Skopje, 25.09.2024
Based on Article 110 of the Constitution of the Republic of North Macedonia and Article 72 and Article 82 of the Act of the Constitutional Court of the Republic of North Macedonia (“Official Gazette of the Republic of Macedonia” No. 115/2024), at the session held on 25 September 2024, the Constitutional Court of the Republic of North Macedonia, composed of Darko Kostadinovski LLD, President of the Court, and the judges: Naser Ajdari, Tatjana Vasikj-Bozadzieva LLM, Jadranka Dabovikj-Anastasovska LLD, Elizabeta Dukovska, Osman Kadriu LLD, Dobrila Kacarska, Ana Pavlovska-Daneva LLD, and Fatmir Skender LLM, adopted the following
D E C I S I O N
1. Articles 2 and 4 of the Law Amending the Law on Obligations (“Official Gazette of the Republic of North Macedonia” No. 154/2023) are hereby REPEALED.
2. The Resolution to suspend the execution of individual acts or actions undertaken pursuant to Articles 2 and 4 of the Law Amending the Law on Obligations (“Official Gazette of the Republic of North Macedonia” No. 154/2023) is hereby OUT OF FORCE.
3. This Decision shall be published in the “Official Gazette of the Republic of North Macedonia.”
Explanation
I
The Constitutional Court of the Republic of North Macedonia, acting upon the submitted initiatives by Petar Barishikj from Skopje and Ljupcho Kuzmanovski, a lawyer from Skopje, through the Resolution U.No.98/2024 and 139/2024, dated 20 June 2024, initiated proceedings for reviewing the constitutionality of Article 2 and Article 4 of the Law Amending the Law on Obligations (“Official Gazette of the Republic of North Macedonia” No. 154/2023), because a valid justification regarding their compliance with the Constitution was raised before the Court.
II
At the session, the Court determined that Article 2 of the Law Amending the Law on Obligations (“Official Gazette of the Republic of North Macedonia” No. 154/2023) regulates
“Article 2
Article 368 is amended to read:
“(1) All claims established by a final court decision, or a decision of another authority with competence, or a settlement before a court or another authority with competence, become statute-barred five years from the moment of their enforceability, as well as the claims for which a shorter statute of limitations period is prescribed in accordance with the law.
(2) All periodical claims arising from decisions or settlements specified in Paragraph (1) of this Article and which mature in the future become statute-barred within the statute limitation period prescribed for periodical claims.
(3) The statute of limitations period for a final court decision, or a decision of another authority with competence, or a settlement before a court or another authority with competence is terminated by submitting a request for enforcement to the enforcement officer with competence, whereby the statute of limitations period restarts, which in the enforcement procedure lasts ten years from the moment the enforcement request is submitted.”
The Court further determined that Article 4 of the Law, as a standalone norm, stipulates that proceedings initiated for the recovery of claims as set out in Article 2 of this Law shall be concluded in accordance with this Law.
III
According to Article 8, Paragraph 1, Indents 3 and 6 of the Constitution of the Republic of North Macedonia, the rule of law and the legal protection of property are fundamental values of the constitutional order of the Republic of North Macedonia.
Article 9, Paragraph 2 of the Constitution guarantees the equality of citizens before the Constitution and the laws.
Article 30, Paragraph 1 of the Constitution guarantees the right to property and the right to inheritance, while Article 30, Paragraph 3 of the same article, stipulates that no one may be deprived of or have their property rights restricted, except in cases of public interest determined by law.
According to Article 51 of the Constitution, laws in the Republic of North Macedonia must conform to the Constitution, and all other regulations with the Constitution and the law. Everyone is obliged to respect the Constitution and the laws.
Pursuant to Article 52, Paragraph 4 of the Constitution, laws and other regulations cannot have retroactive effect, except in exceptional cases when it is more favourable for citizens.
