U-I-133/93

Reference no.:
U-I-133/93
Objavljeno:
Official Gazette of the Republic of Slovenia, no. 32/94 and OdlUS III, 28 | 31.03.1994
ECLI:
ECLI:SI:USRS:1994:U.I.133.93
Act:
Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92 and 7/93), becoming effective on the basis of Article 29 of the Act on Amendments and Supplements to the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, no. 31/93), Article 51, paragraph 3.
Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92 and 7/93), becoming effective on the basis of Article 25 of the Act on Amendments and Supplements to the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, no. 31/93), Articles 48.a, 48.b and 48.c.
Operative provisions:
The third paragraph of Article 51 of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92 and 7/93), becoming effective on the basis of Article 29 of the Act on Amendments and Supplements to the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, no. 31/93), shall be abrogated, with abrogation having legal effects under Article 414, paragraphs 1 and 2, of the Constitution of 1974. Provisions of Articles 48.a, 48.b and 48.c of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92 and 7/93), becoming effective on the basis of Article 25 of the Act on Amendments and Supplements to the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, no. 31/93) are not in conflict with the Constitution.
Abstract:
The third paragraph of Article 51 of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92, 7/93 and 31/93) is not in conformity with the Constitution of the Republic of Slovenia: - for having retrospective effect on legally concluded and effected legal transactions and also for infringing the accrued rights of third parties (Article 155 of the Constitution).

The provisions of Article 48.a of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92, 7/93 and 31/93) only make operational the previously prescribed principles of management of socially-owned assets and of business morality, for which reason they do not have retrospective effect on legally established legal relations, and are thus not in conflict with the Constitution of the Republic of Slovenia (Article 155).

Legal entities under any obligation arising from a decision of an auditing agency are entitled to judicial protection of full jurisdiction, which is why the provisions of Articles 48.b and 48.c of the Companies Ownership Transformation Act are not in conflict with Articles 2, 8, 22, 23, 25 and 157 of the Constitution of the Republic of Slovenia.
Password:
Retrospective effect affecting legally concluded and effected legal transactions.
Infringing of accrued rights of third parties.
Management of socially-owned assets.
Non-standard legal instruments.
Right to independent and impartial court of justice.
Right to appeal and other legal remedies.
Judicial protection of full jurisdiction.
Legal basis:
Constitution of 1974, Article 74, paragraphs 1 and 2.
Constitution, Articles 160, 155, 2, 23, 25 and 157.
Bonded Relations Act, Articles 103, 9, 12, 13, 14 and 18. Enabling Statute for the Implementation of the Amendment XCVI to the Constitution, Article 5.
Constitutional Law on Execution of the Constitution of the Republic of Slovenia, Article 7.
Law of Procedure at the Constitutional Court of the Socialist Republic of Slovenia, Article, 25, paragraph 3, sub-paragraph 2.
Note:
For reasons of joint consideration and adjudication, the Constitutional Court had decided to attach to the case under consideration the cases U-I-134/93, U-I-135/93, U-I-136/93 with its resolution of 26 June 1993, U-I-151/93, U-I-162/93 with its resolution of 16 September 1993, U-I-172/93 with its resolution of 8 November 1993, U-I-20/94 with its resolution of 3 February 1994 and U-I-21/94 with its resolution of 10 February 1994.
Document in PDF:
The full text:
U-I-133/93
31.3.1994
 
