Pl. ÚS 5/01

The  Constitutional  Court has already ruled  in  judgment  no.
96/2001  Coll.  that constitutional delimitation of  derivative
law-making  by the executive branch must respect the  following
principles: - a decree must be issued by an authorized  entity,
- a decree may not interfere in matters reserved to statutes, -
the  legislative  intent  for regulation  above  the  statutory
standard  must be evident (room must be made for the sphere  of
regulation).

     A  conclusion that would require all obligations to be set
directly  and  exclusively by statute would obviously  lead  to
absurd  results, denying the purpose of secondary (and in  some
cases  even  primary) norm creation, as part of the concept  of
each  legal  norm  is  the definition  of  certain  rights  and
obligations of those to whom it is addressed.

    In reviewing the use of property, which may also consist of
rent  regulation,  it  is necessary to carefully  consider  the
existence   of   a   public  interest  which   authorizes   the
implementation  of  regulatory  (monitoring)  measures  and   a
selection  of  detailed rules for implementing these  measures.
State  intervention must observe a commensurate (fair)  balance
between  the  requirements of general public interest  and  the
requirement   of  protection  of  an  individual’s  fundamental
rights.  This means that there must be a reasonable (justified)
proportionality  relationship between the means  used  and  the
aims  pursued.  Otherwise, i.e. if a particular restriction  is
purposeless  or unreasonable, the regulation in question  would
be  clearly  inconsistent with Art. 4 para. 4 of  the  Charter,
under   which,  in  employing  provisions  on  limitations   on
fundamental rights and freedoms, their essence and significance
must  be  preserved. Such limitations may not  be  misused  for
purposes other than those for which they were laid down.

      Finally,  the  Constitutional  Court  states  by  way  of
introduction  that, under its settled case law – in  accordance
with   its  constitutional  and  statutory  definition   –   in
proceedings  on  review of statutes it is bound  by  the  filed
petition’s statement of claim and may not exceed it.

      Neither   the   constitutional  order  nor  international
agreements  on  human rights and fundamental freedoms  prohibit
the legislature from introducing limitations on the amounts  of
farm production, distribution or consumption.

     The  Constitutional Court does not share the  petitioners’
opinion   that   Community  law  is  not   relevant   for   the
Constitutional Court of the Czech Republic, as a state  outside
the European Union, in evaluating constitutionality. This claim
is  impermissibly  over-simplified  and  sketchy.  One  of  the
sources   of  primary  Community  law  is  the  general   legal
principles  which the European Court of Justice  excerpts  from
the  constitutional traditions of European Union member states.
They  contain fundamental values which are common  to  all  its
members. General legal principles are contained in the concepts
or  a  state  based  on the rule of law, including  fundamental
human  rights  and  freedoms and fair proceedings  within  that
framework.  Likewise, the Constitutional  Court  of  the  Czech
Republic has repeatedly applied general legal principles  which
are  not  expressly  contained in legal  regulations,  but  are
applied  in  European  legal culture  (e.g.  the  principle  of
reasonableness)  -  see Pl. ÚS 33/97. The Constitutional  Court
has   thus  subscribed  to  European  legal  culture  and   its
constitutional  traditions. It also  interprets  constitutional
regulations,  primarily the Charter of Fundamental  Rights  and
Freedoms  in  light of general legal principles. Thus,  primary
Community  law is not foreign to the Constitutional Court,  but
to  a  wide  degree permeates – particularly  in  the  form  of
general  legal  principles of European law – its  own  decision
making.   To   that   extent  it  is  also  relevant   to   the
Constitutional Court’s decision making.

     The  charge that introducing production quotas on milk  is
serious  interference in, even prevention of, a free market  is
unacceptable.  A  completely free market,  free  of  all  legal
regulation, is not a fundamental, constitutionally required  or
guaranteed  value  in  the organization of  Czech  society.  An
individual’s  right to it is not a fundamental right  expressed
in  the  Constitution of the CR, the Charter  or  international
agreements  on human rights and fundamental freedoms.  Even  in
the  European Union, which, at the highest level (Art. 2 of the
Treaty  Establishing  the  European  Community)  declares   the
economy  of  the  whole community and within individual  member
states  to be a market economy, agricultural regulation is  not
seen  as  a violation of this principle, because other  equally
valid  aims  are  recognized, for example  the  convergence  of
economic productivity, economic and social cohesiveness,  etc..
Agricultural regulation by market regulations is also expressly
permitted by a provision of primary law on agriculture (Art. 34
of the Treaty Establishing the EC).

     Therefore, the legislature may (of course, only within the
bounds  set  by  constitutionally guaranteed human  rights  and
freedoms)  in  its  discretion  establish  price  or   quantity
regulation of production in a particular branch of the economy,
define  or influence the kind and number of entities active  in
that  branch,  or  somewhat restrict  freedom  of  contract  in
placing  production on the market or in buying  raw  materials.
The  claim  that  restricting the prescribed possibilities  for
regulating  the conduct of business or other economic  activity
applies only to qualification and similar prerequisites can  be
described  as  an  unreasonably narrow  interpretation  of  the
relevant  provision of the Charter (Art. 26  para.  2).  It  is
evident  from  Art.  41 para. 1 of the Charter  that  economic,
social  and  cultural  rights, which include  Art.  26  of  the
Charter, can be claimed only within the bounds of statues which
implement  these  provisions. The nature  of  these  rights  is
fundamentally  different  from other fundamental  rights  (e.g.
civil  and  political rights) and the legislature’s ability  to
set  more  detailed  conditions  and  limitations  on  them  is
therefore  significantly greater and is basically limited  only
by  the above cited principle, enshrined in Art. 4 para.  4  of
the Charter.

     There is also no justification for the objection that  any
limitation on the fundamental right enshrined in Art. 26  para.
1  of the Charter can only be implemented b y a statue (and not
a  government  decree), which the decree in question  allegedly
does not respect, and thereby becomes inconsistent with Art.  4
para.  2  of the Charter. In this case the government  observed
the  principles relevant for issuing the contested decree –  on
the  basis  of  an express statutory authorization  –  and  the
decree (except for § 14 para. 2 and § 4 para. 2) only specifies
in  more  detail  the cited statutory authorization,  i.e.  the
issues governed in the basic features of the statute itself. In
this  case  the bounds of the fundamental rights  and  freedoms
were  provided directly by law (Art. 4 para. 2 of the  Charter)
and  obligations arising from the decree are therefore  imposed
“on the basis of and within the bounds of law” (Art. 4 para.  1
of the Charter).

     Limiting the production amount of any product is naturally
a  limitation on the right to use that product. However, such a
limitation  is not expropriation, as the product owner  himself
may  – although to a limited degree – still control it, use  it
or  even  destroy it. Thus, it does not lead to  a  passing  or
transfer  of property rights to the product (produced over  the
specified amount) to another person. However, an entitlement to
obtaining a particular price on the market is not part  of  the
fundamental right to own property.

     The  penalty levy of a specified amount derived  from  the
minimum  price  of  milk  per  delivery  is  then  a  necessary
instrument  which  the  state must  have  at  its  disposal  in
implementing  any – including a quantitative  –  regulation  of
economic life.

    Imposing penalty levies can not be considered expropriation
or forced limitation of property rights.

     The  quota system thus corresponds to the system enshrined
in  Art.  4  para.  3  of  the Charter, under  which  statutory
limitations on the fundamental rights and freedoms “must  apply
in  the  same  way  to  all  cases  which  meet  the  specified
conditions.”  From  a  constitutional  law  viewpoint   it   is
important  that the rules for the quota system (i.e. for  milk)
are  general, accessible and foreseeable, and therefore in that
sense the objection of inequality is unjustified. <

     The Plenum of the Constitutional Court decided today on  a
petition from a group of 28 deputies of the Chamber of Deputies
of  the  Parliament  of  the  Czech  Republic,  represented  by
attorney  JUDr.  R. W., seeking annulment of government  decree
no.  445/2000 Coll., on Setting Production Quotas for Milk  for
2001 to 2005, as follows:

     As  of  31  December 2001, § 4 para. 2  a  §  14  para.  2
government  decree  no. 445/2000 Coll., on  Setting  Production
Quotas for Milk for 2001 to 2005 are annulled.

    The rest of the petition is denied.


                           Reasoning
                              I.

