Communication from the Constitutional Court No 136 / 2009 Coll.

I. General courts may decide to increase the rent for the period from the application to 31.12.2006. They cannot increase the rent for the period before the action is brought, as the nature of the decisions having a constitutional effect precludes this; the increase in rent for the period from 1 January 2007 cannot be granted since from that date the unilateral increase in rent is permitted by Article 3 (2) of Act No. 107 / 2006 Coll., on the unilateral increase in rent from the apartment and on the amendment of Act No. 40 / 1964 Coll., Civil Code, as amended.

II. Proceedings by landlords (owners of apartments) for damages to the State [based on Act No. 82 / 1998 Coll., on liability for damage caused in the exercise of public authority by decision or by maladministration and amending the Act of the Czech National Council No. 358 / 1992 Coll., on notaries and their activities (notarial order)], which was to arise as a result of the long-term anti-constitutional inaction of Parliament in the absence of a specific law defining cases in which the lessor is entitled to increase the rent unilaterally, the remuneration for the performance provided with the use of the Law of Fundamental Rights and Freedoms of 28 February 2006 sp. Entitlement to compensation for the compulsory restriction of ownership pursuant to Article 11 (2) of the Treaty 4The Charter of Fundamental Rights and Freedoms is subsidiary to the landlord's claim against the tenant to increase the rent only for the period beginning on the date of the application. For the period preceding that date, the landlord of the apartment may claim his right to compensation for the compulsory restriction of ownership against the State directly.

1. The complainant lodged a constitutional complaint challenged the order of the Supreme Court of 11.3.2008 No 25 Cdo 2864 / 2006-82, the judgment of the Municipal Court of Prague of 1.6.2006 No 20 Co 135 / 2006-71 and the judgment of the District Court of Prague of 25.1.2006 No 24 C 169 / 2005-48. According to the schedule of work, the matter was assigned to the First Chamber and is kept under page I. ÚS 2220 / 08; The Judge-Rapporteur is Ivan Jana.

2. It appeared from the file of the Circuit Court sp. zn. 24 C 169 / 2005 that the complainant, by the action of 13.7.2005 against the Czech Republic, claimed compensation for damage caused by maladministration of CZK 4 627 970 with accessories which were to arise as a loss as a result of illegal and unconstitutional rent regulation for the period 2002 to 2004. The Court of First Instance dismissed its action, the Court of Appeal upheld its decision, and the Supreme Court rejected the appeal as it concluded that none of the legal questions raised by the complainant were of fundamental legal importance. For the sake of completeness, it should be added that, in principle, the Constitutional Court also deals with the Constitutional Court under points (a) and (b) of Article 566 / 05 and (c) of the Rules of Procedure 1109 / 08.

3. When considering a constitutional complaint, the First Chamber of the Constitutional Court has reached the following legal views:

- the lessor may request the lessee to increase the rent only with effect from the filing of the application;

- the lessor has, in respect of the period defined by the action, a right against the State to compensation for the compulsory restriction of property rights pursuant to Article 11 (4) of the Charter of Fundamental Rights and Freedoms (hereinafter referred to as "the Charter"), which is not subsidiary in relation to the application of an action to increase rent against the lessee, since such an increase could not have been claimed by the complainant for the period prior to the action.

Since these conclusions were intended to derogate from the legal views expressed in other findings of the Constitutional Court (in details, see below), the Senate submitted the case in accordance with Article 23 of Act No. 182 / 1993 Coll., on the Constitutional Court, plenary of the Constitutional Court. It was led by the following considerations.

4. The Constitutional Court has dealt with the issue of the constitutional complaint several times in the past. In its finding of 28 February 2006 sp. zn.... under certain conditions, the consequences of a gap (lack of legislation) are unconstitutional, especially when the legislator decides to modify a particular area, he will state this intention in the law, but does not accept the foreseen regulation. The same conclusion applies when Parliament has adopted the declared amendment, but it has been abolished because it did not meet the constitutional criteria, and the legislator has not accepted a constitutional conformal compensation, although the Constitutional Court has given it sufficient time (18 months). "In view of the fact that the long-term inactivity of the State (legislator as a representative of one branch of public authority in the State), which did not adopt a unilateral increase in rent, is contrary to the constitutional order, the Constitutional Court concluded that the general courts cannot reject the actions of the lessors but must decide to increase the rent. The level of rent should correspond to local conditions so as to avoid discrimination between tenants (but also tenants) of apartments with regulated rent and tenants (tenants) of apartments with so-called market rent.

