Notification on the published Judgment KO 173/22

The Constitutional Court of the Republic of Kosovo has published the Judgment in case KO173/22, with the applicant Arben Gashi and 9 (nine) other deputies of the Assembly of the Republic of Kosovo, submitted to the Court based on the provisions of paragraph 5 of the article 113 [Jurisdiction and Authorized Parties] of the Constitution of the Republic of Kosovo, regarding the constitutional review of Law no. 08/L-179 on Interim Measures of Essential Products in Special Cases of Destabilization in the Market.

The Court decided (i) unanimously to declare the Referral admissible; (ii) to hold, by seven (7) votes for and one (1) against, that paragraphs 2 and 4 of article 4 (Essential Products), paragraph 2 of article 5 (Interim measures), paragraphs 1, 2, 3, 4, 5, 6 and 9 of article 8 (Decision-making) and paragraph 2 of article 9 (Supervision and sanctions) of the Law no. 08/L-179 on Interim Measures of Essential Products in Special Cases of Destabilization in the Market, are not in compliance with paragraph 1 of article 7 [Values], article 10 [Economy] and paragraph 5 of article 119 [General Principles] of the Constitution of the Republic of Kosovo; (iii) to hold, with seven (7) votes for and one (1) against, that article 10 (Entry into force) of Law no. 08/L-179 on Interim Measures of Essential Products in Special Cases of Destabilization in the Market, is not in compliance with paragraph 1 of article 7 [Values] and paragraph 1 of article 119 [General Principles] of the Constitution of the Republic of Kosovo; (iv) to declare invalid, with seven (7) votes for and one (1) against, in its entirety, the Law no. 08/L-179 on Interim Measures of Essential Products in Special Cases of Destabilization in the Market; and (iv) to reject, unanimously, the request for the interim measure.

The Judgment first clarifies that the contested Law regulates the imposition of interim protective measures for the supply of essential products to consumers, at the time of the appearance of special circumstances of destabilization in the market and the manner of their application to authorities and economic operators in order to eliminate the effects of price increases as well as the lack of essential products in the market. The contested Law, among others, also determines the causes within which the interim protective measures can be imposed. The latter include (i) limiting the quantity sold to the consumer within the specified period; (ii) prohibiting the removal of product from sale; (iii) determining the trade margin for wholesale and retail sales; (iv) setting the maximum allowed price; (v) obliging the economic operator to maintain certain part of the product stock; (vi) obliging the economic operator to supply and offer for sale essential products as before the imposition of protective measures; and (vii) prohibiting, restricting export. According to the provisions of the contested Law, among others, the measures can be imposed in proportion to the need for consumer protection and must be in accordance with the bilateral commitments of the Stabilization and Association Agreement between the Republic of Kosovo and the European Union. The contested  Law, also and among others, determines the establishment of a commission that provides recommendations to the respective Minister regarding the imposition and duration of interim protective measures and enables the latter to consult with relevant public authorities in this context, including the Council of the SAA, whereas it assigns to the Prime Minister the competence to revoke, annul or change any decision of the Minister for the imposition of interim protective measures against economic operators, namely legal legal/natural persons in circumstances of market destabilization.

The applicants, in essence, claimed that the contested Law constitutes interference with the free market economy guaranteed by articles 7 [Values], 10 [Economy] and 119 [General Principles] of the Constitution. In this context, among others, they emphasize that based on the Constitution, the free-market economy is a value of the Republic of Kosovo and that the latter is obliged to provide a favorable legal environment for the market economy, freedom of economic activity and security of public and private property, including the establishment of all the necessary institutional and legal mechanisms to guarantee that in Kosovo there is an open market, “where supply and demand contain the pattern of circulation of goods, work, knowledge and capital in economy” and where private economic operators are protected by a legal system that is sufficient in order to operate freely in the internal market. The applicants, among others, further emphasized that the state must refrain from interfering into the market economy, through any measure that restricts the freedom of economic operators that trade essential products, also emphasizing that (i) according to the Constitution, the state can establish independent organs to regulate the market, when the latter cannot sufficiently protect the public interest; and (ii) the obligation of economic operators, by the decisions of the Government, to keep reserves/stocks of certain goods, is arbitrary because such an approach is also contrary to the provisions of Law no. 03/L-244 on State Reserve Goods. The applicants’ allegations are opposed by the Ministry of Industry, Entrepreneurship and Trade and by the Parliamentary Group of Vetëvendosje! Movement. The latter, among others, argue that the contested Law (i) is not contrary to the constitutional principles of the free market economy, because the Constitution enables action, namely the interference of the state through the regulation of the freedom of economic activity through the laws of the Assembly and that in the circumstances of the present case, the contested Law pursues the legitimate aim of protecting the public interest, namely the consumer protection in special circumstances of market destabilization, and also the measures determined through the contested Law, are proportional to the pursued aim; and (ii) is not contrary to the obligations of the Republic of Kosovo arising from the Stabilization Association Agreement.