D E C I S I O N
 
At the meeting held on 31 March 1994 and concerned with the procedure for assessment of constitutionality proposed by Podjetje FINSA - Finančni inženiring in svetovanje p.o., Ljubljana and Podjetje Emona Merkur, trgovina na drobno, d.d., Ljubljana as represented by Mr. Anton Marolt, a lawyer from Ljubljana; Poslovni sistem Merkator d.d., Ljubljana; National Council of the Republic of Slovenia; Podjetje Avtocommerce d.d., Ljubljana; Podjetje Lepenka Tržič d.d., Poslovni sistem Žito Ljubljana d.o.o., Podjetje LTH Orodjarna in livarna Škofja Loka, Iskra Holding d.d., Ljubljana, Skupina Emona r.o., Ljubljana, Inles Holding d.d., Ribnica, Podjetje Pohorje p.o., Maribor and LIK Holding d.o.o., Kočevje, represented on the basis of special authorization by the Chamber of Economy of Slovenia; Avtotehna d.d., Ljubljana; Turistično podjetje Alpinum d.d., Bohinjsko jezero; IRP Alpinum d.d., Bohinjsko jezero; Social Accountancy Service of Slovenia, the Central Office of Ljubljana; Podjetje "Pecivo" Pekarstvo in slaščičarstvo d.d. Nova Gorica and Pekarsko slaščičarsko podjetje "Kruh" p.o. Nova Gorica, the Constitutional Court
 
I. m a d e t h e f o l l o w i n g d e c i s i o n:
 
The third paragraph of Article 51 of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92 and 7/93), becoming effective on the basis of Article 29 of the Act on Amendments and Supplements to the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, no. 31/93), shall be abrogated, with abrogation having legal effects under Article 414, paragraphs 1 and 2, of the Constitution of 1974.
 
II. e s t a b l i s h e d t h e f o l l o w i n g :
 
Provisions of Articles 48.a, 48.b and 48.c of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92 and 7/93), becoming effective on the basis of Article 25 of the Act on Amendments and Supplements to the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, no. 31/93), are not in conflict with the Constitution.
 
R E A S O N S :
 
1. All the proposers listed in the introductory part of the Decision, except the Central Office of the Social Accountancy Service of Ljubljana, claim that the third paragraph of Article 51 of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92 and 7/93, hereinafter COTA), becoming effective on the basis of Article 29 of the Act on Amendments and Supplements to the COTA (Official Gazette of the Republic of Slovenia, no. 31/93), which stipulates that all unpaid transfers of socially-owned assets from one company to other legal entities shall be considered null and void, is in conflict with Article 155 of the Constitution for having retrospective effect which is not dictated by ascertained public interest, and for infringing the legally accrued rights of legal entities.
 
According to the claims of the proposers, the provision declares, ex tunc, the otherwise properly concluded legal transactions null and void. In this way it is claimed by the proposers to interfere, with retrospective effect, with properly concluded legal transactions, and is thus supposed to be contrary to Article 154 of the Constitution.. They claim that free transfers of socially-owned assets between legal entities were legally based on Article 204 of the Associated Labour Act, which is claimed in accordance with Article 196 of the Companies Act and the constitutional acts to have been an integral part of the legal system of Slovenia. Supposedly null and void were only the transactions through which socially- owned assets were transferred without payment to persons under civil law and physical persons. Assets are claimed to have been transferred between socially-owned legal persons on the basis of payments in kind, and to continue to be socially- owned property without in any way reducing the value of socially-owned property. The transfers are supposed not to have in any way affected the structure of ownership rights, because the transferors and the acquirers are claimed to be entirely socially-owned. The motifs of the companies concerning free transfers are claimed by the proposers to have been guided by the desire for making business operation more efficient. Through transfers, he companies are claimed to have got rid of unnecessary, nonproductive assets, in particular of apartments and buildings of the welfare fund. Additionally, the implementation of the disputed provision of the Act is claimed by the proposers to have resulted in liquidations and bankruptcy of the acquirers, which is claimed to have infringed the rights of workers to social security, in violation of Article 50 of the Constitution. Further, the implementation of the disputed provision would have affected the legal relations with third parties established in good faith by the newly established companies; it would have decreased the level of legal protection in violation of Article 2 of the Constitution, infringing, in violation of Article 33 of the Constitution, the partnership rights of private investors. Due to the effects arising from annulment under the disputed provision, the assets would be returned to the companies, which would be obliged, in accordance with the second paragraph of Article 51 of the disputed Act, to dispose with them without requiring any payment.
 
