U.no.200/2007

2. This decision shall generate legal effects from the date of its publication in the “Official Gazette of the Republic of Macedonia”.

3. Upon the initiatives submitted by Verka Arsovska from Probistip and Miroslav Grcev from Skopje, the Constitutional Court of the Republic of Macedonia with its Resolution U.no.200/2007 of 17 December 2008 instigated proceedings for appraising the constitutionality of the said articles in the Law on Expropriation noted in item 1 of the present Decision.

The proceedings were instigated as there was a well-founded question raised before the Court regarding their agreement with the Constitution of the Republic of Macedonia.

4. At its session the Court found that under Article 3 of the Law on Expropriation, expropriation may be carried out for:

1) the state for its needs, the needs of the public enterprises founded by the state, public funds, education, upbringing, science, culture, health, social care and sport when the activity takes place as a public (state) service;

2) the municipality and the City of Skopje, for the needs of the local self-government units and for the needs of the public enterprises and funds founded by the municipality, that is, by the City of Skopje;

3) for the needs of legal and natural persons for the construction of facilities and performing other matters of public interest, envisaged in Article 2 of this Law (contested).

Under Article 1 of the Law on Supplementing the Law on Expropriation (“Official Gazette of the Republic of Macedonia”, no.46/2005) in the Law on Expropriation (“Official Gazette of the Republic of Macedonia”, nos.33/1995, 20/1998, 40/1999 and 31/2003) in Article 2 paragraph 1 after the line 15 a new line is added which reads as follows: “construction of housing, business and economic facilities stipulated for construction by detailed urban plans, in order to gain priority right of construction of unbuilt construction land”.

Article 2 of the Law provides for that 13 new articles are added: 45-a, 45-b, 45-c, 45-d, 45-e, 45-f, 45-g, 45-h, 45-I, 45-j, 45-k, 45-l and 45-m, after Article 45.

Under Article 45-1 of the Law, the priority right of construction is a right with which the owner of an unbuilt construction land gains, under the conditions, in a manner and in a procedure defined by this Law, to build housing, business or economic facilities planned to be constructed on that land by detailed urban plans.

The acquisition of the right under paragraph 1 of this article is in common interest. The priority right of construction may be acquired by domestic natural and legal entities, including the state.

The other said articles regulate the manner, conditions and procedure for acquiring the priority right of construction, for the acquisition of which, upon the proposal of the owners of the unbuilt construction land having the majority ownership of that land, decides a competent court under the rules of the out-of-court proceedings.

5. Under Article 8 paragraph 1 lines 6, 7 and 10 of the Constitution, the fundamental values of the constitutional order of the Republic of Macedonia are the legal protection of property, the freedom of the market and entrepreneurship and the proper urban and rural planning to promote a congenial human environment, as well as ecological protection and development.

Article 30 of the Constitution guarantees the right to ownership of property and the right of inheritance. Ownership of property creates rights and obligations and should serve the wellbeing of both the individual and the community. No person may have his/her property or the rights deriving from it deprived of or restricted, except in cases concerning the public interest defined by law. If property is expropriated or restricted, rightful compensation not lower than its market value is guaranteed.

Under Article 51 of the Constitution, laws shall be in accordance with the Constitution, and all other regulation in accordance with the Constitution and laws.

Under Article 56 paragraph 1 of the Constitution, all natural resources of the Republic of Macedonia, the flora and fauna, amenities in common use, as well as the objects and facilities of particular cultural and historical value defined by law, are amenities of common interest for the Republic and enjoy special protection.

Article 5 of the Law on Property and Other Real Rights (“Official Gazette of the Republic of Macedonia”, no.18/2001) stipulated that the right to property and other real rights are exercised on the basis of free disposition with required restrictions envisaged in the Constitution and laws.

The provision in Article 16 of this Law defines that all natural resources, the flora and fauna, amenities in common use, construction land, forests and agricultural land, pastures and waters, as well as the objects and facilities of particular cultural and historical meaning defined by law are amenities of common interest for the Republic. Under paragraph 2, objects which on the basis of the Constitution or by special laws are declared to be objects of common interest for the Republic may be the object of the right of property of the state, that is of natural and legal persons.

Article 1 of the Law on Construction Land (“Official Gazette of the Republic of Macedonia”, no.82/2008) defines that this Law regulates the rights and obligations regarding construction land and the arrangement of that land.

Pursuant to Article 2 of this Law, construction land is an amenity of common interest for the Republic and enjoys special protection in a manner and under conditions defined by this Law. The arrangement of the construction land is an activity of public concern.

Under Article 5 also of this Law, ownership of construction land creates rights and obligations and serves the wellbeing of the owner and of the community.

Furthermore, the Law on Construction Land specifically defines that this land may be the property of the Republic of Macedonia and property of domestic and foreign natural and legal persons, that the holder of the right of ownership of this land may transfer the land and lease it on the short-term and long-term, that the construction land may be mortgaged and that the construction land may be expropriated in a manner and under conditions defined by the regulations for expropriation.

Pursuant to Article 45 of the Law on Construction Land, arrangement of construction land in the sense of this law implies construction of facilities of communal infrastructure for the purposes of providing an unobstructed access to the construction lot from a public road, installation of water supply, sewage, electricity, PTT and other systems with connections to the construction lot.

The arrangement of the construction land, which under this law is an activity of public interest, is made by the municipalities, on the basis of an appropriate programme, the content of which is defined in Article 46 of the Law on Construction Land.

