The Decisions of the Constitutional Court of Georgia

Participants to the case:

Applicant: Tengiz Sudadze, founder of Kolkhi Ltd.

Defender: Major of the Town of Poti.

Authorized representatives of the claimant: Archil Kbilashvili and Tamaz Sudadze.

Witness: Karlo Shevardnadze

The Second Board of the Constitutional Court of Georgia considered at an open sitting the constitutional claim of T. Sudadze, a founder of the Kolkhi Ltd, who was asserting the unconstitutionality of the Decree of the Mayor of Poti on the Legality of the Construction of an Oil Terminal on the Territory Adjacent to Samegrelo Street.

The Board of the Constitutional Court has found the following circumstances:

The Mayor of Poti issued Decree N452 of August 10, 1996, on the Legality of the Construction of the Building of the Oil Terminal on the Territory adjacent to Samegrelo Street. The aforementioned decree was published in "Potis Moambe," a local newspaper of August 10, 1997. The decree provides, that in September 1995, GAMS-an Italian Company initiated construction of the oil terminal on the territory of the former military unit, which was subsequently continued by Kolkhi Ltd. The Mayor of Poti in the mentioned decree indicates that he was interested in the notices about the construction filed in the government bodies and discovered that the initiation of the construction was not agreed upon with the appropriate local authorities. Since the strategic significance of the facility was determined, and, furthermore, the fact was discovered that the private company "Kolkhi" of a dubious reputation was in charge of the construction the illegal activities of which were often reported about, the mayor of Poti, with regard to Poti's specific status, considered it an unjustified continuation of the construction by a private company.

The aforementioned decree of the mayor of Poti considers participation of private companies in the designing, construction and exploitation of an oil terminal absolutely unjustified and unreasonable. With respect to state interests, re-registration of the founders of the current construction is considered urgent; in order to make only state companies and organizations with legal rights be founders of such an initiative in future. As for the former founders, private companies, the decree of the Mayor of Poti ensures the complete reimbursement of expenses incurred during the construction, for which the Mayor had the consent of the Georgian Department of Railways (clause 3 of the decree).

The temporary regulations on "the Governance of the Town of Poti" (approved by the Presidential Decree N498 clause 10 on July 26, 1996) provide that the Mayor of Poti is empowered to issue ordinances and decrees. Furthermore, according to the temporary regulations, a decision of a Mayor that is of a normative character is issued as a decree, whereas a decision on operational questions and other current issues is given as a decree. The temporary regulations provide that the President, Parliament, the Constitutional Court of Georgia and a general court may invalidate decisions of the Mayor and the Cabinet of Mayor in cases defined by law.

The board of the Court considers that the decree N 452 of the mayor of Poti is definitely of a normative character as it surpasses the bounds of an individual legal act. The decree considers unjustified the participation of not only Kolkhi Ltd but also of any private company in the design and construction of an oil terminal, because of this, according to the state interests the ordinance requires re-registration of shareholders and founders of the oil terminal now under construction in the way that only state organizations and companies can be participants (item 1 of the ordinance). The aforementioned decree of the Mayor of Poti confirms that the present act is of a multiple application.

The applicant supports his constitutional claim and demands verification of inconsistency of Decree N452 of the Mayor of Poti of August 9, 1996 on the Legality of Construction of an Oil Terminal on the Territory Adjacent to Samegrelo Street with Article 21, clause 2 of the Article 30 of the Constitution of Georgia and he asserted on declaration that the decree is unconstitutional.

At the court sittings, defendant Nugzar Nadaraia, the Mayor of Poti stated, that the Decree N452 of the Mayor of Poti of August 9, 1996 on Legality of Construction of an Oil Terminal on the Territory Adjacent to Samegrelo Street is based on the decision of the Cabinet of Mayor of Poti of August 9, 1996 (protocol N12), which shows position of municipality of the town. With respect to state interests, according to the strategic meaning the re-registration of shareholders and founders of the oil terminal which was under construction on the territory owned by the military base of the Ministry of Defense of Georgia in Poti should had been conducted, so that only state organizations and companies would be owners of the facility. At the court hearing, the Mayor of Poti confirmed unreasonable and unjustified participation of private companies in the design, construction and exploitation of the oil terminal. Furthermore, the respondent indicated that the Ministry of Defense of Georgia which owns the territory for the terminal and is a party to the contract on Reconstruction and Mutual Exploitation of an Oil Terminal on the Territory Adjacent to Samegrelo Street demands acceleration of the construction, as it would like to receive profit considering the defense interests of the state. However, it is not of any significance for the Ministry what kind of company constructs it.

As a witness, Karlo Shevardnadze, one of the founders of Kolkhi Ltd, clarified at the court session that only one company, Kolkhi Ltd, actually participated in construction of the oil terminal. Other parties did not contribute during the construction process, and they merely would receive pure profit from the enterprise from the moment it would be in exploitation. He indicated that the construction of the oil terminal was conducted the most difficult conditions and now when approximately 60% of the construction was accomplished other instances would like to possess the facility and they do their best to reach their goal. Tamaz Sudadze, a representative of the added to the testimony of K. Shevardnadze that KOLKHI LTD has already spent 4 300 000 (four million and three hundred thousand) US dollars at the construction.

The board of the Constitutional Court considers that the Decree N 452 of August 9, 1996 of the Mayor of Poti on Legality of Construction of an Oil Terminal on the Territory Adjacent the Samegrelo Street is not consistent with the constitution due to the following reasons:

1. The materials of the case and the disputable normative act itself indicate that in accordance with the contract concluded on October 18, 1995 definite constructional work is conducted by KOLKHI LTD and naturally it is one of the owners of the facility. The decree of the mayor of Poti prohibited participation of the KOLKHI LTD in the process of construction by stating in the descriptive part of the decree that re-registration of the founders of the terminal was necessary, so that in future only governmental organizations and companies would be empowered to participate in the enterprise (meaningfully the same as in the resolutionary part of the decree). The mentioned decree of the Mayor of Poti actually deprived KOLKHI LTD from its property with the subsequent requisition. The clause 1 of Article 21 of the Constitution provides that right to property and inheritance is ensured. It is impermissible to abolish the universal right to property, to acquire, transfer and inherit property. Items 2 and 3 of the mentioned article provide exception from this general rule; particularly item 2 of Article 21 provides that restrictions of the right noted in the item 1 is permissible for the urgent social needs in cases determined by law and in the legally determined procedure. However, item 3 states that sequestration of property is permissible in cases directly determined by law, by a decision of the court or in case of unavoidable emergency as defined by an organic law but only if full compensation is paid. Regarding above mentioned the decree of the Mayor of Poti would be constitutional in case there was

a)an urgent social necessity directly determined by law;

b)unavoidable emergency as determined by the organic law.