5. In the decision of 6 April 2006 sp. zn. I. ÚS 489 / 05 (N 80 / 41 SbNU 59) - the basis of which was that the complainant, as a prosecutor, sought to pay the difference between the regulated and the so-called market rent (not an increase in rent or compensation for damages) - the Constitutional Court further developed the ideas expressed in the quoted plenary finding. He recalled that the decision to increase the rent was a socially sensitive matter and further stated that "when deciding on the amount of the rent, the general court will have a constitutional decision (for futuro) to complete an objective right (in this respect, the proper premise of the district court is that it is not possible to claim payment of the difference between normal and regulated rents over the past period). In view of the exceptional nature of this procedure, based on the statement of the First Found, Pl. ÚS 20 / 05, the court must give the participants sufficient space to familiarise themselves with the principles of the law in question and to use adequate instruments, including, where appropriate, the amendment of the petition and the possibility of a settlement. In that sense, the claimants must be given an appropriate lesson from the General Court, even beyond the general requirement laid down in Article 5 of the Civil Code. 'In view of the State's liability for the damage caused by the failure to adopt the foreseen legislation, as highlighted in the operative part of the First Decision, Pl. ÚS 20 / 05, the Constitutional Court, in the decision of the First Court, concluded that" if the lessor's reasonable claim is not fully met, there will be no other way than to claim compensation against the State.'

6. The obligation of the courts to rule on a futuro increase in rent was further specified by the Constitutional Court in its decision of 9 September 2008, sp. zn. IV. ÚS 175 / 08. It stated that "if this condition is to have reasonable meaning, the beginning of the period of decision to increase the regulated rent on flats must be determined at the time of the application to the General Court '. The decision referred to below draws on the finding of sp. zn. I. ÚS 489 / 05 the requirement of subsidiarity as compensation for damage to the State following the exhaustion of effective procedural means to protect the right towards tenants.

7. The idea of subsidiarity of entitlement to compensation for the State is generally correct, but in the decision of the Court of First Instance, ÚS 489 / 05 was formulated for a situation other than that which is understood by the Court of First Instance. It should be recalled here that, in the case brought under sp. zn. IV. ÚS 175 / 08, there was a dispute over compensation for damages under Act No. 82 / 1998 Coll., on liability for damage caused in the exercise of public authority by a decision or by an incorrect official procedure and on the amendment of the Act of the Czech National Council No. 358 / 1992 Coll., on notaries and their activities (notarial order), as amended, consisting of the difference between the chartered regulated and the usual. By its action in February 2006, the complainant claimed damages for July 2002 to November 2005, i.e. for the period before the action was brought. In this context, if the Constitutional Court considered the obligation to use up effective means of redress against the lessee, it can be concluded that it came from the view that the lessor had a claim against the lessee for the period before the action was brought. This view was subsequently explicitly expressed by the finding of 4 December 2008, sp. zn. III. ÚS 3158 / 07:... "... the requirement addressed to the general courts in the key finding of sp. zn. Pl. ÚS 20 / 05 that" despite the absence of the regulation foreseen in § 696 (1) of the Code, the requirement to increase the rent, depending on local conditions and in order not to discriminate between different groups of legal entities, "cannot be reduced to the legal relations" future, "or there is no reason not to link it with the claims that the tenants have" hired "in excess of the rental," agreed in the lease contract, at a specified time of last time. "

8. However, the first Chamber did not agree with the legal opinion described in the preceding paragraph, and submitted the case to plenary for an opinion, which did so by the requested majority of votes. The subject of the plenary assessment was two issues closely related to each other: (a) from what time the lessee can be granted increased rent; (b) the existence of a right to compensation for the compulsory restriction of ownership and its subsidiarity.

9. According to the Constitutional Court, the lessor has no right to pay the difference between the regulated rent and the normal rent for the period prior to the application. It is no longer possible to look for support for this view in the finding of point I of the ÚS 489 / 05 (see above), in which it is expressly stated that "it is the right premise of the Circuit Court that the payment of the difference between the normal and regulated rent for a previous period cannot be sought '.

10. The legal opinion allowing the lessee to claim the payment of the difference between the regulated and the normal lease for the period before, i.e. before the action is brought, does not first of all underestimate the nature of the decision to increase the rent. The judgment on the increase in rent is a constitutional decision, which is expressly recognised by the finding of sp. zn. Pl. ÚS 20 / 05 (see above). It is, of course, not about the completion of objective law by the general courts, in the sense that judicial judgments in individual cases are a source of generally binding rules of conduct, but about the change in the substantive lease relationship between a particular lessor and a particular lessee, depending on specific local conditions. It follows from the nature of the constitutional decision that substantive relations can only be affected in the future, that is, from the moment when it becomes legal, unless the law expressly regulates its effects otherwise. The legal fact with which substantive law links the creation, modification or termination of a substantive relationship is only the decision itself; Therefore, it is only logical that a change in substantive relations can only occur from the moment this legal fact arises and starts to produce effects associated with it.

