The Romanian state
abusively confiscated a great number of properties belonging to its citizens,
either as individuals or as members of ethnic or religious groups, after the
establishment of the totalitarian communist regime. The main reason for the
expropriations and confiscations was the elimination of the market economy and
its replacement with the “planned economy”, which was extremely centralized and
exclusively controlled by the totalitarian communist state. The 1948 nationalization of industrial,
mining, transportation, banking, and insurance enterprises, as well as the
expropriations and the subsequent transfer into state or cooperative ownership
of agricultural land, forests, and agricultural equipment were the principal
means by which owners were deprived of their possessions. Numerous confiscations of properties were
dictated as punishment for citizens who opposed the totalitarian communist
regime or for those who left Romania and defected to other countries. Other instances of property confiscations
were conducted as means of persecution against Romanian citizens belonging to
certain religious, ethnic, national, or social groups.
After December 22, 1989,
the Romanian authorities have adopted and put into practice a number of legal
reparatory measures. In general
adequate measures were established for the restitution to the owners of
confiscated agricultural and forest lands.
These measures were laid down by Law No. 18/1991 (Land Law), modified
and amended by Law No. 169/1997 and by Law No. 1/2000, regarding the
restoration of property rights over agricultural and forest lands reclaimed
according to the provisions of Law No. 18/1991 and Law No. 169/1997. The Emergency Ordinance No. 94/2000 ordered
the return of some real estate properties belonging to religious cults that
were abusively confiscated by the Romanian state “with or without title”. Nevertheless, the commission, supposed to
coordinate the return of the above mentioned real estate properties, has not
been formed by May 2001. The most
serious obstacles still encountered in the restitution process are those
regarding the restitution of residential real estate properties and of those
properties expropriated through the “nationalization” of 1948. Since, no legal regulation regarding the
restitution of these properties existed between 1990 and 1996, a great number
of owners of “nationalized homes” addressed the civil courts soliciting the
annulment of the confiscation acts and thus requesting that their properties be
returned to them. The actions of the
owners, taken into the legal court system, were not only based on the idea that
the expropriations were fundamentally unjust, but also on the idea that, in
most cases, the expropriations were performed with disregard of the legal and
constitutional provisions, in effect at the time of the expropriation. The most relevant example is that of Decree
No. 92/1950 of the State Council of the People’s Republic of Romania. According to Decree No. 92/1950 a great
number of residential real estate properties “from the residential properties fund” were nationalized or
confiscated in order to “take away from
the hands of the exploiters an important means of exploitation”. Decree No. 92/1950, only partially published
in the Official Gazette (Monitorul Oficial), was in contradiction even with the
1948 Romanian Constitution, in effect at that time. Decree No. 92/1950 was in contradiction with the 1948 Romanian
Constitution because:
a)
Article 8 stated
that “private property is recognized and
guaranteed”
b) Article 10 (as well as Article 481 of the Civil Code)
stated that expropriation were only permitted for “reasons of public necessity,
in accordance with current laws, and with fair compensation”.
(Decree
No. 92/1950 ordered in a very precise manner, under Article 3, that the
expropriated goods should be “transferred
into state ownership without any compensation”
c) Residential real estate property did not belong to
the category of items that could have been confiscated. This fact was stated in Article 11 of the
1948 Romanian Constitution, according to which only “means of production, banks and insurance enterprises” could be
nationalized.
Decree No. 223/1974 was
equally abusive. Decree No. 223/1974
ordered the confiscation of property belonging to Romanian citizens who legally
left Romania and who refused to return because of serious human and civil
liberties abuses occurring in Romania.
Decree No. 223/1974 also ordered the confiscation of properties
belonging to Romanian citizens who defected Romania because of human right
abuses.