The proposers also consider that the controversial provision of the third paragraph of Article 51 can be interpreted in different ways. The proposers represented on the basis of a special authorization by the Chamber of Economy of Slovenia, as well as the National Council of the Republic of Slovenia, Poslovni sistem Merkator d.d, Ljubljana, Turistično podjetje Alpinum d.d and IRP Alpinum d.d, claim that the controversial provision extends to free transfers of assets and capital, while the last two of the proposers also consider the capital to be a form of assets. The proposers Finsa p.o and Podjetje Emona Merkur d.d, on the other hand, claim that the provision only refers to the transfer of assets.
 
The proposers Finsa p.o. and Emona Merkur d.d. also propose the assessment of constitutionality of Article 48.b, paragraphs 2, 5 and 6, of the COTA; Avtotehna d.d, Ljubljana the assessment of constitutionality of Articles 48.a, 48.b and 48.c in their entirety; the companies "Pecivo" Pekarstvo in slaščičarstvo d.d., Nova Gorica, and Pekarsko slaščočarsko podjetje "Kruh" p.o., Nova Gorica, of Article 48.a, clause 1; the proposers Turistično podjetje Alpinum d.d and IRP Alpinum d.d the assessment of constitutionality of clause 10 of Article 48.a, Article 48.b and Article 48.c of the COTA. And the Social Accountancy Service, Central Office of Ljubljana, proposes the assessment of Article 48.b, paragraphs 2 and 5, of the COTA.
 
In connection with Articles 48.a and 48.c of the COTA the proposers claim that this provisions are not in conformity with Articles 2, 8, 14 and 155 of the Constitution. The proposers Turistično podjetje Alpinum d.d. and IRP Alpinum d.d consider that, as a piece of compulsory regulation, Article 48.a has, supposedly, introduced a legal fiction of damage to the socially-owned property or, at least, of praesumptio iuris et de iure, which will for this reason be impossible to refute in a lawsuit. They claim that fictions or assumption would be allowable if specified for the benefit of protecting human rights against infringements by the State. According to their assertions, the provision of Article 48.a does not take into consideration specific and general economic circumstances in which ownership transformation has been carried out in a legal way in companies. The assumptions concerning the damage to the socially-owned property, defined in Article 48.a of the COTA, should thus be considered unacceptable, and are claimed to have indirect retrospective effect. These assumptions are supposedly unjustifiable even on the basis of assuming violation of morality, or of the economic situation of that period. Until now, government authorities are claimed by the proposers to have granted various credits under more favourable conditions than the criteria prescribed in Article 48.a as the criterion of the damage done to the socially-owned property. Social development plans are supposed to have prescribed a yearly profitability rate of socially-owned capital of not more than 2%; the interest rate of 8% prescribed by law as a criterion in assessing the damage done to the socially-owned property in reference with agreed upon credit conditions is thus claimed to be unacceptable.
 
In reference with discounts relating to rent and lease relations, the proposers claim that, as partners, they have helped in the introduction of newly established companies, and that socially-owned property has in this way not been damaged.
 
By obtaining credits from natural persons, of workers in particular, many companies ensured their liquidity, thus avoiding bankruptcy, while higher interest rates were reasonable in the opinion of the proposers, considering the existing risks. With the provisions of Article 48.a the lawgiver is said to have interfered, with retroactive affect, with the business agreements made in a legal way, without having any support for this in Article 155 of the Constitution.
 
The proposers who dispute Article 48.b state that an auditing agency issues, in accordance with this provision, a final decision, and that in connection with it an appeal or administrative lawsuit is not possible. The provision is claimed to introduce liability to compensate for third parties, without their guilt having been established. In this, way the lawgiver is said to have infringed the rights of private investors, who, on the other hand, do not have any possibility to defend themselves, since assumptions are supposed to be applicable in accordance with law and are realizable automatically.
 