The  group  of  28 deputies of the Chamber of Deputies  of  the
Parliament  of  the  Czech Republic (the “group  of  deputies”)
filed  with  the  Constitutional  Court  a  petition  to  annul
government  decree  no.445/2000 Coll.,  on  Setting  Production
Quotas  for  Milk for 2001 to 2005 (the “decree”). This  decree
was  issued under § 2 para. 5 and § 12 para. 3 to 5 of Act  No.
256/2000 Coll., on the State Agricultural Intervention Fund and
Amending   Certain   Other   Acts   (the   State   Agricultural
Intervention Fund Act).

     The  group of deputies believes that the contested  decree
creates  legal  regulation  of milk production  and  processing
which is incompatible with the fundamental rights guaranteed by
the  Charter of Fundamental Rights and Freedoms (the “Charter”)
and  by  the Convention for the Protection of Human Rights  and
Fundamental  Freedoms  (the  “Convention”),  as  well  as  with
provisions  of  ordinary laws, particularly  Act  No.  256/2000
Coll.   In  the  reasoning  of  their  petition,  the  deputies
primarily claim that the penalty levies – introduced by § 13 of
Act  No.  256/2000 Coll. – causes the given volume of  milk  to
become unsalable, as its price would have to be raised to 215 %
of the minimum price. The essence of the penalty levy is that a
producer,  processor, or sales organization  which  produces  a
volume of milk or receives it for processing or sales from  the
producer,  if  it  exceeds the allocated individual  production
quota, pays a penalty in the amount of 115% (§13 para. 3 of Act
No.  256/2000 Coll.) of the officially determined minimum price
(§10  of  the decree; now CZK 7.60). This individual production
quota   consists  of  an  individual  delivery  quota  and   an
individual  direct  sales quota. Yet, under  Act  No.  256/2000
Coll. the producer is not required to apply for allocation of a
production quota.

     The  group  of  deputies also believes that  limiting  the
production  amount  is  impermissible  interference  with   the
constitutionally guaranteed right to own property (Art.  11  of
the  Charter), as it means an expropriation which is not  based
on   the   public  interest  and  which  takes  place   without
compensation (para. 4 of the same article). Setting  production
quotas  and  allocating  them without  pay  among  the  current
producers,  as  well  the possibility of free  trade  with  the
quotas, allegedly burdens current and future producers who want
to  invest  in the distribution of milk, which the  petitioners
also  see  as impermissible limitation on property rights.  The
group   of  deputies  believes  that  introducing  quantitative
regulation  in  the production of milk leads to restriction  of
the  free  market.  They claim that in the Czech  Republic  the
supply  of milk does not exceed demand, and reject the need  to
introduce  this regulation of production and sales of  milk  in
view  of  the  Czech Republic’s entry into the European  Union.
They  say that it is also in the public interest to enable  the
use  of  privately  owned things, which it  supports  with  the
concept of the public interest under the case law of the  First
Republic   (“...a  public  interest  exists  if  a  matter   is
undertaken for the purpose of meeting the living needs of  some
wider whole ...” / position of the Supreme Administrative Court
of  the CSR in the judgment file no. Boh. adm. no 14224).  They
conclude that a public interest in a limitation on the property
rights of milk producers is lacking in this cases, so there  is
inconsistency with Art. 11 para.4 of the Charter and with  Art.
1 of the Protocol to the Convention.

    The group of deputies claims that the mechanism introduced,
production   quotas  tied  to  sanctions  for   overproduction,
represents the introduction of de facto price regulation, which
causes  unconstitutional  discrimination  against  some  owners
(producers) directed against those milk producers  who  do  not
apply for allocation of production quotas.

    The group of deputies objects that the system of production
quotas  is  also an impermissible limitation of  the  right  to
conduct business and other economic activity(Art. 26 para.1  of
the   Charter).  According  to  them  the  law  may  only   set
qualification  and  similar prerequisites for  the  conduct  of
business or similar activity, but such limitations can  not  be
applied to the process of conducting business itself. Moreover,
the  interference is sufficiently intense that it violates  the
very  essence  of  the right to conduct business.  Quantitative
regulation   of   production  means   a   limitation   on   the
entrepreneur’s responsibility and his freedom to make decisions
about  his  business,  which  is  allegedly  inconsistent  with
statutory  principles  (§  2 of the Commercial  Code).  In  the
petitioners’  opinion,  a system of production  quotas  can  be
introduced  only  by  statute, not by a  subsidiary  regulation
(Art.  26  para.1  in connection with Art. 4  para.  2  of  the
Charter),  because in this case the bounds of (limitations  on)
the fundamental right to conduct business are at issue.

     The  group  of  deputies believes that setting  production
quotas  on  the basis of milk production in the previous  year,
i.e.  in  2000  (§  3-4  of  the  decree)  does  not  meet  the
requirement of equal treatment of all applicants (§12 para.6 of
Act  No.  256/2000  Coll.) and does not  observe  an  objective
manner  of  calculation, as it does not take  into  account  an
affected  producer’s  possible  short-term  decline   in   milk
production,  which  could be caused by various  influences  and
facts.  These  influences are also not  paid  attention  to  in
setting quotas for individual future years.

     The group of deputies also sees the contested provision as
a  violation  of  the legal principles of openness  toward  new
producers  (§  12  para.7 of Act No. 256/2000  Coll.),  in  the
manner of increasing existing individual production quotas  and
allocating new individual production quotas when increasing the
sum of individual production quotas from the reserve (§ 3 and §
4  para. 1, 3 and 4 of the decree), which allegedly exceeds the
limits set by Act No. 256/2000 Coll.. The petitioners also  see
as  unconstitutional  inequality (Art. 1 of  the  Charter)  the
disadvantaging of producers doing business exclusively in dairy
farming,  whereby  –  as  a penalty – an individual  production
quota  can  not be increased (§ 4 para. 2 of the decree).  This
penalty  allegedly has no basis in law, which  the  petitioners
also  see  as exceeding the bounds provided by Act No. 256/2000
Coll.  Finally,  the group of deputies sees as unconstitutional
authorization  for  tertiary  norm  creation  the  Ministry  of
Agriculture’s right, no later than 30 days before the beginning
of  the  applicable quota year, to announce the amount  of  the
reserve  in the Bulletin of the Ministry of Agriculture  (§  14
para.  2  of the decree). Similarly, the petitioners  criticize
the  producer’s  obligation to inform the  processor  or  sales
organization  about  its individual production  quota  and  the
processor’s  or sales organization’s obligation to  inform  the
producer about its fulfillment (§ 11 para. 3, or § 12  para.  5
and  §  13  para.  5 of the decree); these are  claimed  to  be
obligations set by government decree (not by statutes), so they
are imposed in conflict with Art. 4 of the Charter.

     Finally, during a hearing before the Constitutional Court,
the  attorney of the group of deputies pointed to the fact that
in  the  adjudicated matter one allegedly cannot use  community
law  as  an argument, as the Czech Republic is not yet a member
of the European Union.

                              II.
The  Constitutional Court asked for a position statement on the
petition  to annul the contested decree from the party  to  the
proceedings, the government of the CR (as the body which issued
the  contested decree - § 69 para.1 of Act No. 182/1993  Coll.,
on the Constitutional Court). ...

     In  its  statement, the government of the  Czech  Republic
proposes  that  the  Constitutional  Court  deny  in  full  the
petition  of the group of deputies. It states that  the  decree
issued  to  implement  Act No. 256/2000  Coll.,  on  the  State
Agricultural  Intervention Fund, creates market  regulation  of
the production and sale of milk in the Czech Republic which  is
comparable to the market regulation introduced by the  European
Community in all member states. This is necessary for the Czech
Republic’s  future  membership in the European  Union.  In  any
case,  by  the  Europe  Agreement establishing  an  Association
between the European Communities and their Member States, of he
one  part, and the Czech Republic, of the other part (published
under no. 7/1995 Coll.) the Czech Republic committed itself  to
implement  EC law into Czech law. In this regard, it points  to
the  basic  features of community regulation of milk production
in member states of the European Communities. They are based on
centrally  determined national production quotas (of individual
member states), from which individual quotas are then allocated
to   individual  agricultural  businesses.  The  aim   of   the
regulation is to stabilize the agricultural sector,  in  which,
according  to  the  government, the  rules  for  protection  of
economic  competition are not applied (Art. 36  of  the  Treaty
Establishing   the  EC).  In  its  statement,  the   government
expressly  refers  to EC Council directives  no.  3950/92,  no.
1255/99   and   no.  1258/99.  It  especially  emphasizes   its
authorization to support a particular form of agriculture under
§ 2 para. 5 of Act No. 256/2000 Coll. It claims the petitioners
are  contesting only the cited decree and not Act No.  256/2000
Coll.,  even though the substance of the objections is actually
directed  against the Act. With regard to the claimed violation
of  property  rights, the government says that  the  Convention
does  not prohibit states from passing laws which they consider
necessary  to  regulate the use of property in accordance  with
the  public interest. Therefore, the government also  does  not
see  inconsistency between the contested decree and  the  cited
articles   of   the  Charter,  because  –  with  reference   to
Constitutional Court judgment no. 231/2000 Coll. – it  goes  on
the  assumption  that price regulation does not prevent  anyone
from   conducting  business  or  conducting  another   economic
activity, because everyone has an opportunity to freely  decide
whether  or not to conduct business in a particular area  under
the given circumstances. The government derives the possibility
of limiting quotas for producers who do business exclusively in
dairy farming from § 2 para. 5 of Act No. 256/2000 Coll., which
establishes  the authorization to support particular  forms  of
agriculture, in this case “ecological” agriculture.

