania, a party concerned, in which it is maintained that the impugned legal regulation is not in conflict with the Constitution. The positions of the representatives of the parties concerned are substantiated by virtually analogous arguments.

  1. The impugned provisions regulate the restoration of the rights of ownership in the cases where the rights of ownership are restored through the restitution of the plots of rural land in kind that are necessary for the persons other than the owners for the exploitation of the buildings and structures located on these plots and owned by these persons by right of ownership; thus, the said plots of land are not vacant and the owners of such land cannot use these plots directly. In the cases in question, it is necessary to reconcile the interests of the persons who wish to have the plots of land restituted in kind, on the one hand, and the interests of the persons who are the owners of the structures located on those plots of land, on the other, as well as to ensure a balance between the said interests. If the aforesaid plots of land were restituted in kind without any limiting conditions, which could ensure the right of the owners of the structures located on those plots of land to use the plots of land necessary for them for the exploitation of the said structures, the interests of the owners of the said structures would be denied, thus violating the constitutional principles of justice and a state under the rule of law.

The aforesaid structures are not the structures of public use; therefore, the plots of land necessary for their exploitation are not the plots of land that are to be purchased by the state. Thus, the impugned legal regulation, in order to reconcile the interests of the aforementioned groups of persons, established the possibility of the restitution of land in kind whilst providing for the continuity of the legal relations of the lease of the same land.

  1. The owners of structures and buildings, who have concluded the contracts for the lease of state-owned land, have the grounds to expect, provided they comply with the conditions of the contract, that the contractual relations will continue for the period agreed in the contract and that they will be able to implement in reality their rights to use the respective plot of land, which is necessary for them for the exploitation of the buildings and structures owned by them by right of ownership. If the legal relations of the lease of state-owned land were discontinued and the possibilities of using the land were not ensured for the owners of the buildings and structures located on that land, the legitimate expectations of the said owners of buildings and structures would be violated.

The continuity of the legal relations of the lease of land upon the transfer of the right of ownership to that land to another owner is also provided for in the Civil Code.

  1. The right of ownership is not absolute. The restitution of land in kind does not mean that the owner of certain land may use that land, own it, and have it at their disposal without any additional conditions or limitations in all cases, including the cases at issue, where, on the land concerned, there are certain structures and buildings owned by other persons by right of ownership.
  2. In the Constitutional Court’s ruling of 27 October 1998, it is held that Paragraph 11 (wording of 1 July 1997) of Article 4 of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, which prescribed that the established servitudes had to be observed by the owners whose rights of ownership to land were restored by returning to them, in kind, the land on which the structures owned by other persons by right of ownership were located, was not in conflict with Paragraphs 2 and 3 of Article 46 of the Constitution. In the opinion of the representatives of the persons concerned, although the aforementioned legal regulation was subsequently amended by providing that the rights of the owners of the aforesaid structures to use the respective plot of land necessary for the exploitation of the structures owned by them are ensured not through the respective servitude but the contract for the lease of the land, nonetheless, the legal regulation in question is still founded on the same fundamental principles, which give priority to the restitution of land in kind and stipulate that the rights of the users of land must be protected and the interests of the owners of land and those of the owners of the structures located on that land must be reconciled.

In the explanations, it is also noted that the plots of state-owned land granted on lease must be of the size not larger than it is necessary for the exploitation of the structure concerned. Therefore, according to the representative of the Government, a party concerned, the establishment of servitudes would not lead to the greater possibilities for the owners of land to use the respective plot of land owned by them.

The impugned legal regulation ensures the continuity of the economic activity of the lessees of state-owned land. In addition, the impugned provisions provide for the possibility for the owner and lessee of the land in question to agree to use the plot of land in a different manner where they are not satisfied with the conditions of the contract for the lease of the state-owned land concerned.

Thus, in the opinion of the representatives of the persons concerned, the impugned provisions are not in conflict with Paragraph 1 of Article 46 of the Constitution.

The Constitutional Court

holds that:

I

  1. The Supreme Court of Lithuania, the petitioner, requests, inter alia, an investigation into the compliance of the provision “[t[he rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the new owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 10 December 2009) of Article 4 of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property (hereinafter also referred to as the Law) with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.

From the petition of the petitioner and the material of the civil case under its consideration, it is clear that the rights of ownership to certain plots of land, which had been granted on lease under the administrative acts and contracts for lease contested in the said civil case, were restored by the 31 March 2009 orders of the Governor of Kaunas County. Therefore, the legal regulation as laid down in its earlier wording, i.e., in Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, rather than in Paragraph 11 (wording of 10 December 2009) of Article 4 of the Law, is applicable to the civil case under consideration by the petitioner.

  1. Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law prescribed: “Rural land used or leased to natural and legal persons or personal enterprises for the purposes of the exploitation of the buildings and structures (either under construction or built), or holiday buildings and structures (either under construction or built), owned by the said natural and legal persons or personal enterprises by right of ownership, where such land is not, under Article 12 of this Law, categorised as land to be purchased by the state, shall be restituted in kind under the procedure and time limits as provided for in this Law. The rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise.”
  2. Thus, in the constitutional justice case at issue, the Constitutional Court will investigate, inter alia, the compliance of the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.