11. The decision to increase the rent is constitutionally affecting the existing legal relationship between the lessee and the lessor by changing its content in terms of the amount of the rent. From this point of view, the increase in the rent "up to the past 'is a clear contradiction, not corresponding to the nature of the constitutional decision; In addition, it would also constitute an inadmissible real retroactivity in the legal state, since the court would in the past restate the content of the legal relationship between the lessor and the lessee and impose an obligation on the lessee to pay higher rent even for a period in which the lessee had no such obligation.

12. The only theoretically consistent approach would thus be to conclude that the change in the content of the rental relationship (change in the amount of the rent) is only from the legal authority of the judgment declaring an increase in the lease to the future (understood from the date of the application). In view of the fact that the increase in rent by judicial decision-making was an exceptional means of making the use of which the Constitutional Court made it conditional on the impossibility of increasing the rent under the special legislation, it would mean that actions for increasing the rent which had not yet been decided would have to be rejected, as from 1 January 2007 the rent can already be increased under Act No. 107 / 2006 Coll., on unilateral increase of the rent from the apartment and amending Act No. 40 / 1964 Coll., Civil Code, as amended. However, such a conclusion would also mean that an increase in rent would not be an effective means of correcting the unconstitutional situation that the legislature (State) set up by its long-term inactivity. It is therefore possible to agree with the finding of page IV of the ÚS 175 / 08 that the moment of the increase in rent is linked to the date on which the action was brought. this solution is also acceptable from the point of view of the tenant, who can calculate from this point on with an increase in the rent. It is also possible to fully agree with Prof. Musila's separate wax to find sp. zn. III. ÚS 3158 / 07 that only from this point in time the lessee can actually respond to the factual and legal arguments put forward by the lessor in the action seeking an increase in the rent; the combination of the possibility of increasing the rent and bringing an action takes into account the autonomous interests of both parties and complies with the principle of proportionality. Therefore, an exemption from the effects of constitutional decisions, justified by constitutional considerations, which are otherwise only possible on the basis of explicit legal regulation, can also be granted. This different regulation results from the finding of the Constitutional Court sp. zn. However, no reasons can be found to increase the rent before the date on which the action was brought; they are neither based on constitutional arguments nor on the nature of the constitutional decisions. This question can therefore be concluded in such a way that the General Court may decide to increase the rent for the period from the date of the action to 31.12.2006. They cannot increase the rent for the period before the action, as the nature of the constitutional decision itself is hampered by this; The increase in rent for the period from 1 January 2007 is also not possible, as since that date the unilateral increase in rent is permitted by § 3 (2) of Act No. 107 / 2006 Coll.

13. In relation to the second point of the opinion, the Constitutional Court gives its assent to overcoming the legal opinion set out in point IV of the judgment. Although the Constitutional Court has already noted in the finding that the ÚS 20 / 05 found that the legislature's long-term inactivity was not subject to a legal regulation allowing a unilateral increase in the rent, the decision cannot derive a right to compensation against the State. In view of the assessment of the fundamental right to compensation against the State, it is necessary to rely on Article 36 (3) of the Charter. This provision guarantees the right to compensation for damage caused to him by an unlawful decision of a court, another public authority or public authority or by maladministration. However, from this point of view, Parliament cannot be regarded as a public authority, a court or another comparable body of the State. This cannot be done above all when Parliament exercises its legislative power. The responsibility for exercising this power is primarily political. While the legislature's discretion limits are laid down in the constitutional order, the consequence of exceeding them is the possibility of abolishing the law or declaring it unconstitutional by the Constitutional Court. Although such intervention by the Constitutional Court may, under certain circumstances, affect the rights of individuals who have been affected as a result of such a law or a gap in the law (e.g. the inapplicability of the law in a particular case), it does not give individuals a right to compensation.

