Decision No. 1 of 28 January 2014 on Constitutional Case No. 22/2013
The proceedings conform to Art. 149, para 1, item 2 of the Constitution of the Republic of Bulgaria.
The case was filed by a group of 55 Members of the 42nd National Assembly who challenged the Assembly’s Decision to Declare a Moratorium on the acquisition of the right to ownership over land in the territory of the Republic of Bulgaria by non-Bulgarian nationals or non-Bulgarian legal persons and to extend that moratorium till 1 January 2020.
The contending party sees the Decision at issue as noncompliant with Art. 22, para 1 of the Constitution and with § 3 “Free Movement of Capital”, point 2 of Annex VI: The list referred to in Art. 20 of the Accession Protocol: transitional measures, Bulgaria from the Treaty Concerning the Accession of the Republic of Bulgaria and Romania to the European Union (the Accession Treaty) (DV, No. 103 and No. 104/2006, amended, No. 97/23.11.2007), that determine the Constitution justification of the entitlement to farmland, forests and forestland for nationals of a EU Member State other than Bulgaria. The contending party insists that the Decision imposes a ban on individuals and legal persons from EU Member States and from States that are a party to the European Economic Area Agreement (EEAA) to acquire ownership over land in the territory of the Republic of Bulgaria between 1 January 2014 and 1 January 2020 and requests that the Decision be pronounced unconstitutional.
The Constitutional Court discussed the arguments as presented in the challenge and based its ruling on the following considerations:
The MPs don’t bring up any Constitution texts to support their challenge of the Decision which they see as unconstitutional but for Art. 22, para 1; however, the Constitutional Court’s ruling is not to be limited to the indicated grounds for non-conformity with the Constitution and this is an argument to be derived from Art. 22, para 1 of the Constitutional Court Act.
The following explanation must be given regarding the alleged violation of the Accession Treaty. The Treaty Concerning the Accession of Bulgaria and Romania to the EU was drafted at a time when the Treaty Establishing a Constitution for Europe was not adopted yet: that is why the Accession Treaty consists of two parts: 1. the Protocol Concerning the Conditions and Arrangements for Admission of the Republic of Bulgaria and Romania to the European Union (the Accession Protocol) that conformed to the provisions of the Treaty Establishing a Constitution for Europe; 2. the Act Concerning the Conditions of Accession of the Republic of Bulgaria and Romania and the adjustments to the Treaties on which the European Union is founded (the Act of Accession) that conformed to the then existing constituent treaties, specifically the Treaty on the Functioning of the European Union with the Amsterdam, Nice and Maastricht amendments. Since the Treaty Establishing a Constitution for Europe has not been ratified by some Member States and therefore, has not gone into effect, currently the Accession Treaty is applied only in its second part that contains the Act Concerning the Conditions of Accession of the Republic of Bulgaria and Romania and the adjustments to the Treaties on which the European Union is founded and that will be cited hereinafter as the Act of Accession which is the designation used in the Treaty Concerning the Accession of the Republic of Bulgaria to the European Union.
Art. 21, para 1 of the Constitution reads: „Land, as a chief national asset, shall enjoy particular protection“. That concern is addressed by the stronger protection as provided for by Art. 22, para 1 of the Constitution in the version of 13 July 1991 that reads: „No foreign national or foreign legal person shall acquire ownership over land, except through legal inheritance. Ownership thus acquired shall be duly transferred.“ Art. 22 of the Constitution was duly amended as Bulgaria prepared for EU membership to allow foreigners and foreign legal persons to acquire ownership over land under the following circumstances:
Firstly, Art. 22, para 1 of the Constitution refers to the arrangements and timeframes as per the Treaty Concerning the Accession of the Republic of Bulgaria and Romania to the European Union, the Act of Accession where it is stated that starting from 1 January 2014 (the date of accession) the nationals of any EU Member State and nationals of the States that a party to the European Economic Area Agreement and legal persons formed in accordance with the laws of these states shall enjoy the right to own land on the territory of Bulgaria. This is the conclusion to be drawn from § 3 „Free Movement of Capital“, point 1 and point 2 of Annex VI: The list referred to in Art. 23 of the Act of Accession: transitional measures, Bulgaria from the Treaty Concerning the Accession of the Republic of Bulgaria and Romania to the European Union. According to the points above cited Bulgaria may maintain in force for seven years from the date of accession the restrictions laid down in its legislation, existing at the time of signature of the Treaty of Accession, on the acquisition of agricultural land, forests and forestry land by nationals of another Member State, by nationals of the States which are a party to the European Economic Area Agreement and by legal persons formed in accordance with the laws of another Member State or an EEAA State. „Self-employed farmers who are nationals of another Member State and who wish to establish themselves and legally reside in Bulgaria, shall not be subject to the said restriction.“
Concerning the acquisition of ownership over land for a second home by nationals of another Member State, by nationals of the States which are a party to the European Economic Area Agreement who don’t reside in Bulgaria and by legal persons formed in accordance with the laws of another Member State or an EEAA State, the transitional five-year measure that had been agreed ceased to be valid on 1 January 2012. Nationals of another Member State or an EEAA State who legally reside in Bulgaria, shall not be subject to the said five-year restriction.