II

On the compliance of the provision of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law

  1. As mentioned before, in the constitutional justice case at issue, the Constitutional Court is investigating, inter alia, the compliance of the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.
  2. On 1 July 1997, the Seimas adopted the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, which came into force (with a certain exception) on 9 July 1997.
  3. Paragraph 11 (wording of 1 July 1997) of Article 4 of the Law prescribed: “Rural land granted on the grounds of lease to natural and legal persons for the purposes of the exploitation of the economic-commercial buildings and structures (either under construction or built) owned by the said persons by right of ownership shall be restituted in kind. Citizens to whom such land is to be returned in kind shall be obliged to observe the land servitudes established according to the land management projects developed under the land reform.”
  4. It should be noted that, in the Constitutional Court’s ruling of 27 October 1998, it was recognised that Paragraph 11 (wording of 1 July 1997) of Article 4 of the Law was not in conflict with the Constitution. In the said ruling, the Constitutional Court held that, with a view to ensuring the exploitation of the buildings and structures located on the restituted land according to their purpose, Paragraph 11 of Article 4 of the Law prescribed that citizens to whom the said land was to be restituted in kind were obliged to observe the land servitudes established according to the land management projects developed under the land reform; in that way, the Law ensured the possibility for the owners of economic-commercial buildings to use the territory necessary for the exploitation of those buildings.
  5. Paragraph 11 of Article 4 of the Law was subsequently amended and/or supplemented on more than one occasion, inter alia, by the Republic of Lithuania’s Law Amending and Supplementing Articles 2, 4, 6, 10, 12, 16, and 21 of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, which was adopted by the Seimas on 3 August 2001 and came into force on 17 August 2001.

Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, the compliance of the provision of which with the Constitution is a matter for an investigation in the constitutional justice case at issue, prescribed: “Rural land used or leased to natural and legal persons or personal enterprises for the purposes of the exploitation of the buildings and structures (either under construction or built), or holiday buildings and structures (either under construction or built), owned by the said natural and legal persons or personal enterprises by right of ownership, where such land is not, under Article 12 of this Law, categorised as land to be purchased by the state, shall be restituted in kind under the procedure and time limits as provided for in this Law. The rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise.”

Thus, Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law consolidated, inter alia, the rule under which, in the cases where certain land in a rural location was leased by the state to natural or legal persons (lessees) for the exploitation of the buildings and structures (either under construction or built) located on that land and owned by the said persons by right of ownership, upon the restitution of such land in kind to a person (the owner) who had claimed the restoration of the rights of ownership to that land (namely in kind), the owner of the land was obliged to take over those rights and duties of the lessor that under the contract for the lease of the land had been assumed by the state (or the institution acting on behalf of the state), which had granted that land on lease, unless the owner and lessee of the land concerned agreed otherwise. In other words, according to the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, the owner, whose rights of ownership were restored to certain built-up land by returning it in kind, was to continue to lease the land to the owner of the buildings and structures located on that land under the conditions of the contract for the lease of the state-owned land concerned, as concluded prior to the restoration the rights of ownership.

  1. The comparison of the legal regulation established in Paragraph 11 (wording of 1 July 1997) of Article 4 of the Law with that established in Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law makes it clear that the legal regulation in question changed, inter alia, from the aspect that, upon the restitution of certain built-up land in a rural location to its owners in kind, the legal regulation at issue in its subsequent wording provided for the right of the owners of the buildings and structures located on the said land to continue to use that land not on the grounds of the established servitudes but on the grounds of the respective contract for the lease of the land, although it preserved the principle that, upon the restoration of the rights of ownership, the owner of the land in question was bound by the rights of the owners of the buildings and structures located on that land to that land, which had been lawfully used by these latter owners for the exploitation of the buildings and structures owned by them by right of ownership.
  2. It should be noted that, although the Republic of Lithuania’s Law Amending and Supplementing Articles 4 and 21 of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, which was adopted by the Seimas on 10 December 2009 (and came into force on 28 December 2009), amended, inter alia, Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, the legal regulation laid down in that paragraph did not change from the aspect impugned by the petitioner.
  3. The provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law should be construed by taking account of the provisions of the Civil Code (wording of 18 July 2000) (hereinafter also referred to as the CC), which regulates, inter alia, the relations of lease, including the lease of land, as well as the relations related to real rights.

8.1. Article 6.562 “The Expiry of a Contract for the Lease of Land” of the CC, inter alia, prescribes: “A contract for the lease of land shall discontinue: <...> 4) if the land under lease is sold, given as a gift, or otherwise transferred to the lessee; <...> 6) upon the agreement of the parties.”

Thus, the provision “unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, as construed in the context of Item 6 of Article 6.562 of the CC, also means that a contract for the lease of land may be terminated upon an agreement between the owner of the land concerned, whose rights of ownership to the respective built-up land have been restored by returning it in kind, and the lessee of such land, who owns certain buildings and structures located on that land by right of ownership.

It should also be mentioned that, under Item 4 of Article 6.562 of the CC, a contract for the lease of land would similarly discontinue if the land granted on lease were transferred to the lessee.

8.2. In the context of the constitutional justice case at issue, the following provisions of the Fourth Book “Material Law” of the CC should be mentioned:

– “A servitude is a right in respect of an immovable thing of another, which is granted for the purposes of the use of that immovable (the servient immovable), or it is a restriction of the right of the owner of an immovable thing to use that immovable in order to ensure a proper utilisation of that immovable (the dominant immovable), in favour of which a servitude is established” (Paragraph 1 of Article 4.111); “A servitude may be established by <...> transactions <...>” (Paragraph 1 of Article 4.124);

– “The right of superficies is the right to use the land of another for the purposes of the construction of structures on that land or the acquisition and possession of such structures by right of ownership or by right to use the said land for the purposes of the exploitation of its subsoil” (Paragraph 1 of Article 4.160); “The right of superficies shall be established by the agreement of the owner of the land and the person who becomes the superficiary <...>” (Article 4.163);

– “Emphyteusis (a long-term lease) is a real right to use a plot of land or an immovable thing of another on the condition that the emphyteutic lessee does not aggravate its quality, does not undertake the construction of any structures or planting of any perennial plants, and does not perform any works that would substantially increase the value of the land in use or another immovable, except upon the permission of the lessor of the land” (Paragraph 1 of Article 4.165); “Emphyteusis shall be established by an agreement between the owner of an immovable thing and the emphyteutic lessee <...>” (Article 4.167).