According to the assertions of the proposers, the provision of Article 48.b is in conflict with Article 23 of the Constitution, according to which each person shall be entitled to have any criminal charges laid against him decided by an independent court constituted according to statute. At the same time, this provision is supposed to be in conflict with Article 25 of the Constitution, according to which each person shall be guaranteed a right of appeal and a right to any legal redress. The decisions of an auditing agency should be implemented by the said agency and by the Agency of the Republic of Slovenia for the Promotion of Economic Restructuring and Encouraging of Company Renewal, who both act at the same time in the capacity of the complaining party, judge and enforcing party. The civil lawsuit against a decision of an auditing agency is claimed not to be in conformity with the Slovenian legal system. No reason or consequences arising from successful complaint of a complaining party are required by statute for the purpose of initiating a civil lawsuit. Such a lawsuit is thus claimed to be unfair and in conflict with Articles 2, 8, 14, 23 and 25 of the Constitution.
 
The actions imposed on companies by the decision of an auditing agency in accordance with Article 48.c are said to imply in the majority of cases the expropriation of shareholders who have become so in conformity with statute. In this way the Act is claimed to have damaged, in violation of Article 33 of the Constitution, the private property of shareholders, leaving the latter without any legal remedy which would protect their rights, and to have allowed the increasing of socially-owned property at the expense of private capital.
 
As a proposer, the Central Office of Social Accountancy Service of Ljubljana proposes that the Constitutional Court should pronounce Article 48.b, paragraph 5, of the COTA, concerning the lodging of a private lawsuit appeal with the court, against a decision of an auditing agency, to be in conflict with Article 157, paragraph 2, of the Constitution, and to reach a decision, with immediate effect, on abrogation of the said provision; and, further, to pronounce the provision of Article 48.b, paragraph 2, of the disputed Act, concerning the delivery of the decision of the auditing agency to all legal and natural persons legally bound by the decision, to be contrary to Article 48.c of the COTA and Article 2 of the Constitution in as far as interpreted as requiring that the decision be also delivered to other legal and natural persons not legally bound by the adjudication of the decision of the auditing agency to abide by the resolutions concerning provision of correct evidence on the scope of socially-owned capital.
 
2. In its reply to these claims, the National Assembly says that the transfers of socially-owned assets from one legal person governed by civil law and another other such person, which have already been effected, are null and void for being contrary to Article 103 of the Bonded Relations Act and in conflict with the constitutional principle of the social order, with compulsory regulations and the morality of the socialist self-management society. The third paragraph of Article 51 of the COTA is in the opinion of the National Assembly not in conflict with the Constitution. The National Assembly observes that the Secretariat for Legislative and Legal Matters, as well as the Government, hold a different view, and that the National Assembly will persist in its opinion.
 
In connection with Article 48.b the views of the Secretariat, the Commission for Monitoring and Controlling Ownership Transformation of Socially-Owned Property and the Government accord with each other. The National Assembly holds that one should take as the starting point the actual nature of relationships, in connection with which a decision should be made during the auditing process. The auditing agency is responsible for assessing the financial, accountancy and legal aspects of business operations, and checks the legality and correctness of company operation. Due to special circumstances relating to such control procedure, the lawgiver has deemed it necessary to ensure legal judicial protection of full jurisdiction, because the auditing procedure may also involve decisions concerning private property, voidness of legal transaction and other issues bearing on the rights relating to property law. For the said reasons the usual administrative procedure as carried out by the Social Accountancy Service is claimed to be insufficient, and should be combined by judicial protection. In accordance with Article 157 of the Constitution the courts of competent jurisdiction shall be empowered to decide upon the legal validity of each final act in relation to administrative procedures, but only when alternative legal redress is not provided by statute. The disputed provision of the COTA is claimed to take into consideration precisely this provision of the Constitution and, at the same time, to provide a guarantee for prompt execution of procedures, which will ensure comprehensive protection of property. Actually, the only competent bodies for the assessment of voidness of individual acts, agreements made and other legal transactions are the courts of justice.
 
The National Assembly holds that the statutory solutions are adequate and in conformity with the Constitution. The Government, on the other hand, states that the supplementing of Article 48 by Articles 48.a, 48.b and 48.c is sufficient to ensure effective protection of socially-owned property, which is the basic intention of Article 51, paragraph 3 of the disputed Act.
 
