Case No Case No. 14/95 THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA R U L I N G On the compliance of the 20 January 1993 Resolution No.14 of the Government of the Republic of Lithuania “On th

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of the Law of the Republic of Lithuania on Constitutional Court, in its public hearing on 30 April 1996 conducted the investigation of Case No.14/95 subsequent to the petition submitted to the Court by Vilnius City District Court No.1 requesting to investigate if the 20 January 1993 Resolution No.14 of the Government of the Republic of Lithuania “On the portion of possessions belonging to the State which are currently managed by consumer cooperation” and the 10 March 1993 Decree No.186p of the Government of the Republic of Lithuania “On property relations between the State and consumer cooperation” are in conformity with Articles 1 and 2 of the Law on Privatisation of Apartments. The Constitutional Court has established: I On 10 May 1995, the petitioner - Vilnius City District Court No.1 - was investigating a civil case pursuant to the action of the plaintiff K. Dþiovalaitë against the respondent Vilnius Cooperation School of Further Education of the Lithuanian Union of Consumer Cooperatives. The plaintiff indicated the Board of the Lithuanian Union of Consumer Cooperatives as the third party in her 21 April 1995 supplementary petition of the action. The said court in its ruling by which it appealed to the Constitutional Court formulated that the request of the plaintiff concerns the obligation to allocate to her and sell her an emptied room which is in a hostel (the address: 38a-12, Lvovo Street, Vilnius) and which belongs to the Board of the Lithuanian Union of Consumer Cooperatives. The district court by its ruling suspended the investigation of the case and appealed to the Constitutional Court with the request to investigate if the 20 January 1993 Resolution No.14 of the Government of the Republic of Lithuania “On the portion of possessions belonging to the State which are currently managed by consumer cooperation” (Official Gazette “Valstybës Þinios”, No.5-96, 1993; hereinafter in the ruling referred to as the disputed Resolution) and the 10 March 1993 Decree No.186p of the Government of the Republic of Lithuania “On property relations between the State and consumer cooperation” (received together with the request of Vilnius City District Court No.1; hereinafter in the ruling referred to as the disputed Decree) are in conformity with Articles 1 and 2 of the Law on Privatisation of Apartments, and if the Law on Privatisation of Apartments shall be applied when dwelling-houses and hostels belonging to the Lithuanian Union of Consumer Cooperatives are privatised. II The petitioner in its ruling points out that the respondents in the district court explained that the said building is the property of the Lithuanian Union of Consumer Cooperatives. It is established in item 5.1 of the disputed Resolution that a cooperative, after it has settled its accounts with the State, shall independently dispose of the possessions which belong to it. It is held in the disputed Decree that Lithuanian organisations and enterprises of consumer cooperatives completely settled their accounts with the State until 1 February

1. It is indicated in the Cooperative Law of the Republic of Lithuania that a cooperative society is entitled to manage, utilise, and dispose of its possessions. The petitioner grounds its opinion on the fact that it is established in Articles 1 and 2 of the Law on Privatisation of Apartments which went into effect on 30 June 1991 that dwelling-houses and buildings belonging to cooperative organisations shall constitute the public housing fund. The petitioner concedes that these lodgings are the object of the Law on Privatisation of Apartments. III During the preparation of the case for the Constitutional Court hearing, as well as during the judicial investigation, the representative of the party concerned explained that the Government by the disputed Resolution recognised that the shares of the former union of cooperatives (cooperative societies) “Lietûkis” and those of the former and existing members of Lithuanian consumer cooperation, as well as the corresponding value’s portion of the newly created possessions, shall be the property of Lithuanian consumer cooperation. That was done while taking account of the conclusions of both the International Alliance of Cooperation and scientists, and implementing the 6 October 1992 Resolution of the Supreme Council of the Republic of Lithuania “On commissioning the Government of the Republic of Lithuania to decide certain problems”. The Government established by the disputed Resolution that the portion of possessions belonging to the State which are currently managed by consumer cooperation is constituted of the possessions freely granted by the State (except for those transferred to the State), as well as of the corresponding value’s portion of the newly created possessions. The representative of the party concerned indicated that Lithuanian organisations and enterprises of consumer cooperatives transferred the portion of possessions belonging to the State until 1 February 1993, therefore the Government by the disputed Decree recognised that they fulfilled the disputed Resolution of the Government and completely settled their accounts with the State. It is established in Article 5 of the Code of Apartments what dwelling-houses or lodgings constitute the state and public housing fund. In the opinion of the party concerned, this fund is to be held as belonging to the trade unions. Other organisations did not possess any residential lodgings of the public housing fund. It is impossible to draw a conclusion from Article 5 of the Code of Apartments that public organisations belong to cooperation or vice versa. The said law was passed in a different period of time, therefore it is doubtful if it is applicable at present. The hostel, situated in 38a, Lvovo Street, Vilnius, belongs to the Lithuanian Union of Consumer