The mentioned decree of the Mayor of Poti does not indicate on either base defined by the Constitution of Georgia for the deprivation of property. Thus ordinance N 452 of the Mayor of Poti is inconsistent with Article 21 of the Constitution of Georgia "on the Court of Georgia". The board considers that prohibition on the private structures to participate in the construction of a facility is the discrimination of the constitutional right to property.

2. Decree N 452 of August 9, 1996 of the mayor of Poti considers it unjustified participation of not only KOLKHI LTD in the construction and exploitation of an oil terminal, but generally of any private structure. This part of the decree is not in correspondence with the item 1 of Article 21 of the Constitution, as the act contains prohibition over the private companies on the constitutional right to property. The ordinance also contradicts item 2 of Article 30 of the Constitution of Georgia, which provides that the State is obliged to maintain development of free enterprenuership and competition. Monopolization is prohibited, except for cases determined by law.

3. The mayor of Poti obviously exceeded the bounds of his competence while charging different governmental institutions to reimburse occurred expenditures without having consent from them and without examination of their capacity to cover the expenses. As it was verified at the court hearings the KOLKHI LTD had not received any reimbursement for the time of court hearings.

Considering article 43 of the law of Georgia on the Constitutional Court of Georgia, article 30, 31. And 32 of the law on Constitutional Proceedings the Board of the Constitutional Court has made the following suggestions:

1. Decree N $452 of August 9, 1996 of the Mayor of Poti on Legality of Construction of an Oil Terminal on the Territory Adjacent the Samegrelo Street shall be declared unconstitutional;

2. Decision of the Constitutional Court is valid from the moment of its promulgation at the session.

3. Decision of the Constitutional Court shall be published in the official printing body within 7 days from its promulgation.

4. The copies of the decision shall be forwarded to the parties to the case, Parliament of Georgia, President of Georgia and Supreme Court of Georgia.

5. The Decision of the Constitutional Court is final and not subject to appeal or revision.

G. Meparishvili; A. Abashidze; L. Chorgolashvili; Z. Jinjolava

CONSTITUTIONAL COURT OF GEORGIA THE FIRST BOARD DECISION

N 1/1/10

Tbilisi, 1 November, 1996

Composition of the First Board of the Constitutional Court: Jacob Putkaradze (chairman); Otar Benidze; Nicholas Shahskin (reporter); Nikolas Cherkezishvili; Darejan Chaligava (secretary of the court)

Parties to the case:

1. Applicant: Ilia Andriadze represented by Zviad Kordzadze and Gocha Svanidze (barristers)

2. Defendant: Parliament of Georgia (representative-David Mumladze, Head of the Legal Department of the Parliament of Georgia.

3. Witness: Tariel Zambakhidze, Deputy Chairman of the Supreme Court of Arbitration of Georgia.

Subject of the case: citizen Ilia Andriadze Vs the Parliament of Georgia.

Subject of the claim: a) Law of April 23, 1991 on the Court of Arbitration in the Republic of Georgia; b) Decree of the Council of Ministers of the Soviet Union on the Rules of Consideration of Economic Disputes by State Arbitrages. The Claim is based on Articles 21, 39, 42 and 83 of the Constitution of Georgia.

The applicant addresses the Constitutional Court of Georgia on the basis of Article 42, clause 1 Article 89 clause 1 sub-clause "c" of the Constitution; Article 19 clause "e"; Articles 31, 39 of the organic law "On the Constitutional Court of Georgia"; and Article 1 clause 2 of the law of Georgia "On the Constitutional Proceeding".

The subject of the claim is constitutionality of the law of April 23, 1991 "On the Court of Arbitration of the Republic of Georgia", and the Decree N 440 of June 5, 1980 on the Rules of Consideration of Economic Disputes by State Arbitrages by the Council of Ministers of the Soviet Union (by the text of the Decree N 490 of the Council of Ministers of the Soviet Union of April 16, 1988). According to the Articles 21, 29, 42 clause 1 and 2, and 83 clause 2 and 4 of the Constitution of Georgia.

The Supreme Court of Arbitration of Georgia by the decree of August 12, 1996, invalidated a leasing contract and abolished the certificate of property of the claimant who subsequently appealed to the Constitutional Court indicating that mentioned disputable normative acts infringed certain rights entrenched in the Constitution of Georgia; particularly the right to property ensured by Article 21, provision of Article 30 which provides that the State is obliged to promote development of free enterprenuership and competition, also rights which derive from Article 39 and is interpreted by the claimant as the right "to conduct activities in accordance with legal acts adopted and promulgated by the State"; rights defined by Clause 1 and 2 of Article 42 of the Constitution which provides that every person has the right to appeal to court to protect his rights and freedoms (clause 1) and every person may only be judged by the court which has jurisdiction over a particular case.

The applicant asserted that Constitution of Georgia does not recognize the Court of Arbitration as a body exercising judicial power for the following reasons

a)According to Article 1 of law on the Court of Arbitration in the Republic of Georgia court of arbitration carries out law-applying activities which definitely does not constitute justice.

b)Law-applying activity of the Court of Arbitration is not in conformity with requirements of Item 1 of Article 82 of the Constitution which provides that court makes a decision in the name of Georgia whereas court of arbitration makes a decision in the name of the Supreme Court of Arbitration.

c)The constitution of Georgia does not recognize court of arbitration as a body exercising judicial power; furthermore there is no appropriate Code of Proceedings which would regulate activities of the court.

The applicant indicated that the Supreme Court of arbitration is applying the Rules of Consideration of Economic Disputes by the State Arbitrages approved by the Council of Ministers of the Soviet Union in April 16, 1988, Decree N 490 in the Russian language, that clearly contradicts the Constitution. Also, the Rules of Consideration of Economic Disputes by State Arbitrages themselves presuppose implementation of the decisions of the Court of Arbitration from the moment of their promulgation.

The applicant also state that since the Court of Arbitration is not a judicial body exercising justice it has no authority to deprive property ensured by Article 21 of the Constitution of Georgia.

Also, the applicant applied for invalidation of the disputable normative acts holding that they breach Articles 21, 39 and Items 1 and 2 of Article 42 as well as Items 2 and 4 of Article 83 of the Constitution of Georgia. The author of the claim states the invalidation of the normative acts as disputable.

The defendant clarified that the Supreme Court of Arbitration of Georgia functions in the current judicial system of Georgia. According to Article 107 of the Constitution current legislation on judicial system is valid until the adoption of organic laws (clause 1). However law on the Judicial System in the Republic of Georgia does not envisage the Court of Arbitration as a body exercising justice, although Article 107 of the Constitution concerns not a single normative act but the legislation "on current judicial system". Thus Article 107 comprises with the others Law on the Court of Arbitration in the Republic of Georgia of April 23, 1991. In this respect, according to the defendant, the Parliament of Georgia prolonged the authority term of members of the Supreme Court of Arbitration of Georgia.

