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On the legal remedy for the protection of the pre-emption right to acquire private agricultural land

 

Anonymised

Case no 2-A/2021

 

 

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

IN THE NAME OF THE REPUBLIC OF LITHUANIA

 

RULING

ON THE COMPLIANCE OF PARAGRAPH 8 OF ARTICLE 5 OF THE REPUBLIC OF LITHUANIA’S LAW ON THE ACQUISITION OF AGRICULTURAL LAND (WORDING OF 23 NOVEMBER 2017) WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 

28 September 2021, no KT158-A-N12/2021

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Elvyra Baltutytė, Gintaras Goda, Danutė Jočienė, Giedrė Lastauskienė, Vytautas Mizaras, Algis Norkūnas, Daiva Petrylaitė, and Janina Stripeikienė

The court reporter – Daiva Pitrėnaitė

The Constitutional Court of the Republic of Lithuania, pursuant to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1 and 531 of the Law on the Constitutional Court of the Republic of Lithuania, at the hearing before the Constitutional Court on 22 September 2021, considered, under written procedure, the constitutional justice case (no 2-A/2021) following the petition (no 1A-189/2020) of the petitioner [data not made public] requesting an investigation into whether paragraph 8 of Article 5 of the Republic of Lithuania’s Law on the Acquisition of Agricultural Land (wording of 23 November 2017) is in conflict with the constitutional principles of responsible governance and a state under the rule of law.

The Constitutional Court

has established:

I

The circumstances of the petition and the arguments of the petitioner

1. By its decision of 2 April 2019, the Panevėžys Regional Court upheld the claim of the claimants in the civil case and transferred, to the claimants, the rights and duties of the applicant, as the purchaser, under the contract for the purchase and sale of two agricultural land parcels. In the said civil case, the Panevėžys Regional Court held, among other things, that the applicant had acquired the agricultural land parcels without having the pre-emption right to acquire agricultural land, while the National Land Service under the Ministry of Agriculture (hereinafter referred to as the National Land Service) had unlawfully issued certificates to the owners for selling the land parcels to the persons of their choice. In that civil case, the Panevėžys Regional Court noted that the negative legal consequences for the claimants had been caused through the conclusion of the purchase and sale contract by using the above-mentioned certificates; however, disputing these certificates would have no essential effect; therefore, the claimants have the right to choose the special remedy for protecting their violated rights – to challenge the consequences of the concluded transaction and demand the transfer of the rights and duties of the purchaser. By its order of 5 March 2020, the Court of Appeal of Lithuania did not satisfy the appeal of the applicant in the civil case and upheld the decision of the court of first instance. By its orders of 15 April 2020, 14 May 2020, and 12 June 2020, the Supreme Court of Lithuania refused to accept the cassation appeals of the applicant.

2. In this constitutional justice case, revoking the provisions of the official constitutional doctrine, the petitioner substantiates her position regarding the compliance of paragraph 8 of Article 5 of the Law on the Acquisition of Agricultural Land (wording of 23 November 2017) (hereinafter referred to as the Law) with the constitutional principles of responsible governance and a state under the rule of law on the basis of the following arguments.

2.1. According to the petitioner, under the legal regulation that was laid down in the provisional Republic of Lithuania’s Law on the Acquisition of Agricultural Land and was in force until 1 January 2014, a notification (by means of a registered letter) about an agricultural land parcel intended to be sold had to be sent to the person with the pre-emption right by the owner of the land parcel in question and no authorised state institution carried out that procedure. Following the entry into force of the amendments to the provisional Law on the Acquisition of Agricultural Land on 1 January 2014, a state institution – the National Land Service – was involved in the process of selling agricultural land. Where a transaction for the purchase and sale of an agricultural land parcel is concluded, the National Land Services, in accordance with the legal regulation laid down in Article 5 of the Law, verifies whether there are persons with the pre-emption right to purchase the agricultural land parcel and issues the respective certificate to the seller of the land parcel. The petitioner also notes that a notary can approve a transaction for the purchase and sale of an agricultural land parcel only after receiving the respective documents issued by the National Land Service.

2.2. The petitioner considers that a state institution, when issuing all the necessary permits for a transaction, has the duty to ensure the proper exercise of the pre-emption right; therefore, responsibility for the mistakes made in permitting such a transaction must exclusively fall on that state institution. In addition, the petitioner notes that the fact that a state institution and a notary are required to participate in a transaction leads to the reasonable expectations of the parties to the transaction that it is concluded in accordance with the legal imperatives that are binding in that process. According to the petitioner, under the impugned legal regulation, the rights and duties of the purchaser are transferred even in cases where the pre-emption right of a person to purchase a land parcel is violated as a result of fault on the part of a state institution. In cases where the pre-emption right of a person to purchase an agricultural land is violated as a result of fault on the part of a state institution, according to the petitioner, based on the constitutional principle of responsible governance and the imperatives of the protection of legitimate expectations, legal certainty, and legal security, arising from the constitutional principle of a state under the rule of law, the violated right should be defended not by the transfer of the rights and duties of the purchaser to the person with the pre-emption right, but by means of compensation for damage caused by the unlawful actions of the authorities, thus protecting the stability of the established legal relationships connected with the purchase and sale of agricultural land.