Thus, the provision “unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, as construed in the context of the quoted provisions of the CC, also means that, upon an agreement between the owner of land, whose rights of ownership to the respective built-up land have been restored by returning it in kind, and the lessee of such land, who owns certain buildings and structures located on that land by right of ownership, the possibility of using the plot of land or part thereof, which is the object of the contract for the lease of the land, may be ensured by establishing, inter alia, real rights.

8.3. In the context of the constitutional justice case at issue, it should also be noted that Paragraph 1 of Article 6.223 of the CC provides that a contract may be modified by the agreement of the parties.

8.4. To summarise the above, it should be held that the provision “unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, as construed in the context of the legal regulation consolidated in the aforementioned provisions of the CC, implies, inter alia, the fact that, upon the transfer of the rights and duties of the lessor, which had been assumed under the contract for the lease of state-owned land, to the owner of land, to whom the respective built-up land was returned in kind, by the agreement of the owner of the land and the lessee of that land, who owns the buildings and structures on the said land by right of ownership:

– the content of the contract for the lease of the land, inter alia, the amount of the payment for the lease of the land or the size of the area of the leased land, could be modified;

– the contract for the lease of the land could be terminated;

– the possibility for the owner of the buildings and structures to use the plot of land or part thereof, which was the object of the contract for the lease of the land, could be ensured by establishing, inter alia, real rights.

  1. In the context of the constitutional justice case at issue, consideration should also be given to other provisions of the CC, which are related to the defence, inter alia, judicial defence, of the rights of the owner of land and the lessee of that land (the owner of the buildings and structures located on that land).

9.1. It should be noted that the CC provides, inter alia, the following:

– “A party may terminate the contract where a failure of the other party to perform or to properly perform the contract is considered to be a substantial breach of the contract” (Paragraph 1 of Article 6.217);

– “Upon the demand of the lessor, the contract for the lease of the land may be terminated prior to its expiry: 1) if the lessee of the land fails to use the land in conformity with the contract or the principal target purpose of the use of the land; 2) if the lessee of the land fails to execute the payment for the lease of the land for the period exceeding three months from the payment date established in the contract for the lease of the land; 3) in other instances provided for by law” (Paragraph 1 of Article 6.564);

– “Upon the demand of one of the parties, the contract may be modified by the court judgment if: 1) the other party is in a substantial breach of the contract; <...>” (Paragraph 2 of Article 6.223);

– “2. The circumstances considered as restricting the performance of a contract shall be those that substantially alter the balance of contractual obligations, i.e. those that either substantially increase the cost of performance or substantially diminish the value thereof <...>” (Paragraph 2 of Article 6.204).

  1. In the cases where the performance of a contract becomes more complicated, the aggrieved party shall have the right to make a request to the other party for the modification of the contract. Such a request must be well-founded and made immediately after the emergence of the circumstances restricting the performance of the contract. A request for the modification of the contract shall not in itself give the aggrieved party any right to suspend the performance of the contract. Where, within a reasonable time, the parties fail to reach any agreement on the modification of the contract, either of them may bring an action before a court. The court may:

1) terminate the contract and establish a date and conditions for its termination;

2) modify the conditions of the contract in order to restore the balance of the contractual obligations of the parties” (Article 6.204).

9.2. It should also be noted that, under Article 4.126 of the CC, a servitude may be established by a court judgment where the owners concerned fail to reach any agreement, and where, without the establishment of a servitude, it would be impossible to use the immovable thing at reasonable costs according to its purpose (Paragraph 1); the owner or holder of the immovable thing may apply to a court for the establishment of a servitude by court judgment (Paragraph 2).

9.3. Thus, to summarise the overall legal regulation as consolidated in the quoted provisions of the CC, in the context of the constitutional justice case at issue, it should be noted that:

– upon the demand of one of the parties, the contract for the lease of land may be terminated prior to its expiry in the event of the failure of the other party to perform or to properly perform the contract, thus, in substance, in the event of the breach of the contract itself, inter alia, in the instances of the breach of the contract as expressis verbis established by law;

– in the event of the emergence of the exceptional circumstances aggravating, in substance, the performance of contractual obligations or the receiving of the performance of contractual obligations, provided these circumstances meet the criteria established by law, and in the absence of an agreement between the parties on the change of the contract, the contract may be terminated, or its conditions may be changed, through judicial means; upon the demand of one of the parties, the contract may also be changed by judicial means where the other party is in a substantial breach of the contract;

– in the cases where the relations of the lease of land between the owner of the land and the owner of the structures located on that land discontinue, the possibility for the owner of the structures located on the leased land to use that land, as it is necessary for the exploitation of the said structures according to their purpose, may be secured by means of a servitude, which, in the event of the failure of the owner of the structures and the owner of the land concerned to reach any agreement, may be established by judicial means.

