Decision No. 6 of 15 July 2013 on Constitutional Case No. 5/2013
The proceedings conform to Art. 149, para 1, item 2 and item 4 of the Constitution.
The case was instituted on 17 January 2013 in response to the Ombudsman of the Republic of Bulgaria who challenged the constitutionality of Art. 38, para 1, para 2 and para 3, Art. 39, para 1, sentence 2 and Section II “Compensation for the Use of Privately-Owned Property” in Chapter Three “Private Real Property Taken Through the Power of Eminent Domain” of the State Property Act (DV, No. 44/21.05.1996, last amendment , DV, No. 99/14.12.2012), and Art. 27, para 1, Art. 29, para 3, item 1 and Art. 30 of the Municipal Property Act (DV, No. 44/21.05.1996, last amendment, DV, No. 91/ 20.11.2012), and their incompatibility with the international treaties to which Bulgaria is a party.
The Ombudsman insisted that the provisions of Art. 38, para 1, para 2 and para 3, Art. 39, para 1, sentence 2 and Section II “Compensation for the Use of Private Property” in Chapter III “Private Real Property Taken through the Power of Eminent Domain” of the State Property Act (SPA) and Art. 27, para 1, Art. 29, para 3, item 1 and Art. 30 of the Municipal Property Act (MPA) are noncompliant with the principle of the state committed to the rule of law (Art. 4, para 1 of the Constitution), the principle of the primacy of the Constitution (Art. 5, para 1 of the Constitution) and the principle of the inviolability of private property (Art. 17, para 3 of the Constitution), Art. 17, para 5 and Art. 56 of the Constitution and Art. 6, § 1 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. The Ombudsman of the Republic of Bulgaria thinks that the cited texts from the State Property Act and the Municipal Property Act violate fundamental Constitution-proclaimed rights of citizens. Along with, they are incongruent with human rights that are guaranteed by the European Convention.
The challenge premises on the understanding that the provisions challenged practically make it binding on citizens to read through each number of Durzhaven Vestnik if they want to exercise their right to legal defense since the administrative authority is under no obligation to inform the owner about the intention of the central government or the local authorities to take away his or her property or about the very expropriation event. Such an approach that privileges and facilitates the central government and the local authorities to the detriment of citizens’ rights is incompatible with the Constitution. It is unacceptable to refer to discretion to justify legislation that ignores and violates underlying principles that are enshrined in the Constitution of the Republic of Bulgaria. At the same time Art. 38, para 1 and para 2 of the State Property Act and Art. 27, para 1 of the Municipal Property Act violate Art. 6, § 1 of the European Convention for the Protection of Human Rights and Fundamental Freedoms inasmuch as the applicant could not have a recourse that “he should have had to a clear, practical and effective opportunity to challenge an administrative act that was a direct interference with his right of property.” (Judgment of the European Court of Human Rights on the Case De Geouffre de la Pradelle v. France (application No. 12964/87).
The movant assumed that Art. 38, para 3, and the second sentence of Art. 39, para 1 of the State Property Act allows that private real property be taken through the power of eminent domain even if none of the Constitution-prescribed indispensable conditions is met in order to proceed – the prior and just compensation to the owner. Along with, Art. 29, para 3, item 1 of the Municipal Property Act allows, in the Ombudsman’s view, to take private real property before the final court decision on the size of the compensation to be awarded and in this way violate Art. 5, para 1 and Art. 17, para 5 of the Constitution.
The Ombudsman thinks that Section Two of Chapter Three of the State Property Act and Art. 30 of the Municipal Property Act unilaterally and with no regard for the owner’s assent and before the expropriation act takes effect, allows a third party to use and hold the property against a compensation. Thus the State encroaches upon the inviolability of private property with the help of the legislative machine.