The defendant indicated that validity of the Rules of Consideration of Economic Disputes by the State Arbitrages adopted by the Council of Ministers of the Soviet Union derives from the laws of Georgia (from 1990-1992) on the Promulgation of Transitional Period in the Republic of Georgia (adopted on November 14, 1990) and on Enactment of the Constitution and legislation of Georgia (adopted on April 9, 1991); also from the Decree of the Military Council of Georgia on Effect of Legislation in the Republic of Georgia (issued on February 24, 1992). The defendant does not believe the claim to be disputable.

The witness noted that the Supreme Court of Arbitration of Georgia exercises justice on the basis of law on the Courts of Arbitration in the Republic of Georgia of April 23, 1991. He indicted on the same articles of the Constitution and normative acts of Georgia which were invoked by the defendant. Therefore the witness admitted that normative act of the former Soviet Union is not officially translated into Georgian, Russian is used at the Supreme court of Arbitration, and it is arbitrary interpreted at the proceedings by the judges of the Supreme Court of Arbitration.

The Constitutional Court of Georgia verified following circumstances:

Law of December 28, 1990 on the Judicial System in the Republic of Georgia does not envisage court of arbitration in the judicial system of Georgia. The Court of Arbitration has been set up and is acting according to the Law of the Court of Arbitration of the Republic of Georgia in April 23, 1991. According to Article 1 of the Law the court of arbitration carries out law-applying activity and considers economic disputes between legal entities, particularly enterprises, organizations and institutions notwithstanding their official subordination, forms of property and amount of disputable sum. The Court of Arbitration considers disputes arising from conclusion, amendment, implementation, termination of contracts, also disputes of ownership character and contends concerning invalidation of legal acts adopted and issued by the state authority bodies and officers which violate ownership rights and interests of local authorities, enterprises and institutions.

Hence the Court of Arbitration implements judicial functions and according to its specific competence is a special body exercising judicial powers not in the form of justice but in some "other legal forms" as it is provided for in Article 82 of the Constitution. Namely, Articles 3 and 4 of Law on the Court of Arbitration in the Republic of Georgia in April 1991 determined that court of arbitration exercised judicial powers by arbitrating proceedings; whereas the justice is exercised not by the Court of Arbitration, but the common courts (clause 2 of Article 82 of the Constitution).

Regarding above-mentioned circumstances court of arbitration is a part of the current judicial system. According to this, law on the Court of Arbitration in the Republic of Georgia of April 1991 is a part of valid legislation of Georgia.

Accordingly, the competence of Article 107 of the Georgian Constitution (paragraph 9, "transitional regulations") is spread over by the law of "the Court of Arbitration of the Republic of Georgia". By this article clause 1, "According to the Constitution, before adoption of the organic law on the court proceedings, the regulations on the court proceedings stay in force".

Based on Article 107 of the Constitution the Parliament of Georgia issued a decree on the Prolongation of Authority Term of Members of the Supreme Court of Arbitration of Georgia in May 31, 1996. The Parliament has ruled that "According to the law of Georgia of April 23, 1991 the term of authority of the elected members of the Supreme Court of Arbitration is prolonged until the enacting of the law on common courts. Along with this, the corresponding Parliamentary Committee by the power of decree should within 3 months submit to the Parliament of Georgia the project of the law on common courts". Thus law on the Court of Arbitration in the Republic of Georgia of April 23, 1991 does not violate the constitutional rights ensured by Articles 30, 42 as well as provisions of Article 83 of the Constitution (clause 2 and 4).

In the Constitutional Court, alongside with abolition of the law on the Court of Arbitration of the Republic of Georgia, the applicant asks for "abolition of the decree N 440 of June 5, 1980 "of the Rules of Consideration of Economic Disputes by the State Arbitrages adopted by the Council of Ministers of the Soviet Union", confirmed by the decree N 490 of April 16, 1988 (new version) and stopping its force on the territory of Georgia"

Materials of the case, testimonies of witnesses and respondent indicated that the Supreme Court of Arbitration of Georgia invoked the decree N 440 on the Rules of Consideration of Economic Disputes by State Arbitrages adopted on June 5, 1980 and newly approved on April 16, 1988 by the Council of Ministers of the Soviet Union (according to the text of the adopted decree N 490 of April 16, 1988, by the Council of Ministers of the Soviet Union),

Effect of the mentioned legal act in Georgia derives from the following normative acts: law of November 14, 1990 on the Promulgation of Transitional Period in the Republic of Georgia; law of April 9, 1991 on Effect of Constitution and Legislation on the Republic of Georgia; Decree of February 24, 1992 of the Military Council on the Effect of Legislation in the Republic of Georgia; law of November 6, 1992 on the State Authority in the Republic of Georgia. According to the clause 3 of Article 32 of which current legislation on judiciary is effective prior to the judicial reform in the Republic of Georgia.

The law on the Court of Arbitration of the Republic of Georgia considered absence of appropriate Code of Proceedings law on the Court of Arbitration in the Republic of Georgia of April 23, 1991 provides that the Court under the given conditions may invoke and apply legislation of the Soviet Union as well as of the other Soviet Republics if the foreign law does not contradict with legislation of Georgia (Article 3, part 1 and 3).

The Procedural Code of the Court of Arbitration of Georgia has not yet been adopted; and the Supreme Court for Arbitration is using the Rules for Consideration of Economic Disputes by State Arbitrages (text of the 1988 version).

The Rules of Consideration of Economic Disputes by State Arbitrages were adopted for arbitrages and not for the court of arbitration since functions of these two bodies are different. According to the article 1 of the Rules, the act provides enforcement of salvation of economic disputes by the state arbitrages according to the law of the Soviet Union on the State Arbitrages, give the principal tasks, envisaged by this law. Principal task of this normative act is the protection of the socialistic property (the law of the Soviet Union on the State Arbitrages, Article 2). Furthermore it was verified that there is no an official Georgian translation of the disputable normative act of the Rules on Consideration of Economic Disputes by State Arbitrages, and members of the Supreme Court of Arbitration of Georgia are using the Russian version of the Rules while translating the legal act themselves and applying it by their own interpretation to the judgment of the court.

Therefore practically Russian text is applying at the judicial proceedings of the disputable normative act that clearly violates clause 2 of Article 85 of the Constitution which provides that juridical proceedings are conducted in the Georgian language as the constitutional language. Additionally law on the Court of Arbitration in the Republic of Georgia requires that proceedings must be conducted in Georgian (article 4, April 23, 1991).

The Constitutional Court of Georgia holds that application of the Rules of Consideration of the Economic disputes by the State Arbitrages certainly infringes human rights ensured by Article 21 and 30 of the Constitution.

Considering Sub-item "e" of clause 2 of Article 89 of the Constitution on the Constitutional Court of Georgia; Article 19, sub-clause "f", 21, clause 2; 23, clause 1; and 39; and the law on the Constitutional Court of Georgia, Article 32 of law on the Constitutional Proceedings; the Constitutional Court of Georgia Ruled that:

1. Demand of the applicant on declaration of law on the Court of Arbitration in the Republic of Georgia, April 23, 1991, as unconstitutional shall not be satisfied.