II

The arguments of the representatives of the party concerned

3. In the course of the preparation of the case for the hearing of the Constitutional Court, written explanations were received from the representatives of the Seimas, the party concerned: Jonas Gudauskas, a member of the Seimas, and Gintarė Remeikienė, an adviser at the Office of the Committee on Rural Affairs of the Office of the Seimas; in the explanations, it is maintained that the impugned legal regulation is not in conflict with the Constitution. The position of the representatives of the Seimas, the party concerned, is substantiated by the following arguments.

3.1. The representatives of the party concerned note that the provision impugned by the petitioner was laid down in the Provisional Law on the Acquisition of Agricultural Land (wording of 15 July 2004). They maintain that a relatively unfavourable structure of farms has formed and has existed in Lithuania; small farms have prevailed; therefore, in order to ensure the effective use of agricultural land, it is also important to create the conditions for increasing agricultural holdings. It has been observed that larger farms are more easily able to purchase the means of production, as well as to realise their production; they also have more favourable conditions for specialising their production, their investment per unit of production is lower, and the effectiveness of production is higher because of the rational use of machines and labour. Based on the opinion of the Ministry of Agriculture of the Republic of Lithuania, the representatives of the party concerned maintain that small land parcels would be used in a much more rational manner and their value would be higher if they were merged or used together with the adjacent land parcels; therefore, in order to ensure the proper use of agricultural land, it is appropriate to establish such a regulation that would encourage the formation of rationally managed land holdings and the consolidation of land.

3.2. The representatives of the party concerned compare the impugned legal regulation with that established in paragraph 3 of Article 4.79 of the Civil Code of the Republic of Lithuania (hereinafter referred to as the CC), under which, if a share held in co-ownership is sold in violation of the pre-emption right to purchase it, the other co-owner has the right, within three months, to demand in court proceedings that the rights and duties of the purchaser be transferred to him/her; the representatives of the party concerned also argue that the impugned paragraph 8 of Article 5 of the Law, in the light of the whole Law and the expansive interpretation of the above-mentioned norm of the CC, in their opinion, reasonably provides for the right to demand that the rights and duties of the purchaser be transferred to all persons who, under the Law, have the pre-emption right to acquire agricultural land.

3.3. According to the representatives of the party concerned, the fact that, following unlawful decisions taken by state institutions, an agricultural land parcel can be sold in violation of the pre-emption right to purchase it does not, in any way, mean that the legal regulation laid down in paragraph 8 of Article 5 of the Law is in conflict with the constitutional principles of responsible governance and a state under the rule of law. In the opinion of the representatives of the party concerned, if the petitioner considers that a mistake made by a state institution has caused material or moral damage to her, she has the right to apply to a court in accordance with the general procedure for compensation for the damage caused.

III

The material received in the case

4. In the course of the preparation of the case for the hearing of the Constitutional Court, a written opinion was received from Valdas Aleknavičius, the Chancellor of the Ministry of Agriculture.

The opinion states that the legal regulation laid down in the Law creates the preconditions for the rational management of land holdings, their consolidation, as well as the prevention of land speculation. In order to achieve these objectives, the legislature has provided for the pre-emption right of certain persons to acquire private agricultural land and established the possibility of protecting this right in court proceedings under paragraph 8 of Article 5 of the Law. Such a legal regulation is established in order to ensure the protection of the rights of persons who have a pre-emption right, i.e. persons who are more closely associated with the transferred real property than other third parties and whose interests may be directly affected by the sale of that property. Without it, the legal regulation laid down in the Law regarding the pre-emption right to acquire private agricultural land would lose its meaning.

It is noted in the opinion that the applicant in the civil proceedings was, by a court decision, reimbursed for all directly incurred costs (was awarded the reimbursement of the price paid in the transaction); in addition, the applicant has the possibility of defending the violated rights under paragraph 4 of Article 6.271 of the CC, according to which the civil responsibility of the state or a municipality arises where the employees of authorities have failed to act in the manner that the laws require these authorities or their employees to act.

The Constitutional Court

holds that:

I

The impugned and related legal regulation

5. On 28 January 2003, the Seimas adopted the Provisional Law on the Acquisition of Agricultural Land. That law was more than once amended and supplemented, inter alia, by means of the Law Amending the Republic of Lithuania’s Provisional Law (No IX-1314) on the Acquisition of Agricultural Land, which was adopted by the Seimas on 24 April 2014; by means of that law, the Provisional Law on the Acquisition of Agricultural Land was set out in its new wording, inter alia, by changing its title, i.e. it was given the title of the Republic of Lithuania’s Law on the Acquisition of Agricultural Land.

The Law on the Acquisition of Agricultural Land (wording of 24 April 2014) was set out in its new wording by means of the Law Amending the Republic of Lithuania’s Law (No IX-1314) on the Acquisition of Agricultural Land, which adopted by the Seimas on 23 November 2017 and entered into force on 1 January 2018 (with a certain exception).

