The Constitutional Court recognized the norm establishing the possibility to grant compensation for restriction of forestry actions to a lawful manager of immovable property as unconstitutional
On 7 June 2012, the Constitutional Court adopted a judgment in the case No. 2011-19-01 “On Compliance of Section 6 (2) Indent 4 of the Law on the Rights of Landowners to Compensation for Restrictions on Economic Activities in Specially Protected Nature Territories and Microreserves with the First Sentence of Article 91 and Article 105 of the Satversme of the Republic of Latvia”.
On the right to receive compensation for restriction on use of property
Contested Norm
Section 6 (2) indent 4 of the Law on the Rights of Landowners to Compensation for Restrictions on Economic Activities in Specially Protected Nature Territories and Microreserves (hereinafter – the Compensation Law) provides that reimbursement for restrictions on forestry activities is granted pursuant to the condition referred to in Section 5 (1) of the particular Law if restrictions have been determined after: [..] based on a legal transaction, property right to the land plot have been registered at the Land Registry.
The Facts
The applicant, the Administrative Matters Department of the Senate of the Supreme Court of the Republic of Latvia reviews a case where a person asks to grant compensation due to the fact that a microreserve of specially protected species, namely the black stork, has been established in her property. Based on the Contested Norm, the court of the first instance and the regional court have rejected the application of the particular person because the restriction to immovable property has been established at the moment when the person had obtained the property based on a legal transaction; however, her property right had not yet been registered at the Land Registry.
The Applicant holds that the legal regulatory framework included into the Contested Norm that excludes all those persons who had obtained property based on a legal transaction before establishment of a restriction to forestry activities though their property right had not yet been registered at the Land registry after establishment of the restriction has no legitimate aim.
In order to reach the aim of the Law, the Applicant holds that the State should consider the date when a person has obtained the right to own land for a certain value, namely, when legal transaction has been concluded rather than the date when property right is registered at the Land Registry.
Court Findings and Ruling
On the scope of property right enshrined in Article 105 of the Satversme
The Constitutional Court admitted that, when establishing a restriction to forestry activities in the frameworks of immovable property, the right of the owner to own property is restricted. In the meaning of the Compensation Law, compensation is a payment from the State or a local government budget. It compensates material benefit that a land owner obtains due to protection requirements established in respect to a particular territory based on normative acts and the related restrictions to economic activities. Since such compensation bears economic value, the right to claim it for a particular restriction shall be regarded as economic right. Consequently, compensation for restriction to forestry activities pertains to the content of the term “property” referred to in Article 105 of the Satversme [9.2].
On the circle of persons who have the right to receive compensation for restriction to forestry activities established in a land property
The Constitutional Court indicated that registering of property into the Land Registry takes certain time. The moment of purchase of immovable property coincides with the moment when property right is registered at the Land Registry. Consequently, when establishing restriction to forestry activities in a the time frame between conclusion of a legal transaction and registering of property at the Land Registry, a person has fairly any possibility to exercise his or her rights that follow from the legal transaction. Moreover, restriction to forestry activities influences value of immovable property. Consequently, the Contested Norm restricts the right to receive compensation for reduction of value of immovable property in respect to persons who have obtained immovable property based on a legal transaction though had not yet registered their property right at the Land Registry before restriction to forestry actions is established [10].
On compliance of the Contested Norm with the principle of equality
The Constitutional Court recognized that the common criteria of groups of persons referred to in Section 6 (2) of the Compensation Law is the fact that, in case of establishment of restriction to forestry activities, all of them have the right to receive compensation. Although legal grounds for acquisition of immovable property referred to in Section 6 (2) of the Compensation law are various, all the groups of persons mentioned in the particular legal norm are applied a general precondition for granting of compensation, namely, the land owner whose property right has been registered at the land registry shall have the right to receive compensation. Consequently, all persons referred to in Section 6 (2) of the Compensation law enjoy equal and comparable conditions [12].
According to the Court, persons referred to in the Contested Norm have been established an additional criterion for receiving the compensation, which is the moment when property right is registered at the Land Registry, which also is the date before restriction to forestry activities are established. Consequently, the Contested Norm provides a different attitude to persons who enjoy equal and comparable conditions [13].
On legitimate aim of the restriction
The Constitutional Court recognized that the different attitude established by the Contested Norm, namely, the duty to register at the Land Registry property right obtained as a result of a lawful transaction before restriction to forestry activities are established, strengthens public credibility of the Land Registry, facilitates legal certainty in the State and permits clearly identifying property and its boundaries, as well as determine the person who has the right to receive compensation for restriction to forestry activities. Therefore it can be concluded that the legitimate aim of the different attitude established in the Contested Norm is facilitation of legal certainty and therefore protection of interests of other persons [15].
The Court also concluded that, when registering property right at the Land Registry, it is assured that in case of restriction of forestry activities the State can precisely identify the person who has obtained property right to a particular immovable property. Consequently, the State can disburse compensation to the person that is regarded as owner of the immovable property. Consequently, measures selected by the legislator are appropriate for reaching of the legitimate aim [17].
On less restrictive measures to ensure reaching of the legitimate aim
The Constitutional Court indicated that the legislator has failed to take into consideration the entire circle of persons whose property right is restricted and who undergo losses due to such restriction. By prohibiting compensation for restriction of forestry activities to a person who has obtained immovable property on legal grounds and governs over the property at the moment of establishing the restriction, the State fails to reach the purpose of the compensation, which is to reimburse losses to a person due to the restriction. The Court recognized that the Contested Norm fails to ensure protection of right to own property in respect to those persons who lawfully own their property though their property right has not been registered at the Land Registry due to certain reasons [18.3].
The Constitutional Court recognized that the measure selected by the legislator fails to ensure protection of rights of those persons who undergo losses due to restriction to forestry activities. Consequently, the requirement to register property right at the Land Registry before establishment of restriction to forestry activities shall not be regarded as measure that restricts the rights of persons in a lenient way. A more lenient measure for restriction of rights of a person, however, shall be the requirement to register property right at the Land Registry before receipt of compensation, i.e. after establishment of restriction to forestry activities [18.4].
The Constitutional Court indicated that in respect to persons who have obtained land based on a lawful transaction but have not registered property right at the Land Registry after establishment of restriction of forestry activities, the legitimate aim of the Contested Norm can be reached by measures that would restrict rights of a person at a lesser extent. Consequently, the Contested Norm fails to comply with the first sentence of Article 91 of the Satversme [18.4].
The Constitutional Court recognized Section 6 (2) Indent 4 of the Law on the Rights of Landowners to Compensation for Restrictions on Economic Activities in Specially Protected Nature Territories and Microreserves insofar as it requires that property right should be registered at the Land Registry before establishment of restriction to forestry activities as non-compliant with the First Sentence of Article 91 and Article 105 of the Satversme of the Republic of Latvia.
On the moment when the Contested Norm would become invalid
The Constitutional Court recognized the Contested Norm as null and void as from the date of its adoption in respect to the applicant in the particular administrative case and other persons who applied to the court to protect their fundamental rights infringed by the Contested Norm [20].
The judgment of the Constitutional Court is final and not subject to appeal, it shall come into force on the date of publishing it.
Linked case: 2011-19-01