WORKSHOP  1

 

  ROUND-TABLE:

  PROPERTY RESTITUTION/COMPENSATION:

  GENERAL MEASURES TO COMPLY WITH THE

  EUROPEAN COURT’S JUDGMENTS

            organised with financial support from the Human Rights Trust Fund

            under the project “Removing obstacles to the enforcement of domestic

            court judgments/Ensuring an effective implementation of domestic

            court judgments”

            Bucharest, Howard Johnson Hotel,

            5-7 Calea Dorobantilor Dist. 1, Bucharest, 010551 Romania

            Presentation prepared

            by Mr Tomáš Doucha, the Czech Republic

            The views expressed are those of the author only

 Restitution of agricultural assets in the Czech Republic after 1989

1.      Objects of resitution – agricultural assets

-        agricultural land

-        agricultural assets of long-term consumption (buildings, constructions, machinery, etc.)

-        other agricultural assets (livestock, seeds, feeds, etc.)

2.      Forms of restitution

-        restitution of ownership rights, really put down during the communist regime

-        restitution of agricultural assets expropriated after 1948

-        restitution of assets as members¢ investments brought into former agricultural cooperatives

-        restitution as the allotment of new created (revaluated) assets of former cooperatives

3.      Political background for restitution

-        restitution linked to the deadline of February, 25, 1948, it means to the legal situation in the property to this date (in the case of the land, the situation to this date was given by three land reforms after 1918, when the former Czechoslovak Republic was established)

-        it is not possible to ensure 100% of justice, it means a partial solution of injuries of the communist regime

-        restitution relates only to physical persons (for example, the former market agricultural cooperatives are excluded)

-        specific approach to emigrants after 1948

-        specific approach to the church property (see point 7)

4.      Starting structure of users of agricultural assets in 1989

-        agricultural cooperatives based on members¢ investments and new created own assets (about 64 % of farmed land)

-        state farms based on the state, expropriated and other assets (about 33 % of farmed land)

-        family farms based prevailingly on own assets (about 3 % of farmed land)

5.      Legislation for restitution of agricutural assets[1]

-        The Land Law (1991) – the basic law for the restitution of ownership rights to land and to other agricultural assets and for the restitution of expropriated agricultural assets

-        The Transformation Law (1992) for the transformation of agricultural cooperatives:

.        rules for the allotment of new created (revaluated) assets to persons-in-right (according to their used land and other assets and according to their working participation) in the form of the so-called transformation shares to be settled by the transformed cooperatives (originally)  in 7 years (by 1999)

.        rules for the restitution of members¢ investments to physical persons, who decided to establish family farms

-          The Penalty Law (1993) defining the personal responsibility of managers of the transformed cooperatives for the realisation of restitution according to the Land Law and to the Transformation Law (the law reacted to the unwillingness of successors of the former cooperatives to realize restitution)

-          The Law on the Privatisation of the State Land (1999): the law enables to use the state land for the compensatory restitution of land (it means the land already built or devaluated in the past); the land in the state property is administered and privatised by the Land Fund as an independent state institution.

6.      Current situation in restitution

Form of restitution	Situation 1990 (estimate)	Situation 2010 – remains (estimate)	Remains (%)
Transformation shares of cooperatives	CZK 55 bil.	CZK 4 – 6 bil.	7 – 11 %
Restitution of land	CZK 7,8 bil.	CZK 0,9 bil.	12 %

7.      Causes of a slow progress in restitution, or in completion of restitution, respectively

-        in general: relatively high transaction costs for many persons-in-right to be restituted

-        information assymetry between persons-in-right and persons-in-duty and a „sleeping“ behaviour of many persons-in-right with their perception of high transaction costs on the recovery of  assets compared with real value of these assets

-        a significant discrepancy between the extreme concentration in land use and the extreme land ownership fragmentation: about 20 000 larger land users compared with 3 – 3,5 millions of land owners

-        the physical features of the land use structure: extremely large fields without physical property boundaries, abolished during the communist regime, as an obstacle for the physical identification and for the physical access to parcels/plots

-        a slow progress in the land consolidation in cadastres, enabling also to solve the physical identification of plots and their property links; the slow progress caused especially by the political unwilligness some of the governments and also by limited projection/planning capacities and investment sources for this long term process

-        the interruption of the land ownership registration after 1964 (after a real abolition of the land ownership rights)

-        the behaviour of successors emerging after the transformation of cooperatives: the so-called second transformation characterised with the tranfer of assets subdued to persons-in-right from the transformed cooperatives to new join stock and other companies, issuing to the interruption of  legal obligations (there is a frequent but still unsuccessful effort of governments for rectification, accompanied by an unclear social consensus to settle the claims: the government does not struggle for a settlement and persons-in-duty „explain the justice in their own way“)

-        insufficient private sources of persons-in-duty (farms as successors) to settle restitution claims and public sources to speed up land consolidation (however, in the both cases there is an improvement after EU accession, linked with the outstanding increase of subsidies and with the possibility to use the Programme of Rural Development for land consolidation)

-        problems with restitution of large agricultural property of the former nobility and similar landlords, stemming from (a) the uncompleted First Land Reform after 1919 (the shortage of public money in the interwar period for the compensation and the interruption of the process during the World War II); (b) the lengthy identification of contingent claims of persons as enemies and collaborators, whose assets were expropriated after the World War II

-        problems with restitution of the property of church, religious orders and congregations (about 30 000 ha of agricultural land and 180 000 ha of forest land): an agreement between the state and the church to the size of restitution and its form (in kind, financial, shared both forms) has not been still settled, and at the same time (according to the Land Law) the pertinent land is not tranferable till the matter of the church restitution is not solved (it locally creates a signifant barrier for the development of rural municipalities, because they cannot gain the pertinent land in their ownership from the Land Fund).  

8. What next?

-        Further attempts for speeding up or completion of the settlement of remaining transformation shares?

-        It is necessary to add, that the effort to settle the remaining transformation shares has up to now ever failed because of the unwillingness of the Parliament to amend the Transformation Law. Among the main reasons are the supposed costs on the primary settlement of obligations, which (according to bills) shall be covered by the state and which the state shall claim back on persons-in-duty (on transformed cooperatives or their successors). Because of many such cooperatives are in liquidation or already went through bankruptcy and do not exist, the recovery of debts by the state would not be probably fully successful.        

Conclusions

In spite of the fact that only few persons-in-right and little value of assest remain to complete restitution by the laws, it is not possible to expect a 100% settlement. For all that the problem continues to be politically sensitive. In the case of transformation shares, where some former governments tried for a legislative rectification of the situation, there is evidently the risk of a future phasing out of the problem. The situation in the completion of land restitution, where the land in the state property is still available, is better.

February, 1, 2011

Tomáš Doucha, Institute of Agricultural Economics and Infomation, Prague, Czech Republic