B.
 
1. Article 51, paragraph 3, of the COTA declares as null and void all unpaid transfers of socially-owned assets from one company to other legal persons, which is the reason why the Constitutional Court limited itself only to the assessment of constitutionality of such transfers, that is, the transfers of assets. Concerning the unpaid transfers of capital it had already passed an interpretative decision no. U-I-108/92 on 13 July 1993 (Official Gazette of the Republic of Slovenia, no. 42/93).
 
2. On the basis of the Amendment XCVI to the Constitution of the Republic of Slovenia (Official Gazette of the Republic of Slovenia, no. 35/90), the Companies Act (Official Gazette of the Socialist Federative Republic of Yugoslavia, nos. 77/88, 40/89, 46/90 and 61/90), and in accordance with the latter, section 2 of chapter VI of the Associate Labour Act (Official Gazette of the SFRY, no. 11/88) had been integral parts of the legal system of Slovenia until the coming into force of the Companies Ownership Transformation Act (Official Gazette of the Republic of Slovenia, nos. 55/92, 7/93, 31/93). The Associated Labour Act, section 2, chapter VII, had regulated transaction concerning socially-owned assets. Article 204 thereof had provided that socially-owned assets could be transferred without payment, on the basis of self-managing agreements or contracts concluded in writing, to another socially-owned legal person, and that assets could also be obtained in this way. Article 206 had prescribed restrictions on transactions concerning real estate considered a natural resource, and had also stipulated as possible the transfer of farmland and construction land, forests and forest land in social ownership to another socially-owned legal person exclusively without payment, while payment had only been possible up to the amount of invested capital into such a land or forest. Article 205 had prescribed that items serving as means of production and other means of work and the welfare funds could not be alienated without payment from socially- owned property, unless expressly allowed so by statute. All of the said provisions had been compulsory in character, for which reason the contracts concluded in violations of those provisions are null and void.
 
The legal basis for concluding legal transactions through which socially-owned assets could be transferred between socially-owned economic entities, subject to fulfilling certain conditions, had thus existed. However, the Constitutional Court finds that, in assessing the legality of individual transfers just the permissibility of unpaid transfers of socially-owned assets on the basis of general and abstract legal norms is not enough; for the legal bases to be valid, there must also exist all the general and specific legal assumptions. The assessment of legality of actual legal relations is not within the jurisdiction of the Constitutional Court. Thus, the latter restricts itself, in line with Article 160 of the Constitution, to the assessment of conformity of the disputed provisions of the COTA with the Constitution. The assessment of legality of individual legal instruments and acts of companies falls, according to the COTA and other statutes, within the competence in particular of auditing agencies and courts of justice.
 
Transactions involving socially-owned assets had been regulated by the Associated Labour Act, through its compulsory provisions. In addition to provisions of the said Act, bonded relations between socially-owned legal persons in connection with socially-owned assets had also been governed by provisions of the Bonded Relations Act. If legal transactions had fulfilled all general and specific prerequisites for their validity, these had been concluded and effected in accordance with the legislation then in force, with legal persons who had acquired the right to use such socially-owned assets on the basis of such transfers acquiring this right in a legally valid and correct manner. In this connection, the
 
Constitutional Court accepts the assertions of the Government and the Secretariat for Legislative and Legal Matters of the National Assembly, but refuses the arguments of the National Assembly, which state that unpaid transfers of socially-owned assets between socially-owned legal persons based on Article 103 of the Associated Labour Act had been null and void. With transfers of assets, the parties who had acquired socially- owned assets and who had been independent legal persons from the point of view their property had acquired the right to use such assets, with the assets becoming an integral part of their material basis.
 