As a result of public
criticism expressed by the Romanian President Ion Iliescu in 1994 towards the
restitution of residential real estate properties practiced by the Romanian
court system, the Attorney General of Romania successfully promoted annulments
procedures extraordinary appeal of numerous final and irrevocable lower courts
decisions. The Supreme Court of Romania
nullified lower court decision through a practice called extraordinary appeal. The extraordinary appeal practice attacked the
lower courts decisions which were supposed to be final and without the
possibility to be appealed, and reversed the restitution of residential real
estate properties to the rightful owners, leading once again to an unjust
confiscation. The Supreme Court’s principal motivation regarding its
extraordinary appeal practice was that, since there existed no legal regulation
of the property restitution issue, the lower courts did not have the competence
to give a final and irrevocable verdict in restitution matters of properties
confiscated by the Romanian state. The
Supreme Court of Romania, during a joint session
on February 2nd, 1995, decided to change the civil jurisprudence
current at that time, to the effect that the lower courts were stopped from
issuing verdicts in matters regarding nationalized real estate properties. (Two years after the general elections of
1996, on September 28, 1998, the Supreme Court of Romania reversed this
decision.) The Supreme Court’s refusal
to recognize the authority of lower courts to solve property restitution
matters was against the right of access to justice guaranteed by Article 21 of
the Romanian Constitution and by Article 3 of the Civil Code referring to the denial of justice. Moreover, in a member state of the Council
of Europe, as is Romania, the Supreme Court’s refusal to recognize the
authority of lower courts to solve property restitution matters, meant that
Romania violated Article 6, paragraph 1 of the European Convention on Human
Rights and Fundamental Freedoms.
Article 6, paragraph 1 of the Convention guarantees the right to a fair
trial. The European Court of Human
Rights’ decision in the matter Brumarescu
v. Romania from October 28, 1999, deals mainly with the violation by
Romania of Article 6, paragraph 1 of the Convention. In this case, relevant to our analysis, the European Court of
Human Rights, established that by allowing the annulment procedure, through the
extraordinary appeal practice, of a final and irrevocable lower court decision
by which the plaintiff Brumarescu regained ownership of a nationalized
property, a violation of Article 1 of the First Protocol of the Convention also
occurred. Article 1 of the First
Protocol of the Convention guarantees the protection of private property. Under the aspect of a fair trial, the
European Court of Human Rights found two violations of the Convention in the
Brumarescu case. These violations are:
the denial of access to justice and the violation of to a fair trial. The latter violation refers to the unlimited
possibility in time of the Attorney General, to declare and promote the
extraordinary appeal practice, targeted against final and irrevocable civil
court decisions.
The Romanian Parliament
adopted Law No. 112 on June 28, 1995.
Law No. 112/1995 was adopted in order to solve the issue of confiscated
residential real estate properties, which were transferred into state ownership
at the time of the confiscation. Law
No. 112 has been sharply criticized by the owners of confiscated real estate
properties from the very beginning, right after this law entered into
effect. The main criticism was targeted
towards the fact that Law No. 112 did not insure the restitution in integrum, when possible, of
residential real estate properties confiscated by the totalitarian communist
state. According to Law No. 112, the
owners of confiscated residential properties could benefit from restitution in integrum only if they already
occupied the reclaimed residential properties as tenants or if these properties
were vacant. Spokespersons representing
owners’ associations continuously complained about the provisions of Law No.
112 and repeatedly showed that the two conditions under which this law allows
restitution in integrum are very
rare. The fact that the vast majority
of rightful owners could reclaim their properties in integrum only in extremely rare situations, made it very easy
for these confiscated but reclaimed properties to be sold at ridiculously low
prices to third parties, since in most cases these residential properties were
occupied by tenants who were not the original owners. Thus, rightful owners were excluded from the sale of their own
properties, by law. A statistical study
from January 2001 compiled by the owners’ associations shows that from a number
of roughly 115,000 residential real estate properties, 90,000 were sold to
third parties and the rightful owners were excluded from the sale.
