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DIRECTORATE GENERAL FOR INTERNAL POLICIES
POLICY DEPARTMENT C: CITIZENS' RIGHTS AND
CONSTITUTIONAL AFFAIRS
PETITIONS
Private properties issues following
the change of political regime in former
socialist or communist countries
Albania, Bosnia and Herzegovina,
Bulgaria, Croatia, Romania and Serbia
STUDY
Abstract
Some transformations occurred in the area of private property ownership
following the change of political regime in former socialist or communist
countries. The six analysed countries (Albania, Bosnia and Herzegovina,
Bulgaria, Croatia, Romania and Serbia) illustrate well the whole range of
contentious problems in a region where the Communist regimes have
varied tremendously in their approach to private property, intensity of
social control, repression and overall legitimacy. This diversity of
situations poses today different types of dilemmas for the property
restitution process and these six countries responded in different
manners to these general challenges, in the context of their own peculiar
social and economic history.
PE 425.609
This document was requested by the European Parliament's Committee on Petitions.
AUTHORS
Project leader:
Laura Stefan, Romanian Academic Society
With the collaboration of:
Romanian Academic Society (RAS), Romania
Centre for Liberal Strategies (CLS), Bulgaria
Partnership for Social Development (PSD), Croatia
RESPONSIBLE ADMINISTRATOR
Ms Claire GENTA
Policy Department Citizens' Rights and Constitutional Affairs
European Parliament
B-1047 Brussels
E-mail: poldep-citizens@europarl.europa.eu
LINGUISTIC VERSIONS
Original: EN
Translation: FR
ABOUT THE EDITOR
To contact the Policy Department or to subscribe to its monthly newsletter please write to:
poldep-citizens@europarl.europa.eu
Manuscript completed in April 2010.
© European Parliament, Brussels, 2010.
This document is available on the Internet at:
http://www.europarl.europa.eu/studies
DISCLAIMER
The opinions expressed in this document are the sole responsibility of the author and do
not necessarily represent the official position of the European Parliament.
Reproduction and translation for non-commercial purposes are authorized, provided the
source is acknowledged and the publisher is given prior notice and sent a copy.
Private properties issues following a change of political regime in Albania, Bosnia and Herzegovina, Bulgaria,
Croatia, Romania and Serbia
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EXECUTIVE SUMMARY
The restitution of confiscated property to former owners in the ex-communist states of
Central and Eastern Europe was a policy decision with momentous consequences, as the
level of assets concerned was huge. In addition, and the impact of handing back residential
or commercial property to former owners, four decades after nationalization, was difficult to
anticipate. The solutions adopted – relatively quickly, or slowly and incoherently, in many
stages and spanning a long period of time – were very different from country to country.
The historical legacies explain some of these differences in approach. The implementation
of the Communist project was uneven and country-specific. In societies with little
established aristocracy and fewer large real-estate owners, the nationalization of residential
houses and farming land was more difficult to justify in political terms. As such, it took
about a decade or more after taking power for the Communist governments to sufficiently
consolidate in order to be able to embark upon the expropriation of millions of peasant
farmers or urban lower-middle classes. By contrast, large real-estates and the factories
tended to be confiscated earlier. In mountainous areas, confiscated property was less
frequent than in lower, more productive areas.
The determination of the political push towards nationalisation of property, especially in the
rural sector, was another diverging factor. At one end of the scale, in Romania or Albania
the state took control of almost all properties, either directly or through the cooperatives.
By contrast, in Yugoslavia (like in Poland) most of the land had remained in individual
family farms during the socialist period. In addition, some regimes (Yugoslavia, Hungary)
started to relax central control in the '70s or the '80s, trying to simulate a market economy
through "competition" between two or more state-owned enterprises. Therefore, the search
for a way to put property into private ownership started earlier in some of the Communist
countries, while others remained totally unprepared up until 1989.
Still, unlike in the former Soviet Union, in the Western Balkans, Bulgaria and Romania,
legal records of previous owners still existed for both commercial and residential property.