On the basis of the above said, the Constitutional Court considers that Article 51, paragraph 3, of the COTA, the portion declaring as null and void all unpaid transfers of socially-owned assets to other socially-owned legal persons, may infringe also those legal titles whose origin and realization had been based on legislation then in force, thus taking away from such persons the rights having been acquired in a legally valid way. By reducing the material basis of such persons, the third paragraph of Article 51 infringes, in violation of Article 155 of the Constitution, not only the accrued rights of the acquirer but, indirectly, also the rights of third parties who had entered into business relations with the acquirers. The restitution of the acquired assets would decrease the financial standing of the acquirers, which would shake, in violation of the principle of the state governed by the rule of law (Article 2 of the Constitution), the legal security of their business partners.
 
In the case of the acquirers of assets, whose activities would be endangered or prevented as a result of free-of-charge restitution of the acquired assets, this could bring about bankruptcy or liquidation. And the dissolution of a legal person would infringe the accrued rights of the entire staff of that legal person.
 
In this connection, the Constitutional Court points out that the abrogation of Article 51, paragraph 3, of the COTA does not imply validation, at the same time, of transactions considered to be null and void on the basis of the regulations in force at the time of their concluding. The provisions of the COTA do not in any way affect the possibility of legitimate persons to apply all of their civil sanctions provided for in the Bonded Relations Act, regardless of whether such transactions had actually been detrimental to the socially-owned property or not. The position that, in the case when the acquirer had been a socially-owned person in accordance with the Associated Labour Act, "causa donandi" had been permissible with reference to socially-owned assets, does not mean that all such legal transactions had been legal and valid. In addition to permissible cause, all other assumptions had to be fulfilled for such transactions to be valid. Among the conditions necessary for the validity of such
 
transactions, the Constitutional Court points out especially the provision of Article 53 of the Bonded Relations Act, according to which the validity of legal transaction without payment is affected not only by unallowed basis (cause), but unallowed intention as well. In legal assessment of allowability of intentions concerning transfers of socially- owned assets without payment, it is of course necessary to take into consideration that socially-owned legal persons had also been independent economic entities operating in line with the principles of market economy. From the above said it follows that allowable intentions in connection with disposition of socially-owned assets without payment had been more of an exception than the rule. Such would be the transactions relating to socially-owned assets which had been out of use and a burden to the company, if the company had failed to sell such assets.
 
On the basis of the implied intention of the Associate Labour Act (ratio legis) such transfers are also allowed by the COTA in Article 51, paragraph 2; but it makes the validity of such transfers subject to the approval of the Agency of the Republic of Slovenia for the Promotion of Economic Restructuring and Encouraging of Company Renewal. The abrogation of Article 51, paragraph 3, of the COTA does not in any way interfere with the performing of audits in accordance with Articles 48,, 48.a, 48.b and 48.c of the COTA; with all of the civil law sanction provided for through bonded relations and other regulations regardless of ownership transformation procedures continuing to be in force, the implementation of these provisions will ensure, in a legally correct way, the protection and establishing of a real state of socially-owned property in accordance with statute. And this was the basic intention of the disputed third paragraph of Article 51.
 
3. The Enabling Statute for the Implementation of the Amendment XCVI to the Constitution (Official Gazette of the Republic of Slovenia, no. 37/90) in its Article 5 stipulates that, until government legislation on company privatization will have come into force in the Republic of Slovenia, the existing socially-owned companies may be constituted as companies with mixed ownership by issuing internal shares in accordance with the Act on Amendments and Supplements to the Act on Transactions with and Disposing of the Socially-Owned Capital (Official Gazette of the SFRY, no. 46/90), and in accordance with Article 35, paragraph 2, and Article 38 of the Companies Act (Official Gazette of the Socialist Federative Republic of Yugoslavia, no. 46/90), however, always subject to prior approval of the Agency of the Republic of Slovenia for the Promotion of Economic Restructuring and Encouraging of Company Renewal. The approval of the Agency is required in the Enabling Statute also in the case of issuing internal shares of companies constituted as companies with mixed ownership on a different basis, as well as in the case of selling a company by issuing internal shares. The Enabling Statute at the same time stipulates that companies shall be required to harmonize their ownership relations developed on the basis of issuing internal shares in accordance with the national companies privatization act within the time limits, and in the manner, specified therein.
 