  1. In the context of the constitutional justice case at issue, it is also important to disclose another related legal regulation governing the relations of the lease of state-owned land.
  2. It should be noted that, under Paragraph 2 of Article 6.549 of the CC, the duration of a contract for the lease of state-owned land is determined by an agreement between the lessor and the lessee, but it may not exceed 99 years.

Paragraph 3 of Article 22 of the Law on Land (wording of 26 April 1994) stipulated that the procedure for the lease of state-owned land is established by law and by the Government.

In this context, it should be noted that, during the period relevant to the civil case under consideration by the petitioner, the procedure for the implementation of the legal regulation governing the lease of land to other persons for the purposes of the exploitation of the buildings and structures owned by them on that land by right of ownership, as defined in general terms in Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, was specified in greater detail at the level of a legal act accompanying the law.

  1. By its Resolution (No. 260) “On the Purchase and Lease of the Plots of State-Owned Land in Use for the Purposes (Activity) Other Than Agricultural Use” of 9 March 1999, the Government approved the Procedure for the Purchase and Lease of the Plots of State-Owned Land in Use for the Purposes (Activity) Other Than Agricultural Use. That procedure was subsequently amended and/or supplemented on more than one occasion, inter alia, by the Government Resolution (No. 180) “On the Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 260) ‘On the Purchase and Lease of the Plots of State-Owned Land in Use for the Purposes (Activity) Other Than Agricultural Use’ of 9 March 1999” of 20 February 2001 (which came into effect on 24 February 2001), which was adopted pursuant to the Law on Land (wording of 26 April 1994) and set forth the said procedure in its new wording.

In the context of the constitutional justice case at issue, it should be noted that Item 31 (wording of 15 October 2002) of the Procedure for the Purchase and Lease of the Plots of State-Owned Land in Use for the Purposes (Activity) Other Than Agricultural Use (wording of 20 February 2001), inter alia, prescribed:

“31. The plots of land in use shall be leased in observance of the following requirements: <...>

31.4. <...> by paying regard to the interests of the state, as well as by taking account of the duration of the safe exploitation of a building, structure, or facility located on the plot of land concerned, which is determined on the basis of the certified documentation concerning the construction and projects of the said building, structure, or facility (for buildings, structures, and facilities constructed prior to 1 January 1996—on the basis of the data concerning static depreciation as indicated in the respective case-file containing technical records (cadastre measurements) in accordance with the procedure established by the Ministry of Environment), the duration of the lease of the land shall be determined by an agreement between the lessor and the lessee but shall not exceed the period of 99 years.

In a decision on the lease of the plot of state-owned land, the lessor must specify the reasons for the establishment of the duration of the lease of the plot of state-owned land. <...>”

Thus, under the legal regulation established in Item 31.4 (wording of 15 October 2002) of the Procedure for the Purchase and Lease of the Plots of State-Owned Land in Use for the Purposes (Activity) Other Than Agricultural Use (wording of 20 February 2001), as approved by government resolution No. 260 of 9 March 1999, the duration of the lease of built-up land had to be established in a contract for the lease of state-owned land, by taking account of, inter alia, the duration of the exploitation of a building or structure located on the land concerned, but it could not exceed the period of 99 years and had to be justified by the reasons provided by the lessor.

  1. On 27 January 2004, the Seimas adopted the Republic of Lithuania’s Law Amending the Law on Land (which came into force on 21 February 2004), by means of which the Law on Land (wording of 26 April 1994) was amended and set forth in its new wording.

13.1. In the context of the constitutional justice case at issue, the following provisions of the Law on Land (wording of 27 January 2004) should be mentioned:

– “Decisions to lease the state-owned land that has been transferred to municipalities by right of trust by means of resolutions of the Government shall be taken by a municipal council, and those concerning other state-owned land—by the governor of a county. The decision shall provide reasons for setting the validity period of the contract for the lease of state-owned land. <...>” (Paragraph 1 of Article 9);

– “<...> the duration of the lease of the plots of land to be leased for the exploitation or the construction and exploitation of certain structures or facilities shall be determined taking into consideration the economically substantiated duration of the use of a particular structure or facility” (Paragraph 3 of Article 9);

– “State-owned land shall be leased without an auction if: 1) certain structures or facilities owned by right of ownership or leased by natural and legal persons are located on it (except for temporary structures, engineering networks, and structures without any clear functional purpose or of an unspecified use or structures of the nature of economic activity, which serve the main structure or facility or its appurtenance). <...> The plots of land to be leased shall be of the size that is fixed in the territorial planning documents and is required for the exploitation of certain structures or facilities according to their primary purpose indicated in the Real Property Cadastre” (Paragraph 6 of Article 9).

Thus, under the legal regulation consolidated in the quoted provisions of Article 9 of the Law on Land (wording of 27 January 2004), the duration of the lease of the built-up plots of land had to be determined in the respective contracts for the lease of state-owned land by taking into consideration the duration of the use of the structures concerned and had to be substantiated by the reasons provided by the lessor. The size of the plots of land to be leased was limited by taking into consideration the needs of the use of the structures located on these plots.

13.2. It should be mentioned that, although Article 9 of the Law on Land (wording of 27 January 2004) was subsequently amended on more than one occasion, the aforementioned legal regulation was not changed.