This meant that the restitution of the actual assets – buildings, land, industrial assets – was
a feasible option. In reality, however, there were many practical difficulties. Often the land
became unavailable: for example in urban localities which changed and expanded during
Communism, when whole neighbourhoods were erased in order to make room for the
socialist housing units. Land improvement works, artificial lakes of experimental farms had
been laid on top of former plots. In consequence, land swaps of compensation
arrangements had to be made.
In the countries that pursued this strategy, the restitution did not necessarily lead to land
fragmentation, but it may have facilitated the transition from socialist cooperatives to
corporate farms. In other countries, such as Romania and Bulgaria (and many in Central
Europe), some large state farms were downsized, but managed to survive as
corporations. However, in general, the social pressure to dismantle the agro cooperatives
was so high that no post-1989 cabinet could have resisted it.
There are a number of fundamental difficulties and dilemmas the post-Communist
governments in Bulgaria, Romania and the Western Balkans had to face:
How far back in time should the process go? Should only Communist expropriations (or
"collectivization") done through law or decree be considered? Or should cases that
occurred during the World War II or immediately after, sometimes through unlawful
abuse (like in the case of the Jewish community, but not exclusively) also be included?
Should former owners be given back their very same physical property, or another one
of similar value, or should they be compensated financially instead? In the latter case,
should the compensation be in cash, or in vouchers which are the equivalent of shares
in some specially-established funds or in existing state companies? Should the amount
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of the compensation be at full value, or should it be capped (i.e. some confiscation and
redistribution may occur)? Should vouchers be immediately tradable, or must
temporary restrictions be imposed?
Related to the point above, how far can we go with the argument that the state is liable
and should redress the wrongs committed forty of fifty years ago against some
individuals? Do the post-Communist generations have a moral obligation to finance the
restitution process fully, or there are other social considerations that should play a role?
For example, if a building nationalized in 1950 still exists, but is occupied by many
tenants, can it be restored with no restrictions attached to the (inheritors of the) former
owner? Can absentee landlords have their land reinstated, even if this would mean
evicting families with no title but who have used the land for decades (the case of many
Roma communities)? Such concerns of inter-generational redistribution are legitimate in
any sort of public policy and made the crux of the argument, even though not always
explicitly, when the issue of restitution was discussed in early nineties.
Can the restitution process follow fully the inheritance rules from the Civil Code, or
should eligibility be more restricted, for instance only to the original owners and their
children? Should only individuals who are residents of the country be eligible, or should
immigrants also qualify?
Regarding industrial assets or agricultural land, how can the opposing goals of justice
and economic efficiency be reconciled, given that restitution is often likely to result in a
fragmented and unmanageable ownership structure?
Finally, can the post-Communist public administrative apparatus be trusted to discharge
in a reasonably fair and effective way the daunting task of identifying the lawful owners,
assessing properties and compensating eligible individuals for their lost properties?
What procedures and institutions need to be created, at the central and local level, to
ensure property restitution proceeds accurately and expeditiously?
This study outlines the manner in which six South-Eastern European countries – Romania,
Bulgaria, Croatia, Bosnia, Serbia and Albania – responded to these general challenges, in
the context of their own peculiar social and economic history. Like Central Europe, they all
had to confront these dilemmas in the first years after the fall of the Communist regime,
because the longer the process of restitution was dragged out, the more complicated the
situation became. The liberalization of the economies after 1990 created a market for all
types of assets and as a result of this natural pressure, transactions proliferated, even in
situations when ownership rights were not certain. It was obvious from the outset that
delays or piecemeal strategies tended to create more conflicts, overlapping property rights
and actions in courts.
The similarities and differences are all highlighted in the study and the answers given to the
dilemmas above emphasized. Both nationalisation and restitution policies varied
significantly, these variations having an impact also upon the structure of the case-studies
presented in this report. The main structure of the case studies includes an overview, the
historical background of the expropriation process, the restitution/compensation process
and conclusions. However, the inner structure of each topic is not the same for all countries
– for instance, some of the countries have adopted legislation for restitution, while others
have not.
