Decided  9 March – Pl US 2/02
                               
                      “Basic principles”
                                                               

HEADNOTES
The  amendment to the Civil Code effected by Part Two, Art.  II
of  Act No. 229/2001 Coll. violated one of the basic principles
of the law-based state, namely the principle of legal certainty
and  of  trust in law, as emerges from Art. 1 para.  1  of  the
Czech  Constitution.  In view of the fact that the  legislature
changed  the  rules virtually the day before the expiration  of
the time period laid down for the acquisition of the right,  it
renounced  its moral obligation to set an example in  terms  of
respect   law.
      The legislature’s encroachment exhibit strong features of
arbitrariness.   Such a means of proceeding disrupts  trust  in
law, which is one of the elementary attributes of the law-based
state.    The  legislature’s  manner  of  proceeding  did   not
correspond to the basic principles of a law-based state,  which
include  the  tenets of the foreseeability of  laws,  of  their
comprehensibility, and of their internal consistency.
      The  above-described  manner  in  which  the  legislature
proceeded also resulted in a violation of Article 1 of Protocol
No.  1 to the Convention for the Protection of Human Rights and
Fundamental  Freedoms.  In keeping with the  legal  rules  laid
down  in  §  879c  of  the  Civil Code, the  affected  subjects
anticipated, from 1 July 2000 until 30 June 2001, that  on  the
day  following, that is on 1 July 2001, property  rights  would
accrue  to  them in the plots of land in which until then  they
had held a right of permanent use.
      The  contested amendment changed the equal status of  the
affected subjects, which had continued to exist until  30  June
2001,  into that of inequality among individual groups of these
subjects.   This inequality does not correspond to  any  public
interest.  The interest in providing an advantage to one  group
of  subjects and simultaneously disadvantaging a second  group,
under  the  circumstance that all subjects stood  at  the  same
starting  position of § 879c of the Civil Code, cannot  qualify
as  such a public interest.  The Constitutional Court judges an
inequality  introduced in this way, which  cannot  be  said  to
correspond to a public interest, to be a violation of Art. 1 of
the  Charter  of  Fundamental Rights and Basic Freedoms,  which
expresses the principle of equality in rights.

JUDGMENT
The Constitutional Court of the Czech Republic decided today in
the  Plenum composed of Justices JUDr. Frantisek Duchon,  JUDr.
Vojen  Guttler, JUDr. Pavel Hollander, JUDr. Dagmar Lastovecka,
JUDr. Jiri Malenovsky, JUDr. Jiri Mucha, JUDr. Jan Musil, JUDr.
Jiri Nykodym, JUDr. Pavel Rychetsky, JUDr. Pavel Varvarovsky  a
JUDr.  Miloslav  Vyborny in the matter of the petition  of  the
District Court in Pribram proposing the annulment of „Part Two“
of  Act  No. 229/2001 Coll., entitled „Amendments to the  Civil
Code Art. II“, as follows:
Part Two of Act No. 229/2001 Coll., entitled „Amendments to the
Civil Code Art. II.“, shall be annulled as of 31 December 2004.

REASONING
The  District Court in Pribram submitted the petition proposing
the  annulment  of Part Two of Act No. 229/2001  Coll.  (Art  .
II.),  which amends Act No. 219/2000 Coll., on the Property  of
the Czech Republic and its Representation in Legal Relations as
amended  by  Act No. 492/2000 Coll., due to conflict  with  the
Constitution of the Czech Republic.
      It  made this submission in connection with deciding  the
lawsuit  initiated by the cooperative, JEDNOTA  Pribram,  which
has  its  headquarters in Pribram II, Dlouha  155  (hereinafter
„plaintiff“),  against  the  defendant,  the  Czech   Republic,
represented by the Office for State Representation in  Property
Matters, which has its office in Prague 2, Rasinovo nabrezi 42,
on  the determination of property rights in the parcel of  land
designated  for  building No. 99 – having a built-upon  surface
area measuring 362 meters square registered in the municipality
and  the Land Registry in Jablonna, under consideration at  the
District Court in Pribram as file no. 7 C 139/2001.
      The  core  of  the  given dispute is the  fact  that  the
plaintiff,  the  owner of building No. 26  (an  assorted  goods
store)  in  the  Municipality of Jablonna, former  District  of
Pribram,  considers itself also to be the owner of  the  above-
indicated  building plot which is situated in part beneath  the
mentioned  building.  Ownership certificate No.  98,  which  is
kept  both  for  the  Municipality and  the  Land  Registry  of
Jablonna, lists the Czech Republic as the owner of this plot of
land with a permanent right of use for the plaintiff’s benefit.