     For  all the foregoing reasons, the government of  the  CR
proposes  that  the  petition to annul  government  decree  no.
445/2000 Coll. be denied. . . .

                             III.
Before  the Constitutional Court considered the merits  of  the
submitted  petition,  it  considered the  question  of  whether
procedural    prerequisites   for   proceedings   before    the
Constitutional Court had been met.

     In this regard it states that, under § 64 para. 2 let.  b)
of Act No. 182/1993 Coll., on the Constitutional Court, a group
of at least 25 deputies is entitled to file a petition to annul
a  legal  regulation  or  its  individual  provisions.  In  the
adjudicated  matter the petition was signed by 28  deputies  of
the Chamber of Deputies, so there is an entitled petitioner.

     The  Constitutional  Court also considered  the  issue  of
whether  the  contested government decree had been  passed  and
issued   within  the  bounds  of  constitutionally   prescribed
jurisdiction and in a constitutionally prescribed manner (§  68
para.  2 of Act No. 182/1993 Coll., on the Constitutional Court
in  fine).  In  this  regard,  it  stated  that  the  contested
government  decree was passed and issued within the  bounds  of
constitutionally    prescribed   jurisdiction    and    in    a
constitutionally prescribed manner under § 68 para.  2  of  Act
No. 182/1993 Coll., on the Constitutional Court. Therefore, the
Constitutional Court could consider it on the merits.

                              IV.
     The Constitutional Court also considered the issue of  the
legislative jurisdiction of the government and the Ministry  of
Agriculture  to  set a quota system. In this regard  it  stated
that,  in  the  Czech  Republic,  quantitative  limitation   of
production, delivery or the consumption of particular goods, or
the  provision,  brokering or accepting  of  certain  services,
within the framework of the fundamental right to free choice of
profession,  the right to conduct business or to conduct  other
economic  activity (Art. 26 para. 1 of the Charter) – similarly
as  with setting other conditions or limitations – can only  be
introduced  by  law (Art. 26 para. 2 of the Charter).  Defining
the   details  related  to  these  restrictions  or  specifying
framework  conditions more closely can be done by a  subsidiary
legal   regulation,  if  the  relevant  body  issued  it  under
authorization  of  the Constitution of the CR  or  an  ordinary
statute.    The   Constitution   distinguishes   between    the
government’s right to issue a decree “to implement statutes and
remaining within their bounds” (Art. 78 of the Constitution  of
the  CR)  and  the  right of ministries,  other  administrative
offices  and  local government bodies “to issue regulations  on
the basis of and within the bounds of a statute, if they are so
empowered  by statute” (Art. 79 para. 3 of the Constitution  of
the CR).

     The  system of milk production quotas is based on Act  No.
256/2000  Coll.,  on the State Agricultural Intervention  Fund.
The  Act defines a production quota (§ 2 para. 5) and financial
penalties  which apply to a producer, processor or  distributor
in  the  event a quota is exceed or in the event of  production
(sales, processing) without an allocated quota (§ 13). It  also
sets  principles for allocating production quotas  (e.g.  §  12
para.  6).  The  Act  directly charges  the  government  (§  12
para.1), by decree, within three months after the Act goes into
effect,  to  set  conditions  and principles  for  implementing
further  measures  for  the  organization  of  the  market   in
agricultural products and food under § 1 para. 2 let. b) and c)
and, by decree, to set production quotas and conditions for the
system of production quotas (§ 12 para. 3). Thus, it is evident
that  in  issuing  the contested decree,  in  addition  to  the
constitutional  authorization  for  the  government,  statutory
authorization was also applied.

     In  this regard, the Constitutional Court states  that  it
does not agree with the claim of the group of deputies that the
contested  decree  diverges from the  bounds  set  by  Act  No.
256/2000 Coll. and that it is inconsistent with Art. 4  of  the
Charter,  under which obligations may be imposed  only  on  the
basis  of and within the bounds of law and limitations  may  be
placed on the fundamental rights and freedoms only by law.  The
Constitutional Court has already ruled in judgment no.  96/2001
Coll. that constitutional delimitation of derivative law-making
by  the executive branch must respect the following principles:
-  a  decree must be issued by an authorized entity, - a decree
may  not  interfere  in matters reserved  to  statutes,  -  the
legislative intent for regulation above the statutory  standard
must  be  evident  (room  must  be  made  for  the  sphere   of
regulation).

     In  the  case  of the contested decree the  Constitutional
Court  – for the above mentioned reasons – states that all  the
cited principles for issuing it were observed, as the contested
decree  was  issued by the government as an authorized  entity,
the  substance  of  the  decree does not interfere  in  matters
reserved  to  statutes (no. 256/2000 Coll.) and the delineation
of the substance of the contested decree set by the legislature
(§  12  of Act No. 256/2000 Coll.) is sufficiently specific  so
that  it is possible to deduce the clear legislative intent  in
the  above  mentioned sense. Thus, we can  summarize  that  the
contested  decree  does not violate the statutory  reservation,
because   it   merely,  on  the  basis  of  express   statutory
authorization,  provides  specifics  for  issues  whose   basic
features   are  already  regulated  by  statute.  The  contrary
conclusion,  which  would require all  obligations  to  be  set
directly  and  exclusively by statute would obviously  lead  to
absurd  results, denying the purpose of secondary (and in  some
cases  even  primary) norm creation, as part of the concept  of
each  legal  norm  is  the definition  of  certain  rights  and
obligations of those to whom it is addressed.

     Therefore,  in this regard the Constitutional Court  found
the  contested government decree to be neither unconstitutional
nor unlawful.

      In   contrast,   the   Constitutional   Court   considers
unconstitutional  and  unlawful  the  sub-statutory  delegation
according to which the level of the reserve, announced  by  the
Ministry in the Bulletin of the Ministry of Agriculture  (§  14
para. 2 of the decree), is set. The text of the cited provision
does  not  clearly indicate who sets the amount of the reserve.
We  can conclude from the manner of publication that it is done
by the Ministry (Minister) of Agriculture. However, deciding on
the  level  of the reserve is an inseparable component  of  the
milk  production quota system in the CR. The law provides  that
the  system  of  production quotas for individual  agricultural
commodities  is  introduced by the government  of  the  CR,  by
decree   (§  12  para.  3),  which,  in  accordance  with   the
Constitution  of  the  CR and Act No. 309/1999  Coll.,  on  the
Collection   of   Laws  and  the  Collection  of  International
Agreements  § 1 para. 1 let. d) is published in the  Collection
of  Laws.  Thus  it  is  not  a  matter  for  the  Ministry  of
Agriculture  either  by law or under the Constitution.  As  the
Constitutional  Court  ruled  in judgment  no.  96/2001  Coll.,
because  “the  legislature can not delegate  to  the  executive
branch  an  area  of regulation of relationships  intended  for
regulation   by   law,  and  thereby  resign  its   legislative
responsibility,  all the more so the executive  power  can  not
itself adopt the right to such regulation with reference  to  a
law which evidently has a different purpose and meaning.”

    Therefore, the Constitutional Court concludes that for this
reason  §  14  para. 2 of the contested decree is  inconsistent
with Art. 79 para. 3 of the Constitution of the CR.

                              V.
After evaluating the legislative jurisdictional aspects of  the
government decree at issue, the Constitutional Court  continued
with an analysis on the merits, taking in turn the petitioners’
individual  objections in turn. However, first it is  necessary
to present several comments of a more general nature.