14. Therefore, if the Constitutional Court found that there was a potential claim for compensation against the State in its finding, sp. zn. I. ÚS 489 / 05 and, consequently, in the finding, sp. zn. IV. ÚS 175 / 08 (both see above), such a claim was aimed at the failure of the general courts which would not have provided protection for the basic law of the lessors concerned by rejecting its legitimate right to increase the rent. The claim for compensation thus designed does not deviate in any way from the classification of Article 36 (3) of the Charter or the claim for compensation as defined by Act No. 82 / 1998 Coll. Therefore, if the competent authority withdraws the final decision of the court which has failed to fulfil its obligation to decide on an increase in rent within the meaning of the decision of the sp. zn. Pl. ÚS 20 / 05, the lessor may claim compensation from the State for the damage suffered by such unlawful decision. Nevertheless, the Constitutional Court considers that the lessor bears a different legal title in relation to the specified period before the action, namely the right to compensation for the compulsory restriction of property rights under Article 11 (4) of the Charter.

15. The limits on the admissibility of the restriction of ownership should be understood in the context of the creation and development of the rental relationships concerned. Already found on 22 March 1994 sp. zn. The Constitutional Court found the constitutional conformity of the transformation of the right of personal use of the apartment into a rental relationship under Section 871 of the Civil Code. In this context, he pointed out that, at a time when there were legal effects under that provision, there was a public interest in the transformation of former user relations to apartments in a protected rent institution, which would create an acceptable legal certainty for all existing legal relations with apartments based on the existence of the right of personal use of the apartment. However, the assessment of the existence of a public interest requires taking into account its timing. Although it is not possible to find a precise line since the restriction of property rights as a result of the regulation of rent could no longer be regarded as constitutionally conformal, the case-law of the Constitutional Court of 20 November 2002 sp. zn. For this reason, the Constitutional Court addressed the question of whether the restriction of property rights as a result of the rent regulation did not reach such an intensity in the period to which the complainant was entitled that it had to be regarded as a compulsory restriction of property rights within the meaning of Article 11 (4) of the Charter.

16. Article 11 (4) The Charter is granted a compulsory restriction of property rights in the public interest, on the basis of the law and for compensation. That Article cannot be interpreted as a fundamental right to compensation for any restriction on property rights provided for by law. The content of the constitutionally guaranteed right of ownership of property within the meaning of Article 11 of the Charter, as well as the right to use property peacefully under Article 1 of the Additional Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms, is not unfettered and is subject to a number of restrictions which can be regarded as immune from the point of view of the constitutional guarantee to its constitutional and, consequently, legal definition. This means that the law may, in general, lay down limits on ownership without such a restriction being linked to the right to compensation. Forced restriction of ownership and expropriation pursuant to Article 11 (4) The Charter should therefore only be applied to certain qualified cases of restrictions.

17. Without the Constitutional Court finding it necessary to define the characteristics of such a qualified restriction in an exhaustive manner, it can be concluded, in general, that one of these characteristics is a restriction of property rights going beyond the obligations laid down by the Law in general for all entities of ownership rights to respect the principle of equality. Forced restriction of ownership pursuant to Article 11 (4) The Charter constitutes a restriction on the ownership of a particular owner in excess of the restrictions generally imposed on the owners, or which affect only a part of the owners, but that unequal position is in line with the principle of equality as a result of the existence of the facts sufficient to justify that inequality. This can be demonstrated by the so-called legal material burdens, where the obligation to endure, for example, the construction of a power line pillar on its land must be regarded as a restriction beyond the general limitation of the right of ownership resulting from the law, which affects only some owners who cannot influence their "handicaps" by their will. The fact that it is in their case that there will be a restriction is not based on the nature of the case but on a specific assessment by the competent public authority on the basis of which such a restriction will occur.

18. The second condition allowed by the Constitutional Court in this context is the intensity of restrictions on property rights, which may be expressed by several factors, in particular the scope of the restriction itself and the length of the duration of such restrictions, i.e. whether the restriction is temporary or permanent. The Constitutional Court has already pointed out in its findings sp. zn. This inequality has a rational basis in terms of the definition of the lessors concerned, since it is linked to rental relationships resulting from the transformation of the right of personal use of the apartment. However, it is no longer possible to find a reasonable reason in relation to the obligations of owners to bear the costs of housing tenants themselves. While this reason was given at the time of the transformation of the right of personal use of the apartment into a rental relationship, it cannot be found at a time when, even repeatedly, the Constitutional Court has established the unconstitutional nature of the rent regulation under Decree No. 176 / 1993 Coll., on the rental of the apartment and the payment for the performance provided with the use of the apartment, as amended, and in this context a possible violation of the property rights of a number of tenants. The restriction of the ownership right of this group of owners has severely limited the constitutionally guaranteed ownership right of some lessors beyond the restriction of the ownership right laid down for all owners. Such a restriction, having regard to the extent of the costs incurred by each lessor without these being able to benefit from any of these costs, and the longevity of the situation, which was mainly due to Parliament's long-term anti-constitutional inaction, which up to four years after the expiry of the deadline provided by the Constitutional Court in its decision on page 5 of the ÚS 3 / 2000, has adopted a law allowing a unilateral increase in the regulated rent, must be considered to be so intense that it must be subordinated to Article 11 (4) of the Charter.