The  plaintiff seeks a determination of who owns  the  property
rights  in the given plot of land because it is of the  opinion
that  it  became the owner of it pursuant to Act  No.  103/2000
Coll.  – in particular, pursuant to § 879c para. 1 of the Civil
Code.  According to this provision, the right of permanent  use
of  a  plot  of land under § 70 of Act No. 109/1964 Coll.,  the
Management  Code,  upon  which stands a building  or  structure
owned  by  the  person for whose benefit it was created,  which
continues  in  existence until the day this  Act  takes  effect
(that is, on the date 1 July 2000), shall, with the passage  of
one  year  from the day this Act takes effect, change into  the
property  of the legal person for whose benefit it was created.
In  view  of the fact that, pursuant to § 879c para. 4  of  the
Civil Code, the plaintiff requested from the State, within  the
set  time period, the transformation of the right of management
to  a  right  of property, the transformation of his  permanent
right  of use of the plot of land into a property right therein
occurred.   Nothing can change that, not even the fact  that  §
879c of the Civil Code was repealed by Part Two, Art. II of Act
No.  229/2001  Coll. because this provision  is  a  retroactive
norm, which is to be disregarded.
      The  District Court in Pribram (hereinafter „petitioner“)
concurred with the plaintiff’s legal opinion and added that, as
of 1 July 2000, the subjects listed in § 879c of the Civil Code
were  given  the right to request that their right  of  use  be
converted  into  property  and  that  this  right  remained  in
existence  until 30 June 2001, inclusive.  While the repeal  of
the  cited provision effected, as of 30 June 2001, by Part Two,
Art.  II  of  Act  No. 229/2001 Coll. did  not  result  in  the
mentioned subjects being deprived of property (that would  have
come  into  being  only  as  of 1 July  2001),  yet  they  were
deprived,  with retrospective effect, of the right  to  request
the  conversion of their right of use into property.  This  was
an  already-acquired  right in the  sense  of  Art.  1  of  the
Constitution of the Czech Republic.  In the petitioner’s  view,
the legislature carried out these changes in a constitutionally
impermissible form of retroactivity, which is in conflict  with
Art. 1 of the Czech Constitution.  All subjects fulfilling  the
requirements of § 879c of the Civil Code were disadvantaged  by
the the repeal of this provision because they were divested  of
a  right  that  had already been granted by law, that  is,  the
right  to  the creation of a property right.  The annulment  of
Part Two, Art. II of Act No. 229/2001 Coll. would not deny  the
rights of other subjects (in particular natural persons to whom
apartments and non-residential space had passed pursuant to Act
No.  72/1994 Coll.) to the creation of property in the plot  of
land beneath the structure or house that they own pursuant to §
60a  and  following of Act No. 229/2001 Coll.  On the contrary,
it  merely  revives  the state of affairs  established  by  the
provisions of § 879c of the Civil Code and pursuant § 879d  and
879e.
     The Constitutional Court assessed first of all whether the
formal requirements for the submission of a petition were  met.
The petition was submitted by the District Court in Pribram  in
connection  with  its  decision-making  in  the  case  of   the
plaintiff,   the  cooperative  JEDNOTA  Pribram,  against   the
defendant  the  Czech Republic concerning the determination  of
property rights in a plot of land.  In resolving that case, Act
No.  219/2000 Coll., on the Property of the Czech Republic  and
Representation of the State in Property Matters, as amended  by
Act  No.  492/2000 Coll., and Act No. 229/2001  Coll.  must  be
applied.   The  petition was thus submitted  by  an  authorized
petitioner and fulfills the conditions of Article 95 para. 2 of
the  Constitution of the Czech Republic and of § 64 para. 4  of
Act No. 182/1993 Coll., on the Constitutional Court, as amended
by  later acts (hereinafter „Act on the Constitutional Court“).
The petition also meets the requirements of admissibility under
§ 66 of the Act on the Constitutional Court.
      In  conformity  with  § 69 para. 1  of  the  Act  on  the
Constitutional  Court, the Constitutional Court  requested  the
Assembly  of Deputies and the Senate of the Parliament  of  the
Czech  Republic to give their views.  The Assembly of  Deputies
and the Senate gave their views on the petition.
…..
It  was established that the contested statute was adopted  and
issued  within  the  bounds  of competence  laid  down  in  the
Constitution of the Czech Republic and in the manner prescribed
in the Constitution.