6. Paragraph 1 of Article 1 of the Law on the Acquisition of Agricultural Land (wording of 23 November 2017) provides that it aims to prevent the speculation of agricultural land and to preserve the traditional forms of farming, to create the conditions for the formation of rationally managed land holdings and for the consolidation of land, as well as to promote the rational use of agricultural land.

Therefore, by regulating the acquisition of agricultural land, the Law pursues certain objectives of agricultural policy set out therein, inter alia, the objectives of promoting the rational use of agricultural land and creating the conditions for land consolidation.

7. In the context of the constitutional justice case under consideration, the following provisions of the Law are relevant: the provisions of Article 5 “The pre-emption right to acquire private agricultural land”, paragraph 8 of which is impugned by the petitioner; the said provisions regulate the order of priority in which the pre-emption right to acquire private agricultural land is enjoyed and the procedure for exercising the pre-emption right to acquire private agricultural land.

7.1. Paragraph 1 of Article 5 of the Law prescribes the following:

The pre-emption right to acquire private agricultural land at the price at which it is offered for sale and under other same conditions, with the exception of cases where it is sold at a public auction, shall be enjoyed in the following order of priority by:

1) co-owners of a land parcel – in accordance with the procedure laid down by Article 4.79 of the Civil Code;

2) a user of a land parcel offered for sale who has used this land for agricultural activity for at least one year under a contract (contracts) entered in the Real Property Register for that period, with the exception of a contract for the uncompensated use of an item (loan for use), provided that this exception is not applied to close relatives (parents and children, grandparents and grandchildren, brothers and sisters) specified in Article 3.135 of the Civil Code, as well as to spouses, adoptive parents, and adopted children, in cases where the said user of a land parcel offered for sale is a natural person who has registered a farm holding in accordance with the procedure laid down in the Republic of Lithuania’s Law on the Farm Holdings of Farmers or if it is a legal entity or another organisation (hereinafter referred to as a legal entity) whose income from agricultural activity accounts for more than 50 per cent of its total income;

3) a person who holds by the right of ownership an agricultural land parcel that borders an agricultural land parcel offered for sale in cases where that person is a natural person who has registered a farm holding in accordance with the procedure laid down in the Law on the Farm Holdings of Farmers or if it is a legal entity whose income from agricultural activity accounts for more than 50 per cent of its total income;

4) a natural person who has declared his/her place of residence or a legal entity who has registered its domicile in the territory of the municipality in which an agricultural land parcel offered for sale is located, or in the territory of the adjacent municipalities, in cases where that person is a natural person who has registered a farm holding in accordance with the procedure laid down in the Law on the Farm Holdings of Farmers or if it is a legal entity whose income from agricultural activity accounts for more than 50 per cent of its total income.”

Thus, in paragraph 1 of Article 5 of the Law, the legislature, among other things, in order to achieve the objectives of agricultural policy set out in paragraph 1 of Article 1 of the Law, inter alia, the objectives of promoting the rational use of agricultural land and creating the conditions for land consolidation, has specified persons who have the pre-emption right to acquire private agricultural land (at the price at which it is offered for sale and under other same conditions, with the exception of cases where it is sold at a public auction), as well as the order in which these persons may exercise the pre-emption right established for them.

Under paragraph 1 of Article 5 of the Law, the pre-emption right to acquire private agricultural land (under certain conditions) is enjoyed by co-owners of a land parcel  (point 1), as well as natural persons who have registered a farm holding, or legal entities whose income from agricultural activities accounts for more than 50 per cent of their total income: users of a land parcel offered for sale (point 2), persons who hold by the right of ownership an agricultural land parcel that borders an agricultural land parcel offered for sale (point 3), or natural persons who have declared their place of residence or legal entities who have registered their domicile in the territory of the municipality in which an agricultural land parcel offered for sale is located or in the territory of the adjacent municipalities (point 4).

Thus, as can be seen from the legal regulation laid down in paragraph 1 of Article 5 of the Law, the pre-emption right of persons referred to therein, with the exception of co-owners of a land parcel, to acquire private agricultural land is linked to their agricultural activities.

7.2. In this context, it should also be mentioned that paragraph 2 of Article 5 of the Law provides, among other things, that the state has the pre-emption right (with the exception of cases where the pre-emption right is exercised by co-owners of a land parcel in accordance with the procedure laid down by Article 4.79 of the CC) to acquire, at the price offered for sale and under other same conditions, private agricultural land that is intended for public needs according to valid detailed plans or special plans, or agricultural land intended for the implementation of measures that are financed from the state budget and with European Union funds for improving the structure of land holdings and reducing abandoned land areas.