Next, the provision of Art. 22, para 1 read in combination with para 2 of the Constitution allows the acquisition of ownership over land by legal persons or nationals of a non-EU Member State or of a non-EEAA State by virtue of an international treaty that Bulgaria signed after 1 July 2007 and that contains an additional text reading that the ratification act shall be subject to an approval by two-thirds of all Members of Parliament. This option shall not be valid for any international treaty that Bulgaria has signed prior to the above date. Even after the modification of Art. 22 of the Constitution it is still possible for foreign nationals to acquire ownership over Bulgarian land through legal inheritance.
On 22 October 2013 the National Assembly voted on a Decision to Declare a Moratorium on the acquisition of ownership over land in the territory of the Republic of Bulgaria by foreign nationals or foreign legal persons till 1 January 2020. This decision of the Legislature makes it binding on the Council of Ministers to take any action and pass any act as required that will declare a moratorium on the acquisition of ownership over land in the territory of the Republic of Bulgaria by foreign nationals or foreign legal persons and that will maintain that moratorium till 1 January 2020.
The Decision in question goes against fundamental Constitution-enshrined principles, hence the sustainability of the request that it be pronounced unconstitutional.
Bulgaria is a state committed to the rule of law, as Art. 4, para 1 of the Constitution reads. In its case-law the Constitutional Court has repeatedly pointed out that the precise and nondiscriminatory respect of the laws and of the Constitution shall be binding on all subjects of law. The same holds true of the National Assembly in the exercise of public power. The laws and the decisions as set down in Art. 86, para 1 of the Constitution as types of acts that the Legislature approves should be obvious, unambiguous and uncontroversial. In the understanding of the Constitutional Court a state is a law-governed state providing the Constitution and the laws reign supreme. „On their part, the laws of such a state shall be clear, precise and compliant with the Constitution.“
The abovementioned requirements of constitutionality have not been met in the passage of the Decision challenged. The analysis of the Decision to Declare a Moratorium has exposed an intrinsic inconsistency and disagreement between the heading of the decision and its substantive part and the inexistence of an express operative part. Such legally and logically unsustainable act precludes an unambiguous answer to the main question that has been asked, viz.: Has the Legislature declared a moratorium and made it binding on the Council of Ministers to proceed with the required acts and actions to enable the moratorium or has the Legislature made it binding on the Council of Ministers to declare the moratorium, respectively to enforce the moratorium? The indefiniteness as pointed out and the lack of clarity in the declaration of intention of the Legislature lead to the conclusion of noncompliance with the requirements of the principle of the law-governed state, hence, even on these grounds alone the Decision challenged must be pronounced unconstitutional.
The exceptional importance of societal relations that the Decision to Declare a Moratorium impacts calls for a discussion on other Constitution-enshrined principles that have been violated by the adoption of the Decision. While a definite answer cannot be given to the question whether the National Assembly’s decision declares a moratorium, its appropriate part cannot be seen as a recommendation or an instruction that have no legal implications for its addressees. Drawing on Art. 86, para 2 of the Constitution, the National Assembly’s laws and resolutions shall be binding on the Council of Ministers.
