ROMANIA CONTEMPLATES SEIZURE OF 85% OF RESTITUTION PROPERTY RIGHTS |
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Just as the Romanian
government cannot take back a farm that was restituted to the family
from whom it was stolen without paying its fair value, so it cannot
confiscate another family’s right to receive a different farm in
restitution by payment of a mere pittance of its true value. But that
is precisely what the Romanian Government contemplates doing through a
draft law that would confiscate 85% of the property rights of thousands
of victims of Romanian communism and fascism – inviolable rights that
were granted to them twelve years ago by law. The Draft Law proposes to
take 85% of the value of all pending claims by owners of properties that
were seized by Romania's Communist government between 1945 and 1989
without compensation. It is proffered in total disregard of Romania’s
constitutional provisions prohibiting such acts and in violation of
Protocol One of the European Convention of Human Rights to which Romania
is a signatory and which recognizes property rights as human rights.
The Draft Law stems from
the European Court of Human Rights (“ECHR”) pilot judgment against
Romania in Maria Atanasiu et. Alt. v. Romania, dated
October 12, 2010, in which the ECHR gave Romania 18-months, ending on
July 12, 2012, to find and implement a coherent, equitable and effective
mechanism for compensating the victims of communism. Instead, the
government now proposes to confiscate virtually the entire value of the
rights that were given to the victims of communism by law in February
2001. While the ECHR decision contemplates reasonable limitations on
restitution awards, that determination does not permit confiscation of
actual property rights in violation of the Convention and the Romanian
Constitution. Indeed, Article 44 of the Romanian Constitution enshrines
the right of private property which specifically includes obligations
incurred by the State and guarantees them against expropriation except
on grounds of public utility established according to law and then only
upon just compensation paid in advance. Permissible
limitations on restitution rights are never to the value of the right
itself, but to the method by which compensation might be obtained and a
reasonable time in which to pay it or deliver it. No civilized system of
law condones the willful appropriation of a person’s property without
fair, equitable and just compensation as a justifiable limitation on
property rights – and Romania is no exception.
Make no mistake about it -- what is proposed in the Draft Law is as
loathsome and shameful as the brutal takings, cruelties and
exploitations of the communist era. Having provided the victims of
communism with a right to full and fair compensation for the abusive
acts of past governments, Romania’s Constitution and its obligations
under Protocol One of the European Convention on Human Rights prohibit
it from expropriating such right in the manner proposed by the Draft
Law. |
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From Whence Did It Come? |
The government justifies
the expropriations in the Draft Law as warranted by its financial
difficulties. News reports have government officials admitting that the
Draft Law creates an injustice but stating that this is the only way to
deal with the matter because of a purported cost in excess of Euro 16
billion. Their basis is false on three grounds -- the Government’s cost
estimates are grounded on bogus numbers; there are several fair and
legal ways to deal with actual financial issues, which we offer below;
and Romania cannot legally confiscate 85% of the value of any form of
property without fair compensation.
The inflated cost
estimates of restitution arise from adding thousands of claims that were
filed in 2001 but which have never been pursued thereafter. These claims
will remain dormant forever because there are no documents to
substantiate them. They can and should all be dismissed. That leaves
the tangible claims that have been legitimately in process for 12 years.
But the government has even inflated those numbers by adding the value
of the properties that could be restituted in-kind, such as those to the
Catholic Church, but for which the government would not have to pay
anything if they were just returned without any cash burden attached.
Indeed, the real remaining cost of restitution in the equivalent has
been privately estimated by the leadership of the Ministry of Finance to
be between €2 billion and €3 billion. That amount can be paid over a
period of years in cash or in shares in a new Property Fund or in newly
privatized state companies – as suggested in this article.
From where did the
illegal notion of a 15% cap on restitution arise? The finger can be
pointed at Poland. In appalling contrast to prior Romanian governments
in the first decade of the millennium, Poland failed to offer
restitution to the victims of its communist regime. Its leaders now
speak of offering a cap on restitution of only 15% of the value of what
was taken from its citizens. As disgraceful as that may sound, Poland
can do it; Romania cannot. Why -- because Poland, unlike Romania, has
never acknowledged its wrongdoing and never afforded its victims any
property right to the return of what it stole. In sharp contrast,
Romania through Law 10/2001, gave its victims the right to full
compensation in-kind or equivalent thereby creating a property right
that claimants who properly filed have been actively pursuing for 12
years. It is a property right that is protected under the European
Convention and by the Romanian Constitution. It cannot be taken away
without fair and complete compensation. But in Poland, since the
European Convention is not retroactive and the country has not done
anything to provide restitution for communist confiscations that were
legal at the time that they occurred, the Polish government can do
whatever it likes. Romania cannot. Romania must respect in full the
property rights that it granted twelve years ago.