2. Demand of the applicant shall be satisfied, and "the Rules of Consideration of the Economic Disputes by the State Arbitrages" approved by the Council of Ministers of the Soviet Union in June 5, 1980, decree N 440, shall be declared unconstitutional (according to the decree N 490 of April 16, 1988 of the Council of Ministers of the Soviet Union).

3. The normative act-"the Rules of Consideration of the Economic Disputes by the State Arbitrages" approved by the Council of Ministers of the Soviet Union in June 5, 1980, decree N 440 declared unconstitutional (according to the decree N490 of April 16, 1988 of the Council of Ministers of the Soviet Union) is invalid from the moment of publication of the decision.

4. The decision of the Constitutional Court is valid from the moment of its promulgation at the session of the Court.

5. The decision of the Constitutional Court is final and not subject of appeal of change.

6. The decision of the Constitutional Court shall be publicized in the official printing body.

I. Putkaradze; O. Benidze; N. Shashkin; N. Cherkeyishvili

CONSTITUTIONAL COURT OF GEORGIA SECOND BOARD DECISION

N 2/2-9

Tbilisi, 19 November, 1996

Composition of the Court: Gia Meparishvili (chairman); Lamara Chorgolashvili (reporter); Zaur Junjolava.

Secretary of the session: Tamar Gachechiladze

Subject of the claim: non-constitutionality of clause 3.10 of the Decree N 1-3/407 of July 31, 1996 of the Ministry of Management of State Property of Georgia "on the results of complex inspection of Khashuri Regional Department of Management of State Property".

Participants of the case:

1. Applicants: Joseph I. Bibiluri and Lamara I. Gelashvili

2. Defenders: Representatives of the Ministry of Management of State Property of Georgia-Irakli Gvaladze, Vice-chair of the Head of the Department of Legal and Juridical Insurance of the Ministry and Zurab Noniashvili, Leading Specialist of the same Department.

The Board of the Court clarified:

On September 27, 1996 citizen of Georgia Joseph Bibiluri submitted a constitutional claim to the Constitutional Court of Georgia. In the claim the applicant requires: to declare clause 3.10 of the Decree N1-3/407 (hereinafter decree) of July 31, 1996 of the Ministry of Management of State Property of Georgia "on the results of complex inspection of Khashuri Regional Department of Management of State Property" unconstitutional.

According to the noted clause of the Decree, the Ministry of Management of State Property of Georgia states, that at the time of competitive sale of the hotel "Iveria", located in the town of Khashuri, in compliance with the existed rule, established amount of US $22.000 must be paid totally in national currency, stated by the National Bank. Also, privatization cards, paid instead of national currency should be accepted in a concurrent amount of existed market price for the moment of its deposition for the purchaser of the hotel "Iveria".

Applicant Joseph Bibiluri in his constitutional claim notices, that item 3.10 of the Decree of July 31, 1996 of the Ministry of Management of State Property of Georgia, violates his, as Georgian citizen's right to property, recognized and ensured by Article 21 of the Constitution of Georgia, as according to Resolution N 108 of February 24, 1995 of the Council of Ministers of the Republic of Georgia "on the nominal price of privatization cards", the price of privatization card was defined as the equivalent amount of US $30.

In Joseph Bibiluri's point of view, as far as the competitive sale of the hotel "Iveria" took place in the time of him being the Head of the Khashuri Regional Department of Management of State Property, he considers himself obliged, first of all, to protect Lamara Gelashvili's, as the purchaser's of the hotel "Iveria" rights and freedoms. On November 14, 1996, before the beginning of the substantive consideration of the case, the applicant Joseph Bibiluri presented to the Board of the Constitutional Court-Proxy N 1209 issued on November 13, 1996 by the state notary of Khashuri Notary Office, by which the purchaser of the hotel Lamara Gelashvili trusts him, Joseph Bibiluri, to conduct any case of her in every court with the right, that is awarded by Georgia's valid legislature to every applicant. Joseph Bibiluri applied to the Board of the Court with a mediation to declare Lamara Gelashvili as another applicant of the case.

The applicant Joseph Bibiluri explained to the Chamber of the Court, that in the declaration of unconstitutionality of item 3.10 of the above mentioned Decree of the Ministry of Management of State Property he is interested also because, at the time of accounting the price of hotel "Iveria", the use of privatization cards by him became one of the basis of evaluation of his work as not satisfactional and then dismissal him from the office from the part of the Ministry of Management of State Property.

According to the Judgement N2/9/2 of November 14, 1996 the Chamber of the Court recognized Lamara Gelashvili as the applicant in the case and called her for participation in the substantive consideration of the case.

At the Constitutional Court of Georgia, on November 19, 1996 at the time of substantive consideration of the claim, the second applicant - Lamara Gelashvili - totally proved her will and supported the constitutional claim.

The defendant party-the representative of the Ministry of Management of State Property of Georgia did not recognize Bibiluri's and Gelashvili's claim and explained, that, though the Chamber of the Ministry of Management of State Property of Georgia adopted the Decree "on confirming the rule of calculation in the period of efficiency of State Property by the rule of competition and auction in the period of the usage of the privatization cards" far on October 2, 1995, but according to clause 9 of the Decree N 31 of February 7, 1994 of the Head of State of Georgia-"on the registration of official bodies' normative acts", the official bodies' normative act does not have the legal power, if it is not registered by determined rule at the Ministry of Justice. And the Ministry of Justice registered it on October 31, 1995, as the result the mentioned act was put in effect. The competition sale of the hotel "Iveria" of Khashuri was announced long time ago and the rule of calculating pointed there, was only in the hard currency. The competition for the privatization of the hotel "Iveria" of Khashuri was held on October 29, 1995 (protocol N 3 of October 29, 1995 of the competition commission of Khashuri Regional Department of Management of State Property) i.e. before registration of the normative act.

Forthcoming from all above mentioned, in the respondent's point of view, Khashuri Regional Department of Management of State Property of the Ministry of State Property when privatizing the hotel "Iveria" had no right to cover a part of the price of the object in case with privatization cards. In the defendant's interpretation, in the protocol #3 of October 29, 1995 of Khashuri Regional Department of Competition Commission of the Ministry of Management of State Property and in the Decree N 23/2 of November 2, 1995 of Khashuri Regional Department of Management of State Property-the form of calculation "on privatization of the hotel "Iveria" of Khashuri is not given.

Taking into account the above mentioned, the respondent party does not recognize the constitutional claim.