Most of these countries (with the exception of Serbia) attempted to restore in kind or
compensate the previous owners for the property confiscated during the communist
regime. However, the restitution or compensation process has not been consistent, the
procedures (both legal and administrative) have not been coherent, and the process itself
has generally been slow. The main common problems related to restitution in the six
countries under scrutiny, as identified in our analysis, are the following:
Belated adoption of property restitution policies;
Unclear and unpredictable policy on property restitution;
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Private properties issues following a change of political regime in Albania, Bosnia and Herzegovina, Bulgaria,
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Weak institutional capacity to implement the policy;
The emergence of conflicting rights in the same property;
Ineffective compensation systems.
All of these problems have caused significant discontent amongst previous owners or
current tenants, and generated waves of complaints to external institutions such as the
European Court of Human Rights (ECtHR) and petitions to the European Parliament (EP).
However, the issue of restitution or compensation for property confiscated by former
communist regimes does not fit into the sphere of competences of the European Union, so
that any future developments linked to the accession of EU to the ECHR will be completely
neutral to it.
- The role of the European Court of Human Rights.
The ECtHR can examine applications only to the extent that they relate to events which
occurred after the Convention entered into force. In those cases where the property was
confiscated in the interval 1949-1989, that is, long before the date of the entry into force of
the Convention with regard to all six States, the Court is not competent ratione temporis to
examine the circumstances of the expropriation or the continuing effects produced by it up
to the present date.
Therefore, in the absence of domestic legislation providing for restitution or compensation
for lost property or of domestic courts’ final judgments providing for restitution or
compensation, none of those who had lost their possessions before 1989 could have a
chance to win before the ECtHR.
The judgments finding a violation of Article 1 of Protocol No. 1, in cases of property lost
during the communist regime, are not related to the fact of the nationalisation or
confiscation by the authoritarian power. Instead, the judgments relate to the failure of the
States to comply with their own legislation providing for compensation or restoration of
property or with final judicial or administrative decisions restoring property or awarding
compensation, rendered by domestic authorities in favour of the applicants, during the
period following ratification of the Convention.
This amounts to the paradoxical, but nevertheless real situation whereby, if a post-
communist country refuses to take any steps to address in law the issue of properties
nationalized before 1989, the respective state is fully insulated against claims before
ECtHR. It is only once a country begins to pass national legislation on the matter that it can
be held liable in international courts. However, it must be said that, in spite of this strong
institutional incentive for non-action, most post-communist countries in CEE and SEE could
not avoid passing some sort of legislation on property restitution, as a result of domestic
political pressure. It is the difference in timing and quality among these bodies of national
law that explain the wide variation in the number of claims (and, subsequently, successful
claims) coming before ECtHR from each state.
When comparing the judgments rendered by the Court in cases involving each of the
countries, some common patterns emerge for all (or for a subgroup). There are also a
relatively less important set of specific features that emerge for each individual country.
With regard to those countries that have a significant number of judgments, a leading
judgment can be identified. These are normally followed by dozens of similar judgments,
which address the same legal issue and give place to well-established case-law.
The main issues under the Convention are the non-enforcement of final judicial
decisions; the quashing of final judicial decisions and failure by the courts to respect the
finality of judgments; the failure of the domestic authorities to provide compensation to
which the applicants were entitled under domestic law; deprivations of property in the
context of special protected tenancy and access to court in order to ask for restitution of
confiscated property.
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- The role of the European Union.
The countries under scrutiny differ as regards their status vis-ŕ-vis the European Union:
Romania and Bulgaria are already members, Croatia is a candidate country, while the other
three countries, Albania, Bosnia and Herzegovina and Serbia, are potential candidates. In
this respect, it follows that the European Union has at present different leverage and
different mechanisms to influence the process of property restitution in each of
them. The issue of property restitution has been always addressed in country reports of
the European Commission from the perspective of human rights; concrete examples of
country reports are given in each of the case-studies presented in Part II of the present
Generally speaking, the leverage of the EU on national policy tends to be stronger in the
years before a milestone is reached: either as a condition to be fulfilled before the country
can start accession negotiations; or during this process, as a benchmark to be monitored
before negotiations can be concluded. However, the peculiarities of property restitution – it
is a particularly sensitive national issue in every country, very political in nature, grounded
in moral and historical judgements, with a huge amount of resources at stake – and the
fact that it exceeds the explicit mandate of the EU, limits the Union to the role of guardian
of procedures, rather than reviewer of substance on the national decisions adopted. On the
other hand, a reasonable and timely solution to the problem of property in every post-
communist state willing to join the EU is crucial, one way or another, as a building block of
the rule of law, for which is a membership prerequisite. This is the dilemma confronting the
EU institutions: encouraging a fair policy on restitution, but only using indirect instruments
for this goal.