7.3. The procedure for exercising the pre-emption right to acquire private agricultural land is laid down in paragraphs 3–6 of Article 5 of the Law:

the owner of land gives a notice of a decision to sell an agricultural land parcel to the National Land Service (or to the selected notary, who forwards the notice to the National Land Service within the established time period), except in cases where a part of an agricultural land parcel held by the right of common ownership is offered for sale and the co-owner of the land parcel exercises his/her pre-emption right to purchase the land parcel in accordance with the procedure laid down in Article 4.79 of the CC (paragraph 3);

the National Land Service gives a written notice of an agricultural land parcel offered for sale, the terms and conditions of sale, and the conditions under which persons may exercise the pre-emption right to acquire the agricultural land offered for sale not later than within the established time period, among others, to the user (users) of the land parcel offered for sale, also to persons whose land parcels held by the right of ownership border the agricultural land parcel offered for sale, as well as publishes on its website the information about the agricultural land parcel offered for sale; persons must submit their consent for the purchase of the agricultural land parcel or refusal to purchase it to the National Land Service not later than within 15 working days from the day of the receipt of the notice or the publication of the notice on the website of the National Land Service (paragraph 4);

the National Land Service, having received a written consent to purchase an agricultural land parcel from a person wishing to exercise the pre-emption right to purchase the agricultural land parcel and having verified whether the person wishing to exercise the pre-emption right meets the requirements set out in points 2–4 of paragraph 1 of Article 5, issues a certificate for the seller of the land parcel within the established time period stating that the agricultural land parcel is sold in accordance with the procedure laid down in Article 5 to the person with the pre-emption right to purchase it, or, in cases where the persons with the pre-emption right refuse to purchase an agricultural land parcel or fail to submit a consent to purchase the agricultural land parcel within the established time limit, the National Land Service issues a certificate within the prescribed time limit stating that the persons with the pre-emption right to purchase the agricultural land parcel offered for sale have not wished to purchase it according to provisions of Article 5 and that the owner of the land parcel may transfer that land parcel to other persons (paragraphs 5 and 6).

Thus, paragraphs 3–6 of Article 5 of the Law lay down the procedure for exercising the pre-emption right to acquire private agricultural land and, in the event that it is not complied with, the preconditions may arise for the sale of an agricultural land parcel in violation of the pre-emption right, consolidated in that article, to acquire the said land.

8. Paragraph 8 of Article 5 of the Law, which is impugned in this constitutional justice case, provides that: “Where an agricultural land parcel is sold in violation of the pre-emption right to purchase it, the person concerned shall have the right, within three months from the date when he/she became aware or from the moment when he/she apparently could become aware of the sale of the agricultural land parcel, to demand in court proceedings that the rights and duties of the purchaser be transferred to him/her.”

Thus, the impugned paragraph 8 of Article 5 of the Law consolidates the legal remedy for the protection of the pre-emption right to acquire private agricultural land – the right to demand in court proceedings that the rights and duties of the purchaser be transferred, as well as provides for the time limit within which a person with the pre-emption right to acquire private agricultural land has the right to decide whether to apply to a court and demand that the rights and duties of the purchaser be transferred to him/her.

In the context of the interpretation of paragraph 8 of Article 5 of the Law in conjunction with the provisions of paragraph 1 of that article, it should be noted that, in cases where an agricultural land parcel is sold in violation of the pre-emption right to purchase it, a person with the pre-emption right to acquire private agricultural land has the right, within three months from the date when he/she became aware or from the moment when he/she apparently could become aware of the sale of the agricultural land parcel, to make use of the legal remedy, provided for in the impugned paragraph 8 of Article 5 of the Law, for the protection of the pre-emption right to acquire private agricultural land – by applying to a court and demanding that the rights and duties of the purchaser be transferred to him/her, i.e. that he/she be recognised the purchaser of the agricultural land parcel under the conditions laid down in the transaction for the purchase and sale of that agricultural land parcel.

9. In this context, it should be noted that such a legal remedy for the protection of a pre-emption right – the right to demand in court proceedings that the rights and duties of the purchaser be transferred – is also consolidated in other legal acts: paragraph 3 of Article 4.79 “The pre-emption right to buy shares held in co-ownership” of the CC provides that, if a share held in co-ownership is sold in violation of the pre-emption right to purchase it, the other co-owner has the right, within three months, to demand in court proceedings that the rights and duties of the purchaser be transferred to him/her; under paragraph 7 of Article 41 “The pre-emption right to acquire private forestry land” (as amended on 22 August 2019) of the Republic of Lithuania’s Law on Forestry, if a land parcel is sold in violation of the pre-emption right to acquire it, the person concerned has the right, within three months from the day when he/she became aware or from the moment when he/she could become aware of the sale of the forestry land parcel, to demand through a court that the rights and duties of the purchaser be transferred to him/her.

II

The provisions of the Constitution and the official constitutional doctrine

10. In this constitutional justice case, the Constitutional Court is investigating whether the impugned legal regulation, which lays down the legal remedy for the protection of the violated pre-emption right to acquire private agricultural land – the right to demand in court proceedings that the rights and duties of the purchaser be transferred, is in conflict with the constitutional principles of responsible government and a state under the rule of law.

11. The Constitutional Court has held on more than one occasion that the constitutional principle of a state under the rule of law integrates various values consolidated, protected, and defended under the Constitution, as well as that the content of this constitutional principle is revealed in various provisions of the Constitution; the essence of this principle is the rule of law; the constitutional principle of a state under the rule of law is especially broad and comprises a wide range of various interrelated imperatives (inter alia, the rulings of 29 June 2010, 19 November 2015, and 7 December 2020).