  1. It should be noted that the legal regulation governing the size and the establishment of the duration of the lease of the built-up plots of land leased under contracts for the lease of state-owned land, as consolidated in the aforementioned provisions of the Law on Land (wording of 27 January 2004) and the Procedure for the Purchase and Lease of the Plots of State-Owned Land in Use for the Purposes (Activity) Other Than Agricultural Use (wording of 20 February 2001), as approved by government resolution No. 260 of 9 March 1999, is not impugned by the petitioner, and the compliance of the said provisions with the Constitution is not a matter for an investigation in the constitutional justice case at issue.
  2. To summarise the quoted impugned legal regulation and related legal regulation, in the context of the constitutional justice case at issue, it should be noted that, on the one hand, the impugned legal regulation, as laid down in Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, consolidated the continuity of the legal relations of the lease of land in the cases where the rights of ownership of the owners of land were restored by returning, in kind, the built-up rural land leased to other persons for the exploitation of the buildings and structures owned by the latter persons by right of ownership; on the other hand, under the overall legal regulation, as consolidated, inter alia, in the indicated provisions of the Law on Land (wording of 27 January 2004), in the cases where the contracts of the lease of built-up state-owned land were being concluded, the possibilities for the parties to determine, by mutual agreement, the size of the plot of land to be leased, as well as their possibilities of establishing the duration of the lease, were limited by the imperative norms of certain legal acts, i.e. those prescribing that the duration of the lease of the built-up plots of land had to be determined by taking into consideration the duration of the use of the structures concerned and had to be substantiated by the reasons provided by the lessor, also that the size of the plots to be granted on lease was limited by taking into consideration the needs of the use of the structures concerned.

Consequently, Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law provided for the lease of only such land that was necessary for the exploitation of the buildings and structures located on that land and owned by the persons other than the owner of the land by right of ownership, and it also established the related obligation with respect to the citizens to whom such land was, at their request, to be returned in kind to take over the rights and duties of the lessor of the said land.

  1. As mentioned before, in the constitutional justice case at issue, the Constitutional Court is investigating, inter alia, the compliance of the provision regulating the restoration of the rights of ownership through the restitution of built-up land in kind, as established in the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, with Article 23 and Paragraph 1 of Article 46 of the Constitution and with the constitutional principles of justice and a state under the rule of law.

16.1. In the context of the constitutional justice case at issue, first of all, the following provisions of the official constitutional doctrine of restitution—the restoration of the rights of ownership—should be noted:

– the State of Lithuania, seeking, at least in part, to restore justice—to restore the violated rights of ownership, has opted for limited restitution rather than restitutio in integrum; in regulating, by law, the restoration of the denied rights of ownership, it was necessary to take account of the fact that, during the years of the occupation, other property as well as other social and economic relations of people emerged and other objective circumstances appeared, due to which it was impossible to completely restore the rights of ownership (to go back to status quo ante); while regulating the restoration of the denied rights of ownership, the legislature enjoys the discretion to establish the conditions and procedure for the restoration of the rights of ownership (the Constitutional Court’s rulings of 22 December 2010 and 19 June 2012); the competence of the legislature in this respect also includes the establishment of new conditions applicable to the restoration of the rights of ownership (the Constitutional Court’s rulings of 27 May 1994, 27 October 1998, and 30 May 2013);

– in regulating the restoration of the rights of ownership to the existing real property, the legislature must take account of the constitutional principles of the protection of property, as well as of the fact that, in the course of restoring the rights of ownership to the existing real property, it is equally necessary to protect other values consolidated in the Constitution, inter alia, the striving for an open, just, and harmonious civil society, and to ensure that, in the course of restoring the rights of ownership of certain persons, i.e. owners, the rights and legitimate interests of other persons as well as those of the entire society would not be violated (inter alia, the Constitutional Court’s rulings of 23 August 2005, 22 December 2010, and 30 May 2013); in the process of the restoration of the rights of ownership to land, the interests of both the owners of land and the actual users of that land must be reconciled (the Constitutional Court’s ruling of 27 October 1998); while establishing, by law, the forms, conditions, and procedure of the restoration of the rights of ownership to the existing real property, the legislature is equally bound by other norms and principles of the Constitution (the Constitutional Court’s rulings of 23 August 2005, 22 December 2010, and 30 May 2013).

16.2. In the context of the constitutional justice case at issue, consideration should also be given to the following provisions of the official constitutional doctrine, which have been formulated by the Constitutional Court while construing Article 23 and Paragraph 1 of 46 Article of the Constitution:

– the inviolability and protection of ownership, as consolidated in Article 23 of the Constitution, inter alia, means that owners have the right to perform any actions, with the exception of those prohibited by law, with regard to their property, as well as to use their property and determine its future in any way that does not violate the rights and freedoms of other persons (inter alia, the Constitutional Court’s rulings of 14 March 2006, 8 June 2009, and 29 March 2012);

– laws must protect the rights of ownership of all owners (inter alia, the Constitutional Court’s rulings of 8 June 2009 and 29 September 2010);

– under the Constitution, the right of ownership is not absolute, and it can be limited by law due to the character of an object of ownership, due to the committed deeds that are contrary to law, and/or due to a constitutionally justifiable need that is essential to society (inter alia, the Constitutional Court’s rulings of 19 September 2002, 4 March 2003, and 5 July 2013);

– the constitutional right of a person to ownership is an essential (necessary) condition for the implementation of their freedom of economic activity; the limitation of the right of a person to ownership results in the limitation of their freedom of economic activity (the Constitutional Court’s rulings of 14 March 2002, 2 March 2009, and 29 September 2010);

– the freedom of economic activity is not absolute, and a person may exercise it in observance of certain obligatory requirements and limitations (inter alia, the Constitutional Court’s rulings of 31 May 2006, 8 October 2009, and 3 February 2010);

– the freedom to enter into contracts, as well as the rights of ownership, has (have) certain limits (the Constitutional Court’s ruling of 31 March 1994).