The Chamber of the Court considers, that the constitutional claim should be satisfied according to the following circumstances:

1. Decree N1-3/407 of July 31, 1996 of the Ministry of Management of State Property of Georgia-"on the results of the complex inspection of the Khashuri Regional Department of Management of State Property", in its legal nature, being a legal act of mixed character, its clause 3.10 is of a normative character. Particularly the clause 3.10 of the Decree for every purchaser of the hotel "Iveria" of Khashuri states the general rule-privatization cards, paid instead of the national currency must be considered as the respective amount of existing market price at the moment of deposition.

2. The materials for case stated and the defendant too confirms, that after the enforcement of the Decree of October 2, 1995 of the Ministry of Management of State Property of Georgia, at the time of privatization of state property by the rule of competition, the part of the price of the facility (at least 50%) were covered by privatization cards according to their nominal price (US $ 30 per a privatization card)-according to the Decree N 108 of February 24, 1995 of the Council of Ministers of Georgia-"on the nominal price of privatization cards".

The purchaser of the hotel "Iveria", Lamara Gelashvili covered the part of the price of the bought facility with privatization cards, in compliance with the rules existed at that time. With the above mentioned item 3.10 of the Decree N1-3/407 of July 31, 1996 of the Ministry of Management of State Property of Georgia, absolutely different rule was determined-privatization cards paid instead of national currency were considered as the corresponding amount of the existed market price at the moment of its deposit by the purchaser of the hotel "Iveria". Consideration of privatization cards in this way were not provided by any normative acts, which were valid at that time. Before the adoption of Decree N1-/3/407 of July 31, 1996 of the Ministry of Management of State Property of Georgia, the calculation at the time of privatization was conducted in national currency, and after the adoption of this Decree-the price of the privatization facility was covered partially by privatization cards.

So the applicant Lamara Gelashvili's right to property, protected by Article 21 of the Constitution of Georgia has been definitely violated.

3. The Board of the Court cannot share the position of the defendant – representative of the Ministry of Management of State Property of Georgia, according to which, as far as the Decree of October 2, 1995 of the Ministry of Management of State Property of Georgia-"on the confirmation of the accounting rule in the period of validity of privatization cards, when privatizing the state property by competition and auction" was registered on October 31, 1995 in the Ministry of Justice, so the action force of the Decree of the Chamber of the Ministry of Management of State Property of Georgia could not be spread on the privatization of the hotel "Iveria" of Khashuri.

The materials for the case prove, that the privatization of the hotel "Iveria" of Khashuri by the rule of competition really was conducted on October 29, 1995, but was over by November 2, 1995, when the Khashuri Regional Department of Management of State Property confirmed the results of the competition and issued the Decree N23/2 about selling the hotel "Iveria" of Khashuri to the applicant Lamara Gelashvili.

According to point 6.9 of the provision, confirmed by the Decree N42 of January 21, 1994 of the Council of Ministers of Georgia "on the competitive sale of privatizing facilities in the state (municipal) ownership", the results of privatizing facilities in the state (municipal) ownership are the subject of the obligatory confirmation, on the part of the seller of the facility. At the time of issuing the Decree of November 2, 1995 of Khashuri Regional Department of Management of State Property, the resolution of the Board of the Ministry of Management of State Property of Georgia-"on confirmation of the rule of accounting in the period of the validity of privatization cards at the time of privatizing state property by the rule of competition and auction" was already in effect, the first clause of which determined, when privatizing the state property by the rule of competition, the winner, during 20 calendar days after issuing the decision, must pay not less than 50% and not more than 65% of the final price of the facility in national currency. And the remained part of the price of the facility must be covered with privatization cards in the period of validity of privatization cards in the Republic.

According to all the above mentioned, it is the position of the leadership of Khashuri Regional Department of the Ministry of Management of State Property of Georgia, that when covering the price of the bought facility, recognition of the part of the price of the facility as the nominal price of the privatization cards, must be considered legal.

4. During the substantive consideration of the case, violation of the right of the applicant Joseph Bibiluri could not be confirmed, according to which the Board of the Court considers, that Joseph Bibiluri is not a corresponding applicant and according to Article 30, clause 2 of the law of Georgia "on the Constitutional Court of Georgia" and Article 12 "b" of the law of Georgia "on the constitutional proceeding", he only may participate in the case, as a representative of the applicant Lamara Gelashvili.

Based on Article 43 of the law of Georgia "on the Constitutional Court of Georgia" and Articles 30, 31 and 32 of the law of Georgia "on the constitutional legal proceedings", the Chamber of the Court decides:

1. Constitutional claim of Lamara Gelashvili shall be satisfied. Item 3.10 of the Decree N1-3/407 of July 31, 1996 of the Ministry of Management of State Property "on complex inspection of Khashuri Regional Department of Management of State Property" shall be declared as unconstitutional.

2. This decision is valid from the moment of its public promulgation at the session.

3. The decision is final and not subject to appeal or change.

4. Copies of the decision shall be forwarded to the applicant, to the President of Georgia, to the Parliament of Georgia and to the Supreme Court of Georgia.

5. The decision shall be published in the official printing body within the week after its promulgation.

G. Meparishvili; H. Chorgolashvili; Z. Jinjolava;

CONSTITUTIONAL COURT OF GEORGIA THE SECOND BOARD DECISION

N2/3-13

Tbilibi, 5 December, 1996

Composition of the Second Chamber of the Constitutional Court: Gia Meparishvili (chairman); Avtancil Abashidze; Lamara Chorgolashvili; Zaur Jinjolava (reporter); Tamar Gachechiladze (secretary of the sitting).

Subject of the claim: Article 213 clause "f" of the Labor Code of Georgia

Parties to the case:

1. Applicant: Alexander Tskhovrebashvili

2. Defendant: Parliament of Georgia (representative-David Mumladze, head of the Legal Department of the Parliament of Georgia)

The Board of the Constitutional Court has clarified:

On October 10, 1996 Alexander Tskhovrebashvili, a Georgian citizen, submitted a constitutional claim to the Constitutional Court of Georgia. The applicant applied for a declaration of unconstitutionality of the part of Article 213 of the Labor Code of the Republic of Georgia which concerned settlement of employment disputes of detectives by the order of hierarchy.

The applicant indicated that he had previously held the position of detective for very important cases of the Department of Military prosecutions of Georgia and he claimed that the Prosecutor General of Georgia, N. Togonidze, had dismissed him, thus performing rigid violation of the law.

Considering his dismissal unlawful, the applicant lodged a petition to a district court of the city of Tbilisi. The court did not accept his petition for judicial proceedings indicating that according to Article 213 of the Labor Code his claim could be only considered by the authority superior to the applicant.

The Board for civil cases of the city court of Tbilisi, by its regulation N 5-3026 of July 5, 1996, Tbilisi Krtsanisi district court by its regulation of May 10, 1996, at its revolutionary session did not consider the claim of Alexandre Tskhovrebashvili, and the private claim of Alexandre Tskhovrebashvili - not satisfied.