The companies, then, had a legal basis for ownership transformation and limited privatization of socially-owned property; they also had been allowed the possibility of capital increase by investing the capital of other legal or natural persons. In this connection, it needs to be pointed out that ownership transformation under the Act on Transactions with and Disposing of the Socially-Owned Capital, which had been carried out by issuing internal shares, had been limited by discounts prescribed by the said Act and later on, by Article 5 of the above mentioned Implementing Statute which had made reference to the COTA. From this it follows that there had been no other legal basis for any other operation whatsoever involving socially-owned property.
 
Regardless of the fact that the Companies Act had abrogated the provisions of the Associated Labour Act regulating the rights, obligations and responsibilities of workers and other working people concerning the use, management and disposition of socially-owned assets, the Constitutional Court considers that these, being the representatives of socially-owned property had not been without responsibility for maintaining its substantial value. With the transformation of
 
organizations of associated labour into companies with share capital, shareholder and partnership assemblies have been formed, in which socially-owned capital has been represented by workers' delegates, elected on the basis of general company legislation. The principle of delegates, which had been introduced by the Associated Labour Act, has thus been cancelled. Until the completion of ownership transformation the interest of socially-owned capital were supposed to be represented by representatives of socially-owned capital, who should preserve its value and thus, indirectly, protect the interests of future owners.
 
The representatives of socially-owned capital and managers were obliged to manage the capital and the socially-owned assets entrusted to them economically regardless of the fact that during the transitional period of changing the economic system in the Republic of Slovenia a certain legal void developed. Their responsibility concerning efficient and economical management of the assets originates in the first place in the general principles of civil law, as well as in the provisions of labour legislation. The general principles of civil law obliged the persons managing the socially-owned assets to work for the benefit of the entire society and to avoid causing damage to others trough their acts or omissions to act (Article 9 of the Bonded Relations Act), in establishing bonded relations to abide by the principles of conscientiousness and honesty (Article 12), not to misuse the rights (Article 13) and not to exploit the monopolistic position (Article 14), and to act on the basis of principles of good husbandry (Article 18). In addition, Article 5 of the Bonded Relations Act expressly provides that, while entering into bonded relations, socially-owned legal persons shall use socially-owned assets with which they dispose in a socially and economically reasonable way, and to maintain their undiminished value, ensuring the improvement and expansion of the material basis of associated labour and the realization of the their objectives and tasks, as well as the protection of socially-owned property.
 
In the light of the above mentioned legal principles it becomes evident that the lawgiver had also defined legal assumptions concerning the damaging of socially-owned property on the basis of prior regulations concerning the management of the socially-owned property. For this reason it is not possible to accept the claims of the proposers that the provisions of Article 48.a have retrospective effect and that they infringe the accrued rights. The rights of third parties, which they acquired on the basis of damaging socially-owned property are not those accrued in a legal way in the sense defined in Article 155 of the Constitution. In Article 48.a the lawgiver specified the actual situations which were assumed by statute to involve the damaging of the socially- owned property, of course, within the framework of the obligations applying to them prior to that time, in the period to which the provision applied.
 
The provision does not have retrospective effect because the obligation of the management to manage the socially-owned assets on the basis of good husbandry and to maintain their substantial value had applied throughout the period in which those assets had been entrusted to them. Thus, Article 48.a only made operational the criteria of good husbandry, and is thus not in conflict with the Constitution. Because the assessment of appropriateness of these criteria from the economic point of view does not come within its jurisdiction, the Constitutional Court did not concern itself with this issue.
 