A)    Under  Art.  83  of  the  Constitution  of  the  CR,  the
Constitutional  Court is the judicial body  for  protection  of
constitutionality.  Under  Art. 87  para.  1  let.  b)  of  the
Constitution  it  is authorized to decide on the  annulment  of
other legal regulations or their individual provisions, if they
are  inconsistent with a constitutional act, a  statute  or  an
international  agreement under Art. 10. Thus, in  its  decision
making   it   can  evaluate  only  the  constitutionality   (or
lawfulness,  as  the  case  may  be)  of  the  contested  legal
regulation  and not its appropriateness or suitability  to  its
aim. Likewise, in the adjudicated matter, which involves a case
of   “abstract”  review  of  norms,  the  Constitutional  Court
considered  only  constitutional law aspects of  the  contested
decree   and  gives  no  opinion  on  its  appropriateness   or
suitability  to  its  aim  from  the  viewpoint  of,  e.g.  the
existence of a free market and so on(see below).

B)  The Constitutional Court further states that it has already
taken  a  position on the issue of regulation in  judgment  no.
231/2000  Coll.  In  that  judgment,  while  it  evaluated  the
constitutionality and lawfulness of decree no. 176/1993  Coll.,
concerning  the regulation of apartment rents, nonetheless,  in
the  Constitutional  Court’s opinion, some general  conclusions
contained  in  that judgment can also be applied commensurately
in  the adjudicated matter. Therefore, the Constitutional Court
points  out, first of all, that in the reasoning of  the  cited
judgment  it  concluded that in reviewing the use of  property,
which  may also consist of rent regulation, it is necessary  to
carefully  consider  the existence of a public  interest  which
authorizes   the  implementation  of  regulatory   (monitoring)
measures  and  a  selection of detailed rules for  implementing
these  measures. State intervention must observe a commensurate
(fair)  balance  between  the requirements  of  general  public
interest  and  the requirement of protection of an individual’s
fundamental rights. This means that there must be a  reasonable
(justified) proportionality relationship between the means used
and the aims pursued.Art.

C)    Finally,  the  Constitutional  Court  states  by  way  of
introduction  that, under its settled case law – in  accordance
with   its  constitutional  and  statutory  definition   –   in
proceedings  on  review of statutes it is bound  by  the  filed
petition’s statement of claim and may not exceed it.  Thus,  in
the  adjudicated matter it could concern itself only  with  the
constitutionality  and lawfulness of the  contested  government
decree  and  not  the  constitutionality of other  regulations,
particularly of Act No. 256/2000 Coll.. Therefore, on the basis
of  the  filed  petition, the Constitutional Court  could  only
evaluate  whether the contested decree is inconsistent  with  a
statute,  a  constitutional act or an international  agreements
Art. 10 of the Constitution, but not whether the statute itself
– not contested by a complaint – is unconstitutional.

                              VI.
Concerning  the  first  group  of the  petitioners’  objections
concerning  the  freedom to conduct business and permissibility
of limiting it (Art. 26 para. 1, 2 of the Charter).

     Under  Art. 26 para. 1 of the Charter, everybody  has  the
right to the free choice of profession and training for it,  as
well  as  the  right  to  conduct business  and  conduct  other
economic activity. Under para. 2 of that article, the  law  may
set  conditions  and  limitations on the  exercise  of  certain
professions or activities.

    In this regard the petitioners object that the law may only
set qualification and similar prerequisites for the conduct  of
business or similar activity, not limitations on the process of
conducting  business  itself, in the form  of  de  facto  price
regulation  which  is  so intense that  it  violates  the  very
essence of the right to conduct business.

    In response to this the Constitutional Court states that in
judgment  no.  231/2000 Coll. it stated that “price  regulation
does  not prevent anyone from conducting business or conducting
another  economic activity, because everyone has an opportunity
to  freely  decide  whether or not to  conduct  business  in  a
particular  area  under  the  given  circumstances.”   In   the
adjudicated matter the Constitutional Court further  emphasizes
that   neither   the  constitutional  order  nor  international
agreements  on  human rights and fundamental freedoms  prohibit
the legislature from introducing limitations on the amounts  of
farm   production,   distribution  or  consumption.   In   this
connection, it is not inappropriate to point out the fact  that
a   certain  amount  of  limitation  on  the  amounts  of  farm
production   and   distribution  happens   routinely   at   the
international level, through the inspection of import or export
of  goods  between states which contractually liberalize  their
mutual  trade  in  goods (e.g. the relevant provisions  of  the
Treaty  Establishing the EC or the General Agreement on Tariffs
and Trade).

     Thus  it is basically up to the Parliament of the CR (i.e.
the  legislative assembly), to take into account, when  issuing
ordinary  statutes, the general interest in the  regulation  of
relationships  in  a  particular branch  of  the  economy.  The
economic  purpose  and  social acceptability  of  a  particular
regime  should be subject to political control.  On  the  other
hand,  one  must  consistently insist – as  the  Constitutional
Court  already  stated in point V.B) – that in each  particular
case  it is necessary to carefully consider the existence of  a
public   interest   which  authorizes  the  implementation   of
regulatory measures, as state intervention must observe a  fair
balance between the general public interest of society  on  one
hand  and the protection of an individual’s fundamental  rights
on  the  other.  This means that there must be a  corresponding
reasonable  relationship between the means used  and  the  aims
pursued.  Otherwise,  i.e.  if  a  particular  restriction   is
purposeless  or unreasonable, the regulation in question  would
be  clearly  inconsistent with Art. 4 para. 4 of  the  Charter,
under   which,  in  employing  provisions  on  limitations   on
fundamental rights and freedoms, their essence and significance
must  be  preserved. Such limitations may not  be  misused  for
purposes other than those for which they were laid down.

     However,  the introduction of production quotas  (for  the
production,  sales  and processing of milk)  by  the  contested
decree  does not show the cited elements of purposelessness  or
unreasonableness. Limitation of the supply  of  milk  and  milk
products (as one of the basic food groups) through the  setting
of  production quotas is not a danger, in view of the long term
milk  surpluses. As the Ministry of Agriculture and  the  State
Agricultural  Intervention  Fund  correctly  state   in   their
statement  on  the  petition, the job of the  production  quota
system  is to protect the market from speculators and establish
conditions  such  that  every producer will  secure  sales  and
receive  an appropriate minimum price, i.e. so that  a  balance
between  production  and  sales  will  be  guaranteed.  Setting
minimum milk prices (§ 10 of the decree), whose obvious aim  is
to stabilize the market in the event of price declines, is also
not inconsistent with this public interest.

     The Constitutional Court accepts the government’s position
that introducing milk production quotas is an approximation  of
Czech legal regulations to those in the European Union and  its
member  states, caused by long-term overproduction of  milk  in
western   Europe  (see  Europe  -  European  Union  -  European
Commission  - Agriculture: Agriculture -Situation and  Outlook:
Dairy                        Sector,                        in:
www.europa.eu.int/comm/agriculture/public/pac2000/dairy/index_e
n.htm#top).  Thus, the regulation introduced by  the  contested
decree  –  as  the  government  of  the  CR  correctly  states-
basically   represents  a  transfer  of  the  community   model
(regulation)  to  Czech agriculture, both in  terms  of  legal-
technical  means  (production quotas  and  penalty  levies  for
overproduction), and in terms of setting amounts. We can accept
the  government’s  opinion that community  regulation  of  milk
production is based on the principle that individual quotas are
allocated  to  individual  producers  from  the  centrally  set
national   production  quotas  of  individual  member   states.
Therefore,  the  contested government decree is  a  step  which
brings  agriculture in the CR closer to European standards  and
thus  to a certain extent facilities the Czech Republic’s entry
into  the  European Union. Moreover, the regulation implemented
means  fulfillment of the provision on approximation  of  Czech
law  with  community law, as provided and required (though  not
expressly)  by Art. 70 of the Europe Agreement establishing  an
Association  between the European Communities and their  Member
states,  of the one part, and the Czech Republic, of the  other
part of 1993 (no.7/1995 Coll.).