According to Article 213 of the Labor Code, claims related to the imposition of disciplinary sanctions on, or the dismissal or transfer of state officers who are elected, appointed or designated to a position by a supreme body of state authority, including dismissal of judges prosecutors, their deputies and assistants, and detectives, of the Department of Prosecutions, dismissal formalities and dates, transfer to another position, forced absence, performance of low-paid activities and issues of disciplinary measures, shall be considered by the person's superior authority.

Initially the applicant Alexandre Tskhovrebashvili had applied for a declaration for invalidity only of the part of the article 213 of Labor Code of the Republic of Georgia which concerned the settlement of employment claims of detectives of the Department of Prosecutions by their superior authority. However, at the procedural sitting of the Board of the Constitutional Court of Georgia in November 25, 1996, the applicant demanded Article 213 of the labor Code be declared completely unconstitutional.

According to the applicant, Article 213 of the law "on the Labor Code of Georgia" does not comply with the Article 42 of the Constitution of Georgia, according to which every person has right and right for protection, and for this he/she can apply to the court.

During substantive consideration of the Board of the Constitutional Court the applicant increased the scope of the claim and additionally demanded that Article 214 of the Labor Code be declared unconstitutional. According to this Article, where a state officer is restored to his former position by the decision of his superior authority, the officer shall receive the salary of the low-paid activity of only one year for the whole period of dismissal.

The defendant party did not deny the reasonability of the claimant's demand regarding the unconstitutionality of the part of Article 213 of the Labor Code, however, as for Article 214 of the Labor Code, it considered a declaration of unconstitutionality to be unjustified.

The board of the Constitutional Court of Georgia was satisfied by the claim made by A. Tskhovrebashvili and only declared Article 213 of the Labor Code unconstitutional for the following reasons:

1. Clause 1 of Article 42 of the Constitution of Georgia states that "every person has the right to appeal to the court to protect his rights and freedoms", whereas Article 213 of the Labor Code actually deprives some categories of state officers (particularly those who are elected, appointed or designated by a supreme body of state authority, including judges, prosecutors, their deputies and assistants, and detectives of the Department of Prosecutions), of their constitutional right to appeal to courts for the protection of their rights and freedoms. Thus, Article 213 of the Labor Code clearly violates the human right entrenched in Article 42 of the Constitution of Georgia.

2. The Chamber has ruled that the declaration of Article 213 of the Labor Code as unconstitutional will leave to the Parliament of Georgia the task of amending Article 214 and other related articles of the Labor Code.

Considering Article 89 sub-clause "f" of the Constitution of Georgia, Articles 39, clause 1, and 43 of the law on the "Constitutional Court of Georgia", Article 30, 31 and 32 of the Law of Georgia on "constitutional proceedings", the Chamber of the Constitutional Court ruled that:

1. The claim of Alexander Tskhovrebashvili shall be satisfied. Article 213 of the Labor Code shall be declared unconstitutional.

2. The decision of the Constitutional Court is valid from the moment of its promulgation at the session of the Chamber.

3. The decision of the Constitutional Court shall be published in the official printing body within a week after its promulgation.

4. Copies of the decision shall be forwarded to the parties to the proceedings, the Parliament of Georgia, the President of Georgia and the Supreme Court of Georgia.

5. The decision of the Constitutional Court is final and not subject to appeal or change.

G. Meparishvili, A. Abashidze, L. Chorgolashvili, Z. Jinjolava.

CONSTITUTIONAL COURT OF GEORGIA FIRST BOARD DECISION

N1/2-14-19

Tbilisi, 30 December, 1997

Constitutional Court of Georgia with the composition of first Board: Jacob Putkaradze (chairman); Otar Benidze (reporter); Nicholas Shashkin; Nikoloz Cherkezishvili; Darejan Chaligava (secretary of the session),

on an open session of the same court with the participation of parties to the case: applicants-Alexander Danelia and George Tsomaia, and their representative Archil Kbilashvili, defendant-representative of the Parliament of Georgia-David Mumladze, was considered the case-"citizen Alexander Tsomaia and citizen George Danelia v. the Parliament of Georgia".

The claimants addressed the constitutional court on the grounds of Article 42, item 1, Article 89 clause 1 "f" of the Constitution of Georgia, Article 19 "e", Article 39 clause 1 of the organic law "on the Constitutional Court of Georgia" and Article 1 item 2 and Article 16 of the law of Georgia "on constitutional proceedings".

Subject of the dispute is the constitutionality of Chapter 1, Article 11, item 4, paragraph 1 and last paragraph of Article 12, clause 1 "b" of the law of the Republic of Georgia of December 21, 1993 "on the basics of taxation system" with regard to Article 21, item 3, first sentence of Article 30, clause 2, and Article 42, items 1, 2 and 3 of the Constitution of Georgia.

Article 21, clause 3, Article 30, clause 2, first sentence, Article 42, clause 2 and 3, Article 85, clause 3 of the Constitution of Georgia, Article 10, clause 5 and Article 22 of the law of Georgia "on the basics of taxation system", Article 22 of the law of Georgia of July 15, 1993 "on the right to property", Article 1 of the law of Georgia of July 15, 1993 "on State Taxation Agency of the Republic of Georgia" were named by applicants as evidences.

Addressing the Constitutional Court was caused by the matter, that the applicant side, as the founders and superiors of legal entity are under the scope of the disputable norm of the law "on the basics of taxation system". Authors of the constitutional claim consider, that above mentioned norms are in contrary with the provisions, guaranteed by the Constitution of Georgia.

In particular, according to the applicant's point of view: the rule of sequestration of property of necessary social need, stated by Article 21, clause 3 of the Constitution and the obligation of state to foster conditions for the development of free enterprise and competition, foreseen in the first sentence of Article 30, item 2 of the Constitution are in contrary with the first paragraph of Article 11, item 4, last paragraph of Article 12, clause 1 "b", Article 18, clause 1 and 2 of the disputed normative act.

Article 42, clause 1 of the Constitution, according to which each individual has the right and the right to appeal to the court to protect his rights and freedoms and the right of guaranteed security declared by clause 3 of the same Article are in contrary with the first sentence of Article 22, clause 4 of the disputable act; Article 42, clause 2 of the constitution, according to which every individual can only be judged by the court which has jurisdiction over the particular case and clause 3 of the same Article are in contrary with clause 3 of Article 22 of the disputable act.

The applicants notify, that first paragraph of Article 22, item 3 of the law "on the basics of taxation system, in case if the enterprise does not agree with the decision of superior taxation body, foresees the appeal to the Court of Arbitration for final decision of the issue, and with the first sentence of Article 4 of the same law, submitting the claim does not suspend the execution of the decision of the officials of taxation body. The Court of Arbitration is not an independent judicial body (it is accountable to the relative governmental body) and the taxation agency is also a state body.