The Law Amending the Law on Obligations was published on 20 July 2023 in the “Official Gazette of the Republic of North Macedonia” No. 154/2023 and entered into force on the date of its publication. The contested Article 2 of the aforementioned law, which amends Article 368 of the Law on Obligations, provides as follows:
(1) All claims established by a final court decision, or a decision of another authority with competence, or a settlement before a court or another authority with competence, become statute-barred five years from the moment of their enforceability, as well as the claims for which a shorter statute of limitations period is prescribed in accordance with the law.
(2) All periodical claims arising from the decisions or settlements referred to in Paragraph (1) of this Article, and which mature in the future, become statute-barred within the statute of limitations period prescribed for periodical claims.
(3) The statute of limitations period for a final court decision, or a decision of another authority with competence, or a settlement before a court or another authority with competence is terminated by submitting a request for enforcement to the enforcement officer with competence, whereby the statute of limitations period restarts, which in the enforcement procedure lasts ten years from the moment the enforcement request is submitted.
According to the contested Article 4 of the Law, “Ongoing proceedings for the recovery of claims stipulated in Article 2 of this Law shall be concluded in accordance with this Law.”
Before the amendments to the Law entered into force, Article 368, Paragraph 1 of the Law on Obligations stipulated that claims established by a final court decision, a decision of another authority with competence, or a settlement before a court or another authority with competence would become statute-barred after ten years. This legal solution granted obligees the right to enforce the recovery of their claims within the specified ten-year period. Under the newly formulated legal solution set out in the contested Article 2 of the amendments to the Law, the previously established ten-year period is reduced to five years, with the statute limitation period commencing from the moment of enforceability of the aforementioned acts.
The statute of limitations, as a legal institution, serves as a form of sanction for a negligent obligee who fails to submit a request for enforcement within the legally prescribed timeframe, thereby forfeiting the right to forcibly recover the claim. Even after the statute of limitations period has expired, the obligee may still submit a request for enforcement (since the court/enforcement officer does not consider the limitation period ex officio, only the obligor can invoke it), however, if the obligor raises a statute of limitations objection, the claim cannot be forcibly recovered. The statute of limitations objection lies within the discretion of the obligor, and the obligor freely disposes of the right whether or not to exercise this right. Once the statute of limitations period expires, the claim is transformed into what is referred to as a natural obligation, which cannot be forcibly recovered but remains in existence, and the obligor may still voluntarily fulfil such a claim if they do not invoke the statute of limitations. Whether an obligee submits a request for enforcement before the expiration of the statute of limitations period depends entirely on their will, who are aware of the fact that failing to submit an enforcement request within the prescribed period precludes the possibility of forcible recovery of their claim and are also aware of the risk that the obligor may raise a statute of limitations objection in such cases. However, the obligee’s decision to submit a request for enforcement is determined by the timeframe established by law for such a submission. Specifically, their right to seek forcible recovery is linked to the statutory period, which actually depends on the certainty of achieving forcible recovery.
It is indisputable that the risk and consequences of failing to comply with the statutory time limit are borne solely by the obligee, as this represents a foreseeable situation of which they were aware, one that they themselves caused, and they could not have had a legitimate expectation that their claim could be enforced after the expiration of the prescribed period. However, the Court holds that such defined rights and obligations apply only when the obligee is aware of the limitation periods for claims, as established by law. Conversely, if the legislator enacts a new, shorter period for the realisation of the right to enforcement recovery, they are confronted with legal uncertainty, which in turn results in the deprivation of citizens’ constitutionally guaranteed right to property.
The Court considers that the obligee, like any citizen of the state, cannot be held responsible or suffer consequences due to a legal situation (in this case, statute of limitations) that they did not create. In this context, the question arises as to the impact of reducing the statute of limitations period from ten to five years, and the consequences obligees may face due to this legislative change of reducing the statute of limitations period from ten to five years, who, prior to the entry into force of the legal amendments did not submit enforcement requests and were not afforded a legal opportunity to adapt to the new framework from the new legal solution.