On April 24, 1997, the
Parliamentary Assembly of the Council of Europe, through Resolution No. 1123, “encourages Romania to settle the matter
of return of confiscated or expropriated real estate”. The Assembly “earnestly requested that the Romanian authorities amended the
legislation relating to the return of confiscated and expropriated property,
particularly Act. No. 18/1991 and Act. No. 112/1995, so as to provide for the
restitution of such property in integrum or fair compensation in lieu”. The European Parliament adopted on December
3rd, 1998, Resolution A4-0428, through which Romania is asked to
amend Law No. 18/1991 and Law No. 112/1995 and “to provide a final and fair solution which will ensure the return in
full (in integrum) of the property concerned, or if that is impossible, the
payment of fair compensation”. On
October 1st, 1998, the House of Representatives of the United States
of America adopted Resolution No. 562 concerning properties wrongfully
expropriated by formerly totalitarian governments. According to this resolution, the US House of Representatives “urges countries which have not already done
so to return wrongfully expropriated properties to their rightful owners or,
when actual return is not possible, to pay prompt, just and effective
compensation, in accordance with principles of justice and in a manner that is
just, transparent and fair”. After
the above-mentioned resolutions were adopted, the Romanian Parliament adopted
Law No. 1/2000 regarding the restoration of property rights over agricultural
and forest lands reclaimed according to the provisions of Law No. 18/1991 and
Law No. 169/1997. The Romanian
Parliament also adopted Law No. 10/2001 regarding the status of residential
real estate properties abusively confiscated between March 6, 1945 and December
22, 1989. The owners of agricultural
and forest lands consider Law No. 1/2000 generally acceptable. Nevertheless, intentions to delay the
application of Law No. 1/2000 and to amend it were made public by the new
Romanian authorities after the elections of 2000. These intentions are conceived as troublesome.
Law No. 10 from February 8,
2001 regulates the restitution to the rightful owners, in integrum or through
reparatory measures of equivalent value, of residential real estate properties
abusively confiscated by the Romanian state between March 6, 1945 and December
22, 1989 and in the year 1940, according to Law No. 139 regarding
requisitions. But Law No. 10/2001 does
not regulate the status of confiscated properties belonging to religious cults
and to ethnic minorities. The law
states that the status of these properties will be regulated later through “special normative acts” (Article 8,
paragraph 2). Law No. 10/2001 revisits
the issue of confiscated residential real estate properties, addressed by Law
No. 112/1995, but it regulates for the first time after 1990, the status of properties
nationalized through Law No. 119/1948.
Law No. 119/1948 ordered the confiscation and the transfer into state
ownership of enterprises from the industrial, banking, insurance, mining, and
transportation sector. Law No. 10/2001
also addresses the issue of properties confiscated and transferred into state
ownership without proper and valid title.
The owners’ associations have expressed extensive criticism towards Law
No. 10/2001. This criticism can be
summed up in the following. Law No.
10/2001 cannot provide an equitable and a real reparation of the abusive
expropriations suffered by the owners.
The Association for the
Protection of Human Rights in Romania-the Helsinki Committee
(APADOR-CH) believes that
Law No. 10/2001 marks a positive development for the property restitution
issue, compared to the situation prior to the adoption of this law. This positive development is the fact that
Law No. 10/2001 establishes reparatory measures for the owners of properties
confiscated through Law No. 119/1948.
But the delay with which Law No. 10/2001 was adopted makes it extremely
difficult to provide equitable compensations to the owners. A more equitable compensation would have
been possible shortly after 1989. Due
to the slow privatization pace and also due to the careless administration of
the “state properties”, the value of
most properties that must be returned to the owners has been continuously
decreasing after 1989.
It is the opinion of
APADOR-CH, that “the reparatory measures”
described by Law No. 10/2001 do not represent a real and effective compensation
for the owners. Thus, according to
Article 1, paragraph 2 of Law No. 10/2001, the reparatory measures are made up
by “goods or services”, “stocks of
companies traded on the stock market”, “titles of nominal value exclusively
used in the privatization process” or
“”monetary compensation”. The
monetary compensation is a simple declaration at the present time. Article 40 states that the method, the
quantity, and the procedures used to establish the monetary compensation will
be regulated by a later law, that must be adopted until August 11, 2001. Besides the uncertainty regarding the
adoption of such a law, the detail from Article 40 regarding the capping of
monetary compensations, is also worrisome.