The Court, in assessing the constitutionality of the contested Law, first elaborated (i) the basic principles of the free market economy according to the Constitution and the legislation in force of the Republic of Kosovo; (ii) the relevant principles arising from international instruments pertaining to the free market economy and the circumstances in which the respective state interference may be compatible with the freedom of the market economy as defined through the applicable European Union regulations and the case-law of the Court of Justice of the European Union, but also the case-law of the European Court of Human Rights, the relevant Opinions of the Venice Commission and the contribution of the Constitutional Courts and/or their equivalents members of the Venice Commission Forum; and then (iii) applied these principles throughout the constitutional review of the contested Law.

The Judgment, in light of the arguments and counter-arguments presented, among others, examines and assesses (i) whether the interim protective measures established through the contested Law constitute interference with the free market economy; (ii) whether the decision-making mechanisms regarding the imposition of interim protective measures established in the contested Law are in compliance with the Constitution; and (iii) whether the contested Law is in compliance with the principle of legal certainty, namely the rule of law as an essential value of the Republic of Kosovo.

(i) whether the contested Law violates the constitutional principles of free market economy

 The Judgment emphasizes the fact that (i) based on article 7 [Values] of the Constitution, the market economy is a value of the Republic of Kosovo; (ii) based on article 10 [Economy] of the Constitution, the market economy with free competition is the basis of the economic regulation of the Republic of Kosovo; and (iii) based on article 119 [General Principles] of the Constitution, among others, it is the duty of the state authorities to ensure a favorable legal environment for the market economy, freedom of economic activity and security of public and private property, and also to protect the consumer in accordance with the law. The Judgment further clarifies that (i) actions/measures that restrict free competition through the establishment or abuse of a dominant position or practices that limit competition are prohibited, except when these are “explicitly” allowed by law; whereas (ii) the Republic of Kosovo shall establish independent organs for the regulation of the market when the market itself cannot sufficiently protect the public interest. Moreover, the Judgment emphasizes that the economic operators to whom the interim protective measures specified by the contested Law are applied to, are also legal entities and, based on article 21 [General Principles] of the Constitution, all rights and fundamental freedoms specified in Chapter II [Fundamental Rights and Freedoms] of the Constitution are valid to them to the extend applicable and therefore, may be limited only according to the provisions of article 55 [Limitations on Fundamental Rights and Freedoms] of the Constitution, respectively insofar as the relevant limitation is “prescribed by law”, “pursues a legitimate aim” and is “proportionate to the aim pursued”.

According to the clarifications given in the Judgment and as far as it is relevant in the circumstances of the present case, the Assembly of the Republic of Kosovo has the right but also the duty to adopt the appropriate legislation to ensure the favorable legal environment for the market economy but also the protection of the consumer, including the possibility to (i) “explicitly allow” the exemptions from free competition; and (ii) establish independent organs for the regulations of the market when the market itself cannot sufficiently protect the public interest. Obligations in the context of the free market economy also originate from the Stabilization and Association Agreement, which, based on articles 16 [Supremacy of the Constitution] and 19 [Applicability of International Law] of the Constitution, is part of the domestic legal system and has superiority over the laws of the Republic of Kosovo.

In principle, and in the context of the common denominator stemming from the decisions of the Court of Justice of the European Union, the European Court of Human Rights and the contribution of the Constitutional Courts and/or the corresponding equivalents members of the Venice Commission Forum, it is not disputed that interim protective measures in the context of import, export, including circumstances of market destabilization, may be possible, as long as the latter are “prescribed by law”, follow a “legitimate aim” and are strictly “proportional”. According to the case-law of the Court of Justice of the European Union, such interferences with the freedom of the market economy must be expressly necessary and cannot under any circumstance constitute an arbitrary discrimination and/or an indirect restriction on free trade. Moreover, according to the detailed elaboration in the Judgment, the applicable legislation in the Republic of Kosovo also contains provisions and definitions for the regulation/imposition of interim protective measures or interim restrictive measures both in the context of internal and external trade.