According to the Court, the ten-year limitation period, throughout its validity (until the entry into force of the legal amendments), constituted a legally established and predictable framework upon which legal entities could reasonably expect to enforce their claims through legal means by submitting enforcement requests within the prescribed ten-year period. However, the legislative reduction of the statute of limitations period to five years results in all claims becoming statute-barred if, at the time the new legal solution takes effect, five years have already elapsed since the enforceability of the final act establishing the claim, and as a consequence, obligees are unable to enforce their claims, despite the previous ten-year period providing them with a legitimate expectation that their rights could be exercised within that timeframe. Obligees could not have foreseen, nor were they aware or obligated to be aware, that the legislator would introduce a new, shorter period for submitting requests for forced recovery, nor that such provision would apply to their existing, ongoing legal relationships within the sphere of private law.
The essence of enforcement through enforced means lies in the realisation of a specific right established by a final judicial decision or another decision by an authority with competence, however, the legislator, exercising its authority to regulate legal relations through law, not only reduces the limitation period to five years but also interferes with previously regulated relations (set at ten years), thereby derogating citizens’ legal certainty that existing, positive legal norms will indeed be applied to their cases, without offering a transitional solution that would allow legal entities to adapt to the newly created situation.
From the above, it follows that the legislator has disregarded what it initially guaranteed, imposing new conditions and deadlines under which previously established legal relations will now operate.
The undeniable retroactive effect of the provision introduced by the amendments to the Law on Obligations is further evidenced by an analysis of the provision within the same amendments, which fails to establish a transitional legal solution at protecting the legal certainty of citizens and their legitimate expectations held before the entry into force of the new legal solutions.
Thus, a specific provision in the legislative amendments is the contested Article 4, according to which: “The initiated proceedings for the recovery of claims stipulated in Article 2 of this law will be concluded in accordance with this law.”
The content of the contested Article 4 from the amendments to the Law on Obligations clearly indicates that this particular provision applies specifically to enforcement proceedings initiated before the entry into force of the amendments to the Law, which are to be concluded in the manner prescribed by the contested Article 2 of the law in question, to a timeframe that neither existed nor was legally prescribed at the time such proceedings were initiated. The legislator, disregarding the acquired rights of obligees, has mandated their removal, i.e, obligees who did not initiate enforcement proceedings but acquired an enforceable document more than 5, 6, 7, 8, or 9 years prior to the entry into force of the law in question find their claims statute-barred, effectively losing the right to enforce their claims.
From this, according to the Court, it is clearly pointed out that the contested Article 4 of the law in question retroactively applies to the new legal solution of Article 368 of the Law to previously established legal relations, with adverse effects, contrary to the constitutional prohibition from Article 52(4) of the Constitution, which stipulates that laws and other regulations cannot have retroactive effect except in exceptional cases where it is more favourable to citizens. It requires no further elaboration to establish that in this case, the exception outlined in Article 52 Paragraph 4 of the Constitution cannot be invoked, because the obligees are equally citizens of the Republic of North Macedonia, as the obligees, and consequently, any favourable impact for one group automatically creates an adverse, i.e., discriminatory effect for the other citizens, as the two parties represent the legal relationship. This results in unequal treatment of citizens under the Constitution and the law. Furthermore, the obligees undoubtedly have not contributed to the consequences and risks of this situation, as they relied upon and operated under the assumption of the ten-year limitation period, which was legally established as the timeframe for the expiration of claims confirmed by final court decisions, decisions of other authorities with competence, or settlements reached before courts or other authorities with competence.