Cooperatives, which, according to Article 21 of the Cooperative Law, shall function as a cooperative society. These societies may not be identified with public organisations. The Supreme Court of Lithuania also had no doubts if a cooperative is an economic entity. According to Article 7 of the Cooperative Law, a cooperative society shall have the right to manage the property belonging to it, utilise and dispose of it. Therefore the Presidium of the Supreme Court judged this question fairly and did not doubt if the disputed acts of the Government contradict the Law on Privatisation of Apartments or other laws. The representative of the party concerned alleged that a question arose when the possessions were being separated whether cooperation would survive at all if all possessions were recognised as State possessions. When it was clear while separating the possessions that dwelling-houses had been built from the portion of State means, these houses were transferred to local governments and later privatised. In the opinion of the representative of the party concerned, the Government, when deciding the possessions’ separation question, did not violate people’s rights as all conditions were created to people residing in hostels to buy the dwelling space on easy terms. There are no significant disputes concerning this and the Government has not received any complaints. The Government has not violate its jurisdiction. Life itself confirmed that the right decisions have been passed. The Constitutional Court holds that: The Government, while implementing the 14 December 1990 Resolution of the Supreme Council of the Republic of Lithuania “On the property of consumer cooperatives of the Republic of Lithuania”, established in item 5.1 of the 20 January 1993 Resolution No. 14 “On the portion of possessions belonging to the State which are currently managed by consumer cooperation” that “upon settling its accounts with the State, consumer cooperation shall independently dispose of its property”. The Government established in item 1 of the 10 March 1993 Decree No. 186p “On property relations between the State and consumer cooperation” that the organisations and enterprises of Lithuanian consumer cooperation had transferred to the State the portion of possessions that belong to the State until 1 February 1993 and that they completely settled their accounts with the State. Following the said legal acts of the Government, when separating the portion of the possessions belonging to the State, hostels, together with other possessions, were received by consumer cooperation as its own property. The petitioner doubts if these acts of the Government are in conformity with the law. In its opinion, it is prescribed in Articles 1 and 2 of the Law on Privatisation of Apartments that the public housing fund shall consist of dwelling-houses and buildings which belong to cooperative organisations, therefore these lodgings are the objects of the Law on Privatisation of Apartments.
2. Cooperative movement and activity are grounded on private ownership. A cooperative enterprise (a cooperative) is a subject of private ownership law. While assessing the possibility, which has been raised by the petitioner, to privatise hostels which were received by the consumer cooperation, it is impossible not to take account of specific Lithuanian historic conditions which influenced the legal status of cooperative property and its accumulation. The property of cooperatives was private until the 1940 Soviet occupation. The Soviet of People’s Commissars of the Lithuanian SSR by its 25 October 1940 Resolution No. 262 “On organisation of state and cooperative trade in the Lithuanian SSR” established the Union of Consumer Cooperatives of the Republic by transferring to it the property of the “Lietûkis”. During the period of Soviet occupation, state and collective-cooperative property was proclaimed as the basis of the state-economic system. Attempts were made to bring together cooperative property with state property. This was established in normative acts of that time and it was implemented by various ways. Among such ways, there existed transfer of some of state possessions free to consumer cooperation among them. Thereby the cooperative property during the period of Soviet occupation became of a double character, viz., the transferred and nationalised possessions of the “Lietûkis” functioned together with the state possessions transferred to it. The double character of the cooperative property was ascertained in the 14 December 1990 Resolution of the Supreme Council of the Republic of Lithuania “On the property of consumer cooperatives” whereby it was prohibited to sell, divide or transfer in any manner the possessions of the Lithuanian Union of Consumer Cooperatives and its organisations, except for those meant for trade, until the procedure of the utilisation of the state property held in the said organisations was established. Thus legal preconditions were created by this Resolution of the Supreme Council to separate the portions of possessions belonging to the State and to consumer cooperation. Upon the reinstatement of the constitutional institute of private ownership in the legal system of the Republic of Lithuania, they began to create legal pre-requisites to restore and further develop the economic system based on the right to private ownership. To achieve this goal, while carrying out the economic reform, the Law on Initial Privatisation of State Property, the Law “On the Procedure and Conditions of the Restoration of the Rights of Ownership to the Existing Real Property”, the Law on Land Reform, the Law on the Privatisation of Property of Agricultural Enterprises, and other laws and legal acts were passed. A distinct Law on Privatisation of Apartments is devoted for the privatisation of the state and public housing fund. Privatisation of apartments has become one of the main directions of the State social policy. It has been sought that dwelling lodgings became private property, i.e., that their owner was the person residing in the said lodgings.