Following this initial finding, the Constitutional Court  moved
on  to consider the content of the contested provision of  Part
Two, Art. II of Act No. 229/2001 Coll., from the perspective of
its   conformity   or  conflict  with  the   Czech   Republic’s
constitutional  order  and  came to  the  conclusion  that  the
petition is well-founded.
      The  provisions  contested  by  the  petitioner  read  as
follows: „In Act No. 40/1964 Coll., the Civil Code, as  amended
by  Act  No.58/1969  Coll., Act No.  131/1982  Coll.,  Act  No.
94/1988 Coll., Act No. 188/1988  Coll., Act No.  87/1990 Coll.,
Act No. 105/1990 Coll., Act No. 116/1990 Coll., Act No. 87/1991
Coll., Act No. 509/1991 Coll., Act No. 264/1992 Coll.,  Act No.
267/1994  Coll.,  Act  No.  104/1995 Coll.,  Act  No.  118/1995
Coll.,   Act No. 89/1996 Coll., Act No. 94/1996 Coll., Act  No.
227/1997 Coll., Act No. 91/1998 Coll., Act No. 165/1998  Coll.,
Act  No.  159/1999  Coll., Act No. 363/1999   Coll.,   Act  No.
27/2000  Coll., Act No. 103/2000 Coll., Act No. 227/2000  Coll.
and  Act  No.  367/2000  Coll., § 879c,  §  879d  and  §  879e,
including  the designation of chapters and headings,  shall  be
repealed.“
     Sec. 879c was included in the Civil Code by Art. VII, Part
the  Fifth  (Amendments to the Civil Code) of Act no.  103/2000
Coll.,  of  4 April 2000, and § 879d a § 879e were placed  into
the Civil Code by an act amending that Code, No. 367/2000 Coll.
of  14  September 2000.  Sec. 879c formed a part of  the  Civil
Code  from 1 July 2000 (that is, from the day Act No.  103/2000
Coll.  entered into force) until 20 June 2001, that  is,  until
the day Act No. 229/2001 Coll. entered into force.
      Stated  in brief § 879c, § 879d and § 879e were by  these
means  removed from the text of the Civil Code.  For  a  better
comprehension  of  the problem, it would  appear  desirable  to
quote  the precise wording of the repealed provisions, §§  879c
to 879e, from which the problem arises:

§ 879c
   (1) The right of permanent use of a plot of land under §  70
of  Act  No.  109/1964 Coll., the Management Code,  upon  which
stands  a  building or structure owned by the person for  whose
benefit the right of permanent use was created, and the plot of
land  related  thereto, if such plot of land is connected  with
the operation of that building or structure, which continues in
existence until the day this Act takes effect, shall, with  the
passage of one year from the day this Act takes effect,  change
into  the  property of the legal person for whose  benefit  the
right of permanent use was created.
    (2)   The provisions of paragraph 1 shall apply analogously
as well to the right of loan or of lease, which substituted for
the  right  of  permanent use of the plot of land,  if  it  was
created for the benefit of a residential cooperative or for the
benefit of the person to whom title to an apartment or  a  non-
residential space was transferred pursuant to§ 23 of the Act on
the Ownership of Apartments.
   (3)  If the right of permanent use was created for more than
one person in a common plot of land, such persons shall become,
pursuant to para. 1, co-owners with equal shares.
   (4)  If  a  legal  person for whose  benefit  the  right  of
permanent use was created does not, within a period of one year
from the day this Act takes effect, request from the State that
this  right be changed into property, the change of this  right
into  that  of property, pursuant to paras. 1 or 2,  shall  not
occur, and the right of permanent use shall terminate with  the
expiration of one year from the day this Act takes effect.

§ 879d
For  the purposes of § 879c, a person for whose benefit a right
of  permanent  use  was  created  shall  refer  as  well  to  a
residential  cooperative  of  citizens  or  an  association  of
citizens  which has come into being or is deemed to  have  come
into  being  pursuant to Act No. 83/1990 Coll., on Associations
of  Citizens, as amended by subsequent acts, to the extent that
the  right of permanent use mentioned in § 879c para.  l  shall
have  passed to such residential cooperative or the association
of citizens.

§ 879e    § 879c para. 1 shall apply analogously as well to the
right  of  loan or lease under § 879c para. 2, created  at  the
latest  on  31 December 2000 for the benefit of the  person  to
whom  title  to  an  apartment or a non-residential  space  was
transferred  pursuant to§ 23 of the Act  on  the  Ownership  of
Apartments.   The conversion of such right of  loan  or  rental
into ownership shall come about on 1 July 2001.