So, by the Court of Arbitration in case of dispute on the equality and adversary basis of the parties of proceedings between the enterprise, as a private legal organization, and taxation agency, as a public legal organization the principle of conduction is violated. The authors of the claim consider, that submission of the claim in the court must suspend the execution of the decision, because illegal conduct of the officials of taxation agency will be followed by the discrimination of constitutional right to property. This violates the provision of Article 42, item 3 of the Constitution, according to which "the right to protection is guaranteed" and the right to protection must be preceded by the determination of legal fact and not followed. Thus, the provision on the protection of rights and freedoms, guaranteed by Article 42, clause 1, and 3 are violated.

First paragraph of Article 11, clause 4 of the disputable act foresees the responsibility of tax payers for the violation of tax legislation. Financial sanctions of these violations are carried out by the State Taxation body. This clause obliges the tax payers that the amount according to hidden or reduced exemptable facility and fines for violation of taxation legislation must the paid into the budget in 10 days period from the day when act is made by the state taxation agency. And article 22, clause 3 foresees the appeal of the conduct of taxation agency officials. Forthcoming from this, the applicants think, that categorical and compulsory demand for keeping the limit of 10 day term clarifies the following opposition: the legislator thinks, that any decisions of taxation agency on this matter is true, but at the same time the law presupposes illegal activities of the employees of taxation agency for possibility of property sequestration.

The same contradiction is included in the last paragraph of Article 12, clause 1 "b", and Article 18, clause 1 and 2. They empower the state taxation bodies – on the basis of the decree to make the enterprises to pay unpaid taxes, fines and other fees in law-defined occasions and stated terms.

Such rule of property sequestration is in contrary with Article 21, clause 3 of the Georgian Constitution, according to which sequestration of property for necessary social need is permissible in cases directly determined by law, by a decision of the court or through urgent necessity by organic law but only if full compensation is made. Therefore, the claimants assume, that all disputable norms are in contrary with that provision of Article 22 of the law of Georgia of July 15, 1993 "on the right to property", that "the decision of governmental bodies on the suspension of the right of owner, if the owner does not agree with it, shall not be entered in force before the decision of the court".

Forthcoming from this, the claimants think, that on the basis of the decisions of the officials, property sequestration may take place unrightfully and a tax payer is not obliged at first place and irrefutably fulfill the legal result of illegal action.

Above mentioned circumstances, in the applicant's opinion, contradict the first sentence of Article 30, clause 2 of the Georgian Constitution, that "the state is obliged to foster conditions for the development of free enterprise and competition,"

Thus, according to the constitutional claim, disputable norms are incompatible with and violate Article 21, clause 3, first sentence of Article 30, clause 2, and Article 42 clause 2 and 3 of the Constitution of Georgia.

Authors of the constitutional claim require the negation of disputable norms.

The defendant generally expressed his position towards the disputable provision, that the issue essentially concerns not constitutionality of disputable norms, but the expediency of their development and substantiation. This issue is the subject of consideration not of the Constitutional Court but of legislative body. The defendant does not agree with the applicant's position, that irrefutable payment of the amount of tax is the same as sequestration of property for social necessity, which is envisaged by Article 21, clause 3 of the Constitution of Georgia. Therefore, he notifies that these sums belong to state property from the beginning and shall not be treated as property sequestration. He considers rightful the rule on the appeal of disputed issues with regard to tax payment. Payment of tax, in the respondent's opinion, is the competence of appropriate government organ and intrusion into judicial power in it would be unjustified. And the right to protection will act in the orbit of judicial power.

The applicant noted, that the issue of constitutionality of the Court of Arbitration is already decided by the Constitutional Court. Thus, above noted disputes are subject of judgement of the Court of Arbitration.

The defendant does not recognize the claiming requirement. The Constitutional Court of Georgia with the composition of first board clarified the following circumstances:

According to the Decision of the Constitutional Court N1/1-10 of November 1, 1996, the law of Georgia of April 23, 1991 "on the court of arbitration in the Republic of Georgia" is declared constitutional.

According to Article 18 of the noted law, the court of arbitration reviews the disputes of economic character between the enterprises, organizations and bodies, which are the legal entities, despite their departmental subordination, property form and disputed amount of sum. The court of arbitration is authorized to review economic disputes between the legal entities.

Article 42, clause 3 of the Georgian Constitution guarantees the right on protection. Valid legislature foresees the guarantees on protection for the tax payers. According to Article 10, item 5 of the law of Georgia "on the basics of taxation system", a tax payer has the right "to demand the return of sums additionally deposited into the budget". Article 22 of the same law envisages the appeal of conduction of the officials of taxation agency in the superior agency and acceptance to the court of arbitration for final decision of the case.

Therefore, according to Article 42, clause 9 of the Constitution of Georgia, "Any individual who suffers damage illegally rendered by the state, self-governing bodies of officers is guaranteed full remuneration through the court from state resources. Forthcoming from this: everyone has the guaranteed remuneration for illegal damages; damages must be renders by the state, self-governing bodies and officers; the damages must be compensated through the court; compensation will take place from the state resources.

Above mentioned Article of the Constitution is related to Article 22, clause 1 of the law "on the basics of taxation system": incorrect payment of the amounts of taxes made by the taxation agency and also other mandatory fees submit the return, and damages made by taxation agencies and their officers to the tax payers of illegal conduct shall be compensated in a stated rule."

Compensation of damage "in a stated rule", considered in item 1 of Article 22 of the law "on the basics of taxation system" is determined by Article 42, clause 9 of the Constitution of Georgia – "compensation through the court".

Forthcoming from all above mentioned disputed norms of the law of the Republic of Georgia of December 21, 1993 "on the basics of taxation system" is not in contrary with Article 42, clause 1, 2 and 3 of the Constitution.

According to Article 94, clause 1 of the Constitution of Georgia "everyone is obliged to pay taxes to the amount and right determined by law". Thus, to submit taxes and payments is obligatory and must be carried out in an amount and rule, determined by law.

On the basis of this requirement of the Constitution, submission of taxes and payments is regulated with appropriate legislative act, among which basic one is the law "on the basics of taxation system".

The state, on the one hand, determines the obligatory taxes and payments and on the other hand mechanism of their submission. In particular, according to Article 11, clause 2 of the law "on the basics of taxation system", "for the violation of taxation legislation by tax payers, financial sanctions are used".

According to Article 21, item 3 of the Constitution "sequestration of property for necessary social needs is permissible in cases directly determined by law, by a decision of the court or through urgent necessity of organic law but only if corresponding compensation is made."

Thus, several conditions are needed for the sequestration of property:

Sequestration of powers must be caused by necessary social needs;

Cases, when sequestration of property for social needs is permissible must be directly determined by law;

Court decision is obligatory for sequestration of property for necessary social needs Sequestration of property is possible through urgent necessity;

Cases of urgent necessity must be determined by organic law; Sequestration of property is impermissible without appropriate compensation.