Recommendations:
In our opinion, the European Union should continue to use its traditional monitoring
mechanisms and conditionality systems to assess the extent to which countries have
implemented policies to address the issue of property restitution. In this process, the EU
should not limit its assessment to the review of legislation, but should also request concrete
action plans with clear benchmarks, budgetary allocations and responsible institutions, once
the national governments adopted a law. In other words, the Union cannot impose a
solution on Eastern-European societies, but once such a solution has been agreed upon by
the legitimate authorities of the particular country, it can request that the government and
the administration do not undermine the policy through implementation flaws.
This would be a good strategy which takes account of a well-known phenomenon: that it is
often easier for the national voters and the public to make the government embrace the
broad principles of a policy, and even to adopt a law, but much more difficult to monitor
their bureaucratic implementation. External monitoring of administrative performance in
this field, as well as the performance and fairness of other structures, such as the judiciary,
which play a role in the process of property restitution, may make an important
contribution to an increased level of accountability in the candidate / prospective candidate
country, and thus provide a tool to improve the quality of governance.
As regards the particular case of property restitution, the solutions do not come without
significant costs (which in any case would be lower if restitution in kind were the solution
adopted by the countries). In this context the EU may explore together with the countries
concerned a mechanism for financing such costs in a manner which is both practical and
morally acceptable. Various arrangements may be considered, from linking restitution with
the privatization process, to mutual funds, selling of state assets, special purpose loans,
etc. Due consideration must also be given to the likely implications for the national
budgetary deficit.
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- National cases
1. The section on Albania deals with the complex problem of property restitution in a
country that for almost a decade suffered from social turmoil and unstable governments.
First, the legal framework has been volatile and incoherent over time. The financial burden
that the amount of compensation to former owners would place on the state has never
been estimated. Furthermore, as described in the respective section of the study, there
have been serious issues regarding the methodology for establishing the compensation
sums. The current law on restitution allows for restitution in kind or compensation in cash
at the property’s market price, and the methodology used to establish the value of
compensation has been approved by the National Property Restitution and Compensation
Agency. However, this has been criticised by international organisations, because it makes
the value of compensation dependant upon the income the property would have generated
if it had been in the possession of the rightful owners. The chapter also describes the
administrative procedure of the restitution process.
The 2008 EC Progress Report highlighted that, despite the problems created by the lack of
property registration and the legalisation of informal use of land, Albania had registered
advances in the restitution process and the enforcement property rights. In the same year,
a report issued by the European Parliament on the property restitution process in Albania
discussed thoroughly the problems created by the disruptive legal framework and the
inefficient institutional setup for the management of property issues after 1990. Its
conclusions and recommendations were in line with those of the EC 2009 progress report,
according to which Albania showed little progress on issues related to property rights in
general. The report urged the adoption of a comprehensive working plan in order to
improve the situation regarding property rights.
Another report, made by the Property Restitution and Compensation Agency in October
2009 for the use of the Prime Minister’s office, shows that no decisions have been taken
after the July 2009, since the deadline stated in the law had not yet been postponed. This
means that besides new claims, the Agency will have to provide an answer to pending
claims for which the administrative investigation has not yet been finalized. Usually, claims
are still pending due to missing documents or procedural mistakes which impeded or
delayed the adoption of a final decision. However, human resources are not available to
speed up the process or support better communication with beneficiaries. At present, the
number of requests is already too large for the current administration to handle.