In the context of the contested Law, the Judgment clarifies that, in principle, the purpose and scope of the contested Law, including the definition of the list of essential products and interim protective measures that can be imposed on economic operators, in special circumstances of market destabilization, insofar as they pursue a legitimate aim and are strictly proportionate to the aim pursued, do not constitute arbitrary interference with the free market economy. In addition, interim protective measures against economic operators, namely legal entities/natural persons, are also subject to the right to use legal remedies and judicial protection of the rights of economic operators guaranteed by articles 32 [Right to Legal Remedies] and 54 [Judicial Protection of Rights] of the Constitution, and therefore, the legal framework that enables the interference of the state with the free market economy in special circumstances of market destabilization, does not necessarily imply the legality and constitutionality of the respective interim protective measures, which may be subject to the assessment of legality by regular courts and constitutionality by the Constitutional Court according to the provisions of paragraph 7 of article 113 [Jurisdiction and Authorized Parties] of the Constitution.

Therefore and based on the clarifications given in the Judgment, the Court concludes that article 1 (Purpose), article 2 (Scope), article 3 (Definitions), paragraphs 1, 3 and 5 of article 4 (Essential Products), paragraphs 1 and 3 of article 5 (Interim measures), article 6 (Causes and duration of safeguard measures), article 7 (Calculation of the margin), paragraphs 7 and 8 of article 8 (Decision-making) and paragraphs 1, 3, 4, 5 and 6 of article 9 (Supervision and sanctions) of the contested Law, are not in contradiction to paragraph 1 of article 7 [Values], article 10 [Economy] and paragraph 3 of article 119 [General Principles] of the Constitution.

Having said that, the content of the contested  Law includes two constitutional issues, namely (i) the constitutional obligation of the Republic of Kosovo defined based on paragraph 5 of article 119 [General Principles] of the Constitution, according to which, when the market itself cannot sufficiently protect the public interest, the Republic of Kosovo shall establish “independent organs” for the regulation of the market; and (ii) the principle of legal certainty, an essential part of the rule of law embodied in the constitutional order of the Republic of Kosovo according to paragraph 1 of article 7 [Values] of the Constitution, the findings in relation to which, are summarized in what follows:

(ii) whether the decision-making mechanisms regarding the imposition of interim protective measures are in compliance with constitutional guarantees

The Judgment clarifies that the Constitution of the Republic of Kosovo, in paragraph 5 of its article 119 [General Principles], clearly defines the obligation of the state to establish “independent organs” for the regulation of the market in protection of the public interest, when the market itself cannot achieve this. According to the clarifications provided in the Judgment, the circumstances established in the contested Law, in which the freedom of economic activity of economic operators can be restricted by the respective interim protective measures, namely (i) sudden or continuous lack of essential products; (ii) sudden or immediate rise in prices of essential products; (iii) non-adjustment of local prices with large price movements in the world market; and (iv) the unjustifiable difference of local prices from prices in neighboring countries, include circumstances in which the market can not necessarily regulate itself without the interference of public authorities and which, based on the Constitution of the Republic of Kosovo, should be “independent organs”. The Judgment also clarifies that the Law no. 06/L-113 on Organization and Functioning of State Administration and Independent Agencies, for the purpose of regulating and supervising the activity of the operators of a certain market with the aim of protecting consumers and ensuring free competition, refers to the independent regulatory agencies/bodies. Such a solution is also in accordance with the determination of the free market economy as an essential value of the constitutional order of the Republic of Kosovo according to articles 7 [Values] and 10 [Economy] of the Constitution.

Based on the contribution of the Venice Commission Forum and the comparative analysis elaborated in the Judgment, depending on the relevant constitutional orders, states have set different mechanisms for the implementation of restrictive/protective measures in circumstances of market destabilization, including the executive power/branch, regulators/independent organs or even special commissions. The independence of decision-making mechanisms in the context of the restriction of the freedom of economic activity of economic operators in the circumstances of market destabilization, has also been specified in the acts that have been subject to the constitutional review of the Constitutional Court of the Republic of Albania, despite the fact that unlike the Constitution of Kosovo, the one of Albania does not contain the constitutional obligation to establish “independent organs” for this purpose. By two relevant Judgments, the Constitutional Court of Albania repealed the contested acts in its entirety and in part as contrary to the Constitution.

In the circumstances of the contested Law, while it foresees (i) the establishment of a Commission which recommends to the Minister the undertaking/imposition and duration of interim protective measures; (ii) the possibility of the consultation of the Minister with the relevant public authorities for the purpose of imposing interim protective measures; and (iii) the role of the SAA Council, which is only consulted and/or notified before taking decisions on interim protective measures, none of these mechanisms oblige the respective Minister, whose decision-making in imposing the interim protective measures on the economic operators, namely legal entities/natural persons, is full and exclusive, while moreover, the Prime Minister can revoke, cancel or change any decision of the Minister in this context.