And that raises another
question which Romania cannot avoid. Why has it taken 12 years for
victims to obtain restitution without success? Who is to blame for this
unreasonably long period? As no one disputes, the answer lies in the
indolence of the Romanian government – a bureaucratic lethargy (and bad
faith in some instances) for which it alone is to blame, but for which
it now seeks to unjustly penalize the victims. |
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In-kind restitution is no longer available |
The
Draft Law totally eliminates the in-kind return of property stolen by
past governments. This means that any property that could actually be
returned will not be given back, but instead would be compensated by
equivalent – meaning cash – but only for 15% of its real value. There
has not been a serious argument made by anyone to support the exclusion
of in-kind restitution. The explanation offered by the Ministry of
Finance is that restitution in-kind in full would represent
discrimination against those claimants who cannot obtain the same –
thereby making a ploy a pretext for the exercise of very real
discrimination against an entire class of claimants. Restitution by
equivalent is and should always be available ONLY in cases where in-kind
restitution is no longer possible. Forcing claimants to receive
compensation for real property which still exists and can be restituted
in-kind is not only a breach of their ownership right, but represents a
second nationalization for those who have already been deprived of their
property in the past by the communist regime.
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Compensation limited to a 15% cap and
payable in 10 years |
In the current form of
the Draft Law, claimants are limited to a 15% cap on the value of their
property rights, payable in 10 years. This 15% cap does not represent a
real and actual mechanism of compensation as required by the ECHR in its
pilot judgment -- the cap is merely a limitation on what otherwise
would be the total theft of restitution property rights by the Romanian
State.
Moreover, the payment of
this meager amount in 10 years is tantamount to claimants receiving
almost nothing from the state for their confiscated real estate because
this payment would occur at a minimum of 22 years after the claimants
first exercised their property rights and at a time when most of them
will be long dead. The explanation of the Ministry of Finance is that
the Romanian state lacks the required funds for payment of compensation
– but while this might have been an acceptable excuse to the regime of
Nicolae Ceausescu, it is completely unacceptable in a democratic society
where ownership rights are guaranteed and discrimination is sanctioned.
Needless to say, if lack of funds is the main argument for creating an
unreasonable and inequitable cap, the state should also consider the
huge amounts which Romania will be obliged to pay to claimants as
damages in the myriad of litigations that will follow at the ECHR.
Besides violating the
right of property established in Article 44 of the Romanian Constitution
through the taking of 85% of the value of the claimants’ rights without
payment, the Draft Law’s cap on compensation also violates Article 16
(“equality of rights”) of the Constitution, which states that citizens
are equal before the law and the public authorities without privileges
and without discrimination. Under Article 1(2) of Ordinance no.
137/2000, any form of discrimination regarding “an ownership right” is
prohibited. The Draft Law arbitrarily changes the principle of full
compensation and does so by discriminating between those who were
granted restitution and those whose properties are still to be
restituted.
The current law provides
for the principle of full compensation for both types of restitution,
whether in-kind or by compensation, and so claims that have already been
processed have been settled in full. The Draft Law would create an
obvious discrimination between the claimants who already received
compensation in full and those whose claims are to be settled after the
adoption of the Draft Law, who will have 85% of the value of their
rights unilaterally taken without compensation – and the rest paid over
10 years. It is probable – as the ECHR states in the pilot judgment, and
the Romanian Government admits – that decisions have not yet been issued
in many restitution files NOT by the fault of the claimants but as the
fault of the National Authority for Property Restitution (“ANRP”), which
has constantly delayed the issuance of decisions in the restitution
files. The Draft Law would make those hapless claimants suffer for the
state’s incapacity to make its institutions function properly.
While installments might
be provided with appropriate and legal limitations, the Draft Law
permits the compensation already limited to a maximum of 15% of the
value to be paid during a term of 10 years, in annual installments. The
amounts payable as compensation do not bear any interest, which is why,
given the long period during which they are to be paid and the
continuing inflationary process, claimants would most likely end up
being paid less than even the meager amount to which they would be
entitled under the Draft Law. Such limitation plainly violates the human
rights of the claimants. |
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Applicability of the draft law to claimants
whose claims have already been evaluated |
Inexplicably, the Draft
Law appears to apply to claimants whose claims have already been
evaluated (article 8, paragraph 1 of the Draft Law). The Draft Law fails
to recognize that besides final and irrevocable court decisions, there
are restitution decisions issued by the Authority for State Asset
Recovery (“AVAS”) that have already been evaluated, but were sitting for
months at ANRP without being processed due to ANRP’s institutional
dysfunctionality. These dysfunctions have been cited by the ECHR as one
of the main grounds for the issuance of the pilot judgment against
Romania. Indeed, the Romanian Government itself has acknowledged these
problems, mentioning through its spokesman that “there are extremely
numerous suspicions in relation to what has happened at ANRP during the
past years”. In such context, why should claimants be penalized for
ANRP’s failure to function properly or for the potentially questionable
practices now under investigation?