19. Article 11 (4) The Charter itself does not contain any further modification of a whole series of practical issues, such as the one with which the State body must be entitled, within which deadlines, etc. In this respect, it is necessary to follow the regulation by analogy with its content and purpose closest to the Act No. 82 / 1998 Coll., on liability for damage caused in the exercise of public authority by decision or incorrect official procedure and amending the Czech National Council Act No. 358 / 1992 Coll., on notaries and their activities (notarial order).

20. The Charter needs to be assessed on the question of subsidiarity. The subsidiarity of one claim against another can only be talked about in those cases where two claims are at least partially overlapping (e.g. they can typically compete with claims for damages and claims for unjust enrichment). However, in the case under point IV, the ÚS 175 / 08 was not in fact in competition with claims. The lessor could not claim payment of the difference between the normal and regulated rent for the previous period but could only ask for an increase in the rent from the date on which the application was lodged. The compensation claimed by the complainant in the proceedings before the General Courts was directed towards the State and concerned the period from 2002 to 2005. It is clear from this that no competitor was entitled to compensation against the lessor for that period and had neither the right to increase the rent for that period. The claim for compensation for the compulsory restriction of ownership of the State clearly concerns another entity and another legal title and cannot therefore be excluded by reference to the subsidiarity of the claim for compensation against claims allegedly claimed by the lessor against the lessee.

21. It follows from those considerations that it is necessary to carefully consider the right of the lessor. If there is a compensation for the compulsory restriction of property rights for the period prior to the application against the tenant, such as in the case at issue by the First Chamber under sp. above, ÚS 2220 / 08, when the action against the State was brought on 13.7.2005 and the complainant claimed compensation for the period from 2002 to 2004, his claim cannot be conditional on the fact that he first had to apply effective means to protect the right to the tenant, since the lessor had no right to the tenant for that period. The lessor is entitled to a higher rent against the lessee only on the basis of a court ruling whose constitutional effects - in view of the above stated constitutional context - are not ex nunc, but are attached to the date of the application; In any event, however, it did not before, i.e. before the action was brought.

22. The question whether, in the present case, the complainant's specific claim for compensation for the compulsory restriction of property rights under Article 11 (4) of the Charter remains to be answered by the General Court, which must consider the extent to which the regulated rent has led to interference with his fundamental right to own the property and whether the abovementioned conditions for the right to compensation have been fulfilled. The very unconstitutional nature of the regulated rent law did not mean that in each individual case the basic right of the lessor (owner of the apartment) was infringed. It should also be stressed that the amount of the right to compensation for the compulsory restriction of property rights under Article 11 (4) The instruments need not be identical to the difference between normal and regulated rent. Therefore, the General Courts must not reject the right to compensation against the State in any way, but must assess the individual claims applied individually in compliance with the above conclusions. Accordingly, the alleged right of the lessor (owner of the apartment) should be legally assessed in the light of the right to compensation under Article 11 (4) of the Charter. In this respect, the General Courts are obliged to create sufficient procedural space within the meaning of Article 118a of the Civil Code so that both parties can comment on the new legal assessment and, where appropriate, apply new evidence or objections.

23. The Constitutional Court also stresses that in no way does it consider the whole matter to be definitively resolved, but it raises a strong appeal to the legislator to look again and this time systematically at the issue of regulated rent and to take into account measures that the Polish legislator, for example, has taken in response to a decision by the European Court of Human Rights in the Hutten-Cuzska case, namely in the pilot case in relation to the regulation of rent in Poland, which for a long time has shown similar constitutional shortcomings to that of rental in the Czech Republic. In this context, Poland approved in 2006 a law which allowed for a faster increase in rent up to such an amount as would be sufficient to cover maintenance costs, including ensuring the return on the capital injected and a reasonable profit, further adjusting the civil liability of the municipality for the damage incurred by the owner due to the failure to provide the social flat by the lessee to obtain the right to a social apartment allocated by the municipality because of low income. In this respect, the intention of the Polish Government of 2008 to introduce a system of compensation contributions to owners whose assets were subject to a regulated rental system between 1994 and 2005 can also be assessed positively [cf. Judgment of the European Court of Human Rights of 28 April 2008 in the Hutten-Czasska case against Poland, paragraphs 14 to 26].