The lack of personnel is reflected in the number of judicial appeals on property restitution
issues. Only one third of all appeals were dealt with so far, which reflects a low capacity, to
a large extent due to the lack of trained personnel. This issue needs to be addressed by
future reform plans.
Making the process of evaluation of restitution claims more efficient is crucial, since
unsolved claims end up in judicial courts, a trend that is accelerating: between August and
October 2009, 187 lawsuits were initiated against the Agency’s decisions. The demand for
highly trained staff is urgent, both for dealing administratively with the files and to
represent the state in courts. A property fund out of which compensation in kind could be
made does not yet exist. Five years after the adoption of the current law on restitution and
compensation, despite additional legal acts that aimed at clarifying the procedure,
restitution in kind has never been made.
According to the law, property used in the public interest cannot be returned to its owners.
This required initial registration of immovable property that could be used for restitution all
over the country. The Albanian Assembly took a recent decision to verify property titles,
including those belonging to the State. The institution in charge identified a high level of
uncertainty related to registered titles, including the ones in state ownership. Thus, setting
up a Property Fund based on the records of the Immovable Property Registration Office was
not legally secure.
A yearly fund for cash compensation was included in the state budget. For 2009 this fund
reached 10 million Euros and it was used to cover compensations for 211 out of the 521
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owners who had their property rights restored that year. The compensation process is
conducted according to the distribution of the claimed land across the value maps of the
Agency. These maps need to be continually updated until the final compensation deadline
in 2015. Considering the dynamics of the real estate market and of the number of filed and
solved claims, the budget required to cover compensation can be expected to grow.
2. The chapter on Bosnia and Herzegovina highlights the special situation of a country
with split governance. A law on the denationalisation of property seized during the
Communist regime was adopted at state level, but immediately suspended, thus producing
no legal effects. The study describes the events after World War II and the Bosnian war of
the '90s which had important implications for the restitution process, and reviews critically
the final draft of the proposed law on denationalisation, as well as the governmental and
institutional challenges to the implementation of the proposed law. It examines the existing
policy conflicts and problems that the proposed law could aggravate, including the
complications arising from the Dayton Peace Accords. Then it moves on to predict the
impact of government and administrative corruption in the implementation process.
Even though the current draft form of the restitution law has weak points, they can be
addressed in by-laws, codes of conduct, and the administrative tools and mechanisms that
do not have to form part of the formal law. Adopting this Law would at least establish an
institutional framework, after which there is a six-month period before the actual
implementation begins. The adoption of the Denationalisation/Restitution laws in each
entity (they are in progress) should be in line with the state level law. The ideal solution,
though probably the least likely, would provide that Entity laws be in accordance with the
state law, and that they empower the state level law in terms of the speed and quality of
implementation. This would be done by creating specific regulations on registering property
at municipal/city/district levels and making such data available to the public and all
interested parties. New registers of property (a register of confiscated property subject to
denationalisation, a register of property that shall be used for the purpose of natural
compensation, and a general register of all municipal property) should be put in place in
each of the municipalities in Bosnia and Herzegovina or at the cantonal or entity level. Such
registers, aside from simple counting of the property, should contain data that is in the
possession of the public bodies (location, type and size of the property, under which law
the property was confiscated and the legal basis for confiscation, who is in possession of
such property or who has occupancy rights and on what basis, approximate commercial
value of the property). Such registers should be available to the public as well as to all
interested parties. In addition, a combined register of persons and companies that have
been compensated for their property through bilateral agreements (such as the Agreement
between the U.S. Government and SFRJ) should be established and made available to the
public and interested parties.
Municipalities should be required by law to establish registers of property which is
unaccounted for and to provide a binding deadline within the law for starting the procedure
before the court by the relevant public office (public defender) in the name of the targeted
municipality, and stating that all property which remains unaccounted for after the deadline
belongs to the State of Bosnia and Herzegovina.