     The  Constitutional  Court  considers  it  appropriate  to
emphasize  that  it  does  not share the  petitioners’  opinion
(stated  during the hearing) that Community law is not relevant
for  the Constitutional Court of the Czech Republic, as a state
outside  the  European Union, in evaluating  constitutionality.
This claim is impermissibly over-simplified and sketchy. One of
the  sources  of  primary Community law is  the  general  legal
principles  which the European Court of Justice  excerpts  from
the  constitutional traditions of European Union member states.
They  contain fundamental values which are common  to  all  its
members. General legal principles are contained in the concepts
or  a  state  based  on the rule of law, including  fundamental
human  rights  and  freedoms and fair proceedings  within  that
framework.  Likewise, the Constitutional  Court  of  the  Czech
Republic has repeatedly applied general legal principles  which
are  not  expressly  contained in legal  regulations,  but  are
applied  in  European  legal culture  (e.g.  the  principle  of
reasonableness)  -  see Pl. ÚS 33/97. The Constitutional  Court
has   thus  subscribed  to  European  legal  culture  and   its
constitutional  traditions. It also  interprets  constitutional
regulations,  primarily the Charter of Fundamental  Rights  and
Freedoms  in  light of general legal principles. Thus,  primary
Community  law is not foreign to the Constitutional Court,  but
to  a  wide  degree permeates – particularly  in  the  form  of
general  legal  principles of European law – its  own  decision
making.   To   that   extent  it  is  also  relevant   to   the
Constitutional Court’s decision making.


     The  charge that introducing production quotas on milk  is
serious  interference in, even prevention of, a free market  is
unacceptable.  A  completely free market,  free  of  all  legal
regulation, is not a fundamental, constitutionally required  or
guaranteed  value  in  the organization of  Czech  society.  An
individual’s  right to it is not a fundamental right  expressed
in  the  Constitution of the CR, the Charter  or  international
agreements  on human rights and fundamental freedoms.  Even  in
the  European Union, which, at the highest level (Art. 2 of the
Treaty  Establishing  the  European  Community)  declares   the
economy  of  the  whole community and within individual  member
states  to be a market economy, agricultural regulation is  not
seen  as  a violation of this principle, because other  equally
valid  aims  are  recognized, for example  the  convergence  of
economic productivity, economic and social cohesiveness,  etc..
Agricultural regulation by market regulations is also expressly
permitted by a provision of primary law on agriculture (Art. 34
of  the  Treaty  Establishing  the  EC).  In  this  regard  the
Constitutional  Court  points out again that  in  its  decision
making activity it can evaluate only the constitutionality  (or
lawfulness)  of  the  contested legal regulation  and  not  its
suitability  or  appropriateness  for  a  purpose.  Thus,  this
objection by the petitioners is unjustified.

     Therefore, the legislature may (of course, only within the
bounds  set  by  constitutionally guaranteed human  rights  and
freedoms),  in  its  discretion, establish  price  or  quantity
regulation of production in a particular branch of the economy,
define  or influence the kind and number of entities active  in
that  branch,  or  somewhat restrict  freedom  of  contract  in
placing  production on the market or in buying  raw  materials.
The  claim  of  the  group  of deputies  that  restricting  the
prescribed possibilities for regulating the conduct of business
or  other  economic activity applies only to qualification  and
similar  prerequisites  can  be described  as  an  unreasonably
narrow  interpretation of the relevant provision of the Charter
(Art.  26 para. 2). It is evident from Art. 41 para. 1  of  the
Charter  that  economic,  social  and  cultural  rights,  which
include Art. 26 of the Charter, can be claimed only within  the
bounds  of statues which implement these provisions. The nature
of   these   rights  is  fundamentally  different  from   other
fundamental  rights (e.g. civil and political rights)  and  the
legislature’s  ability  to  set more  detailed  conditions  and
limitations on them is therefore significantly greater  and  is
basically  only limited by the above cited principle, enshrined
in Art. 4 para. 4 of the Charter.

      In  response  to  the  objection  that  price  regulation
restricts the responsibility a business has for its results  (§
2  of  the  Commercial Code), it must be said that a producer’s
legal independence – despite the evidently strict regulation of
milk  production – remains preserved. Even now a milk  producer
can   make  a  profit  or  suffer  a  loss,  depending  on  the
productivity of his work, its quality and external  influences.
He continues to be responsible for his production, similarly to
other businesses. His position is not like that of an employee,
managed  by an employer. Every state regulation of business  or
economic  activity affects the business environment, the  level
of  realistically possible revenues and profits and the risk of
losses. In the case of strict regulation of milk production  it
is  certainly  possible  to conclude that  revenues  from  milk
production  are  relatively easy to foresee,  in  view  of  the
factual  impossibility of selling milk above a certain  amount.
However,  the  contested regulation does  not  change  anything
about the substance of doing business in milk production.

     Every  limitation on business or setting of  prerequisites
and  conditions for it must have a certain purpose, must pursue
a  certain  public  interest.  Purposeless  restrictions  –  as
already stated above – represent the “failure to preserve”  the
essence  and  significance of fundamental rights, forbidden  by
the  Charter.  In view of the particular social,  economic  and
ecological  characteristics  of agriculture,  stabilization  of
prices,  and thereby of the revenues of agricultural businesses
and  private  farmers is a public interest which is  sufficient
grounds  for  state intervention in the milk market,  including
regulating the amount of production.

     In this regard we also can not agree with the petitioner’s
claim that there is a balance between milk supply and demand in
the CR. The annual consumption of milk in the CR (of course, in
the  form of various milk products) was 2.1 million tons, while
production was 2.789 million tons (see the Statistical Yearbook
of  the CR 2000, Czech Statistical Office, Prague, 2000, p. 278
and  p.  713).  The excess, which also results from  increasing
imports,  is,  with  great  difficulties,  primarily  exported.
Without export subsidies provided from state funds, this export
would be done at a great loss, and it would only be possible to
continue it for a transitional period.

     To  conclude this part of the judgment, the Constitutional
Court  points  out that (in principle) it is not  its  role  to
evaluate  the  economic  aspects of the  need  and  urgency  of
limitations  on  the  conduct of business  or  the  setting  of
conditions for the conduct of business in view of the  need  to
ensure  separate  public  interest,  often  parallel  or   even
conflicting.  The  choice of limiting (monitoring)  instruments
and  the degree to which they are applied is primarily the  job
of  the  legislature. In our constitutional  system,  only  the
Parliament, as a representative body, can take such steps.  Its
responsibility  for recognizing problems in the  economy  which
require  regulation, choice of instruments and  their  effects,
which  can  sometimes also be negative, is primarily political,
and  in this case the Constitutional Court can intervene in its
legislative   activity   only   if   it   finds   it   to    be
unconstitutional.  However,  in  the  adjudicated  matter   the
legislature,  by Act No. 256/2000 Coll. (which was  not  itself
subjected  to  review by the Constitutional Court),  set  clear
rules  of  authorization and bounds for  issuing  a  government
decree,  and  the  government observed  this  authorization  in
issuing  the contested decree. Thus, one can conclude that  the
present  government  decree is not inconsistent  with  Art.  26
para. 1 and 2 of the Charter.

    Finally, as the Constitutional Court stated above (in point
IV.)  -  there is also no justification for the objection  that
any  limitation on the fundamental right enshrined in  Art.  26
para. 1 of the Charter can only be implemented by law (and  not
a  government  decree), which the decree in question  allegedly
does not respect, and thereby becomes inconsistent with Art.  4
para.  2  of the Charter. In this case the government  observed
the  principles relevant for issuing the contested decree –  on
the  basis  of  an express statutory authorization  –  and  the
decree (except for § 14 para. 2 and § 4 para. 2) only specifies
in  more  detail  the cited statutory authorization,  i.e.  the
issues  governed  in the basic features of the statute  itself.
Thus, it is evident that the contested decree as a whole is not
unconstitutional  in  this respect either;  in  this  case  the
bounds  of  the  fundamental rights and freedoms were  provided
directly by law (Art. 4 para. 2 of the Charter) and obligations
arising from the decree are therefore imposed “on the basis  of
and within the bounds of law” (Art. 4 para. 1 of the Charter).

     For the sake of completeness the Constitutional Court adds
that  in this case the system of milk production quotas is also
not  unreasonable from a comparative viewpoint, with regard  to
the  similar  regulation of the milk market in  European  Union
member states. Comparable regulation of the market in milk  and
some  other  agricultural  products exist  not  only  in  these
countries,  but  also  in  other developed  democratic  western
European   countries  (see  Council  Directive   no.   3950/92,
Commission  Directive  no. 536/93).  Although  they  are  often
subject  to  strong  criticism  due  to  their  strictness  and
problematic competitive and structural effects, this  criticism
is not based on doubts about the compatibility of regulation of
the  milk  market with the European and universal  standard  of
human rights.