The Constitutional Court considered the argumentation as set forth in the challenge and in the positions that were presented by the interested parties and to make a pronouncement, took into account the following:
1. The Constitution of the Republic of Bulgaria treats the forcible expropriation of property or parts thereof to serve State or municipal needs as an exception to the principle of the inviolability of private property – Art. 17, para 3 of the Constitution. It is only in exceptional cases that the power of eminent domain shall be exercised by virtue of a law to infringe on the right to private property of citizens or legal entities to serve such public purpose which shall be incapable of being otherwise served and, then, not without prior and just compensation. As a result of the exercise of the power of eminent domain the State or municipalities become the right-holders of the original title. The power of eminent domain is exercised on the basis of individual administrative acts aiming at the transformation of the proprietary rights. Such acts are the Council of Ministers decisions under Art. 34а, para 1 of the State Property Act, the regional governors’ decisions under Art. 34а, para 2 of the State Property Act and the mayors’ ordinances under Art. 25, para 2 of the Municipal Property Act. The challenged texts – Art. 38, para 1 and para 2 of the State Property Act and Art. 27, para 1 of the Municipal Property Act – provide that citizens and legal entities shall not be notified about the expropriation by individual administrative acts that are served to the stakeholders in keeping with the Administrative Procedure Code; instead the acts shall be published in Durzhaven Vestnik and the fact of publication is equivalent, in legal terms, to the service of notice.
Unlike administrative proceedings under the general framework of the Administrative Procedure Code where stakeholders who have been injured by administrative acts have the chance to timely react and defend their rights in expropriations as per Art. 38, para 1 and para 2 of the State Property Act and Art. 27, para 1 of the Municipal Property Act, the notice in Durzhaven Vestnik is the earliest information they can obtain about the completed expropriation proceedings. The cited texts virtually make it binding on citizens and legal entities to read each number of Durzhaven Vestnik if they want to contest the legality of the forcible expropriation given that the competent central or local government institution is not bound to notify the rightful owner about their intention to exercise the power of eminent domain or about the expropriation act itself. Such an approach that facilitates solely the State and the municipalities to the detriment of the citizens and legal entities’ right to resort to administrative remedies is dissonant with the Constitution. It is true the injured stakeholders are free to appeal against the expropriation act on the basis of the challenged SPA and MPA texts but this option is strongly limited and out of proportion to an extent that it is an option in name only since the notice is merely published and the act is not served to the rightful stakeholder. In principle it is the Durzhaven Vestnik that is commonly resorted to for the publication of summons and letters of the courts in a form that is prescribed by the procedural law whenever the notification address is not the approachable channel. Thus the publication in Durzhaven Vestnik is perceived as an anticipated alternative to personal notice. The challenged texts defiantly prescribe to substitute the obligation of the institutions of the State to serve a personal notice to the rightful owner and recipient of the individual administrative act by which his or her property is to be taken away with a nameless notice to be published in Durzhaven Vestnik. This impairs the right to legal defense (Art. 56 of the Constitution) of citizens and legal entities without any valid reason. It is not a sound concept that the communication of the administrative act is not a right that citizens enjoy by virtue of the Constitution and that it is a tool or procedure to implement a definite action as part of administrative proceedings. It is even more unacceptable to assume that the ways in which the notification is sent is an element of the Constitution-vested competence, under Art. 84, para 1, of the National Assembly to pass, amend and supplement laws and that the Lawmaker is free to give authorization as appropriate. There exists no reason to believe that the challenged SPA and MPA texts don’t impose restrictions as they strike the right balance between the rights of citizens on one hand and the public interest, on the other hand. In principle the taking of private real property through the power of eminent domain for the sake of national and large-scale infrastructure projects impinges on a great number of properties and owners, so it is to be expected that the personal notice to inform about the administrative acts would slow down and delay the process. While public interest may give good reason for having the notice printed in Durzhaven Vestnik, the owners’ private interest should be adequately protected by the legislating authority since the right to property shall be guaranteed and protected by the State (Art. 17, para 1 of the Constitution) and private property shall be inviolable (Art. 17, para 3 of the Constitution).
The SPA and MPA texts that are challenged evidently seek fast and efficient implementation of infrastructure projects and other projects of national or regional importance. The pace at which such projects go may be ensured by various legislative solutions that will not impair or curtail the citizens’ Constitution-proclaimed rights. The texts challenged violate the principle of the state committed to the rule of law as set forth in Art. 4, para 1 and Art. 17, para 1 of the Constitution. This principle calls for a consistent and predictable Legislature. The legislation that it passes must guarantee legal certainty by, inter alia, the recognition of the rights that citizens and legal entities enjoy rather than by changes in the interests of the State and to the detriment of citizens and legal entities. The Legislature in a state committed to the rule of law must enact texts that comply with Art. 17, para 1 of the Constitution and with fair interest within the framework of the Constitution-set model rather than, accidentally or forcibly, “impose restrictions or award privileges or grant rights that are impossible to exercise” (Constitutional Court Decision No. 1/2005). There is no impediment to codify the publication in Durzhaven Vestnik as a subsidiary avenue of notification when and if the rightful owner cannot be located to be served the personal notice of the administrative act by which the private real property is to be taken through the power of eminent domain. Such regulation is to be found in both, the Administrative Procedure Code and the Code of Civil Procedure.