11.1. Legal certainty, legal security, and the protection of legitimate expectations are inseparable elements of the principle of a state under the rule of law; these constitutional principles imply the duty of the state to ensure the certainty and stability of a legal regulation, to protect the rights of persons, to respect legitimate interests and legitimate expectations, and to fulfil the obligations undertaken to the person (inter alia, the rulings of 4 March 2003, 15 February 2013, and 16 July 2021). One of the elements of the principle of the protection of legitimate expectations is the protection of rights acquired under the Constitution and under the laws and other legal acts that are not in conflict with the Constitution; under the Constitution, in relationships with the state, only those expectations of a person are protected and defended that arise from the Constitution itself or the laws and other legal acts that are not in conflict with the Constitution; only such expectations of a person in relationships with the state are considered legitimate (inter alia, the rulings of 4 July 2003, 13 December 2004, and 25 June 2019).

11.2. The constitutional principle of a state under the rule of law is also reflected in paragraph 2 of Article 5 of the Constitution, which consolidates the constitutional principle of responsible governance and stipulates that the scope of power is limited by the Constitution (inter alia, the rulings of 16 April 2019, 19 December 2019, and 7 December 2020). The Constitutional Court has noted that the principle of responsible governance, as consolidated in the Constitution, implies that all state institutions and officials are obliged to follow the Constitution and law while performing their functions and must properly implement the powers granted to them by the Constitution and laws by acting in the interests of the People and the State of Lithuania (inter alia, the rulings of 19 November 2015, 8 July 2016, and 11 December 2020).

12. In this constitutional justice case, the petitioner impugns the provision of the Law relating to the acquisition of agricultural land into private ownership.

12.1. Article 23 of the Constitution prescribes:

Property shall be inviolable.

The rights of ownership shall be protected by law.

Property may be taken only for the needs of society according to the procedure established by law and shall be justly compensated for.”

As held by the Constitutional Court, the provisions of Article 23 of the Constitution, while constituting a whole, reveal the essence of the protection of property rights (inter alia, the rulings of 27 May 2002, 10 April 2009, and 31 January 2011). The Constitution, while guaranteeing the protection of property, also consolidates the constitutional right to the acquisition of property and guarantees the protection of this right (inter alia, the rulings of 14 March 2002, 20 May 2008, and 15 March 2017). The legislature, paying regard to the norms and principles of the Constitution, must establish the ways and grounds for the acquisition of the right to property (ruling of 30 October 2008).

Under the Constitution, the right to property is not absolute; it can be limited by means of a law, inter alia, due to the nature of the object of property and due to the committed acts that are contrary to law; in all cases where property rights are limited, the following conditions must be observed: they may be limited only on the basis of a law; the limitations must be necessary in a democratic society in order to protect the rights and freedoms of other persons, the values consolidated in the Constitution, and the constitutionally important objectives that are essential to society; regard must be paid to the principle of proportionality, under which the measures provided for in laws must be in line with the pursued objectives that are essential to society and are constitutionally justifiable (inter alia, the rulings of 21 December 2000, 10 April 2009, and 15 March 2017).

The Constitutional Court has emphasised on more than one occasion that ownership includes obligations (inter alia, the rulings of 21 December 2000, 7 June 2016, and 25 November 2019). As a rule, the subjects of property relationships regulated by means of legal norms have not only certain rights, but also the respective duties (inter alia, the rulings of 8 April 1997, 31 January 2011, and 25 November 2019). An owner, enjoying the right to possess, use, and dispose of his/her property, may not violate laws and the rights of other persons (inter alia, the rulings of 14 March 2002, 12 April 2013, and 7 June 2016). The duties of an owner are determined, inter alia, by the specificity of the objects of property; taking account of the particularities of the objects of property, the legislature may establish certain duties of the owners of these objects, as well as their responsibility for non-compliance with these duties (inter alia, the rulings of 12 April 2013, 7 June 2016, and 25 November 2019).

12.2. Paragraph 1 of Article 46 of the Constitution provides that the economy of Lithuania is based on the right of private ownership, freedom of individual economic activity, and economic initiative; under paragraph 3 of the same article, the state regulates economic activity so that it serves the general welfare of the people.

The Constitutional Court has noted that the constitutional right of a person to property is an essential (necessary) condition for the exercise of the freedom of economic activity of the person; if the right of a person to property is limited, the freedom of economic activity of the person is also limited (inter alia, the rulings of 14 March 2002, 2 March 2009, and 9 October 2013).

In this context, it should also be noted that, among other things, while interpreting the constitutional obligation of the state, arising from paragraph 3 of Article 46 of the Constitution, to seek the general welfare of the people, the Constitutional Court has held that, under the Constitution, the Seimas, as the legislative authority, has a very broad discretion to shape the economic policy of the state and to regulate economic activity accordingly by means of legal acts, certainly, without violating the Constitution and laws under any circumstances, inter alia, having regard to the constitutionally consolidated principles of a state under the rule of law, responsible governance, the protection of legitimate expectations, and legal certainty (inter alia, the rulings of 31 May 2006, 22 September 2015, and 13 May 2021).