The  petitioners arguments consist in the assertion that § 879c
of  the Civil Code accorded to the subjects there indicated the
right  to  request that their rights of use be  converted  into
property  rights and that they were divested of this right,  an
already  acquired right, by the contested provision of Act  No.
229/2001  Coll.   In the petitioner’s view,  this  occurred  by
means  of an impermissible form of retroactivity, which  is  in
conflict with Article 1 of the Czech Constitution.
      The  Constitutional Court has dealt  with  the  issue  of
retroactivity in a large number of its judgments.  Perhaps  its
most  extensive treatment of this problem was in  its  judgment
No. 63/1997 Coll., the reasoning of which can be referred to in
this  connection.   In  that  case,  the  Constitutional  Court
expressed, among other things, the postulate that the principle
of  the  protection of citizens‘ trust in law, as well  as  the
related  principle prohibiting the retroactive effect of  legal
norms,  belong  among  the basic principles  which  define  the
category  of  the  law-based state.  While the  prohibition  on
retroactivity  of  legal norms is expressly  provided  for,  in
respect of the field of criminal law, in Art. 40 para. 6 of the
Charter of Fundamental Rights and Basic Freedoms, its operation
for  other branches of law must be deduced from Art. 1  of  the
Czech Constitution.  A legal norm can be considered retroactive
in  the  case  that  it lays down legal consequences  for  such
factual  conditions  as already came into being  prior  to  the
dates the norm came into effect.
      In the given case, the factual conditions laid down in  §
879c of the Civil Code for the conversion of the property right
on  1  July  2001  can  be  considered  as  just  such  factual
conditions.  The acquisition of property rights pursuant  to  §
879c  of  the  Civil  Code was tied to the fulfillment  of  two
condition  (§  879c paras.1, 4).  The first condition  was  the
submission  of a request to the competent state body,  and  the
second was the passage of time, that is, the lapsing of the one-
year  period  running from the day that Act No. 103/2000  Coll.
came  into effect, in other words from 1 July 2000.  That  term
would have expired on 1 July 2001.  This did not occur however,
because  the fulfillment of this second condition was  excluded
by  operation  of Part Two, Art. II of Act No. 229/2001  Coll.,
promulgated  on 29 June 2001 in Issue 85 of the  Collection  of
Laws,  with effect from 30 June 2001, which among other  things
repealed  §  879c  of  the Civil Code  in  its  entirety.   The
legislature  thus  managed, prior to the end  of  the  one-year
term, to eliminate the legal consequences foreseen in § 879c of
the  Civil  Code in the case that period elapsed.  This  was  a
manner  of  proceeding, however, in which none of the  subjects
upon  whom  the  benefaction of § 879c of the  Civil  Code  was
conferred  were  deprived of any property  right  because  such
right  never  came into being.  The right to  the  delivery  of
title  to a plot of land, which was established on 1 July  2000
by  §  879c and following of the Civil Code, would have  arisen
only  as  of  1  July  2001.   Thus the  repeal  of  the  cited
provisions of the Civil Code by the contested Part Two  of  Act
No.  229/2001  Coll., did not constitute the deprivation  of  a
property right.
      In  the  dispute which the District Court of  Pribram  is
deciding,  it  was determined that the plaintiff submitted  the
required request.  He thus met the first condition, but was not
given the opportunity to meet the second condition because Part
Two,  Art. II of Act No. 229/2001 Coll., in effect from 30 June
2001,  did  not enable him to fulfill it.  In this  context  it
must  be concluded that the mere submission of the request,  in
the  sense of § 879c para. 4 of the Civil Code, within the time
limit  set down therein, established no property right  in  the
plaintiff.   The  Constitutional  Court,  therefore,  does  not
consider the contested provisions to be retroactive.
     It follows however from the above-mentioned facts that, in
the period from the entry into effect of Act No. 103/2000 Coll.
(that is, from 1 July 2000), to all those subjects who met  the
conditions in § 879c, which were introduced into the Civil Code
by  the  mentioned  statute, and who  conducted  themselves  in
conformity with them, a legitimate expectation arose consisting
in the belief that with the passage of one year, that is from 1
July  2001, they would become the owners of the plots  of  land
falling within the regime of §§ 879c to 879e of the Civil Code.
The already-mentioned manner in which the legislature proceeded
encroached  upon this legitimate expectation a mere day  before
the  expiration of the period in which the acquisition  of  the
property  right would have occurred.  This means that  subjects
who  acted  with  confidence  in the  conditions  laid-down  in
advance by the state were confronted with an entirely different
stance  on  the  part  of  the State  a  mere  day  before  the
expiration of the mentioned deadline.