The expositive part of the Decision clearly names the targets of the moratorium – the subjects of private law who are subject to the moratorium and the duration of the moratorium. Further, the Decision names the policing authority and by doing so actually extends the duration of the preceding measure as agreed under the Accession Treaty (the Treaty Concerning the Accession of the Republic of Bulgaria and Romania to the European Union). It should be made clear that the National Assembly makes it imperative that the Council of Ministers should take any required action and pass any required act to exercise a prerogative that the National Assembly is not vested with or else that the Decision appears to be ultra vires inasmuch as Art. 84 and Art. 85 of the Constitution do not give the justification for the adoption of the Decision. Therefore it is beyond dispute that the Constitution provisions that determine the National Assembly’s prerogatives fail to envisage a hypothesis where a decision of a unilateral declaration of intention by the Legislature assigns to proceed with actions leading to a unilateral revision of international treaties that have been ratified, promulgated and that have taken effect for Bulgaria and that the text of Art. 22, para 1 of the Constitution refers to. A hypothesis of this kind is not to be found vis-à-vis the acts by which the Legislature exercises its prerogatives. On that point it should be noted that the prerogatives that the National Assembly exercises and the acts that it passes are thoroughly enumerated in Art. 84, Art. 85 and Art. 86 of the Constitution. The fathers of the Constitution have divested the National Assembly of the power to enact laws by which further powers are vested in the Legislature as this would disturb the balance that the principle of the separation of powers keeps and would add to the prerogatives of the Legislature – in the argumentation of Art. 8 of the Constitution. It is true the Constitutional Court has had the opportunity to express its view that „The Constitution does not rule out a situation where some of the National Assembly’s prerogatives may be established by a law“. However, such a view can in no way substantiate the idea of vesting in the National Assembly prerogatives other than those in the Constitution and of doing it by a procedure that the Constitution does not provide for.
Next, the adoption of the here challenged Decision by the National Assembly fails to conform with yet another requirement of the principle of the state committed to the rule of law, namely, that a certain category of societal relations should be subject to law only.
The Constitution arrangements concerning the land which is a national asset and the related special land ownership scheme as a real right which creates restrictions on the acquisition of ownership over land by foreign nationals or foreign legal persons shall be subject to a subsequent law alone. The reason is that in the hierarchy within the legislation a law ranks second but for the Constitution and deals with primarily and durably essential societal relations like those that are the object of the Decision contested. By their exceptional importance the societal relations that are the matter treated by the Act of Accession and that Art. 22, para 1 of the Constitution refers to, are arranged by an international treaty which, as per Art. 5, para 4 of the Constitution, ranks immediately after the Constitution in terms of legal force. Therefore, any request for an amendment, suspension or abolition shall be subject to a law. Thus for the National Assembly to declare a moratorium that is viewed in its concrete dimension as an act that prolongs the action of the transitional measures that restrict the acquisition of ownership over Bulgarian land by foreign nationals and foreign legal persons, it shall exercise its prerogative under Art. 84, para 1 of the Constitution only upon the condition that all other preconditions exist.
Undeniably the National Assembly went beyond its fundamental powers and functions as per Art. 62 of the Constitution read in combination with Art. 84 and Art. 85 of the Constitution when it voted on its Decision to Declare a Moratorium. In that context it is logical to draw the conclusion that the National Assembly prescribes that the Council of Ministers undertake actions and pass acts that are noncompliant with the Constitution, because, to say the least, the Council of Ministers is not equipped with law-established tools to translate the moratorium into reality – as argued in Art. 114 of the Constitution. Moreover, the National Assembly does not enjoy the competence to unilaterally suspend the Accession Treaty which has been ratified and promulgated and has gone into effect for Bulgaria as a signatory party to the Treaty. Further, the heading of the Decision and its substantive part reveal the aim pursued which is to exclude the acquisition of ownership over land by the persons who are the targets of the moratorium and, in addition, to disable the Council of Ministers to undertake any foreign policy-related actions that fall within its range of competence during the moratorium in relation to the international treaties of the kind as described in Art. 22, para 1 of the Constitution. Implicitly, the Decision to Declare a Moratorium comprises, inter alia, a prior renunciation by the National Assembly of the prerogatives that Art. 85, para 1 of the Constitution vests in it, viz. the prerogative to ratify international instruments, and the waiver is to last as long as the moratorium is in place and this is inadmissible. This is so as the principle of the law-governed state precludes vesting powers other than those that the Constitution names just as it forbids the Legislature to renounce its prerogatives. Next, the National Assembly’s Decision to Declare a Moratorium disables the Council of Ministers to make a standalone examination and assessment of the fulfillment of the Accession Treaty (the Treaty Concerning the Accession of the Republic of Bulgaria to the European Union), including the part that treats the agreed transitional measures and on that basis to propose to the Legislature relevant measures to enable the fulfillment of the Treaty or to revise the measures, as appropriate. Therefore, apart from the violation of Art. 22, para 1, the adoption of the Decision to Declare a Moratorium constitutes a violation of the principle of the separation of powers that Art. 8 of the Constitution proclaims.