Transparency and access to data should be improved in the policy-making process at all
levels (draft laws, future by-laws and other relevant policy documents, registers of
property subject to restitution law, decisions in the process of denationalisation as well as
statistical and other relevant data). Integrity and anti-corruption measures should be
imbedded either in the law or by-laws and codes of conduct of relevant bodies, as
requested in the implementation of the Dayton package of property laws. Special attention
should be given to conflict of interest-related issues in the appointment of members of the
municipal commissions, as well as the appointment of
members of the Appellate
Commission, with both soft (prevention) and hard (ban on appointment to public service
employment) measures against those that breach the codes of conduct or other similar
instruments.
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The international community should give special attention to the issue, as it is one of the
last issues to be resolved in Bosnia and Herzegovina preceding the development of a free
market – corruption aside. Therefore, the denationalisation issue, as well as effective,
timely, fair and just implementation of the Law and international treaties, should become a
criterion for Bosnian progress in accession to the EU.
By the end of the denationalisation process, Bosnia and Herzegovina should consider a
special approach to the property that belonged to victims of the Holocaust or the last war in
Bosnia and Herzegovina. Even though the country is in a difficult economic situation, no
state should benefit from sufferings of the past. Such measures pay tribute to the victims
of tragic historical events, and at the same time prevent special interests within the State
from making money and taking precedence over the interests of all citizens. In complex
situations, the tenants should be given the right to buy such apartments as guaranteed
under the law. Bosnia and Herzegovina can consider a solution similar to the one in
Macedonia, and create a fund from the money received through the sale of public property
to be used for paying compensation to victims and their descendents. The fact that proper
and fair denationalisation is not a condition for the BiH roadmap to the EU raises suspicions
that this matter will never be adequately or fairly resolved. Since there is almost no
leverage from the international community in relation to denationalisation policies, it is
expected by many that the final outcome of denationalisation will be a failure.
3. In the chapter on Bulgaria, we describe and analyse the restitution process against its
historical and political background. The process of nationalisation of agricultural land, or
urban, industrial and other property in the early communist period and the subsequent
practices of alienation of property are also briefly presented in order to facilitate the
understanding of subsequent developments. The legislation, the judicial practice and the
decisions of the Bulgarian Constitutional Court on the property restitution in the transition
period are discussed in detail. The social, economic and urban development consequences
of this process are also outlined with a special attention given to the minorities, with an
emphasis on the restitution of property to the Bulgarian ethnic Turks.
The restitution of property in Bulgaria over the last twenty years has been one of the most
consequential and complex social processes. It has been both shaped by, and has itself
shaped Bulgarian politics. Issues of the balance between retributive justice and the general
public good, issues of evaluation of the past and projections for the future, and indeed
issues of political identity were all entangled in this process. Therefore, any overall
judgement is necessarily partial and controversial. One thing is clear, however: the process
of restitution has determined the outlook of contemporary Bulgaria in a variety of important
In terms of economic efficiency, the restitution of agricultural lands in their real boundaries
has fragmented the plots, and has created a serious need for the consolidation of land.
Bulgarian agriculture, partly as a result of this fragmentation, has been one of the sectors
facing the most severe difficulties of recovery following the crisis of the 1990s. This
fragmentation also creates problems in absorbing the EU funding in the sector.
The benefits of the restitution process should therefore be searched for mostly in the area
of social (retributive) justice and the legitimacy of the transition to liberal-democracy and
market economy. Here, the restitution efforts of the political elite indeed created a
significant constituency of owners supporting the political transformation.
4. The chapter on Croatia reviews the various positions of the European bodies and other
international organisations such as the Organisation for Security and Cooperation in Europe
(OSCE), EctHR etc, in relation to the process of restitution and compensation. It further
covers the legal framework and analyses, critically the Law on Compensation, which was
weakened by the inherent conflict of interest of the County Administration Offices. There
are also important issues with the implementation of the legal framework: the slow pace of
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procedures in the County Administration Offices and the decisions taken by the national
courts that affect the process of restitution and compensation.
A number of problems stem from the choice of the County Public Administration Offices as
the responsible body for the arbitration of claims to restitution and compensation: (i) the
inherent conflict of interest; (ii) the different principles applied to the administrative
procedure, and (iii) the slow pace of the procedure. The conflict of interest problem poses
the greatest threat to the just settlement of claims for restitution and compensation.