16.3. In this context, it should be noted that, as it has been held by the Constitutional Court on more than one occasion, the constitutional principle of a state under the rule of law, which is consolidated in the Constitution, in addition to other requirements, also implies that human rights and freedoms must be ensured (inter alia, the Constitutional Court’s rulings of 23 February 2000, 22 December 2010, and 16 May 2013).

The Constitutional Court has held in its acts on more than one occasion that one of the elements of the constitutional principle of a state under the rule of law is the constitutional principle of proportionality, which means that the measures provided for in a law must be in line with the legitimate objectives that are important to society, that these measures must be necessary in order to reach the said objectives, and that these measures must not restrain the rights and freedoms of a person clearly more than necessary in order to reach the said objectives (inter alia, the Constitutional Court’s rulings of 11 December 2009, 15 February 2013, and 16 May 2013).

The Constitutional Court has also noted that the content of the constitutional principle of a state under the rule of law should be disclosed by taking account of the content of various other constitutional principles, including the principle of justice (which comprises, inter alia, natural justice). Disregard for the principle of justice, which is consolidated in the Constitution, would also mean disregard for the constitutional principle of a state under the rule of law (the Constitutional Court’s rulings of 3 November 2005 and 22 December 2010). Justice may not be achieved through the satisfaction of the interests of exclusively one group and the simultaneous denial of the interests of others (the Constitutional Court’s ruling of 4 March 2003).

  1. As mentioned before, in the constitutional justice case at issue, the Constitutional Court is investigating, inter alia, the compliance of the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.
  2. In the opinion of the petitioner, it is doubtful as to whether the impugned legal regulation reconciled, in a fair and proportionate manner, the rights and interests of, on the one hand, the persons whose rights of ownership were restored by returning to them in kind certain land in a rural location and, on the other, the persons to whom the said land was leased and was necessary for the exploitation of the buildings and structures owned by them by right of ownership, and whether the lessees of the land in question were not given an unjustified priority; according to the petitioner, the impugned legal regulation did not ensure the actual restitution of land to lawful owners; in the opinion of the petitioner, the impugned legal regulation was incompatible with the principle of the freedom of contract, and it eliminated the freedom of the economic activity and initiative of the lawful owners of land, since, in the event of the lack of agreement between the will of the parties, or in the event of dispute, the parties were bound by the rights and duties stipulated in the contract for the lease of the state-owned land concerned; in addition, according to the petitioner, the state may have at its disposal the land that should be returned to owners for only as long as it holds that land under its ownership, and, upon the expiry of such a right of the state, a contract for the lease of state-owned land entered into by the state must be terminated prior to the expiry of the contract and may not lead to the transfer of the obligations assumed by the state under the contract to the lawful owner of the land concerned.
  3. While assessing the compliance of the impugned legal regulation with the Constitution, account should be taken of the Constitutional Court’s ruling of 27 October 1998, in which, as mentioned before, the Constitutional Court ruled Paragraph 11 (wording of 1 July 1997) of Article 4 of the Law to be not in conflict with the Constitution. It has been mentioned that, in the latter ruling, the Constitutional Court held that, with a view to ensuring the exploitation of the buildings and structures located on the recovered land according to their purpose, Paragraph 11 of Article 4 of the Law prescribed that citizens to whom the said land was to be returned in kind were obliged to observe the land servitudes established according to the land management projects developed under the land reform. In the said ruling of 27 October 1998, the Constitutional Court took the legal position that, in the aforesaid way, the Law ensured the possibility for the owners of economic-commercial buildings to use the territory necessary for operating these buildings; thus, although, compared to the previously valid law on restitution, the legislature expanded the restitution of land in kind in rural areas, the Law at the same time provided for the necessary guarantees ensuring that the land to be restituted, as well as the infrastructures existing on such land, continued to be used according to their purpose.
  4. While deciding whether the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law was not in conflict with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law, it should be noted that, as mentioned before, under the official constitutional doctrine:

– while regulating the restoration of the rights of ownership to the existing real property, the legislature must take account of the constitutional principles of the protection of property, as well as of the fact that, in the course of restoring the rights of ownership to the existing real property, it is equally necessary to protect other values consolidated in the Constitution, inter alia, the striving for an open, just, and harmonious civil society, and to ensure that, in the course of restoring the rights of ownership of certain persons, i.e., owners, the rights and legitimate interests of other persons would not be violated; in the process of the restoration of the rights of ownership to land, the interests of both the owners of land and the actual users of that land must be reconciled;

– while regulating the restoration of the denied rights of ownership, the legislature enjoys the discretion to establish the conditions and procedure for the restoration of the rights of ownership; the competence of the legislature also includes the establishment of new conditions applicable to  the restoration of the rights of ownership.

In the context of the constitutional justice case at issue, it should also be noted that, when the rights of ownership to land are restored by returning to owners the land in kind, situations can occur where, inter alia, due to the nature of an object to which the rights of ownership are to be restored, and in order that the rights of other persons, inter alia, their constitutional right to ownership, be protected, the users of such land must be provided with the possibility of being able to continue using the land in the future. In this respect, so that its constitutional duty to reconcile the interests of the owners of land and the actual users of that land would be performed, the legislature may employ various means of legal regulation, provided that regard is paid to the Constitution, inter alia, the constitutional principle of a state under the rule of law, which, inter alia, comprises the constitutional principle of proportionality.