Art. 56 of the Constitution reads thus: “Everyone shall have the right to legal defense whenever his/her rights or legitimate interests are violated or endangered. The challenged SPA and MPA texts enable, in principle, citizens to appeal against an act that will take their property away through the power of eminent domain. However, exemption of the obligation of personal notice nominally meets the Constitution-set requirement but in practical terms curtails the right to legal defense. As it is, the regulation is not consistent with the purpose and meaning of Art. 56 of the Constitution.
Art. 5, para 4 of the Constitution reads thus: “International treaties which have been ratified in accordance with the constitutional procedure, promulgated and having come into force with respect to the Republic of Bulgaria, shall …... have primacy over any conflicting provision of the domestic legislation.” In that sense the provisions in Art. 38, para 1 and para 2 of the State Property Act and Art. 27, para 1 of the Municipal Property Act disagree with Art. 6, § 1 the European Convention for the Protection of Human Rights and Fundamental Freedoms. The Judgment of the European Court of Human Rights on the Case De Geouffre de la Pradelle v. France (application No. 12964/87) points out that the applicant “should have had a clear, practical and effective opportunity to challenge an administrative act that was a direct interference with his right of property.” The Court agreed that the administrative act is to be brought to the attention as the addressee in the form of a personal notice so that the addressee may have the option of appeal over a certain period of time following the service.
In defiance of the Constitution and the Convention Art. 38, para 1 and para 2 of the State Property Act and Art. 27, para 1 of the Municipal Property Act strip citizens of an efficient tool to efficiently protect their right to private property. The said texts allow appealing against Council of Ministers decisions and regional governors’ and mayors’ orders within 14 days reckoned from the date of their publication in Durzhaven Vestnik. The appeal process is difficult largely because citizens are not bound nor are they in a position to peruse all numbers of Durzhaven Vestnik and even in the cases when the Durzhaven Vestnik copies are available, it is unlikely that citizens will realize that it is their property that is slated for expropriation through the power of eminent domain as the very form in which these administrative acts are published is complicated. The cadastre, property and zoning identification numbers change repeatedly, hence the difficulty to trace the progress of the expropriation procedure.
When the Lawmaker allowed the central government and the local authorities to use Durzhaven Vestnik as the sole medium to notify of individual administrative acts by which private real property is to be taken away through the power of eminent domain, in fact it freed them from the obligation to locate and identify the owners to serve them the personal notice through the proper channel. Thus the challenged SPA and MPA texts exempt the central government and the local authorities of duties despite the fact that they keep cadastral maps, tax statistics and land surveys and other tools sufficient to trace facts back. The disorganization of and non-coordination between and within the central government agencies and local government services shall not be accepted as an excuse for the violation of owners’ Constitution-proclaimed rights. It is out of tune with the Constitution to justify bad governance with infringement on and curtailment of fundamental Constitution-enshrined rights of citizens in the Republic of Bulgaria.