                             VII.
Concerning  the second group of the petitioners’ objections  on
the  nature  of  property  rights and  the  permissibility  and
conditions  for  restricting them (Art. 11 of the  Charter  and
Art. 1 of the Protocol to the Convention)

    Under Art. 11 para. 1 of the Charter everyone has the right
to  own  property.  Each owner’s property right  has  the  same
content   and  enjoys  the  same  protection.  Under  para.   4
expropriation  or  other  mandatory  limitation  upon  property
rights is possible in the public interest, on the basis of law,
and  for  compensation. Under Art. 1 of  the  Protocol  to  the
Convention  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 petitioners basically claim that limiting the amount of
milk  production is an impermissible intervention into property
rights,  is  not based on the public interest, and takes  place
without compensation.

     In  response to this the Constitutional Court  stats  that
limiting  the production amount of any product is  naturally  a
limitation on the right to use that product – as an  object  of
ownership – produced over the established production quota  and
this  leads  to  a certain form of limitation on  property.  In
particular, this concerns limiting or even preventing  sale  of
such a product on the market for a certain price. However, such
a  limitation  is not expropriation (which the petitioner’s  do
not  claim  in  any case), as the product owner himself  may  –
although to a limited degree – still control it, use it or even
destroy it. Thus, it does not lead to a passing or transfer  of
property  rights  to the product (produced over  the  specified
amount) to another person. Through regulation the product  only
becomes difficult to sell, or even impossible to sell. However,
an entitlement to obtaining a particular price on the market is
not  part of the fundamental right to own property. In response
to  the objection that a quota system is a forced limitation of
the  right of ownership, the Constitutional Court again  points
out  (see  point V.B) that this system is a form of controlling
the  use  of property, with which it is necessary to  carefully
consider  both  the  existence  of  a  public  interest   which
authorizes   the  implementation  of  regulatory   (monitoring)
measures  and  a  selection of detailed rules for  implementing
these  measures. State intervention must observe a commensurate
(fair)   balance  between  the  general  public  interest   and
protection  of an individual’s fundamental rights.  This  means
that  there  must  be a reasonable (justified)  proportionality
relationship  between the means used and the aims  pursued.  In
the  Constitutional Court’s opinion – as far as  the  contested
decree is concerned – a public interest (i.e. stabilization  of
the  milk market) legitimating the state in introducing a quota
system  does  exist, and the means chosen to achieve  this  aim
(the   quota   system)   are   quite   proportionate   from   a
constitutional viewpoint.

     In this regard it must be pointed out that e.g. tightening
the qualitative requirements for the production of goods in the
conduct of business or other economic activity also often means
creating,  for  the  party  conducting  business  or   economic
activity, a price disadvantage for the products it makes or raw
materials and facilities which it uses for production. However,
such regulation is often necessary in order to better secure  a
palette  of  often  inadequately  protected  important   public
interests.  However, in such cases the objection that  property
rights   are   restricted  would  undoubtedly   be   considered
unacceptable.

     As  the Ministry of Agriculture of the CR correctly states
in  its  position statement, under the contested decree,  every
producer  who  wants to increase milk production  or  wants  to
start  milk  production as a result of increased demand  has  a
chance  to  apply  for  allocation of a new  quota  or  for  an
increase of his existing quota from the reserve, or can acquire
a quota by contractual transfer from another producer. Thus, it
is  evident  that  the quota system is not  a  fundamental  and
unjustified  limitation of property rights, but  is  –  in  its
essence  –  a purposefully protectionist measure. To a  certain
extent  and  in  a  certain  regard this  may  be  subjectively
perceived  as  a  restriction on the property  rights  of  milk
producers;  however,  it  can not be  overlooked  that  such  a
measure  –  its final effects under clearly defined  conditions
set   in  advance  –  objectively  protects  and  develops  the
producers’ property rights. The purpose of the quota system  is
creating conditions such that every producer will have  secured
sales  and that he will obtain the corresponding minimum price.
However,  the  answer to the question of whether  this  is  the
optimal  and  economically most advantageous measure  obviously
cannot be given by the Constitutional Court.

     The  logic of the newly introduced quota system comes from
the  fact  that given a long-term greater supply of  milk  than
demand  for  it  (see  point  VI.) the  profitability  of  milk
production  in  the  CR  is ensured only  by  increasing  state
subsidies. Investment in such production under these conditions
are  an  attempt to take advantage of them. Yet, the impact  of
introducing a system of milk production quotas, created day  by
day,  is basically only a potential one. The penalty levy of  a
specified amount derived from the minimum price of milk imposed
for  production in an amount exceeding an individual production
quota  (§  13  of Act No. 256/2000 Coll.) is then  a  necessary
instrument  which  the  state must  have  at  its  disposal  in
implementing  any – including a quantitative  –  regulation  of
economic life. Its purpose is precisely to deter producers from
a legally prohibited or generally undesirable behavior. A state
which,  for  important reasons, introduces  limits  on  amounts
produced  can also prohibit production exceeding a set  amount.
Undoubtedly, it can impose penalties for violation  of  such  a
ban.   A   less   intrusive  limitation,  which  merely   makes
overproduction of milk above set production quotas  or  outside
their system disadvantageous, but does not forbid them, is also
admissible  (the  argument a maiori ad minus).  Thus,  imposing
penalty  levies can not be considered expropriation  or  forced
limitation  of  property rights in the above  mentioned  sense.
Moreover,  as the Constitutional Court has already stated,  the
ability  of the State Agricultural Intervention Fund (SAIF)  to
impose  penalty  levies is regulated in Act No. 256/2000  Coll.
and  not in the contested decree. However, the petitioners  did
not  contest  that act, and therefore the Constitutional  Court
could  not review it within the proceedings on abstract  review
of norms.

     The  Constitutional Court did not overlook the  fact  that
setting quotas for the production of milk (or any other  goods)
by  the very nature of the matter manifests the state’s efforts
to  deter  potential  investors from further  –  in  this  case
quantitative – development of an economic sector in which there
is no public interest. Such deterrence from investment may also
mean  changes  in  qualitative regulations,  changes  in  taxes
(restrictive taxation) or even changes in purchases of goods or
services   by  public  entities  appointed  to  ensure   public
services. Thus, deterrence of investment in milk production can
not be considered limitation of ownership to means whose use in
other  economic  sectors current and potential producers  could
consider (in view of the cited circumstances). These means  can
–  generally speaking – be used for the development of a number
of  other economic sectors (including agricultural ones)  whose
quantitative  growth  is not a barrier to an  important  public
interest.

     From  a comparative viewpoint, we must also point  to  the
case  law  of  the  European  Court  of  Justice  (ECJ),  which
addressed  the  issue  of  limiting the  fundamental  right  to
property  in  connection  with  the  application  of  community
regulations  on agricultural production. In the case  of  Hauer
(44/79, in: P. Craig and G. de Búrca, EU Law, Text, Cases,  and
Materials, Oxford University Press, 1998, pp. 306-307), the ECJ
pointed  out  that Art.1 of the Protocol to the Convention  (on
the  right to own property) does not rule out the state’s right
to  use  such  regulations as the state considers necessary  to
regulate the exercise of property rights in accordance with the
public  interest.  In  that case, the  German  authorities,  in
applying  community  law, specifically  EEC  Council  Directive
no.1162/76,  on adapting vineyards to the needs of the  market,
did  not permit a winegrower from the German land of Nordrhein-
Westfalen  to plant grapevines on her property, precisely  with
regard to community limitation of production.

                             VIII.
Concerning  the third group of the petitioners’  objections  to
application  of  the  principle of  equality  and  the  ban  on
discrimination (Art. 1 of the Charter)

    Under Art. 1 of the Charter all people are free, have equal
dignity,  and enjoy equality of rights. The fundamental  rights
and basic freedoms are inherent, inalienable, non-prescriptible
and  not  subject to repeal. The principle of equality and  the
ban  on discrimination are further specified in Art. 3 para.  1
of  the  Charter (“Everyone is guaranteed the enjoyment of  his
fundamental rights and freedoms without regard to gender, race,
color of skin, language, faith and religion, political or other
conviction, national or social origin, membership in a national
or  ethnic minority, property, birth or other status”). We must
also  point  to  Art.  4  para. 3 of the Charter,  under  which
“Statutory  limitations on the fundamental rights and  freedoms
must  apply  in  the  same  way to all  cases  which  meet  the
specified conditions.”

    The petitioners find violation of the principle of equality
in   the  fact  that  the  system  of  milk  production  quotas
introduces  a certain form of de facto price regulation,  which
introduces  two prices for milk. The method of calculating  the
primary  allocation  of  production  quotas  is  allegedly  not
objective, as it does not take into account factors  which,  in
2000,  could  have negatively affected a particular  producer’s
production of milk. Finally, the limitation arising under  §  4
para.  2  of the contested decree, under which producers  doing
business  exclusively  in dairy farming  will  not  have  their
allocated individual production quota raised, nor will they  be
allocated  a new individual production quota from the  reserve,
allegedly  discriminates against a certain group of  producers,
those doing business exclusively in dairy farming.