      In this connection the Constitutional Court refers to the
decisional  law  of  the European Court  for  Human  Rights  in
Strasbourg  (hereinafter ECHR) relating to the  application  of
Art.  1  of Protocol No. 1 to the Convention for the Protection
of  Human Rights and Fundamental Freedoms.  According  to  this
article:  „Every  natural or legal person is  entitled  to  the
peaceful  enjoyment  of  his  possessions.   No  one  shall  be
deprived  of his possessions except in the public interest  and
subject  to  the  conditions provided for by  law  and  by  the
general principles of international law.”
      The  preceding provisions shall not, however, in any  way
impair  the right of a State to enforce such laws as  it  deems
necessary to control the use of property in accordance with the
general  interest or to secure the payment of  taxes  or  other
contributions or penalties.“
      The concept of “possessions” in the first part of Article
1  of  Protocol No. 1 has an autonomous meaning  which  is  not
limited  to  the ownership of material goods and is independent
from  the  formal  classification  in  domestic  law  (see  the
decision  of  the  ECHR  in the case of  J.  Broniowski  versus
Poland,   from   2002).   It  might  include   both   „existing
entitlements“  and property values, including  claims,  on  the
basis  of  which the complainant might assert  that  he  has  a
„legitimate expectation“ (esperance legitime) in attaining  the
effective  enjoyment  of  a  property  rights  (see  the   case
Gratzinger  and  Gratzingerova versus the Czech  Republic  from
2002  or the case Zvolsky and Zvolska versus the Czech Republic
from 2001).
      The object of protection in the mentioned article is thus
not  only  acquired, that is existing property,  but  also  the
legitimate expectation of the acquisition of such property.  It
is  undisputed that each of the subjects who, up until 30  June
2001, abided by the rules in § 879c of the Civil Code had  just
such  a  legitimate  expectation.  They  did  not  acquire  the
property  solely  due  to the fact that the  legislature  acted
arbitrarily by changing the rules one day before the  lapse  of
the mentioned one-year period.
      It  appears worthwhile at this juncture to make reference
to  the particular manner in which the law of property in  land
evolved in the former Czechoslovakia after 1948.  In an  effort
to  attain the collectivization of the land the State gradually
created  various „institutes of use“ in land, which were  meant
to  displace private property, ideologically considered to have
been  historically obsolete.  In the case of land owned by  the
State,  there  were such institutes of use, in  particular  the
„provisional administration of national property“,  „the  right
to  manage  national property“, which were also  designated  as
„the  administration  of  national  property“,  „the  right  of
permanent use of immovable national property“ or the „right  of
personal use of a plot of land“.
      The  provisional administration of national property  was
regulated by Regulation No. 61/1986 Coll.  The right to  manage
national property, or its administration, was governed by §  63
and  following of Act No. 109/1964 Coll. (the Management  Code)
and the regulation implementing this statute, No 119/1988 Coll.
      The right of permanent use of immovable national property
was  also regulated by the Management Code, specifically  §  70
para.  1  thereof, according to which a portion of the national
property could be transferred, free of charge, to the permanent
use of some organization other than the State, in particular  a
cooperative or a civil association.  The right of personal  use
of  a plot of land was regulated in § 198 and following of  Act
No. 40/1964 Coll., that is, the Civil Code.
       Regardless  of  the  fact  that  these  institutes  were
designated  as  ones  of use, in essence they  were  institutes
corresponding to the right of property, or substituting for the
right of property.  This was so in particular for „the right of
permanent use of immovable national property“ and „the right of
personal  use  of  a plot of land“.  Even the  legislature  was
cognizant of this fact, as one of the first steps it took  when
restoring  the  classic property institutes was  to  amend  the
Civil Code, effected by Act No. 509/1991 Coll., as a result  of
which the then existing right of personal use of a plot of land
was  converted into property held by natural persons (§ 872  of
the Civil Code).
      In  the  area of the right of permanent use of  immovable
national property under § 70 of the Management Code, there  was
a  somewhat  more complex development that endured considerably
longer.   In  relation to this property, § 876  para.1  of  the
Civil  Code,  which was likewise inserted by Act  No.  509/1991
Coll.,  provided  that, until such time as  a  special  act  is
issued,  the relations of permanent use under § 70 of  Act  No.
109/1964  Coll.,  the  Management Code,  should  be  judged  in
accordance with the laws then in effect.
      In this instance as well the legislature made it possible
to  convert this right into a property right, which it  did  in
Part  Five  of Act No. 103/2000 Coll., which amended the  Civil
Code  by the insertion of § 879c.  Further elaboration was then
added  by  Act  No. 367/2000 Coll., which with  effect  from  1
January  2001 inserted two new provisions into the Civil  Code,
§§ 879d and 879e.