2. The Constitution of the Republic of Bulgaria proclaims that private property shall be inviolable (Art. 17, para 3); the inviolability forbids, inter alia, other persons to hold, use or dispose of private property without the consent or against the consent of the title-holder. The State is bound to respect and guarantee the inviolability of private property. The only exception to the rule is to be found in Art. 17, para 5 of the Constitution where a possibility is provided for forcible expropriation. The exception stands for the primacy of the public over the private interest of the title-holder. The Constitution makes the forcible expropriation of private property conditional on multiple cumulative factors: the expropriation in the name of State and municipal needs shall be effected only by virtue of a law, provided that these needs cannot be otherwise met, and after fair compensation has been ensured in advance. The expropriation proceeds with an administrative expropriation act which is issued subject to a special law. The Constitutional Court’s Decision No. 7/2001 reads that “compensation is seen as prepaid if it is paid before the real property is taken”. Moreover, the compensation should be paid up to the owner in full, and not in installments. The Constitutional Court also ruled that the compensation in the event of taking private real property is not seen as being paid-up in advance if an ultimate price is not set. Practically, this is taking of private real property under Art. 38, para 3, and sentence two of Art. 39, para 1 of the State Property Act and a failure to comply with the Constitution-prescribed binding conditions – fair compensation that has been ensured in advance to satisfy the owner. The provision of Art. 29, para 3, item 1 of the Municipal Property Act allows to proceed with expropriation pending a court’s final decision on the amount of the compensation that is contested by the owner. Such an approach by the legislating authority conflicts with Art. 17, para 5 of the Constitution of the Republic of Bulgaria and with the principle of the state committed to the rule of law (Art. 4, para 1 of the Constitution). In the event of unliquidated claim the court is the only authority to determine the ultimate fair compensation. It is only after the compensation as awarded by the court is paid up that the condition of a fair compensation that is due to the owner and that has been ensured in advance is met, as per Art. 17, para 5 of the Constitution. Forcible expropriation is an exception to the principle of the inviolability of private property, hence the inadmissibility to give latitudinarian interpretations of Constitution prescriptions. The texts of Art. 38, para 3, Art. 39, para 1, sentence 2 of the State Property Act and of Art. 29, para 3, item 1 of the Municipal Property Act are in contravention of Art. 4, para 1, Art. 5, para 1 and Art. 17, para 1 and para 5 of the Constitution of the Republic of Bulgaria.
Compensation is seen as fair in three cases: when the title-holder was satisfied with the amount of the compensation that was awarded by the expropriation act; when the title-holder was not satisfied with the amount of the compensation but did not appeal against it within the prescribed period; when the title-holder was dissatisfied with the amount of the compensation that was awarded by the expropriation act and appealed against it. Whenever the amount of the compensation is appealed against in court, it will be only the amount that the court awards by its final judgment that is seen as fair. The title-holder of taken property is not entitled to compensation other than the fair compensation. Moreover, the compensation shall be paid up in advance, i.e. prior to the expropriation. The compensation is not seen as a payment in advance in the sense of Art. 17, para 5 of the Constitution if it is not fair and is not fully paid up. An installment is not seen as an advance payment if its amount is not unconditionally pre-fixed as a grand total. Whenever the title-holder appeals against the amount of the compensation, the advance payment of the compensation can’t be made pending the court’s final decision that fixes the amount.
The Court viewed as groundless the understanding that the SPA and MPA texts that the Ombudsman challenged are compliant with the Constitution for they provide for a prior execution of the expropriation act when it is only the amount of the compensation that is appealed against. Given that the appeal concerns only the amount of the compensation, the Constitution-prescribed requirement of a fair compensation that has been ensured in advance is not met when the payment of the amount as awarded by the compensation act is made to the regional governor’s account. Only after the court awards a fair compensation will the amount be transferred to the owner’s account. The dispute over the amount of the compensation is a dispute about its fairness while the Constitution provides that fairness and prepayment shall be the indispensable and cumulative conditions prior to the transfer of ownership in the event of expropriation.
Whenever, hypothetically, the amount of the compensation that is awarded by the act of expropriation is appealed against and the settlement of the dispute is pending the court’s final decision, there exists no valid advance payment of the compensation regardless of the transfer to the owner’s account of an amount that has been awarded by the challenged administrative act.
Forcible expropriation of private property is tolerable but in the conditions of Art. 17, para 5 of the Constitution. Section Two “Compensation for the Use of Privately-Owned Property” of Chapter Three “Private Real Property Taken through the Power of Eminent Domain” of the State Property Act and Art. 30 of the Municipal Property Act grants a third party the right, against the owner’s consent and prior to the expropriation, to hold and use the owner’s property in return for a compensation other than the compensation awarded on the expropriation as per Art. 17, para 5 of the Constitution. Moreover, the law makes it binding on the owner to suffer such conduct. The opportunity that is offered by the central and local government to an investor to take possession of private property and to start construction pending the enactment of the administrative act of expropriation constitutes an encroachment, at variance with the Constitution, of the inviolability of private property. Hence the noncompliance of the SPA and MPA challenged texts with Art. 4, para 1 and Art. 17, para 3 of the Constitution of the Republic of Bulgaria.