     First, the Constitutional Court points out that the  issue
of  equality was already addressed by the Constitutional  Court
of  the CSFR, which ruled (judgment Pl. ÚS 22/92, Collection of
Judgments  and Resolutions of the Constitutional Court  of  the
CSFR,  p.  37 and p. 38): “The equality of citizens before  the
law  was  not  seen  as an abstract category,  but  was  always
attached  to  a  particular legal norm,  taken  in  the  mutual
relationships  of  various subjects of  law,  etc.  Insofar  as
equality was made a right, every individual is entitled to have
the   state,   insofar  as  it  is  able,  remove  all   actual
inequalities.  However, this construction only  applies  if  we
consider  equality to be absolute. Relative  equality,  as  all
modern  constitutions understand it, only requires the  removal
of  unjustified differences. (.) Special norms may set  special
criteria of equality for certain fields, criteria which do  not
arise  from the general principle, because application  of  the
principle  of  equality does not set such strict bounds  as  to
rule out any consideration by those who apply it.”

     In  the adjudicated matter, the Constitutional Court again
emphasizes that the purpose of the production quota  system  is
to  create  conditions so that every producer will  have  sales
secured  and will receive a corresponding minimum price.  Thus,
it  is evident that this system was not created for the purpose
of  giving  advantages or disadvantages to any  group  of  milk
producers,  but quite the contrary: its purpose  is  to  ensure
equal  conditions  on the market and to protect  producers  and
consumers  from  undesirable  large  price  fluctuations.   The
objection of two milk prices is therefore unjustified,  as  the
price  of  milk  remains the same for all  producers,  and  the
penalty  levy in the amount of 115% of the minimum or regulated
price (§ 13 of Act No. 256/2000 Coll.) is not a (“second”) milk
price,  but  a  penalty for violating the rules  of  the  quota
system.  In  other words, if they observe the rules,  all  milk
producers  have  an  equal position,  and  precisely  for  that
reason, in order to achieve the aim of the quota system, market
stability, the law (not the contested decree) set penalties for
violating the rules of the system.

    One must also see the fact that creating a production quota
system  does not discriminate against those entities  which  do
not  join it. The objection of inequality or discrimination  is
groundless  in  this sense, because in this case distinguishing
between  individual  producers is based  on  a  choice  by  the
affected  entity. The producer has an opportunity to apply  for
an  individual  production quota, or to not take  advantage  of
this  opportunity.  Thus, the quota system corresponds  to  the
principle  enshrined in Art. 4 para. 3 of  the  Charter,  under
which  statutory  limitations on  the  fundamental  rights  and
freedoms  “must apply in the same way to all cases  which  meet
the specified conditions.” In view of the factual impossibility
to  produce  milk outside the production quota  system  –  with
regard  to the unsalability of milk, the purchase of which  the
state  would  burden with a penalty levy –  the  allocation  of
production quotas represents an analogous mechanism, e.g.  with
entrepreneurs’ activities related to defining the  quantitative
scope of their business. From a constitutional law viewpoint it
is  important  that the rules for the quota  system  (i.e.  for
milk) are general, accessible and foreseeable, and therefore in
that sense the objection of inequality is unjustified.

    Of course, it is obvious from the nature of the matter – as
was  already stated – that creating a system of milk production
quotas  must  somewhat “deter” new entities from entering  this
sector. The aim of production quotas is to stabilize production
at a certain maximum level, which, in the present situation, de
facto  means  a  certain decrease. Unrestricted access  to  the
sector could thwart any effect of the production quotas.  Thus,
the  purpose of limiting the amount of production is  to  deter
persons  from  entry into the sector, as well  as  from  future
investments where there is a public interest in limiting  them.
A  certain disadvantaging of potential future producers  vis-à-
vis   current   producers   is  a   natural   and   irremovable
characteristic of all limitations of the amount of  production,
and  it  cannot  be seen as a violation of the constitutionally
guaranteed principle of equality, because – as was already said
–  equality in modern constitutional systems can not be seen as
an  absolute  category, but as a relative one.  Therefore,  the
Constitutional Court also could not agree with the petitioners’
objections that the contested decree is inconsistent with §  12
para.  7  of  Act  No.  256/2000, under which  “The  system  of
production quotas will permit new entities to enter the  market
and  will ensure that entities which enter the market will have
the  same  opportunity to obtain production quotas as  entities
already  active  in  the  market,  through  allocation  of  the
reserve, but with a maximum level of the current annual quota.”

    Allocation of individual production quotas among individual
farmers  according to their production in the previous calendar
year (§ 3 para. 1 et seq. of the decree) can not in practice be
fully  consistent with the principle of equality  –  which  the
petitioners claims is violated – enshrined in § 12 para. 6 let.
a)  of  Act No. 256/2000 Coll., if this principle is understood
as an absolute (abstract) concept. One can reason, e.g. that in
2000  some producers might not have produced a lot of milk,  as
they  had  primarily heifers and calves in  their  stables  for
various  reasons, their businesses might have  been  struck  by
natural disasters of disease, and so on. Nonetheless, most such
cases  are  taken  into account by the formula for  calculating
individual delivery quotas, provided in appendix no. 1  to  the
contested  decree. Therefore, a certain inequality could  arise
if the producer, for a certain period, due to natural disasters
or  cattle  stocks  unbalanced in age  or  in  other  respects,
delivered  only  a  limited  amount  of  milk.  However,   this
inequality can not be considered unconstitutional, because  any
legally  regulated manner of determining individual  production
quotas   could,   in   a   particular   case,   under   certain
circumstances, lead to a subjectively perceived unjust  result.
However,  if the legal regime wanted to eliminate these  cases,
there  would be another – no less serious – danger,  consisting
of   the  risk  of  a  certain  arbitrariness  in  “eliminating
harshness” when allocating production quotas. Thus,  even  here
one  can  not  find the contested decree to be unconstitutional
(or unlawful).

     Concerning producers doing business exclusively  in  dairy
farming,   the   Constitutional  Court   considers   that   the
preference,  in  the  allocation of new  production  quotas  or
increasing  of existing ones, for ecological raising  of  dairy
cattle  under a special Act (no. 242/2000 Coll., on  Ecological
Agriculture   and   Amending  Act  No.   368/1992   Coll.,   on
Administrative Fees, as amended by later regulations) can not –
in   and   of   itself   –   be   considered   unconstitutional
discrimination.  The legislature has a right to  resort  to  it
precisely  for  reasons of the public interest, which  improved
treatment of animals (see also the position of the Ministry  of
Agriculture  on  animal  welfare)  certainly  is.  This  is  an
activity which is surely correct and acceptable. State  support
can  take the form of, e.g., subsidies or other forms of public
support.  Thus, the legislature has the right to enshrine  this
preference  in  the  law in connection with allocating  further
production quotas or reducing them.

     However,  the  government can  not  do  so  –  beyond  the
framework  of the law – at the stage of issuing a sub-statutory
implementing regulation.

     Therefore, the government of the CR – in this regard –  is
mistaken,  if  it claims that § 2 para. 5 of Act  No.  256/2000
Coll. authorizes it to give preference to a particular form  of
agriculture  in  the way that it does in § 4  para.  2  of  the
present  decree. That provides that producers who  do  business
exclusively  in  dairy farming, shall not have their  allocated
individual production quota increased, nor be allocated  a  new
individual  production  quota for milk from  the  reserve.  The
cited § 2 para. 5 of Act No. 256/2000 Coll. only states that “A
production  quota  may be conditioned on  the  provision  of  a
particular form of agricultural support.” That means  that  the
purpose  of  the  cited statutory provision evidently  lies  in
permitting  positive  preferences  for  a  particular  form  of
agriculture  (typically, e.g., ecologically  oriented)  through
state  support, if the condition of participation in the system
of  production quotas is met. However, at the same time  it  is
evident  that  one cannot draw from the wording  of  the  cited
provision  a  statutory  authorization for  the  government  to
exclude  certain producers from the possibility  of  increasing
their  current production quotas or allocating  a  new  one  as
provided by § 4 para. 2 of the contested decree.

     Therefore,  this provision clearly does  not  observe  the
statutory reservation and is thus in conflict with Art. 4 para.
1 and 2 of the Charter.