12.3. The Constitutional Court has also noted that land is a special object of the property right (rulings of 13 May 2005, 14 March 2006, and 30 March 2006). The possession of land parcels by the right of ownership may be one of the essential conditions for setting up and developing a business and one of the necessary preconditions for engaging in economic activity (ruling of 30 March 2006). The proper use of land as a limited resource is a condition for the survival and development of human beings and society, as well as a basis for the welfare of the people; ensuring the rational use of land as a natural resource is a public interest; the state is under the constitutional obligation to guarantee this interest (rulings of 13 May 2005, 14 March 2006, and 30 March 2006). The duty of the state is to ensure that land should be used rationally and be protected. The said duty arises, inter alia, from the provisions of Article 54 of the Constitution, under which: the state takes care of the protection of the natural environment, wildlife and plants, individual objects of nature, and areas of particular value and supervises the sustainable use of natural resources, as well as their restoration and increase (paragraph 1); and, inter alia, the destruction of land and subsurface, the pollution of water, as well as the depletion of wildlife and plants, are prohibited by law (paragraph 2). The above-mentioned duty of the state also arises from the constitutional imperative of social harmony and other provisions of the Constitution (ruling of 30 March 2006).

The Constitutional Court has held that, in the legal regulation of the relationships connected with the use of land for business and economic activity, regard must be paid to the nature of land as a natural resource and the specificity of land as real property; the Constitution gives rise to the possibility and necessity of legally regulating the relationships connected with the acquisition, possession, and transfer of land as a special object of the property right (and as one of the conditions for business – one of the preconditions for carrying out economic activity) in such a manner that no preconditions are created for inflicting harm on land as a special value defended and protected by the Constitution or for violating other constitutional values; the said possibility and necessity arising from the Constitution imply, inter alia, that the legal regulation of these relationships cannot avoid certain particularities if compared with the legal regulation of other property relationships; the foundations for the differentiated legal regulation of the relationships connected with the ownership and use of land (and other objects of the natural environment) stem from the Constitution itself; the legal regulation of the relationships connected with land (inter alia, the ownership and use of land) may be differentiated based on whether the land parcels in question are classified as agricultural or other land; regulating the relationships connected with the ownership and use of land in a differentiated manner, the legislature, taking account of the type (category) of land, may establish a legal regime in relation to land, inter alia, the conditions, limitations, and prohibitions regarding ownership, use, as well as economic and other activities; the said limitations and prohibitions must be constitutionally justified (ruling of 30 March 2006).

12.4. The Constitutional Court has held that the establishment of the pre-emption right under certain conditions for the respective persons does not in itself deny the right of ownership established in Article 23 of the Constitution, the principle of the equality of persons before the law, courts, and other state institutions, as consolidated in Article 29 (rulings of 18 October 2000 and 5 July 2013), or the requirements of paragraphs 1 and 4 of Article 46 of the Constitution (ruling of 18 October 2000).

13. It has been mentioned that, in this constitutional justice case, the impugned provision of the Law provides for the legal remedy for the protection of the pre-emption right, established by the Law, to acquire private agricultural land.

The Constitutional Court has held more than once that paragraph 1 of Article 30 of the Constitution, which provides that a person whose constitutional rights or freedoms have been violated has the right to apply to a court, consolidates the constitutional principle of judicial protection (inter alia, the rulings of 18 April 1996, 2 July 2002, and 19 March 2021). The Constitutional Court has noted that the violated rights, inter alia, acquired rights, and legitimate interests of a person must be defended regardless of whether they are directly consolidated in the Constitution; the rights of a person must be defended not formally, but in reality, and effectively against the unlawful actions of both private persons and state institutions (inter alia, the rulings of 8 May 2000, 28 March 2006, and 18 April 2019).

As held by the Constitutional Court, the specificity of the protection of property rights is also determined by an object of property; taking account of the specificity of the objects of property, the legislature may consolidate various remedies for the protection of the violated rights of the owners of these objects, inter alia, remedies related to reimbursement (compensation) for the inflicted damage or other losses (rulings 27 March 2009 and 6 January 2011).

14. In the context of the petition filed by the petitioner, mention should also be made of the following provisions of the official constitutional doctrine of compensation for damage, specifically regarding the legal responsibility of the state for damage caused as a result of actions carried out by its institutions or officials: paragraph 2 of Article 30 of the Constitution gives rise to the right of a person to claim compensation for damage inflicted by unlawful actions; one of the main remedies for the protection of violated rights and freedoms is compensation for damage inflicted as a result of unlawful actions; on the basis of the provisions of Article 5 of the Constitution, under which the scope of power is limited by the Constitution and state institutions serve the people, also on the basis of the constitutional principle of the protection of human rights and freedoms, as well as other principles of a state under the rule of law, the conclusion should be drawn that, in order to implement paragraph 2 of Article 30 of the Constitution, a law must provide for the duty of the state to compensate material and moral damage inflicted as a result of unlawful actions committed by its institutions and officials (inter alia, the rulings of 8 March 2018 and 2 September 2020).