In addition to the arrangement of the construction land, pursuant to the Law on Local Self-Government (“Official Gazette of the Republic of Macedonia”, no.5/2002) the urban and rural planning, the issuance of a permit for the construction of facilities of local importance defined by law, and the arrangement of the space in general are also within the competence of the municipalities.

Spatial and urban planning of space is made pursuant to the Law on Spatial and Urban Planning (“Official Gazette of the Republic of Macedonia”, no.51/2005) which regulates the conditions and manner of the system of spatial and urban planning, the types and contents of the plans, the drafting and procedure for the adoption of the plans, the implementation of the plans, etc.

In Article 3 of the Law on Spatial and Urban Planning, the drafting, adoption and implementation of the spatial plan of the Republic of Macedonia and of the urban plans are defined as matters of public interest.

Issues regarding expropriation of property and the rights deriving from it in terms of land, buildings and other facilities (immovable property) for the purposes of building facilities and performing other matters of public interest, the definition of public interest and the determination of the just compensation for the expropriated immovable property are regulated by the Law on Expropriation.

From the noted provisions it arises that under Article 56 of the Constitution, land, and hence unbuilt construction land as an amenity of common interest enjoys special protection and is used in a manner and under conditions defined by law, which means that construction land and the rights deriving from it may be the object of expropriation with which the right to ownership and other rights terminate, and for the purposes of exercising the public interest which under Article 30 paragraph 3 is the only constitutional-legal instrument for restriction of the right to property.

Thereby, given the fact that neither in Article 30 nor in any other article of the Constitution is there a definition of what is implied under the term “public interest” and on the basis of which criteria it is defined by law, the Court judges that despite the discretionary right of the legislator to define public interest, that discretionary right must extend to certain degree, that is, it should not be without a reasonable ground. Namely, it does not suffice only to note in the Law on Expropriation that there is public interest and to enumerate the types of facilities for the construction of which expropriation is made. It is necessary to define what public interest is realised in, what it consists of and what is the reasonable ground that imposes the need to interfere into the private sphere through expropriation. Otherwise, through failure to observe the said elements, the Court found that expropriation as a final, necessary and useful measure will lose its sense.

Furthermore, taking into consideration that the arrangement of construction land, realised through the adoption of urban plans, is an activity of public interest, the Court finds unacceptable the stance that everything that is included in the urban plan is of public interest and that with the very planning of certain facilities and their inclusion in the urban plan, and for the needs of natural and legal persons, it should gain the character of a facility of a public interest and that it is a sufficient ground to carry out expropriation, in which way the right to property will be restricted.

According to the Court, the detailed enumeration of the types of facilities for the construction of which Article 2 of the Law defines public interest was sufficient in the conditions of transformation of ownership, but now in conditions when there are also other legal instruments such as purchase of construction land, concession or long-term lease, expropriation should be the last legal instrument for the restriction of the right to property. Otherwise, the public interest as a constitutional restriction of property shall be replaced by the commercial interest of the holders of the right to construction, that is the needs of natural and legal persons for the construction of housing and business facilities will be elevated to the level of public interest.

6. In connection with the issue for priority right of construction, the Court judges that there should be difference made between the right of priority purchase as an obligation right and the right of priority construction which derives from the ownership of the land. Accordingly, the deprivation of property owing to the priority right of construction, that is, the deprivation of property of certain person who has part of the ownership of the land and the award of that land to another person, which deprivation is brought into relation with facilities that are housing, business or economic, and not whether these facilities are of public interest, questions the right of that property. That is so since certain category of persons-owners who are not economically powerful to build is exploited by another person who appears as the proposer of expropriation and he/she acquires the priority right, and not the one who is the owner of the land.

In the opinion of the Court, all instruments of contractual law should be exhausted in order to proceed with expropriation, as is the case in a number of countries, and not to proceed with expropriation immediately, as it is envisaged in this specific case.

Given what has been noted, the Court assessed that such manner of regulation of the issue regarding the restriction of the right of property, and for the purposes of a priority right of construction, is not a reasonable and proportionate measure for the realisation of the public interest goals.

Accordingly, taking into consideration what has been noted above, vis-à-vis the content of the contested provisions under which expropriation, as a forced measure implemented by the state, may take place also for the needs of natural and legal persons to construct housing, business and economic facilities for the purposes of acquiring a priority right of construction, questions the right of property for the benefit of the persons requesting that certain immovable property be expropriated. Accordingly, the Court assessed that the contested provisions enable certain property to be taken away always and at any case, under the auspices of common-public interest, for the benefit of economically powerful users, and the interest of the holder of the right to property to be minored, thus questioning the constitutionally guaranteed right of property.

Based on what has been noted above, the Court assessed that the contested provision of Article 3 paragraph 1 item 3 of the Law on Expropriation and Articles 1 and 2 of the Law on Supplementing the Law on Expropriation are not in accordance with the noted provisions of the Constitution.

7. On the basis of the aforementioned, the Court decided as in item 1 of the present Decision.

8. The Court took the present decision with a majority of the votes, in the following composition: Dr Trendafil Ivanovski, President of the Court, and the judges: Dr Natasha Gaber-Damjanovska, Mr Ismail Darlishta, Mrs Liljana Ingilizova-Ristova, Mrs Vera Markova, Mr Branko Naumoski, Mr Igor Spirovski, Dr Gzime Starova, and Dr Zoran Sulejmanov.