Though the Council of Ministers is constituted and operates as long as it enjoys the National Assembly’s confidence, it is not an executive agency of the Legislature; the CoM is a standalone body with competences that the Constitution grants it in the field of foreign policy – an argument to be derived from the Constitution – its Art. 105 and Art. 106, para 1, point 3 in the enumeration. While the Constitution guarantees that the Executive branch of power will be independent in its foreign policy activities, it does not rule out interaction with the Legislature. By its lawmaking activity the Parliament can formulate and identify strategic problems of the foreign policy, the national security, the values and the priorities that are to inspire the policies of Bulgaria in its relations with other countries. And if the Parliament comes to think that the Government pursues its foreign policy in violation of the Constitution or the laws or that the policy pursued by bodies of the Executive goes against the Parliament’s will and charted foreign policy course to be followed, it may, at any time, drawing on the mechanism of political responsibility, take a vote of no-confidence in the Government or make the Government resign or dissolve it. The mechanism of interaction between the Executive and Legislative branch of power, however, precludes actions to be taken or acts to be prescribed that will strip the Council of Ministers of the autonomy and of the power of discretion that are guaranteed to it at Constitution level to be at the helm of the policy of the Republic of Bulgaria on European Union issues in the other foreign policy sectors, including the conclusion, revision or suspension of international treaties to which Bulgaria is a signatory party. This deduction is based on the powers that are vested in the National Assembly and that entitle it to have a say on all foreign policy issues but disallow the Assembly to directly pursue the foreign policy.
The juxtaposition of the Decision to Declare a Moratorium with Art. 22, para 1 of the Constitution concerning the range and time limits that confront non-Bulgarians who are willing to own land in Bulgaria shows that the act of Parliament seeks to suspend the application of the codified tools that allow foreign nationals and foreign legal persons to acquire ownership over land in Bulgaria from 1 January 2014 onwards. That part of the Decision to Declare a Moratorium conflicts with Art. 22, para 1 of the Constitution as it stipulates suspension of the expressly codified right of non-Bulgarian nationals to acquire ownership over land in Bulgaria through legal inheritance and that is a materialization of the Constitution-established principle of inheritance in its Article 17. The prohibition against the acquisition of ownership over land until 1 January 2020 covers all foreign nationals and foreign legal persons and not just nationals and legal persons from another EU Member State or an EEAA State. The prohibition is total and covers all the land regardless of its class or purpose – urbanized land or farmland, land as a means of production or as a beneficiary of investment. Here the Decision to Declare a Moratorium does not conform at all to the differentiated approach that the Second Amendment of the Constitution introduced, effective from 1 January 2007. Given this, it is obvious that the prolongation of the restriction on land ownership by foreigners and foreign legal persons is openly at variance with Art. 22, para 1 of the Constitution.