3. It was established in Part 2, Article 1 of the Law on Initial Privatisation of State Property that “the procedure and conditions of the privatisation of the apartments from the state and public housing fund shall be established by other laws of the Republic of Lithuania”. The said procedure and conditions are established in the Law on Privatisation of Apartments that came into force on 30 June 1991 and Part 1, Article 2 whereof stipulates: “...the procedure of purchase and sale of the state and public housing fund shall be established by this law...”. It is established in Part 1 of Article 2 of the said law that the entities of purchase and sale shall be corresponding dwelling-houses and apartments of the state and public housing fund. When judging what residential lodgings shall be subject to privatisation pursuant to the Law on Privatisation of Apartments, it is necessary to elucidate the content of the notion the state and public housing fund which is used in this law from its very coming into force, as well as later, after the law had been amended and appended. During the period of adoption of the Law on Privatisation of Apartments, according to Part 1 of Article 4 of the Code of Apartments, all dwelling-houses, as well as other residential lodgings in other buildings, belonged to the housing fund. Only non-residential lodgings of dwelling-houses which were devoted to the matters of trade, private life, and those of non-industrial character, did not belong to the housing fund. Hostels, according to their purpose, were residential lodgings (Part 1 of Article 7 of the Code of Apartments). It is prescribed in Part 1 of Article 5 of the Code of Apartments that the housing fund shall comprise of: 1) dwelling-houses as well as residential lodgings which are in buildings belonging to the State (the State housing fund); 2) dwelling-houses as well as residential lodgings in other buildings belonging to collective farms and other cooperative organisations, unions thereof, trade unions, and other public organisations (the public housing fund); 3) dwelling-houses belonging to dwelling-houses’ construction cooperatives (the fund of the dwelling-houses’ construction cooperatives); 4) dwelling-houses and apartments which are private property of citizens (the private housing fund). It was established in Part 2 of the said article that the rules prescribed for the public housing fund shall be applied to dwelling-houses belonging to state-collective and other state-cooperative unions, enterprises, as well as organisations. Thus the legislator, passing the Law on Privatisation of Apartments, consolidated in Part 1 of Article 1,

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of the said law that the entire state and public housing fund shall be subject to privatisation. Only Article 3 of the Law on Privatisation of Apartments formulated exceptions to this general rule. When amending and appending this law, the number of exceptions was decreased. Pursuant to the systematic analysis of the law’s content, it means that providing there is not an exception provided for by the law, all remaining residential lodgings of the aforementioned housing funds shall be entities subject to privatisation.

1. Upon adoption of the Law on Privatisation of Apartments, the right of the population of Lithuania was consolidated to acquire as private property the rented dwelling-houses, and apartments in apartment buildings and hostels. It was established in item 2 of the 30 May 1991 Resolution of the Supreme Council “On the entry into force of the Law on Privatisation of Apartments” that “the apartments in hostels indicated in Part 1 of Article 2 shall be privatised in case that: 1) individual apartments are reorganised into hostels; 2) residential lodgings used as hostels meet the requirements for the individual apartment: there exists a separate entry, as well as dwelling rooms, the kitchen, and other facilities conforming to the conditions of that locality”. Thus, during that time a part of the people of Lithuania who lived in hostels was not entitled to privatise residential lodgings which did not meet the requirements for the individual apartment. The 15 July 1993 amendments and appendages of the Law on Privatisation of Apartments attempted, first of all, to retain a unanimous provision in the sphere of residential lodgings’ privatisation, i.e., to transfer as many as possible of them at the disposal of natural persons. In the norm of Part 1 of Article 2 of this law, wherein it is established that rooms in hostels shall also be the object of purchase and sale, the scope of entities subject to privatisation from the state and public housing fund was enlarged. The Law on Privatisation of Apartments widened the circle of persons entitled to privatise lodgings of the state and public housing fund. It is established in item 2, Part 1 of the aforesaid article that only such rooms shall not be subject to privatisation “which are allotted pursuant to the procedure established by the Government for the purpose of tenanting pupils, students, post-graduate students of secondary, vocational, further education schools as well as universities, and also the rooms in the hostels of the Lithuanian Union of the Blind and Weak-Sighted, and those of the Lithuanian Society of the Deaf, and of the Lithuanian Society of the Disabled”. This norm prescribes that only such rooms in hostels shall not be sold which are either allocated for the purpose of tenanting learners, i.e., for such persons who live there transiently, i.e., who live there not on the grounds of their labour agreement, or those belonging to the hostels of the aforementioned union and both societies. The persons who were allocated rooms in hostels on the grounds of labour relations save for the aforesaid unions and societies acquired the right to buy residential lodgings pursuant to the Law on Privatisation of Apartments. In this respect, the rights of the employees of consumer cooperation residing in hostels to privatise residential lodgings were equalised with those of the employees of other enterprises, offices, and organisations. The 8 June 1995 Law of the Republic of Lithuania “On Determination of the Property of the Sanatorium-Resort Institutions and Rest Centres Which Were Run by Former State Trade Unions of the Lithuanian SSR” also confirms a general aim of the Law on Privatisation of Apartments to transfer as many as possible of residential lodgings at the disposal of natural persons. It is prescribed by the former law that individual hostels belonging to the public housing fund shall be privatised pursuant to the procedure established by laws.