The other compensatory measures include, due to their nature, a high
level of risk. Since real estate
investment is generally regarded as a highly secure investment, Law No. 10/2001
offers to those who had such secure investments, a very risky and uncertain
compensation. This APADOR-CH conclusion
has been also confirmed by the economic ratings received by Romania from the
most prestigious international rating agencies. These poor ratings for Romania’s economy make it even more
obvious that the value of compensations offered by Law No. 10/2001 to property
owners is uncertain and undesirable.
Moody’s placed Romania at B3 negative, S&P and Thomson at B-, FitchIBCA
at B. The ratings of the three
agencies for Romania have a similar aspect: investments in Romania have a
higher than normal risk and the capacity of Romania to pay back its debts is
uncertain. It is also noteworthy that
between 1997 and 2001 the ratings for Romania have decreased constantly. The Romanian economy is not performing well
and it does not guarantee the good functioning of the capital market. More than 70% of the economy is in state
ownership and privatization is presently an unpredictable process. It is uncertain whether privatization will
take place in the predictable future.
Equally uncertain is how privatization will occur. Obviously, the service market is
characterized by the same uncertainty.
Under these circumstances, the stocks on the capital market, the titles
used in the privatization process and the services offered as reparatory
measures by Law No. 10/2001 cannot be regarded, at the present time, nor in the
foreseeable future, as a real and effective compensation.
An unacceptable limitation
of exercising the property right is found in Article 21, paragraph 1 of Law No.
10/2001. Thus, the procedures allowed
by Law No. 10/2001 may be initiated only within 6 months after the law was
adopted, that is until August 11, 2001.
According to paragraph 5 of this Article, the lack of action in this
time interval “means losing the right to
request by law reparatory measures, either in integrum or as equivalent
value”. In practice, this
interdiction not only targets to block the use of Law No. 10/2001, but also
targets to prevent the use of the Civil Code that guarantees the right to
private property. Even though it is
obvious that this law cannot modify the Civil Code, it has the tendency to
produce this effect.
Law No. 10/2001 is
deficient also because it does not repair the unjust solutions reached by the
implementation of Law No. 112/1995 and by the annulment by the Supreme Court of
Romania of final and irrevocable lower court decisions that had ordered the
restitution to the owners of abusively confiscated residential real
estate. Thus, Law No. 10/2001
establishes under Article 46, paragraphs 1 and 2 that the legal acts through
which the properties were sold to other persons than the owners remain valid if
they were completed in accordance with the laws in effect at the time of the
sale. (The reference is made, implicitly,
to Law No. 112/1995.). Regarding the
residential real estate confiscated “without
valid title” and sold to other persons than the owners, the sales remain
valid if they were completed in “good
faith”. Regarding the second thesis
of Law No. 10/2001, it must be observed that practically all cases in which
residential real estate was sold to other persons than the owners, the sale
happened in “bad faith” because both,
the representatives of the administration authorities of these residential real
estate properties as well as the third parties, that is the tenant-buyers, knew
that these properties were reclaimed by the original owners. Article 46, paragraph 3, states that the “good faith” motivation cannot be used
in cases in which properties of persons suffering political prosecution were
sold to third parties. It is our opinion that the same solution should be
applied to all cases of expropriations ordered by the totalitarian communist
state (except in cases of expropriations based on public need and with just
compensation). Article 49 states that
it is the owners’ obligation to “compensate”
the tenants for “added value brought
to the residential properties in form of necessary and useful
improvements”. This provision of
the law is obviously unjust because owners have not and will not be compensated
neither for the abusive confiscation of their properties nor for the use of
their properties for long periods of time.
Law No. 10/2001 distinguishes between properties confiscated “without a valid title” and properties
confiscated “with a valid title”. In our opinion, such a distinction puts
owners from the latter category at a great disadvantage. Moreover, such a distinction is inadequate
because absolutely all “titles” by
which the Romanian totalitarian state has expropriated its citizens were
abusive and most of the time issued with disregard to the constitutional
provisions in effect at the time of the confiscations. The provisions presented by Law No. 10/2001 validate
the unjust solutions offered by Law No. 112/1995. For example, Article 18 states that there will be no restitution in integrum of those abusively
confiscated residential properties that were “sold to former tenants according to Law No. 112/1995”.