Article 30(1) of the Constitution guarantees the right to property that is exercised, which includes the right of citizens to initiate judicial and other proceedings to assert and protect their property rights, among other things. However, such protection remains merely declarative if a claim confirmed by a final and enforceable decision becomes statute-barred, thereby preventing its actual realisation, and this results in the reduction of property, not due to any fault of the obligee, who holds a legitimate expectation that their claim will be statute-barred only within the determined timeframe by the legislator. A claim established by a final court decision, decision of another authority with competence, or settlement before a court or other authority with competence constitutes the obligee’s property, and therefore, the fact that such a claim becomes statute-barred, thereby reducing the obligee’s property to the benefit of the obligor, unequivocally amounts to a threat to the constitutionally guaranteed right to property under Article 30 Paragraph 1 of the Constitution.
Regarding such normative actions, the legislator, in accordance with its constitutional powers, is authorised to adopt and amend laws, determine the commencement of their application, declare their cessation, and so forth, and in this regard, it is also entitled to establish deadlines by which citizens must adhere to exercise their rights, including amending them, however, the Court holds that the legislator also bears an obligation to regulate the transition from the old to the new regime (a transitional regime) in a manner that provides a period for citizens to adjust their conduct to the new regime, thus ensuring that their rights and legitimate expectations under the previous norms of the same law are not jeopardised, which in this specific case has not been done.
The Law Amending the Law on Obligations (“Official Gazette of the Republic of North Macedonia,” No. 154/2023), in Article 5, stipulates: “This law enters into force on the day of its publication in the “Official Gazette of the Republic of North Macedonia,”” meaning that its application commences immediately upon publication, without a vacatio legis, with a meaning to allow citizens to familiarise themselves with the content of the law before it takes effect. Furthermore, despite these being substantial legislative changes, it is evident that the legislator had no intention of delaying the application of the contested provisions of the law to provide citizens with an opportunity to adjust their behaviour to the new legal regime.
On the other hand, Article 52 Paragraph 3 of the Constitution stipulates: “Laws enter into force no earlier than the eighth day following their publication, except in cases determined by the Assembly, on the day of their publication.” From the content of this constitutional provision, it follows that the legislator may invoke this exception but must justify and substantiate the urgency by presenting reasons that argue the need to use the exception instead of the general rule. In this particular case, the Assembly, in its explanation of the legislative amendments and the necessity for their adoption, made no reference to the reasons for shortening the constitutionally mandated vacatio legis, and with this omission, according to the Court, raises questions regarding compliance with Article 52 Paragraph 3 of the Constitution, even though this issue is not specifically addressed in the initiative.
Furthermore, the contested Article 2 of the legislative amendments introduces a new Paragraph 3 to Article 368 of the Law, which reads as follows: “The statute of limitations period for a final court decision, or a decision of another authority with competence, or a settlement before a court or another authority with competence is terminated by submitting a request for enforcement to the enforcement officer with competence, whereby the statute of limitations period restarts, which in the enforcement procedure lasts ten years from the moment the enforcement request is submitted.”
The term “statute of limitations period for a final court decision” used in this provision is likely an error, as it is not possible to speak of a final act itself as statute-barred, but rather of the statute of limitations of a claim established by a final act. Moreover, the provision employs the terminology “enforcement proceedings.” However, under the positive legal framework, an enforcement officer does not conduct enforcement proceedings but rather implements enforcement and undertakes enforcement actions.
The content of Article 368, Paragraph 3 of the Law introduces a new type of statute of limitations period for claims, established as a ten-year period starting from the date of the submission of the enforcement request.
Considering the regulation established by the contested Article 4 of the Law in question, which stipulates that ongoing procedures for the recovery of claims, as defined in Article 2 of this Law, will be concluded in accordance with it, it follows that this contested article addresses the matter of enforcement actions that were initiated and ongoing, but remain incomplete. An analysis of this provision inevitably leads to the conclusion that enforcement proceedings, which obligees have diligently and properly initiated before the entry into force of the legislative amendment, and have not yet settled the claim established by the enforcement document, will no longer be able to settle it once the ten-year period from the moment the submission of the enforcement request expires—a deadline has never been previously prescribed in Macedonian legislation.