2. The Supreme Council by its 14 December 1990 Resolution “On the Property of the Lithuanian Union of Consumer Cooperatives” commissioned the Government to determine the amount of the Sate possessions used by consumer cooperation as well as that of cooperative (private) possessions. This must have been performed until 30 January
3. The Government did not accomplish the commission in time fixed by the legislator. Before State and cooperative property were separated, the Law on Privatisation of Apartments was passed on 28 May 1991 wherein the privatisation of State and public housing fund was regulated. Following this law, the apartments were privatised which were at the disposal of consumer cooperation. When separating State and cooperative property, and deciding to whom hostels must belong, the Government had to take account of it, i.e., it had to reckon with the aim of the Law on Privatisation of Apartments, moreover, that in Article 3 entitled “Dwelling Houses and Apartments Which Are Not Subject to Privatisation” of the said law, there was not any exception provided for that the rooms in hostels transferred to consumer cooperation shall not be privatised. When separating the property, rooms in hostels tenanted by employees which, according to valid laws, belonged to the public housing fund subject to privatisation pursuant to the Law on Privatisation of Apartments were transferred to consumer cooperation by legal acts of the executive power. Thus the disputed Resolution and the Decree of the Government do not correspond the aim and content of this Law, therefore the arguments stating that prescriptions of the Law on Privatisation of Apartments shall not be applied to the rooms in hostels which were transferred to the consumer cooperation by the Government are groundless. Alongside it should be noted that the contested legal acts have, in fact, restricted the rights of persons of one social group to privatise residential lodgings possessed on the grounds of labour and lease agreements. This may be assessed as a disregard of the principle of all people’s equality before the law. Taking account of these arguments and those set forth above, a conclusion is to be drawn that the disputed Resolution and disputed Decree contradict Part 1 of Article 1,

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of the Law on Privatisation of Apartments in their volume whereby the transfer of rooms in hostels to consumer cooperation is decided. 5. The petitioner also requests to judge if the Law on Privatisation of Apartments is to be applied when privatising dwelling-houses and hostels belonging to the Lithuanian Union of Consumer Cooperation. It is established in Part 1 of Article 102 of the Constitution, as well as in Part 1 of Article 1 of the Law on the Constitutional Court, that the Constitutional Court shall decide whether the laws and other legal acts adopted by the Seimas are in conformity with the Constitution, and if legal acts adopted by the President and the Government do not violate the Constitution or laws. Thus the Constitutional Court judges the questions of constitutionality of corresponding legal acts, meanwhile, the application of a law or a legal norm is a prerogative of the court which is investigating the case, therefore the aforesaid request of the petitioner is not to be investigated in the Constitutional Court. Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55 and 56 of the Law of the Republic of Lithuania on the Constitutional Court, the Constitutional Court has passed the following ruling: To recognise that the 20 January 1993 Resolution No.14 of the Government of the Republic of Lithuania “On the portion of possessions belonging to the State which are currently managed by consumer cooperation”, and the 10 March 1993 Decree No.186p of the Government of the Republic of Lithuania “On property relations between the State and consumer cooperation” contradict Part 1 of Article 1,

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of the Law on Privatisation of Apartments in their volume whereby the transfer of rooms in hostels to consumer cooperation is decided. This Constitutional Court ruling is final and not subject to appeal. The ruling is promulgated on behalf of the Republic of Lithuania. Justices of the Constitutional Court: Egidijus Jaraðiûnas Kæstutis Lapinskas Zigmas Levickis Augustinas Normantas Vladas Pavilonis Jonas Prapiestis Pranas Vytautas Rasimavièius Teodora Staugaitienë Juozas Þilys