Law No. 10/2001
establishes many other exceptions from restitution in integrum. Article 16,
paragraph 1, states that reparatory measures of equivalent value will be
offered only for properties occupied by state institutions, like educational,
health, social, cultural (very vague notion), public institutions, or by
political parties, diplomatic missions, consular offices, and international
intergovernmental organizations accredited in Romania and by their diplomatic
personnel. In reality, many confiscated
properties that were transferred into state ownership are occupied by the kind
of institutions or organizations described in Article 16, and thus are exempt
from being restituted in integrum. As a result, this provision of the law
greatly reduces the chance of owners to reclaim their properties in integrum.
Under these circumstances,
APADOR-CH considers that Law No. 10/2001 does not meet the demands imposed on
Romania by the Council of Europe and the European Union to amend Law No.
112/1995. Based on the provisions of
the Romanian Constitution, on the First Protocol of the European Convention for
the Protection of Human Rights and Fundamental Freedoms, on the jurisprudence
of the European Court, especially in relation to the case Brumarescu v. Romania, as well as on the Resolutions 1123/1997 and
A4-0428/1998 of the Parliamentary Assembly of the Council of Europe and of the
European Parliament, respectively, APADOR-CH considers that the main principle
should be that of restitution in
integrum. Only in cases where
restitution in integrum is not
possible because the properties do not exist any more, an equitable and just
compensation should be offered promptly to the owners. It is uncertain how Law No. 10/2001 can be
applied efficiently, especially with regard to the terms, the methods, the quantity,
and the procedures established for the payment of monetary compensations as
reparatory measures (see Article 38 and 40).
Despite the announcement made on February 25, 2001, by the Minister for
Public Administration, that within a maximum of two weeks the norms and the
methodology on how Law No.10/2001 should be applied will be published, this did
not happen yet. There are no published
norms and methodologies on how to apply Law No. 10/2001 as of May 2001. In the meantime, the Association of Romanian
Magistrates, prominent attorneys, and numerous journalists sharply criticized a
memo sent by the Minister of Justice to all Romanian Courts of Appeal. The memo drew the attention to the “complexity of the tenants’ evacuation
problem” and to the fact that “such
cases will be permanently kept in the attention of the judicial
leadership”. (The Minister of
Justice memo was published in the daily newspaper “Evenimentul Zilei” on April 4, 2001.) The Minister’s intervention was considered to have the strong impact
of influencing the independence of judges and also to favor the tenants
occupying the confiscated properties.
Recently a legislative initiative was announced for the protection of
the tenants that already entered parliamentary debates. This proposed law, if adopted, will extend
the lease contracts of tenants occupying confiscated properties, from 3 to 5
years. Another worrisome aspect is the
adoption of the Emergency Ordinance No. 59/2001. This ordinance extends the time limit in which the Attorney
General can declare extraordinary appeal against final and irrevocable lower
courts decisions in civil matters from 6 months to 1 year. The same ordinance extended the motivation
for which extraordinary appeal can be declared. This extended motivation includes cases in which “the decision attacked produced an essential
violation of the law, violation that determined a wrongful solution of the
case, or the decision has no foundation or merits”. This extension can include any final and
irrevocable lower court decision and allows the Attorney General to declare
extraordinary appeal in any situation in which owners have regained ownership
of their confiscated property. The
provisions of this ordinance violate the principle of “adjudication” (a matter
already decided upon by a court of law) and also endangers the stability of judicial
relationships. The
ordinance also gives the Attorney General the
power to participate in any civil dispute and to attack any decision given by a
court in a civil matter. In effect,
these provisions return Romania to the legislation of the extraordinary appeal from the communist period and invalidate the
beneficial changes that occurred after 1990, when the role of the prosecution
attorneys in civil matters has been reduced.
The Constitutional Court as well as the European Court in Strasbourg
(see Vasilescu v. Romania and Brumarescu v. Romania) defined the
prosecution attorneys as being agents of the executive power, and consequently,
their substantial role, including their power of control, in civil matters is
not justified. Moreover, since the
Attorney General, by own initiative or at the request of the Minister of
Justice, declares the extraordinary appeal, the Government has the possibility
to control the decisions relating to extraordinary appeal according to its own
interests. Since the attitude of the
current Romanian government administration is unfavorable to “former owners” and favorable to
tenants, promoting extraordinary appeal against
final and irrevocable lower court decisions is very likely. Decisions favorable to property restitution
and decisions ordering the evacuation of tenants will be most likely attacked
by extraordinary appeal.