                              IX.
For all the cited reasons the Constitutional Court annulled § 4
para.  2  of  government decree no. 445/2000 Coll., on  Setting
Production   Quotas  for  Milk  for  2001  to  2005,   due   to
inconsistency with Art. 4 para. 1 and 2 of the Charter, and §14
para.  2 of the decree, due to inconsistency with Art. 79 para.
3 of the Constitution of the CR.

    In accordance with § 58 para. 1 and § 70 para. 1 of Act No.
182/1993 Coll., on the Constitutional Court, the Constitutional
Court  annulled  these provisions as of 31  December  2001,  in
order  to  give  the government sufficient time  for  necessary
measures and adjustments.

     The Constitutional Court denied the remaining part of  the
petition to annul the contested government decree.

Instruction: Decisions of the Constitutional Court can  not  be
appealed.

Brno, 16 October 2001



Pl. ÚS 5/01
                      Dissenting Opinion
of  judges JUDr. P. H. and JUDr. A. P. to the reasoning of  the
Constitutional Court’s judgment file no. Pl. ÚS  5/01,  on  the
petition  of  the group of deputies to annul government  decree
no.  445/2000 Coll., on Setting Production Quotas for Milk  for
2001 to 2002

      The  dissenting  opinion,  filed  to  the  reasoning   of
Constitutional Court judgment file no. Pl. ÚS 5/01, is based on
these reasons:

     In  its judgment in the matter of setting the value  of  a
point  in  health  insurance  (file  no.  Pl.  ÚS  24/99),  the
Constitutional   Court   expressed   the   constitutional   law
classification of price regulation restrictively: “An essential
component of the democratic state based on the rule of  law  is
protection of the freedom of contract, which is a derivative of
the constitutional protection of property rights under Art.  11
para. 1 of the Charter (a fundamental component of which is ius
disponendi).  Therefore,  price regulation  is  an  exceptional
measure, acceptable only under quite limited conditions.”

     In  its judgment in the matter file no. Pl. ÚS 3/2000, the
Constitutional  Court  again  addressed  the  issue  of   price
regulation,  this  time  in  connection  with  evaluating   the
constitutionality  of legal rent regulation.  It  took  as  its
starting  point  Art.  1  para. 2 of  Protocol  no.  1  to  the
Convention  for the Protection of Human Rights and  Fundamental
Freedoms, which provides states the right to enforce such  laws
as  it  deems  necessary  to control the  use  of  property  in
accordance with the general interest, and also the case law  of
the  European  Court of Human Rights. Under it, such  laws  are
particularly necessary and usual in the area of housing,  which
is  becoming a central issue of social and economic  policy  in
modern societies, and for the purpose of which legislation must
have a wide margin for consideration (evaluation) (“wide margin
of  appreciation”),  both in determining  whether  there  is  a
public   interest   which  authorizes  the  implementation   of
regulatory  (monitoring) measures and in selection of  detailed
rules for implementing these measures. As the European Court of
Human  Rights  emphasized  in the  case  James  et  al.,  state
intervention  must observe a the principle of a “fair  balance”
between  the  requirements of general public interest  and  the
requirement   of  protection  of  an  individual’s  fundamental
rights.  There must be a reasonable (justified) proportionality
relationship between the means used and the aims pursued.

     Thus,  in this matter the Constitutional Court accepted  a
possible  price  regulation of rent, but on  the  condition  of
applying  the  principle of reasonableness  (for  comprehensive
discussion  of  all components of the reasonableness  principle
see  Constitutional Court judgments file nos. Pl. ÚS 4/94,  Pl.
ÚS  15/96,  Pl.  ÚS  16/98). Although the Constitutional  Court
acknowledge  the  presence  of the first  component,  i.e.  the
suitability  of the means used in relation to the aim  pursued,
it  found a failure to observe the principle of necessity, i.e.
the  subsidiarity  of  the  means used  in  relation  to  other
possible  means, from the viewpoint of the limited  fundamental
right (in the given matter, the property right): “In order that
the   apartment  building  owners  could  meet   their   stated
obligations,  and  that  the  individual’s  right  to  adequate
housing under Art. 11 of the International Covenant on Economic
and  Social  Rights,  the  path chosen  could  have  been,  for
example,  that taken by the legislation of the First  Republic,
which,  in § 9 para. 4 of Act No. 32/1934 Coll., as amended  by
later  regulations, permitted increasing rent  for  reasons  of
paying  expenses for temporary or exceptional necessary repairs
and  renovation  of  the  building.”  On  the  basis  of  these
arguments  the  Constitutional Court concluded that  there  was
violation  of Art. 4 para. 3 a 4 of the Charter, in  connection
with Art. 11 para. 1 of the Charter.

    From a general perspective, in the judgment in question the
Constitutional  Court  also formulated  another  criterion  for
evaluating  the  constitutionality of price regulation:  “Price
regulation,  if it is not to exceed constitutional bounds,  may
not  obviously  decrease a price so that, in view  of  all  the
demonstrated  and  necessarily  incurred  expenses,  it   would
eliminate  the  possibility of their  being  at  least  repaid,
because  in  that cause it would actually imply denial  of  the
purpose and all functions of ownership.”

     Where  the  Constitutional Court decided on the  issue  of
production    quotas    for   sugar,    in    evaluating    the
constitutionality  of government decree no. 51/2000  Coll.,  it
limited  its  argumentation to the question  of  observance  of
safeguards contained in Art. 78 of the Constitution.

    The system of milk production quotas under Act No. 256/2000
Coll.  and government decree no. 445/2000 Coll. are established
by  penalty  price  regulation under § 13  of  the  cited  act,
affecting that part of production by which the producer exceeds
the set quotas.

     From  a  general perspective, the Act on Prices  considers
acceptable  reasons  for  introducing price  regulation  to  be
danger  to  the  market from the effects of  limiting  economic
competition or from an exceptional market situation (§ 1  para.
6  of  Act  No. 526/1990 Coll. on Prices, as amended  by  later
regulations). In this regard it also fully corresponds  to  the
paradigms  of democratic economic thinking (see P. A. Samuelson
-  W.  Nordhaus, Economics, Prague 1991). The Act on the  State
Agricultural  Intervention Fund, insofar as it establishes  the
possibility  of  price  regulation in  agriculture,  is  a  lex
specialis to the Act on Prices.

    From the perspective of the Constitutional Court’s existing
case  law,  the  reasoning  in the  majority  opinion  has  not
observed all the safeguards, which arise from the principle  of
reasonableness. It did not analyze fulfillment of the condition
of  subsidiarity to possible alternative means  permitting  the
achievement of the pursued aim as the Constitutional Court  did
in the matter under file no. Pl. ÚS 3/2000.

    If price regulation is interference in contractual freedom,
which  is a derivative of constitutional protection of property
rights  under  Art.  11 para. 1 of the Charter  (a  fundamental
component of which is ius disponendi), it is essential  in  the
present  matter  to evaluate the observation of  constitutional
safeguards  for  limitation on property rights  under  Art.  11
para. 3 and 4 of the Charter and Art. 1 para. 2 of Protocol no.
1  to  the  Convention for the Protection of Human  Rights  and
Fundamental Freedoms.

     From  the  perspective of the meaning and purpose  of  the
cited  provisions,  which are components of the  constitutional
order  of the Czech Republic, Art. 1 para. 2 of Protocol no.  1
to  the  Convention  for the Protection  of  Human  Rights  and
Fundamental  Freedoms applies to the matter (on  interpretation
of the concept of mandatory limitation of property rights, see,
in  particular, Constitutional Court judgment Pl. ÚS 15/96). In
this  regard, a key aspect is interpretation of the concept  of
public  interest, which is the basis for the regulation of  use
of property and the related limitation of property rights.

      In   the  matter  under  file  no.  III.  ÚS  31/97   the
Constitutional  Court  applied European  Community  law  as  an
interpretative  tool of domestic law when it  stated  that  the
interpretation  based  on competition  rules  governed  by  the
Treaty Establishing the European Community cannot be considered
unconstitutional, because that Treaty, just like the Treaty  on
European  Union, is based on the same values and principles  on
which the constitutional order of the Czech Republic is based.

    Starting from the stated legal opinion, the authors of this
dissenting  opinion  find application of  Art.  1  para.  2  of
Protocol  no. 1 to the Convention for the Protection  of  Human
Rights and Fundamental Freedoms to be key for the reasoning  of
the  Constitutional Court’s judgment in matter file no. Pl.  ÚS
5/01,  from  the interpretative perspective which is  given  by
European standards contained in Community law..

Brno, 16 October 2001
JUDr. P. H                                        JUDr. A. P.