The reform of the management of the ports of Riga and Ventspils complies with the Constitution
Constitutional Court declared the reform of the management of the ports of Riga and Ventspils to be compatible with Article 1 and the first sentence of the second part of Article 101 of the Constitution, emphasising that the development objectives of the major Latvian ports are subordinate to the common good of the State and the legislator has the discretion to choose the model of port management.
The Constitutional Court, following the request of twenty-two members of the 13th Saeima and the Municipal Council of State City of Ventspils, a joint case was examined regarding the provisions that provide for the transition to a new port management model and the activities of the new port authority with local government property. The applicants believe that the contested provisions does not comply with the principle of local government contained in Article 1 of the Constitution and the first sentence of the second part of Article 101, because the right of the local government to participate in the management of the port, as well as the right to dispose of its property and receive revenues accordingly, are violated.
The Constitutional Court noted that local government in a democratic state serve to get citizens involved in managing the affairs of their local community. The right of institutional existence and functional competence of the local government constitutes the principle of local government. The Constitutional Court concluded that from the principle of local government follows, among other things, the obligation of the State in its legal relations with the local government to comply with the principle of autonomy of its competences, the principle of financial autonomy and the principle of consultation.
Evaluating the compliance of the contested provisions with the principle of autonomy of local government competences, the Constitutional Court recognized that the choice of port management model is the competence of the legislator. What port management model the legislator chooses and how local governments are involved in it is a question of efficiency. The management of the port of Riga and the port of Ventspils has already been a function of the public administration. Regardless of whether the local governments were historically involved in port management, the implementation of the management functions of the port of Riga and Ventspils was not and is not related to any of the autonomous competences of the local government established by law.
Evaluating the rights of the local government arising from the principle of financial autonomy, the Constitutional Court concluded that one of the objectives of the legislator, when transferring land to the possession of the port authority, was to ensure a sufficient economic basis for the economic activity and development of ports. The fact that, as a result of the agreement concluded by the Ventspils Municipality, historically, such a situation has arisen, that there are buildings belonging to the local government and private individuals on the land located in the port area, does not affect the goals of the port territory creation established by law. In other words, the possession of the port authority is transferred to such property, which is necessary for the performance of port functions defined by law. Therefore, there is no reason to include in the port territory such assets that are not necessary for the performance of the port’s functions. Thus, the prohibition to expropriate land belonging to the local government to third parties is also applicable to such land, which, according to the law, must be in the possession of the port authority, and the local government, as the owner, initially had limited opportunities to deal with this land and benefit from it. Among other things, the Constitutional Court recognized the revenues that the local government can obtain from the expropriation of real estate in the port area cannot be considered a source of funding determined by law, which would ensure the implementation of the autonomous competences of the local government.
Finally, the Constitutional Court concluded that the development of the contested provisions was based on research and that the local governments were consulted in the legislative process.
In view of the above, the Constitutional Court recognized that the contested provisions did not violate the principle of autonomy of local government competences, the principle of financial autonomy and the principle of consultation arising from the principle of local government contained in Article 1 and the first sentence of the second part of Article 101 of the Constitution.
Linked case: 2022-17-01