III

The assessment of the compliance of paragraph 8 of Article 5 of the Law on the Acquisition of Agricultural Land (wording of 23 November 2017) with the Constitution

 

15. It has been mentioned that the petitioner requests an investigation into whether paragraph 8 of Article 5 of the Law is in conflict with the constitutional principles of responsible governance and a state under the rule of law.

16. According to the petitioner, in cases where the pre-emption right of a person to acquire agricultural land is violated as a result of fault on the part of a state institution, the violated right should be defended not by the transfer of the rights and duties of the purchaser on the person with the pre-emption right, but by means of compensation for damage caused by the unlawful actions of the authorities, thus protecting the stability of the established legal relationships connected with the purchase and sale of agricultural land.

17. As mentioned before, the impugned paragraph 8 of Article 5 of the Law consolidates the legal remedy for the protection of the pre-emption right to acquire private agricultural land – the right to demand in court proceedings that the rights and duties of the purchaser be transferred: under paragraph 8 of Article 5 of the Law, in cases where an agricultural land parcel is sold in violation of the pre-emption right to purchase it, a person with the pre-emption right to acquire the agricultural land parcel has the right to apply to a court and demand that the rights and duties of the purchaser be transferred to him/her, i.e. that he/she be recognised the purchaser of the agricultural land parcel under the conditions laid down in the transaction for the purchase and sale of that agricultural land parcel. It has also been mentioned that, in paragraph 8 of Article 5 of the Law, the legislature established a period of three months during which a person with the pre-emption right to acquire private agricultural land, from the date when he/she became aware or from the moment when he/she apparently could become aware of the sale of the agricultural land parcel, has the right to decide whether to apply to a court and demand that the rights and duties of the purchaser be transferred to him/her.

Thus, in paragraph 1 of Article 5 of the Law, the legislature, in order to achieve the objectives of agricultural policy set out in paragraph 1 of Article 1 of the Law, inter alia, the objectives of promoting the rational use of agricultural land and creating the conditions for land consolidation, has specified persons who have the pre-emption right to acquire private agricultural land, as well as the order in which these persons may exercise the pre-emption right established for them.

18. In order to decide whether paragraph 8 of Article 5 of the Law is compatible with the constitutional principles of a state under the rule of law and responsible governance, it should be noted that, as mentioned before:

the constitutional principles of the protection of legitimate expectations, legal certainty, and legal security, inter alia, imply that the state must fulfil all its obligations undertaken to a person; under the Constitution, in relationships with the state, only those expectations of a person are protected and defended that arise from the Constitution itself or the laws and other legal acts that are not in conflict with the Constitution; only such expectations of a person in relationships with the state are considered legitimate;

the principle of responsible governance, as consolidated in the Constitution, implies that all state institutions and officials are obliged to follow the Constitution and law while performing their functions and must properly implement the powers granted to them by the Constitution and laws by acting in the interests of the People and the State of Lithuania;

Article 23 of the Constitution consolidates the constitutional right to acquire property and guarantees the protection of this right; land is a special object of the property right and it constitutes a value defended and protected by the Constitution (and is one of the conditions for business – the preconditions for carrying out economic activity); ensuring the rational use of land as a natural resource is a public interest; the state is under the constitutional obligation to guarantee this interest; in the legal regulation of the relationships connected with the use of land for business and economic activity, regard must be paid to the nature of land as a natural resource and the specificity of land as real property; the foundations for the differentiated legal regulation of the relationships connected with the ownership and use of land stem from the Constitution itself; the legal regulation of the relationships connected with land (inter alia, the ownership and use of land) may be differentiated based on whether the land parcels in question are classified as agricultural or other land; regulating the relationships connected with the ownership and use of land in a differentiated manner, the legislature, taking account of the type (category) of land, may establish a legal regime in relation to land, inter alia, the conditions, limitations, and prohibitions regarding ownership, use, as well as economic and other activities; the said limitations and prohibitions must be constitutionally justified; the establishment of the pre-emption right for the respective subjects under certain conditions does not in itself deny, inter alia, the right of ownership, consolidated in Article 23 of the Constitution;

the specificity of the protection of property rights is also determined by an object of property; taking into account the specificity of the objects of property, the legislature may establish various legal remedies for the protection of the violated rights of the owners of these objects;

paragraph 2 of Article 30 of the Constitution gives rise to the right of a person to claim compensation for damage inflicted by unlawful actions; in order to implement paragraph 2 of Article 30 of the Constitution, a law must provide for the duty of the state to compensate material and moral damage inflicted as a result of unlawful actions committed by its institutions and officials.