20.1. It has been mentioned that Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law consolidated, inter alia, the rule under which, in the cases where certain land in a rural location was leased by the state to natural or legal persons (lessees) for the exploitation of the buildings and structures (either under construction or built) owned by the said persons on that land by right of ownership, upon the restitution of such land in kind to a person (the owner) who had claimed the restoration of the rights of ownership to that land (namely in kind), the owner of the land was obliged to take over those rights and duties of the lessor that under the contract for the lease of the land had been assumed by the state (or the institution acting on behalf of the state), which had granted that land on lease, unless the owner and lessee of the land concerned agreed otherwise.

It should be noted that the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law regulated the validity of contracts for the lease of land upon the restoration of the rights of ownership to the respective rural land leased to natural and legal persons for the exploitation of the buildings and structures owned by the them on that land by right of ownership; thus, the provision in question did not regulate any relations connected to the conclusion of contracts for the lease of state-owned land, nor the relations connected to the establishment and/or change of the conditions of such contracts.

20.2. It should also be pointed out that, as mentioned before, the provision “unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, as construed in the context of the legal regulation consolidated in the CC, implies, inter alia, the fact that, upon the transfer of the rights and duties of the lessor, which have been assumed under the contract for the lease of state-owned land, to the owner of the land concerned, to whom the respective built-up land has been returned in kind, by the agreement of the owner of the land and the lessee of that land, who owns the buildings and structures on the said land:

– the content of the contract for the lease of the land, inter alia, the amount of the payment for the lease of the land or the size of the area of the leased land, may be modified;

 – the contract for the lease of the land may be terminated;

– the possibility for the owner of the buildings and structures to use the plot of land or part thereof, which is the object of the contract for the lease of the land, may be ensured by establishing, inter alia, real rights.

It should also be emphasised that, as mentioned before, under the overall legal regulation consolidated in the provisions of the CC:

– upon the demand of one of the parties, the contract for the lease of land could be terminated prior to its expiry in the event of the failure of the other party to perform or to properly perform the contract, thus, in substance, in the event of the breach of the contract itself, inter alia, in the instances of the breach of the contract as expressis verbis established by law;

– in the event of the emergence of the exceptional circumstances aggravating, in substance, the performance of contractual obligations or the receiving of the performance of contractual obligations, provided these circumstances meet the criteria established by law, and in the absence of an agreement between the parties on the change of the contract, the contract may be terminated, or its conditions may be changed, through judicial means; upon the demand of one of the parties, the contract may also be changed by judicial means where the other party is in a substantial breach of the contract;

– in the cases where the relations of the lease of land between the owner of the land and the owner of the structures located on that land discontinue, the possibility for the owner of the structures located on the leased land to use that land, as it is necessary for the exploitation of the said structures according to their purpose, may be secured by means of a servitude, which, in the event of the failure of the owner of the structures and the owner of the land concerned to reach any agreement, may be established by judicial means.

20.3. It should also be noted that, as mentioned before, Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law provided for the lease of only such land that was necessary for the exploitation of the buildings and structures located on that land and owned by the persons other than the owner of the land by right of ownership, and it also established the related obligation with respect to the citizens to whom the said land was, at their request, to be returned in kind to take over the rights and duties of the lessor of such land.

In this ruling, it has been mentioned that, under the overall legal regulation consolidated, inter alia, in the Law on Land (wording of 27 January 2004), in the cases where contracts for the lease of built-up state-owned land were being concluded, the possibilities for the parties to determine, by mutual agreement, the size of the plot of land to be leased, as well as their possibilities of establishing the duration of the lease, were limited by the imperative norms of certain legal acts, i.e. those prescribing that the duration of the lease of the built-up plots of land had to be determined by taking into consideration the duration of the use of the structures concerned and had to be substantiated by the reasons provided by the lessor, as well as that the size of the plots to be granted on lease was limited by taking into consideration the needs of the use of the structures concerned.

20.4. Consequently, there is no ground for stating that the impugned legal regulation, as established in Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law, limited the rights of ownership of the owners of land, whose rights of ownership were restored to the respective built-up land by returning it to them in kind, as well as their freedom to enter into contracts, in a disproportionate manner.

  1. Thus, it should also be held that the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law did not deviate from the requirements stemming from Article 23 and Paragraph 1 of Article 46 of the Constitution and did not violate the constitutional principle of a state under the rule of law, comprising, inter alia, the principle of proportionality, and the constitutional principle of justice.
  2. In view of the foregoing arguments, the conclusion should be drawn that the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property was not in conflict with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.

III

On the compliance of the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wordings of 12 November 2001 and 7 April 2004) of Item 18 of the Procedure for the Implementation of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property (wording of 11 November 1999), as approved by government resolution No. 1057 of 29 September 1997, with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law

  1. In the constitutional justice case at issue, the Constitutional Court is investigating, inter alia, the compliance of the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wordings of 12 November 2001 and 7 April 2004) of Item 18 of the Procedure for the Implementation of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property (hereinafter also referred to as the Procedure), as approved by the Government Resolution (No. 1057) “On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property” of 29 September 1997, with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.
  2. The doubts of the petitioner regarding the compliance of the aforesaid provision of Item 18 of the Procedure with the Constitution are substantiated by the same arguments as regarding the constitutionality of Paragraph 11 of Article 4 of the Law.
  3. By its Resolution (No. 1057) “On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property” of 29 September 1997 (which came into force on 4 October 1997), the Government approved the Procedure for the Implementation of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property. By the Government Resolution (No. 1274) “On the Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 1057) ‘On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property’ of 29 September 1997” of 11 November 1999 (which came into force on 18 November 1999), the aforesaid Procedure was set forth in its new wording.
  4. The Procedure (wording of 11 November 1999), inter alia, the first paragraph of Item 18 thereof, the provision of which is impugned in the constitutional justice case at issue, was subsequently amended and/or supplemented on more than one occasion, inter alia, by the Government Resolution (No. 1347) “On the Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 1057) ‘On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Citizens to the Existing Real Property’ of 29 September 1997” of 12 November 2001 (which came into force on 17 November 2001) and the Government Resolution (No. 387) “On the Amendment of the Resolution of the Government of the Republic of Lithuania (No. 1057) ‘On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property’ of 29 September 1997” of 7 April 2004 (which came into force on 11 April 2004).
  5. The first paragraph (wordings of 12 November 2001 and 7 April 2004) of Item 18 of the Procedure (wording of 11 November 1999) prescribed:

– “Rural land used by or leased to natural and legal persons for the purposes of the exploitation of the buildings and structures (either under construction or built), or holiday buildings and structures (either under construction or built), owned by the said persons by right of ownership, where such land is not, under Article 12 of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, categorised as land to be purchased by the state, shall be restituted. Upon the adoption of the decision by the governor of the county to restore the rights of ownership, the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise. The areas and borders of the said plots of land shall be fixed in the respective land management projects developed under the land reform” (first paragraph (wording of 12 November 2001) of Item 18);

– “Rural land used by or leased to natural and legal persons for the purposes of the exploitation of the buildings and structures (either under construction or built), or holiday buildings and structures (either under construction or built), owned by the said persons by right of ownership, where such land is not, under Article 12 of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property, categorised as land to be purchased by the state, shall be restituted in kind. Upon the adoption of the decision by the governor of the county to restore the rights of ownership, the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise. The areas and borders of the said plots of land shall be fixed in the respective land management projects developed under the land reform” (first paragraph (wording of 7 April 2004) of Item 18).

  1. In this Constitutional Court’s ruling, it has been mentioned that Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law consolidated, inter alia, the rule under which, in the cases where certain land in a rural location was leased by the state to natural or legal persons (lessees) for the exploitation of the buildings and structures (either under construction or built) located on that land and owned by the said persons by right of ownership, upon the restitution of such land in kind to a person (the owner) who had claimed the restoration of the rights of ownership to that land (namely in kind), the owner of the land was obliged to take over those rights and duties of the lessor that under the contract for the lease of the land had been assumed by the state (or the institution acting on behalf of the state), which had granted that land on lease, unless the owner and lessee of the land concerned agreed otherwise.

Thus, the legal regulation consolidated in the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wordings of 12 November 2001 and 7 April 2004) of Item 18 of the Procedure (wording of 11 November 1999) is analogous to that established in Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law.

  1. It should be noted that Item 18 of the Procedure (wording of 11 November 1999) was subsequently amended and set forth in its new wording by the Government Resolution (No. 457) “On the Amendment of the Resolution of the Government of the Republic of Lithuania (No. 1057) ‘On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property’ of 29 September 1997 and Certain Resolutions Amending This Resolution” of 20 April 2011 (which came into force on 24 April 2011), however, the legal regulation established therein did not change from the aspect impugned by the petitioner.
  2. Having held in this Constitutional Court’s ruling that the provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001) of Article 4 of the Law was not in conflict with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law, on the grounds of the same arguments, it should also be held that the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wordings of 12 November 2001 and 7 April 2004) of Item 18 of the Procedure (wording of 11 November 1999) was not in conflict with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.
  3. In view of the foregoing arguments, the conclusion should be drawn that the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wordings of 12 November 2001 and 7 April 2004) of Item 18 of the Procedure for the Implementation of the Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property (wording of 11 November 1999), as approved by the Government Resolution (No. 1057) “On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property” of 29 September 1997, was not in conflict with Article 23 and Paragraph 1 of Article 46 of the Constitution and the constitutional principles of justice and a state under the rule of law.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 531, 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 provision “[t]he rights and duties assumed under the contract for the lease of land shall be transferred to the owner of the land unless the parties agree otherwise” of Paragraph 11 (wording of 3 August 2001; Official Gazette Valstybės žinios, 2001, No. 71-2518) of Article 4 of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property was not in conflict with the Constitution of the Republic of Lithuania.
  2. To recognise that the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wording of 12 November 2001; Official Gazette Valstybės žinios, 2001, No. 96-3393) of Item 18 of the Procedure for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property (wording of 11 November 1999; Official Gazette Valstybės žinios, 1999, No. 97-2807), as approved by the Resolution of the Government of the Republic of Lithuania (No. 1057) “On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property” of 29 September 1997, was not in conflict with the Constitution of the Republic of Lithuania.
  3. To recognise that the provision “the rights and duties assumed under the contract for the lease of state-owned land shall be transferred to the owner of the land unless the parties agree otherwise” of the first paragraph (wording of 7 April 2004; Official Gazette Valstybės žinios, 2004, No. 53-1803) of Item 18 of the Procedure for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property (wording of 11 November 1999; Official Gazette Valstybės žinios, 1999, No. 97-2807), as approved by the Resolution of the Government of the Republic of Lithuania (No. 1057) “On the Procedure and Conditions for the Implementation of the Republic of Lithuania’s Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property” of 29 September 1997, was not in conflict with the Constitution of the Republic of Lithuania.

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

Justices of the Constitutional Court:         Pranas Kuconis

                                                                             Gediminas Mesonis

                                                                             Egidijus Šileikis

                                                                             Algirdas Taminskas

                                                                             Romualdas Kęstutis Urbaitis

                                                                             Dainius Žalimas