The Draft Law as applied
to these claimants violates Article15 of the Romanian Constitution
concerning the non-retroactivity of the law. For example, the Draft Law
appears to apply to claims which were already evaluated but where no
restitution titles were yet issued (the language as drafted requires
clarification). The principle of non-retroactivity is obviously breached
in such cases where decisions have already been issued by AVAS, but are
pending at ANRP. Indeed, such decisions contain, in all cases, an
evaluation of the property with the amount to which the claimants are
entitled as compensation. ANRP is not permitted to change the amount of
compensation, but merely to verify whether the claim is fully documented
and issue the restitution title providing the same amount of
compensation as set forth in the AVAS decision (unless, of course, ANRP
can prove that the evaluation was made in breach of the law). In these
cases, the theory of “already acquired rights” is also applicable,
meaning that the state cannot take away a right which has already been
recognized and quantified and has already become the claimant’s
property.
The Draft Law’s breach
of the constitutional provisions in Articles 15 and 16 of the Romanian
Constitution is supported by Decision no. 830/2008 of the Constitutional
Court of Romania, which declared as unconstitutional certain provisions
of Law no. 247/2005 amending Law 10/2001. More specifically, according
to Law 10/2001, certain claimants were entitled to in-kind restitution
while, after the then-proposed amendments were adopted, the same
claimants were entitled only to compensation. Most significantly, the
Constitutional Court ruled that the change of the compensation mechanism
triggered a breach of Articles no. 15 and 16 of the Romanian
Constitution in that it created discrimination between those claimants
who had already been compensated and those who were to be compensated
under the proposed amendment. In addition, the proposed amendment
breached the principle of non-retroactivity of the law, as it would have
amended the legal rights of the claimants to which they had become
entitled after the filing of the restitution claim. Consequently, the
respective proposed articles of Law 247 were annulled.
If restitution decisions
already issued by AVAS fell under the ax of the Draft Law, it would
contravene the principle of acquired rights, as well as the principles
of non-discrimination and non-retroactivity of law. Therefore, article
8, paragraph 1 of the Draft Law should make a reference to the “amount
provided in final and irrevocable court decisions, in restitution titles
… or, as the case may be, restitution decisions issued by AVAS …”. If so
amended, the Draft Law would include all claims that have already been
evaluated, without discriminating against those who did not obtain a
title because of ANRP’s indolence, lack of action, or malfeasance. In
addition, the 12-year term mentioned in the same article is excessive
and unwarranted. |
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The 60-day term in which claimants must file
additional documentation in support of their claims |
The 60-day term provided
in Article 11 of the Draft Law is not only unrealistic, but penal in
nature. Claimants are unable to submit additional documentation in
support of their files not by their fault, but because of the state
institutions’ incapacity to function properly. Despite claimants’
repeated requests for documents, state archives refuse to release them.
Why should claimants be sanctioned for the state’s incapacity to
establish and implement a functional mechanism? |
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60-months to process claims which are
currently pending before ANRP vs. 36-months for processing claims to be
filed after the Draft Law becomes effective |
This undoubtedly
represents discrimination between claimants whose claims are currently
pending before ANRP versus those whose claims will be filed after the
Draft Law becomes effective. |
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Conclusion |
The notion that Romania
can rescind property rights that it rightfully gave to all victims of
communism twelve years ago without fair compensation is an anathema to
its own laws and to the principles of justice and decency to which
Romania seeks to adhere. Reasonable limitations on the delivery of
future restitution awards – not on their actual value – can be
contemplated. Here are several alternatives for consideration by the
government to ameliorate the actual financial difficulties it faces
which all contemplate the continuation of in-kind restitution:
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Creation of a second
Property Fund. This could be done quite quickly, since it would be
created through a Government Decision. The assets of such fund would
consist of shares that the Government owns in listed companies.
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Granting
compensation in the form of shares in listed companies in which the
state maintains an interest.
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Payment through
state bonds with a face value that reflects the actual value of a
bond payable at a future date.
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The grant of
compensation through state-owned land, subject to proper evaluation.
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Payment of cash in
installments would be acceptable if made over a reasonable period of
time and, obviously, with no cap. The installments must be subject
to interest and inflation.
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With the exception
of claims that have already been evaluated, claimants awaiting cash
compensation could be provided with the choice of taking a capped
amount of money immediately or delayed payment of the full amount,
not to exceed 7 years, in equal installments plus interest at the
prime rate and subject to inflation.
The Draft Law may well
be dead on arrival at Parliament, but those who thought that they could
perpetrate such an act are still very much alive. It must be made clear
to them that they can neither take back restituted property nor the
right to receive such property. It’s that simple!
Finally, it should not
go unsaid that the government’s disregard of the right of property has
shaken foreign investors. As word of the contemplated confiscations
spread, investors understood that if such property rights can be seized
without just compensation, then so can other forms of property such as
security interests in current or former state owned companies. The
shudder of dread that this has brought was slightly dissipated by
comments from the government that it was “re-thinking” the matter.
Pursuing any form of unjust taking will serious harm Romania’s efforts
to induce and keep foreign investment in the country. Once again,
Romania is on the precipice of turning a great and noble deed into a
shameful and despicable legal morass out of which it cannot recover
other than humiliated and further impoverished.
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are made.
Copyright 2012 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
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