      As was already stated above, the right to the delivery of
title  to  a plot of land, which was established by § 879c  and
following  of the Civil Code, would have arisen only  as  of  1
July 2001.  No property rights were divested in consequence  of
the  repeal  of the mentioned provision of the Civil  Code,  as
effected  by the contested Part Two of Act No. 229/2001  Coll.;
this  was  not a case of the deprivation of property.   On  the
other  hand, up until 30 June 2001 the subjects upon  whom  the
benefaction of § 879c of the Civil Code was conferred lived  in
the  legitimate  expectation that on  the  day  following  they
would, without charge, become the owners of the affected  plots
of  land.   This expectation was genuine, entirely  legitimate,
and  very  strong,  a conclusion which is supported  by,  among
other  things,  the above-given overview of the  conversion  of
certain  relations  of  use  in plots  of  land  into  property
relations.
      On  the  basis of the considerations laid out above,  the
Constitutional Court has come to the conclusion that the manner
in  which the legislature proceeded constituted an encroachment
upon   the   legitimate  expectations  of  the  above-mentioned
subjects, in the sense of Article 1 of Protocol No.  1  to  the
Convention  for the Protection of Human Rights and  Fundamental
Freedoms.
       Under   the  circumstances  that  there  has   been   an
encroachment,   it   is  necessary  to  review   whether   this
encroachment  was  conditioned by the  existence  of  a  public
interest.   Any  sort of interference with the enjoyment  of  a
right or freedom recognized by the Convention must in any  case
pursue  a  legitimate aim.  The principle of a ‘fair  balance‘,
which is inherent in Art. 1 of Protocol No. 1, presupposes  the
existence of a general interest (see the case of Beyeler versus
Italy from 2000).
      In  its  statement  of  views, the Assembly  of  Deputies
asserted that its aim in adopting Act No. 229/2001 Coll. was to
remove  interpretive  problems which had appeared  in  practice
when  applying  §  879c  of the Civil Code.   In  particular  a
question  arose  as  to  whether a plot  of  land  passes  into
ownership  in the form it was registered under the plot  number
in  the land registry, as well as to ambiguity concerning plots
of land in relation to which, as of 1 January 2001, an easement
came  into being pursuant to § 21 para. 5 and 7 of the  Act  on
the   Ownership   of   Apartments.   It  also   concerned   the
preferential  treatment of certain subjects  in  the  group  of
legal  persons who, on 1 July 2000, had the use of  a  plot  of
land  owned by the State and the discrepancy consisting in  the
failure  to exclude the passage of ownership in an entire  plot
of  land,  although  only  a  very small  portion  thereof  was
connected with the operation of a structure.  During the course
of  the  mentioned one-year time period, the legislature became
aware  of certain problems connected with the passage of  plots
of land pursuant to § 879c of the Civil Code, and, by amendment
to  the  Act on the Property of the Czech Republic effected  by
Act   No.  229/2001  Coll.,  incorporated  therein  a  complete
resolution of the problems of transformation of plots  of  land
in the permanent use of legal persons.  This point also emerges
from  the  part of the Explanatory Report relating to Part  Two
(amendment  to  the  Civil  Code) of Act  No.  229/2001  Coll.,
according  to  which the aim was to repeal the existing  rules,
which   would   not  take  effect  until  1  July   2001,   and
comprehensively resolve the transfer of plots of land  free  of
charge  in  the  amendment to Act No. 219/2000  Coll.,  on  the
Property of the Czech Republic and its Representation in  Legal
Relations.
       However,   Act   No.   229/2001   Coll.   resolved   the
“comprehensive assignment of plots of land free of charge” such
that  it enabled one group of select subjects to acquire  plots
of  land  free of charge and made it more difficult  for  other
groups to acquire them.  According to its own designation, this
Act  is one amending the Act on Property of the Czech Republic,
No.  219/2000 Coll.  In reality, first and foremost it  governs
the  acquisition from the State of plots of land by residential
cooperatives,  owners  of family homes, owners  of  apartments,
garages   and  non-residential  spaces  in  houses,   if   such
structures stand on state land.