The
Association for the Protection of Human Rights in Romania-the Helsinki
Committee (APADOR-CH) considers that the legislative and administrative
measures undertaken by the Romanian authorities after 1989, have only partially
repaired the prejudices caused by the abusive confiscations and expropriations
ordered by the Romanian state. These
reparatory measures are not yet sufficiently enough in accordance with the
principle of restitution “in integrum”. At the same time, the reparatory measures do
not offer equitable compensations.
The
restitution of agricultural and forest land, is the only domain that is
regulated acceptably. Law No. 18/1991,
amended and completed by Law No. 169/1997 and especially by Law No. 1/2000,
ensures and will ensure in the future a legal framework favorable to the
restitution of lands confiscated by the totalitarian communist state. But APADOR-CH believes that intentions
expressed by some governmental representatives to delay the application of
these laws and to amend them are unacceptable.
APADOR-CH believes that Law No. 1/2000 offers a good legislative
solution to the restitution of abusively confiscated agricultural and forest
land. Regarding the properties
confiscated according to Law No. 119/1948, it is imperative that the Romanian
authorities adopt as soon as possible the organizational measures outlined by
Law No. 10/2001, so that the prejudices caused to property owners will not be
amplified through unjustified delays and through the reduction in value of
their properties. Regarding reparatory
measures through equivalent value, it is very important that the law regarding
civil compensations is adopted urgently and no upper limits to compensations
will be set. Considering the high risk
factor posed by the reparatory measures of equivalent value established by Law
No. 10/2001, the only real compensations are civil compensations without
cap. The civil compensations should
include, besides the market value of the property, the deprivation of use of
the property by the owner, especially in cases in which the property titles
were annulled by illegal and unconstitutional decisions that invalidated,
between 1995-1997, irrevocable court decisions to restitute properties.
It is also imperative that
the Romanian Parliament adopts as soon as possible a final and equitable
legislation regarding the restitution of properties abusively confiscated by
the state or by other parties that belonged to religious cults or to ethnic
minorities.
Any
interference in justice matters must be avoided. A real and absolute independence must be guaranteed to judges. Judges, first of all, must obey the
law. They must make their decisions
based on the principles of the Romanian Constitution, of the European
Convention for Human Rights, of the Civil Procedure Code, and considering the
jurisprudence of the European Court with regard to the right of private
property and the right to a fair trial principle. At the same time, the role of prosecution attorneys in civil
matters must be reduced considerably.
The power of the executive authorities to change final and irrevocable
decisions via extraordinary appeal must be reduced drastically, as well.
The
Association for the Protection of Human Rights in Romania-the Helsinki
Committee (APADOR-CH) considers that Law No. 10/2001 did not bring forth the
necessary amendments and improvements with regard to the restitution of
confiscated residential properties. The
law substantiates the unjust solutions for property owners offered by Law No.
112/1995 and by the decisions of the Romanian Supreme Court of Justice prior to
1998. Law No. 10/2001 disregards the
principle by which property restitution must be done in integrum. Only in cases
in which restitution in integrum is
not possible, because the properties no longer exist, payment of just
compensation should be promptly offered.
In our opinion, the current regulations violate the principles of the
Romanian Constitution, the provisions of the First Protocol of the European
Convention for Human Rights and Fundamental Freedoms, and the demands of the
Resolutions No. 1123/1997 of the Parliamentary Assembly of the Council of
Europe, No. A4-0428/1998 of the European Parliament, and No. 562/1998 of the US
House of Representatives.
The
Association for the Protection of Human Rights in Romania-the Helsinki
Committee (APADOR-CH) will continue to monitor legislative and administrative
developments regarding the restitution of properties abusively confiscated by
the Romanian state.
The
Board of APADOR-CH
May 15, 2001