However, it is also the most difficult to change at this point in time, because 71% of all
cases have already been settled by this administrative mechanism. The recommendation
here must then be generalized to the politics of the Republic of Croatia in the future. A
possible solution to prevent future conflict of interest problems could be the introduction of
a practice that would permit the Committee for the Prevention of the Conflict of Interest to
consider and point out any potential areas of concern before any act of legislation is
presented to the Parliament. Of course, the Committee would not have the power to
change the legislation but at least it would have oversight and whistle-blower status. This
would also work towards giving the Committee a more prominent position within the
structure of government.
The problem of the different principles of procedure being applied in different counties
could be solved by the legislature opting to pass additional regulations and amend the
contradictory wording in the Law on Compensation. This type of solution should at least be
contemplated for the most contentious issues. The less controversial issues must continue
to rely on the Administrative Court for their resolution as foreseen by the legislative
framework.
The third problem of the slow pace of the administrative procedures calls for Government
pressure to be placed on the counties to complete the administrative stage of the process
of restitution and compensation. The European Commission and the European Parliament
could also encourage the Croatian Government to the complete the process.
The last recommendation is based on the general problem of ownership and tenancy rights.
These problems can be partially remedied by a proactive organisational policy by the
Republic of Croatia. Three different registers for the categorisation of property for the
restitution and compensation process could be created: (i) one register would document
the current property whose restitution is requested; (ii) the second register would
document the property that is set aside for compensation by the state or counties; (iii) the
third register would document the current owners of the property whose restitution is
requested and when these ownership rights were gained.
These three registers would avoid a plethora of problems that surround the tenancy and
ownership issues: tenants who have requested to be granted ownership rights of privately
owned apartments could be easily identified. These cases would obviously be dismissed
because they are based on a basic misunderstanding of the Croatian civil law. The second
problem that would be solved is that the tenants who have legitimately requested
ownership rights for state owned apartments could also be easily identified. The conclusion
of these cases would then depend on the pace of the administrative procedure. The tenants
in these cases would receive the right to purchase the property and the original owner
would receive compensation.
The third problem that would be placed in a clearer light is the minority of cases where
corruption or a conflict of interest within the legal or administrative bodies is in question.
The cross referencing of the first and third register would clearly identify the property that
has been given to individuals through illicit means. Since the third register would contain
both the owner and the date that their ownership rights where granted, this would set the
stage for a more detailed investigation by the authorities of those individuals who gained
property without proper tenancy rights or the rights to restitution and compensation. This
final recommendation would require political action to regulate and sanction corruption
within the Republic of Croatia.
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5. Romania is distinctive among the other countries in the region because of the
combination of widespread nationalisation, high expectations – the target was restitutio in
integrum – and weak institutions to implement these challenging tasks. The restitution
policy was designed and re-designed gradually, over a period of almost 20 years, so it
lacked a coherent vision. The report highlights the frequent changes in legislation which
lead to overlapping entitlements provided by the law at various moments in time. The
outcome was a slow process with a disjointed practice both in administration and judiciary.
The restitution in kind of agricultural land and forestry is slowly coming to an end.
However, the process of compensation for the claims that could not be addressed in this
way is an extremely protracted one. The restitution of urban property has barely reached
half way, again with a major delay in providing compensations. The prospects are not
encouraging because at the current pace the restitution process is likely to be prolonged
over several decades.
The poor implementation of its restitution policy made Romania a leader in the number of
cases taken to the EtCHR and also in the number of sanctions applied in respect of property
issues. The failure of the administration and judiciary to comply with the rules created by
this intricate framework and the different interpretation given to the rules triggered a clear
reaction from the international organisations Romania adhered to, especially the ECtHR.
The most important idea that emerges from this research is the fact that a lack of political
vision and frequent changes in the legal framework were the main causes of the existing
uncertainties regarding the restitution of property. Therefore, there is an obvious need for
the political class to refrain from major policy shift. The key word should be consolidation of
the legal framework by a clear-cut interpretation of the law by the Constitutional and High
Courts, in order to provide the lower courts with the necessary basis for a unitary practice.