According to the Court, such a legal situation results in unequal treatment of obligees who are in same legal positions, because both initiated enforcement of their claims in a proper manner, with the same legitimate expectation that their claims would be settled through enforcement, however, due to the newly introduced ten-year statute of limitations period for claims from the moment of submitting the enforcement request, some obligees will face their claims to become statute-barred, while others will not, which is not in accordance with the constitutional principle of equality of citizens before the Constitution and the law, as established by Article 9, Paragraph 2 of the Constitution. It is also essential to emphasise that the introduction of the institute of a “ten-year statute of limitations period for claims from the moment of submitting the enforcement request” effectively imposes a time limitation on the duration of enforcement, a legislative solution within our legal system that has never existed before and one unfamiliar in other countries in the region. Moreover, considering that an obligor may have multiple obligees, in accordance with the prescribed rules for the priority right to settle the claims, i.e., the rules on the sequence of their settlement, it becomes evident that this legislative solution could result in the practical impossibility of executing enforcement to the extent required for the full settlement of claims.
According to the Court, this legislative solution fails to guarantee legal certainty for obligees that initiated enforcement will not be in vain. This raises questions about the very purpose of initiating judicial proceedings, as well as the legal certainty of citizens that final and enforceable judicial decisions will ever be enforced. More specifically, this legal norm introduces, for the first time in our legal system, the concept of the so-called “statute of limitations of final judicial decisions,” which is, in itself, a legal absurdity. The essence of enforcement through enforced measures is to realise a specific right established by a final judicial or other decision of an authority with competence, namely, to achieve full realisation of the claim, however, the newly introduced time limitation on enforcement prevents this from being fulfilled.
According to the Court, the inability to fully realise the claim due to the time limitation on enforcement results in a reduction of the obligee’s property in favour of the obligor, despite they having diligently submitted an enforcement request and without showing any intention to relinquish the claim established by the enforceable document, which implies a violation of the constitutionally guaranteed right to property. Moreover, the time limitation on enforcement, according to the Court, leads to unequal treatment of obligees in terms of their ability to fully realise their claims, contrary to the constitutional principle of equality of citizens before the Constitution and the laws, established in Article 9, Paragraph 2 of the Constitution.
Given that this constitutes a novelty in our legal system, according to the Court, the legislative solution in Paragraph 3 of Article 368 of the Law not only implies negative consequences for obligees but also creates ambiguities, dilemmas, and numerous open questions regarding its implementation, for which no answers can be found in the existing regulations in this field. Specifically, it remains unclear before which body the obligor would invoke this type of statute of limitations, or which body would determine the statute of limitations period, whether the court or the enforcement officer and with what act, it is uncertain who will bear the costs incurred during the enforcement proceedings, which, under the new legal solution, would have to cease without the obligee having settled their claim, in essence, there is no clear guidance on how to proceed under the new legal framework established by Article 368 Paragraph 3 of the Law. These ambiguities introduced by the newly regulated Paragraph 3 of Article 368 of the Law undeniably lay the groundwork for arbitrariness in the actions and implementation of the new legal solution by the authorities with competence, further calling into question the constitutional principle of the rule of law.
Based on the above, the Court has determined that Articles 2 and 4 of the Law Amending the Law on Obligations (“Official Gazette of the Republic of North Macedonia” No. 154/2023) are not in accordance with the provisions of Article 8, Paragraph 1, Indents 3 and 6, Article 9, Paragraph 2, Article 30, Paragraph 1, and Article 52, Paragraph 4 of the Constitution.
IV
Based on the above, the Court, by majority vote, has adopted the decision as in the dispositive part of this Decision.
V
This Decision takes legal effect from the date of its publication in the “Official Gazette of the Republic of North Macedonia”.
PRESIDENT
of the Constitutional Court
of the Republic of North Macedonia, Darko Kostadinovski LLD