      Whereas  §  879c of the Civil Code enabled all  non-State
legal  persons  who held permanent rights of use  in  plots  of
State  land pursuant to § 70 of the Management Code, to acquire
property  in  those plots, as the result of  Act  No.  229/200l
Coll.,  solely the subjects listed in the immediately preceding
paragraph  retained  such  right  to  acquire.   The  remaining
subjects,  consumer  or  manufacturing cooperatives  and  civic
associations in particular, lost this opportunity as the result
of  the  repeal  of § 879c of the Civil Code, and  their  legal
status  in relation to the plots of land of which they had  use
was considerably weakened.  Whereas, as long as § 879c remained
in effect, all subjects using plots of land under the regime of
§  70 of the Management Code were of equal standing, the change
ushered  in  by  Act  No.  229/2001 Coll.  introduced  a  basic
inequality among them.
     That is, Art. IV paras. 1 and 2 of Act No. 229/2001 Coll.,
contained in Part Four (Transitional Provisions), provide  that
any  then existing relationship of permanent use under § 70  of
the Management Code, which had not changed into a loan pursuant
to  § 59 para. 1 of Act No. 219/2000 Coll., on the Property  of
the  Czech  Republic and its Representation in Legal Relations,
was transformed, on the day this act took effect, into a fixed-
term loan lasting until 1 January 2004, inclusive.
     Although, pursuant to the rules concerning agreements on a
loan  found in § 659 and following of the Civil Code, such loan
is  free  of charge, it is only for limited period of time,  in
this  case,  until 1 January 2004, as mentioned  above.   These
subjects have the opportunity, by proceeding in conformity with
' 59 para. 2 of Act No. 219/2000 Coll., to acquire ownership of
the  plot of land free of charge, but only in the case that the
requirements  of § 22 para. 2 of the same act are  met,  namely
that an item of property may be assigned free of charge only if
such  is  in the public interest, should an assignment free  of
charge  be  more  economic than some other disposition  of  the
item, or if a special enactment so provides.
      As  was  demonstrated  above, the  adoption  of  Act  No.
229/2001  Coll. considerably worsened the position of  subjects
who  had  a  legitimate expectation under § 879c of  the  Civil
Code.   Not only did they not acquire property rights, but  the
regime  of permanent use became one of temporary loan, and  the
opportunity  to  acquire  plots of  land  free  of  charge  was
considerably  worsened by the fact that it is tied  chiefly  to
the public interest, which is not however sufficiently defined.
      While it follows from the Constitutional Court’s constant
jurisprudence that it is a matter for the State to decide  that
it  will  bestow  upon  one  group less  advantages  than  upon
another,  yet it may not proceed arbitrarily, and  it  must  be
clear  from  its  decision  that it is  acting  in  the  public
interest and not, for example, in order to conceal deficiencies
in  the administration of public affairs (see judgment no.  Pl.
US  17/99, published as 3/2000 Coll.).  After all the  Assembly
of  Deputies itself confirmed in its expression of  views  that
the  aim  of its amendment was, among other things, to  resolve
interpretive problems connected with the future application  of
§  879c  of the Civil code, which had been adopted less then  a
year earlier.
      The contested amendment thus changed the equal status  of
the  affected subjects, which had continued to exist  until  30
June  2001, into that of inequality among individual groups  of
these subjects.  In the Constitutional Court’s conclusion, this
inequality  does  not correspond to any public  interest.   The
interest in providing an advantage to one group of subjects and
simultaneously  disadvantaging  a  second  group,   under   the
circumstance  that  all subjects stood  at  the  same  starting
position of § 879c of the Civil Code, cannot qualify as such  a
public interest.  The Constitutional Court judges an inequality
introduced in this way, which cannot be said to correspond to a
public interest, to be a violation of Art. 1 of the Charter  of
Fundamental  Rights  and Basic Freedoms,  which  expresses  the
principle of equality in rights.
     As concerns an encroachment upon the right to the peaceful
enjoyment of possessions under Art. 1 of Protocol No. 1, in the
matter of Beyeler versus Italy from 2000, the ECHR stated:  „In
order  to be compatible with the general rule set forth in  the
first sentence of Article 1, such an interference must strike a
‘fair  balance‘ between the demands of the general interest  of
the  community  and the requirements of the protection  of  the
individual's  fundamental rights.  Furthermore,  the  issue  of
whether  a  fair balance has been struck becomes relevant  only
once  it has been established that the interference in question
satisfied the requirement of lawfulness and was not arbitrary”
      In  the  same matter the ECHR reiterated that  lawfulness
represents  a basic prerequisite for measures resulting  in  an
encroachment  to be compatible with Art. 1 of Protocol  No.  1.
That  provision also requires that an interference by  a  state
body upon the right to the enjoyment of property be statutorily-
based.   The principle of lawfulness also entails the existence
of  sufficiently accessible, precise, and foreseeable  domestic
law norms (see the matter of Hentrich versus France 1994).