Individual transfers of assets without payment between socially-owned legal entities which are in fact allowable may nevertheless be subject to auditing under Articles 48. or 48.a of the COTA. While the argument of the proposers, that such transfers of assets without payment could not have decreased socially-owned property as a whole, is true, it nevertheless remains irrelevant for the assessment of the controversial provisions. The assets which had been transferred from one entity to another had, it is true, remained socially-owned property, but have been decreased by the amount of those which had been transferred. The company, being a legal person, is an independent entity in accordance with civil law, with its own property. Ownership transformation, in particular that based on the method of distribution and internal purchase, is carried on with reference to its property and is limited to the eligible parties specified in Articles 23 through 25 of the COTA. The entire property of a company with socially-owned capital is the basis for the initial balance sheet and company ownership transformation. Thus, any interference with the property of companies would have decreased their initial value and acted to the detriment of the eligible parties most closely responsible for creating the said property.
 
The implementation of Article 48.a, then, applies to the evaluation of individual legal transactions and acts from the point of view of the damaged socially-owned property. Through these procedures it will also be possible to verify the existence of all other assumptions, which are the prerequisite for the validity of legal transactions. In particular, it will be necessary to establish the allowability of intention and legality of developing and expressing the will in the process of concluding legal transactions on the basis of which socially-owned assets had been transferred without payment.
 
In Article 48.b., paragraph 2, and Article 48.c of the Act it is stipulated that the auditing agency shall issue a decision imposing upon the company the prescribed measures if the company should fail, within 30 days, to effect such harmonization as has been prescribed in the audit report. In accordance with Article 48.b, paragraph 3, the company suffering damage, as well as other legal and natural persons to whom the decision has been delivered, may lodge an appeal against such a decision with the competent court. The auditing agency is obliged to impose upon the company the measures on the basis of identifying the existence of the assumptions referred to in Article 48.a of the disputed Act.
 
Article 23 of the Constitution stipulates that each person shall be entitled to have all issues relating to his rights and obligations decided by an independent and impartial court of justice. And Article 25 of the Constitution stipulates that each person shall be guaranteed a right to appeal and a right to any other legal redress in relation to the decision of any court or other government body which determines the rights, obligations and legal entitlements of such person.
 
Article 157 of the Constitution, in addition, specifies that the courts of competent jurisdiction shall be empowered to decide upon the legal validity of each final act in relation to administrative procedures, but only when alternative legal redress is not provided by statute.
 
With the provision of Article 48.b, the lawgiver had only regulated the procedure required to establish a legally valid statement on socially-owned assets on the basis of the criteria specified in Article 48.a, making it possible at the same time for the decision based on an assumption to be reversed by counter-evidence through a particular lawsuit ensuring full jurisdiction.
 
The Constitutional Court further points out that auditing under Articles 48 and 48.a of the COTA does not exclude a possibility for the eligible parties to initiate any other procedure in a competent court, or with other bodies responsible for ensuring the exercising of rights provided for in other applicable regulations.
 
This Decision was reached on the basis of Article 160, paragraph 1, of the Constitution and Article 7 of the Constitutional Court Act used in conjunction with Article 25, paragraph 3, sub-paragraph 2, of the Law of Procedure at the Constitutional Court of the Republic of Slovenia (Official Gazette of the Socialist Republic of Slovenia, nos. 39/74 and 28/76) by the Constitutional Court in the following composition: Dr. Peter Jambrek, President, and Dr. Tone Jerovšek, Matevž Krivic, M.L., Janez Snoj, M.L., Dr. Janez Šinkovec and Dr. Lovro Šturm, Franc Testen, Dr. Lojze Ude and Dr. Boštjan M. Zupančič, the judges. The adjudication in section I was made with six votes in its favour and three against it. In reference with this section separate negative opinions were expressed by the judges Jambrek, Jerovšek and Šturm. The adjudication in section II was made with eight votes in its favour and one against it. In reference with this section a separate negative opinion was expressed by the judge Ude.
 
 
P r e s i d e n t:
Dr. Peter Jambrek
Type of procedure:
review of constitutionality and legality of regulations and other general acts
Type of act:
statute
Applicant:
Podjetje FINSA - Finančni inženiring in svetovanje p.o., Ljubljana
Date of application:
14.06.1993
Date of decision:
31.03.1994
Type of decision adopted:
decision
Outcome of proceedings:
annulment or annulment ab initio
Document:
AN00380