According to the clarifications given in the Judgment, while the constitutional competencies of the Government and/or the Prime Minister in issuing decisions in implementation of the laws of the Republic of Kosovo, including in the context of economic development, are clear, taking into account that paragraph 5 of article 119 [General Principles] of the Constitution, precisely determines that the Republic of Kosovo shall establish “independent organs” for the regulation of the market when the market itself cannot sufficiently protect the public interest, and which based on the case-law of the Court of Justice of the European Union, also includes the consumer protection, the competence of the Minister and/or the Prime Minister to impose interim protective measures which restrict the freedom of economic activity of economic operators in the Republic of Kosovo, does not coincide with the constitutional standard of independent decision-making regarding the regulation of the market when the market itself cannot sufficiently protect the public interest.

Therefore, the Court found that paragraphs 2 and 4 of article 4 (Essential products), paragraph 2 of article 5 (Interim measures), paragraphs 1, 2, 3, 4, 5, 6 and 9 of article 8 (Decision-making) and paragraph 2 of article 9 (Supervision and sanctions) of the contested Law, are not in compliance with paragraph 1 of article 7 [Values], article 10 [Economy] and paragraph 5 of article 119 [General Principles] of the Constitution.

(iii) whether the contested Law is in compliance with the principle of legal certainty

The Judgment clarifies that the contested Law establishes that the latter enters into force upon its publication in the Official Gazette of the Republic of Kosovo. Having said that, the circumstances regulated by the latter, namely the interference of the state with the free market economy through the imposition of interim protective measures in circumstances of market destabilization, are regulated by at least two other laws applicable in the Republic of Kosovo, respectively (i) Law no. 03/L-244 on State Reserve Goods; and (ii) Law no. 2004/18 on Internal Trade in conjunction with Law no. 04/L-005 on Amending and Supplementing Law no. 2004/18 on Internal Trade. The contested Law neither amends nor repeals the relevant provisions of either of the two aforementioned laws.

According to the elaborations of the Judgment, in such circumstances, (i) “in case of destabilization in the market” responsible for interfering in the market to protect the population and/or the consumer, is the Ministry of Industry, Entrepreneurship and Trade, through two different laws, respectively the Law on State Reserve and the challenged Law, while they do not clearly define the division of the burden between the legal entity/natural person, namely the economic operator and the public authority, namely the state in cases of destabilization/disorder of the market, leaving such a determination at the full discretion of the aforementioned Ministry; furthermore (ii) the Law on Internal Trade, also provides for interim protective measures and sanctions for legal entities/natural persons/economic operators in the circumstances of market destabilization/disorder, and which remain applicable in parallel with the interim protective measures established in the contested  Law.

The circumstances under which for the purpose of regulating the market in cases of its destabilization, two different applicable laws would be in force, namely the respective provisions of the Law on Internal Trade and the contest Law, which provide for the possibility of state interference with the free market economy, through parallel mechanisms, measures and sanctions, do not serve the principle of legal certainty and prevent the legal entities/natural persons, namely the economic operators, to regulate their behavior in accordance with the applicable laws within a market economy with free competition, which is the basis of economic regulation and a constitutional value of the Republic of Kosovo. The Judgment emphasizes the fact that, one of the most essential principles of the rule of law as a value of the Republic of Kosovo, is the principle of legal certainty and the latter, based on case-law of the European Court on Human Rights, the Court of Justice of the European Union, but also of the Court, requires, among others, that the applicable rules/laws are clear and precise and aim to ensure that legal situations and relationships remain predictable and that for this purpose, the legal norm must be formulated with sufficient precision and clarity. Public authorities, when drafting laws, must also take into account these basic principles of the rule of law, as an important part of the constitutional system of the Republic of Kosovo.

Therefore, the Court also found that article 10 (Entry into force) of the contested Law is not in compliance with the principle of legal certainty and the rule of law, guaranteed by paragraph 1 of article 7 [Values] of the Constitution and paragraph 1 of article 119 [General Principles] of the Constitution.

Finally, the Judgment clarifies that the applicants’ Referral was submitted to the Court based on paragraph 5 of article 113 [Jurisdiction and Authorized Parties] of the Constitution and that this category of referrals has a suspensive character, respectively such a law can be sent to the President of the Republic of Kosovo for promulgation only after the decision of the Court and in accordance with the modalities established in the final decision of the Court on the contested case. In the context of its case-law, as elaborated in the Judgment, the Court notes that taking into account the nature of the provisions of the contested Law declared contrary to the Constitution and the fact that the rest of the contested Law would be difficult to apply after the declaration of the aforementioned provisions as invalid, the contested Law, in the service of the principle of legal certainty, should be declared invalid in its entirety.

This translation is unofficial and serves for informational purposes only.

Note:

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