      In  light of the above-mentioned principles by which  the
ECHR   case-law  is  governed,  the  Constitutional  Court   is
persuaded  that  the  provisions  of  Act  No.  229/2001  Coll.
proposed for annulment do not meet the above-mentioned criteria
of  legality,  especially not the principle of  foreseeability.
The  legislature’s  encroachment  exhibit  strong  features  of
arbitrariness.   Such a means of proceeding disrupts  trust  in
law, which is one of the elementary attributes of the law-based
state.    The  legislature’s  manner  of  proceeding  did   not
correspond to the basic principles of a law-based state,  which
include  the  tenets of the foreseeability of  laws,  of  their
comprehensibility, and of their internal consistency.
      The  Constitutional Court thus concludes that the  above-
described manner in which the legislature proceeded resulted in
a  violation  of Article 1 of Protocol No. 1 to the  Convention
for  the  Protection of Human Rights and Fundamental  Freedoms.
In  keeping  with the legal rules laid down in §  879c  of  the
Civil Code, the affected subjects anticipated, from 1 July 2000
until  30 June 2001, that on the day following, that  is  on  1
July 2001, property rights would accrue to them in the plots of
land  in  which until then they had held a right  of  permanent
use.   The  day before the said one-year period was to  expire,
however,  the  amendment  to the Act  introduced  a  completely
different outcome, as averted to above.
     The amendment to the Civil Code effected by Part Two, Art.
II of Act No. 229/2001 Coll., as described above, also violated
one  of the basic principles of the law-based state, namely the
principle  of legal certainty and of trust in law,  as  emerges
from Art. 1 para. 1 of the Czech Constitution.  In view of  the
fact  that the legislature changed the rules virtually the  day
before  the  expiration of the time period laid  down  for  the
acquisition of the right, it renounced its moral obligation  to
set an example in terms of respect for law.
      After  weighing all mentioned grounds, the Constitutional
Court has decided to grant the petition and has, pursuant to  §
70  para.  1  of  Act No. 182/1993 Coll., on the Constitutional
Court,  annulled the contested statutory provision due  to  its
conflict  with  Art. 1 of Protocol No. 1 to the Convention  for
the  Protection of Human Rights and Fundamental Freedoms,  with
Article 1 para. 1 of the Czech Constitution, and with Article 1
of the Charter of Fundamental Rights and Basic Freedoms.
     In norm control proceedings, the Constitutional Court acts
as  a  „negative legislature“, authorized, in the case that  it
grants a petition, solely to derogate from the contested  legal
enactment  (see  judgment No. Pl. US 21/01 – published  as  No.
95/2002  Coll.).  Consequently, the annulment of the  contested
enactment may also result solely in its „elimination“ from  the
legal  order  of the Czech Republic, and not to  the  effective
establishment of a new rule in the form of the „revival“ of  an
already repealed enactment.
     This particular case, however, concerns the annulment of a
derogating  provision  of  Act  No.  229/2001  Coll.   In  this
connection, the Constitutional Court refers to its judgment No.
Pl. US 5/1994 – published as No. 8/1995 Coll.  In that judgment
the Constitutional Court annulled point 198 of Act No. 292/1993
Coll.,  which amended and supplemented Act No. 141/1961  Coll.,
on  Criminal  Court Proceedings (the Criminal Procedure  Code).
Point  198  of the said act removed from the Criminal Procedure
Code   its  §  324,  which  governed  decision-making  on   the
modification of the manner in which sentences are carried  out.
The  referred to derogation of the derogating provision,  point
198 of Act No. 292/1993 Coll., resulted in the „rehabilitation“
of  §  324 of the Criminal Procedure Code, which remains a part
thereof  until today.  The Court thus affirms the  petitioner’s
view  that  the  annulment of Part Two,  Art.  II  of  Act  No.
229/2001 Coll. revives the state of affairs established  by  §§
879c, 879d, and 879e of the Civil Code.
      Naturally this fact could result in a considerable amount
of legal uncertainty coming into being, not only in relation to
the rights of subjects to which the rules in §§ 879c to 879e of
the Civil Code apply, but even for third parties.  Accordingly,
the  Constitutional Court has decided to defer the coming  into
effect of the annulment of the contested provisions of Act  No.
229/2001  Coll. until 31 December 2004, in order to  allow  the
Parliament of the Czech Republic a sufficiently long period  of
time in which to adopt a appropriate legal rule.

Notice:  There  is  no  appeal  against  a  judgment   of   the
Constitutional Court.

Brno, 9 March 2004