18.1. In the context of the constitutional justice case at issue, it should be noted that, implementing its discretion to regulate economic activity and taking into account, among others, the nature of land (protected under the Constitution) as a natural resource and the specificity of land as real property, as well as taking into account the constitutional requirement to ensure the rational use of agricultural land as a special object of the property right (and as one of the conditions for business – the preconditions for carrying out agricultural activity), which is a public interest and to guarantee which is a constitutional obligation of the state, by means of the provisions of Article 5 of the Law, the legislature provided for the pre-emption right to acquire private agricultural land: the persons who have the pre-emption right to acquire private agricultural land, the order in which these persons may exercise the pre-emption right established for them (paragraph 1), and the procedure for exercising this right (paragraphs 3–6); in the impugned paragraph 8 of Article 5 of the Law, the legislature consolidated the legal remedy for the protection of the pre-emption right to acquire private agricultural land – the right to demand in court proceedings that the rights and duties of the purchaser be transferred in cases where an agricultural land parcel is sold in violation of the pre-emption right to purchase it.

It should also be noted that, since under the Constitution, the legal regulation of the relationships connected with land (inter alia, the ownership and use of land) may be differentiated based on whether the land parcels in question are classified as agricultural or other land and since an object of property determines the specificity of the protection of property rights, the legislature, implementing the requirement, arising from the Constitution, to ensure the rational use of agricultural land, may, by means of a law, establish various legal remedies for the protection of the pre-emption right, provided for in paragraph 1 of Article 5 of the Law, to acquire private agricultural land, inter alia, such a legal remedy as provided for in the impugned paragraph 8 of Article 5 of the Law, i.e. the right to demand in court proceedings that the rights and duties of the purchaser be transferred in cases where an agricultural land parcel is sold in violation of the pre-emption right to purchase it, inter alia, due to non-compliance with the procedure, laid down in paragraphs 3–6 of Article 5 of the Law, for exercising the pre-emption right to acquire private agricultural land.

Thus, in view of the obligation of the state, stemming from the Constitution, to protect and rationally use agricultural land as a special object of the property right, as well as in view of the above-mentioned discretion of the legislature to consolidate, by means of a law, various legal remedies for the protection of the pre-emption right to acquire private agricultural land, there are no constitutional grounds for stating that the violated pre-emption right of a person to acquire private agricultural land may not, under the Constitution, be protected in the manner chosen by the legislature and laid down in paragraph 8 of Article 5 of the Law, but that it must be protected by legal remedies other than the said remedy chosen by the legislature, i.e. for instance, by legal remedies such as compensating a person whose pre-emption right has been violated for damage caused as a result of unlawful actions by public authorities.

18.2. At the same time, it should be noted that, once paragraph 8 of Article 5 of the Law consolidates such a remedy for protecting the pre-emption right to acquire private agricultural land whereby a person with the pre-emption right to acquire the said land is granted the right to demand in court proceedings that the rights and duties of the purchaser be transferred in cases where an agricultural land parcel is sold in violation of the pre-emption right to purchase it, inter alia, due to non-compliance with the procedure, laid down in paragraphs 3–6 of Article 5 of the Law, for exercising the pre-emption right to acquire private agricultural land, a person having, for any reason, inter alia, due to the actions of state institutions, acquired an agricultural land parcel in violation of the pre-emption right, provided for in the law, to purchase it cannot have the legitimate expectations that this his/her right to the acquired property may be maintained in any event.

18.3. It should also be noted that paragraph 8 of Article 5 of the Law, which provides for a short period of three months during which it is possible to demand in court proceedings that the rights and duties of the purchaser be transferred, is aimed to ensure the balance of interests of a person who has, for any reason, acquired an agricultural land parcel in violation of the pre-emption right to purchase it and a person whose pre-emption right has been violated, as well as to protect the stability of the established legal relationships connected with the purchase and sale of agricultural land.

18.4. In the context of this constitutional justice case, it should be mentioned that, under paragraph 2 of Article 30 of the Constitution, a person who has suffered material or moral damage caused by the unlawful actions of state institutions or officials has the right to apply to a court and demand compensation for such damage.

18.5. Thus, it should be held that the legal regulation laid down in paragraph 8 of Article 5 of the Law should be assessed to be in compliance with the constitutional principle of responsible governance and not to deny the imperatives of the protection of legitimate expectations, legal certainty, and legal security, which stem from the constitutional principle of a state under the rule of law.

19. In the light of the above arguments, the conclusion should be drawn that paragraph 8 of Article 5 of the Law is not in conflict with the constitutional principles of a state under the rule of law and responsible government.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 531, 54, 55, and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

To recognise that paragraph 8 of Article 5 of the Republic of Lithuania’s Law on the Acquisition of Agricultural Land (wording of 23 November 2017; Register of Legal Acts, 07-12-2017, No 19742) is not in conflict with the Constitution of the Republic of Lithuania.

This ruling of the Constitutional Court is final and not subject to appeal.

Justices of the Constitutional Court:        Elvyra Baltutytė

                                                                             Gintaras Goda

                                                                             Danutė Jočienė

                                                                             Giedrė Lastauskienė

                                                                             Vytautas Mizaras

                                                                             Algis Norkūnas

                                                                             Daiva Petrylaitė

                                                                             Janina Stripeikienė