Secondly, increasing the capacity of the administrative bodies in charge of restitution
should become a priority. Institutional audits for the central level, Bucharest City Hall and
other lagging institutions are recommended to find pragmatic ways for speeding up the
bureaucratic process by eliminating redundant checks and streamlining the procedures. The
compensation mechanism should become truly effective. Payment titles should be directly
enforceable, and the Proprietatea Fund should be listed on the stock market as soon as
possible.
Another important aspect to be considered is the capacity of the state to pay the promised
compensation. The economic crisis greatly affected the Romanian treasury, the public
budget facing high deficits and lower incomes at a time when the social expenditure is on
the rise. As the payment of compensation is already a cumbersome process, it is not
advisable that budgetary constraints should add to this delay. In addition, the value at
which the shares in the Proprietatea Fund are traded now on the unregulated market
indicates that the real price of the shares may be significantly lower than the nominal value
used for compensation. As compensation will be at the trading value, a higher rate of
transfer of the shares owned by the state to private recipients should be anticipated. The
Fund has already transferred about 40% of the value of assets into titles to claimants.
Under these circumstances, it is advisable to have more restitution in kind or compensation
by other properties of equivalent value, which are not claimed back by former owners.
However, the lagging local authorities, such as Bucharest, have not finalised an inventory
of properties, although the deadline provided by the applicable law expired years ago. A
better enforcement of such laws and an improvement in the performance of other
institutions, such as cadastre or archives, are crucial for reducing the total monetary cost of
the restitution process to the rest of the society, by maximizing the in-kind or equivalent
6. In Serbia, property restitution has not yet been fully addressed in legislation or
administrative practice, but similar issues are expected to arise if the country’s government
makes the same mistakes as its neighbours in designing the restitution/compensation
policy. The first step towards denationalisation was the Law on Declaring and Registration
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Policy Department C: Citizens' Rights and Constitutional Affairs
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of Seized Property in 2005. The Law regulated the procedure for declaring and registering
seized property, as a first step in the process of returning property to its owners. The
purpose of this was to quantify the property seized by means of nationalisation,
expropriation, confiscation etc, applied after 1945 in Serbia, in order to establish the
appropriate manner of returning it to the owners by enacting the law on denationalisation.
About 73,000 applications were filed within the deadline, and some more submitted after
the deadline with the expectation that it would be extended. Until September 2009 it is
estimated that around 76,000 claims, submitted by approximately 130,000 individuals,
were collected. There are 49,400 applications containing the requested documentation, and
16,100 without sufficient data for identification of the nationalised property.
In 2007, Serbia produced a second important draft law, this time called by its proper
name: the Law on Denationalisation. It entered the adoption procedure, it was accepted by
the Government of Serbia and released for public debate. However, during the public
debate many objections were raised, such as those relating to violation of the rights of
current owners, as the law provided for the seizure of assets from the current owners
without compensation. It also contained provisions on the restitution of construction land
by establishing a dual ownership between the building owners and land owners. Following
sharp criticism during the public debate, the Government withdrew the draft law from the
legislative procedure.
Such delay of almost two decades is likely to make Serbia a very special showcase for the
difficulties of the restitution process in South-Eastern Europe. The market pressure has
produced situations which, after successive transactions, will prove difficult to disentangle.
In addition, the government is pressed to come with a separate law, dealing with the
division of public property between the state and Serbia’s 174 municipalities. It plans to do
this in 2010, largely because without clarifying the situation of municipal property, many
investment projects, including those financed by the EU, cannot proceed. However,
securing municipal property by law, before the broad framework of restitution is set, is
likely to complicate the matter further.
The assessments as to the financial implications of restitution or compensation are rather
blurry and give rise to disputes between various stakeholders and the Government.
Restitution in kind could decrease the direct financial costs to society, as this method would
eliminate monetary compensation. However, the longer the issue drags on, the more
difficult will become to make use of the mechanism, as Serbia delays a clear decision on
this matter.
Inapoi la Activitati APP. |
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