The Constitutional Court has previously pronounced a number of decisions concerning the binding nature of EU acts as part of the existing domestic legislation. By the signature of the Treaty Concerning the Accession of the Republic of Bulgaria to the European Union and the Treaty’s ratification, promulgation and entry into effect the Republic of Bulgaria has become a signatory party to the constituent treaties (amended and adjusted as appropriate) establishing the European Communities and the European Union and has accepted them as primary Community legislation that thoroughly provides for the Union institutions and bodies and for their competences and acts. The EU primary legislation acts are international instruments in the sense of Art. 5, para 4 of the Constitution and become part of the Bulgarian domestic legislation subject to relevant Constitution provisions. Moreover, these acts shall supersede any national legislation stipulating otherwise. The Accession Treaty (the Treaty Concerning the Accession of the Republic of Bulgaria and Romania to the European Union) has been ratified by the constitutionally established procedure and has been promulgated and has come into force: therefore, it is considered part of the domestic legislation of the country. As the case stands, the content of the general precept as per Art. 22, para 1 of the Constitution should be interpreted and applied in the light of the Accession Treaty and the TFEU (the Treaty on the Functioning of the European Union) with respect to the conditions and requirements under which nationals and legal persons from EU Member States shall be free to acquire ownership over land in the Republic of Bulgaria. The existence of the link referred to between the general Constitution prescription and the relevant legal prescriptions from the Treaties in the mentioned part rules out a possibility to see as Constitution-compliant the decision by which the Parliament makes it binding on the Council of Ministers to take actions and measures that will unilaterally extend the transitional measure of restriction on the acquisition of land by nationals and legal persons of another Member State or of the States which are a party to the European Economic Area Agreement until 1 January 2020 due to, to say the least, noncompliance with the provision of Art. 22, para 1 read in combination with Art. 5, paras 2 and 4 of the Constitution. Art. 85, para 3 of the Constitution should be borne in mind in that context as according to it international treaties that are ratified by the National Assembly, the Accession Treaty being such a treaty, may be amended or denounced only by their built-in procedure and, as it is, the procedure is not subject to any provision that may extend the duration of the foregoing measures of restriction on the acquisition of the right to ownership over Bulgarian land by foreign nationals or foreign legal persons. No provision exists about a procedure of unilateral revision or suspension of the Treaty in that particular part as may arise from the Decision to Declare a Moratorium. As the case stands, the only available alternative is to renegotiate the amendment to the Accession Treaty as per its Art. 4, viz. that the Government of Bulgaria should initiate negotiations on adjustments of the Treaty subject to the consent in writing of all EU Member States on the scope of the adjustment requested and subject to the subsequent ratification of any adjustments of the Treaty by all EU Member States in accordance with their respective constitutional requirements. Till 1 January 2014, during the two months between this day and end 2013, it was objectively impossible to comply with the requirements in question regarding adjustments of the Accession Treaty. Despite these undeniable facts, as evident from the verbatim reports of the floor discussion on, inter alia, the issue of the possible unconstitutionality of the National Assembly’s act in taking action that sidetracks from the procedure to be followed when adjustments are introduced in the Accession Treaty, the Decision to Declare a Moratorium was approved. Such an approach by the Legislature makes the Decision contested noncompliant with the requirements of legal certainty and predictability that underpin the constitution of any state committed to the rule of law as set forth in Art. 4, para 1 and Art. 3 of the Constitution. The consideration of the Decision to Declare a Moratorium appears to have ignored the fact that the acquisition of land by nationals of another EU Member State or by nationals of an EEAA State or by legal persons formed in accordance with the laws of those states should be treated as an investment in real estate and falls within the range of the free movement of capital as one of the fundamental freedoms enjoyed in the EU. From 1 January 2014 onwards which is the closing date of the transitional measure, land transactions fall within the scope of the free movement of capital within the EU as per Art. 64 ff. of the TFEU except for instances where restrictive measures are justified as needed to maintain law and order and to safeguard internal security, that is, an assumption that is not at issue. Art. 63, § 1 of the TFEU provides as follows: “Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.”, therefore an act of the national legislation shall not unilaterally impose restrictions.
To summarize in conclusion: in the exercise of a prerogative that it enjoys as a legislating authority, the National Assembly has approved a Decision to Declare a Moratorium and by doing so has infringed on fundamental Constitution-enshrined principles, namely, the fact that Bulgaria is a law-governed state where there exists separation of powers and where the governance is compliant with the Constitution and the domestic legislation is mindful of EU law. Hence the reason to overturn the Decision.