Irrefutable payment of taxes, envisaged in the first paragraph of Article 11, clause 4, last paragraph of Article 12, clause 1 "b", Article 18, clause 1 and 2 of the law "on the basics of taxation system", is the sanction, determined by the state in case of non-payment of obligatory taxes and gatherings in a law determined rule. It is not related to Article 21, clause 3 and to the first sentence of Article 30, part 2 of the Constitution of Georgia, which foresees the state obligation – "to foster the development of free enterprise and competition".

Above mentioned rule of payment of taxes and gatherings is compatible with recognized international-legal norms. In particular, first article of first protocol of 1950 European Convention of fundamental human rights and freedoms states:

"every physical or legal person has the right to use his/her property peacefully. No one shall be confiscated with property, except the necessary case for the protection of social interests and protection of conditions, which are envisaged by the legislature and general principles of international law.

Above mentioned provision does not limit the right of state to adopt such laws, which it considers necessary for implementing the control over the use of property according to common interests, or for providing the payment of taxes, other fees of fines.

Guided with Article 89, clause 1 "f" and clause 2 of the Georgian Constitution, Article 19; clause "e", article 21, clause 2; article 23, clause one and article 39 of the organic law "on the Constitutional Court of Georgia", with articles 32 and 33 of the law "on constitutional proceedings",

The Constitutional Court of Georgia with the composition of First Board Determines:

1. Constitutional claim of citizen Alexander Danelia and George Tsomaia shall not be satisfied;

2. The decision of the Constitutional Court is valid from the time of its public announcement at the sitting;

3. The decision of the Constitutional Court shall be published in an official printing body in 7 days period;

4. Copies of the decision shall be sent to the parties of the case, to the Parliament of Georgia, to the President of Georgia and to the Supreme Court of Georgia;

5. The decision of the Constitutional Court is final and not subject to appeal or revise.

J. Putkaradze; O. Benidze; N. Shashkin; N. Cherkezishvili.

CONSTITUTIONAL COURT OF GEORGIA FIRST BOARD DECISION

N1/3/21

Tbilisi, 20 February, 1997

Constitutional Court of Georgia with the composition of first Chamber: Jacob Putkaradze (chairman); Otar Benidze; Nicholas Shashkin (reporter); Darejan Chaligava (secretary of the session).

On an open session of the same court with the participation of the applicant Otar Zoidze; specialist Juris Doctor, Professor Valeri Loria-Deputy Dean of the Law Faculty of Tbilisi State University; and witnesses: representatives of Georgian Parliament-David Mumladze-Head of the Juridicial Department of the Parliament of Georgia and Malkhaz Dzneladze-Head of the Staff of the Parliamentary Committee of Protection of Environment and Natural Resources; Tengiz Lagidze-representative of the Ministry of Protection of Environment of Natural Resources of Georgia, Head of the Economical Department of Environmental Protection-Nona Burchuladze, representative of the Ministry of Finance, Deputy Director of the Department of Tax and Customs Policy Implementation, Head of the Department of Tax Policy-Nugzar Kavtaradze, representative of the Tax Agency of Georgia, Head of the Department of the Taxation Agency.

Name of the case-"citizen Otar Zoidze vs. President of Georgia".

Constitutional claim is submitted on the basis of Article 89, clause 1(f) of the Constitution of Georgia, Article 19 clause (e) and Article 39, clause 1 of the organic law of Georgia "on the Constitutional Court of Georgia".

Subject of the claim is the constitutionality of the Decree N1010 of October 22, 1992 of the Government of the Republic of Georgia "on imposing taxes and tax payments for environment pollution by harmful substances", and temporal regulation "on imposing taxes and tax payments for environment pollution by harmful substances", confirmed by this Decree regarding first point of Article 21 and Article 39 of the Constitution of Georgia.

Article 94, clause 1 of Georgian Constitution is presented in the constitutional claim, according to which "payment of taxes and duties in an amount and rule stated by law is obligatory", Hence, the applicant believes, that it is obligatory to pay taxes and duties defined only by the law in an amount and rule stated by the same law.

The author of the constitutional claim presents the Decree of the Parliament of Georgia of December 29, 1993 on the basis of taxation system regarding the law of the Republic of Georgia, Article 5 of which defines that before the enaction of the law "on customs taxes, state customs, taxes on the environmental pollution, taxes on the means of transportation, about the taxes for state registration of enterprises and for registration of enterprising works, the existing rule of payment of these taxes should be retained". Thus, the Decree, mentioned by the Parliament, kept the disputable acts in force, and the applicant notifies, that decree of the Parliament can not make the normative act into law.

In the author's point of view, normative acts do not represent the laws, thus they must be declared as unconstitutional regarding Article 94, clause 1 of the constitution of Georgia.

The applicant considers, that according to Article 21, clause 1 of the Constitution of Georgia, recognition of property, in its way means its protection from unlawful encroachment, as the taxes apply to the property, so existence of unconstitutional taxes encroaches non-replacement of the property. In the applicant's point of view, one of the guarantees for protection from such encroachment is Article 94 of the Constitution of Georgia. As the applicant thinks, that in this particular case, Article 399 must be considered as subsidiary of Article 21.

The applicant presented Decree #260 of September 26, 1996 of the Ministry of Finance of Georgia, by which changes were made in the temporal regulation "on imposing and taxing on the pollution of the environment" confirmed by Decree #1010 of October 22, 1992 of the government of Georgia, by the same name. In the applicant's point of view, Decree of the Minister of Finance made changes in the act of superior body, which was not within the minister's authority. Article 7 of the law of Georgia of December 27, 1996 "on changes and additions in the legislative acts regulating the Georgian taxation system", tariffs were imposed on each liter of gasoline and diesel for explosion of harmful substances form moving sources in the atmosphere.

The applicant noted, that provision of Article 5, clause 4 of the Constitution of Georgia on the principle of separation f powers is violated by the disputable decree.

The applicant requires to abolish the disputable normative act.

In the specialist's point of view, as far as according to Article 106, clause 2 of the Constitution of Georgia, the Parliament and the President of Georgia must ensure conformity of the normative acts adopted before the enforcement of the Constitution with the Constitution and with the laws, during two years after the enforcement of the Constitution, thus before the expire of the term of two years, normative acts and generally, even the normative acts incompatible with the Constitution, should be in effect as totally constitutional. It is not defined precisely with the first part of Article 94 of the Constitution, whether the payment of taxes is conducted only according to the rule, stated by law. If, in this case, we consider, that this rule may be stated by legal acts as well, then raising the issue on the constitutionality of disputable normative acts has no sense. Abrogation of disputable acts and provisions may have a negative influence on the state budget.

On the basis of Article 106, clause 2 of the Constitution, representatives of the Parliament of Georgia pointed out that the issue of abolishment of disputable acts may be raised only after the expire of the term of two years, before that, their existence is reasonable. Regarding the above mentioned matter, they made a statement, that the Taxation Code is in the process of consideration in the Parliament, the adoption of which is planned in May of this year. In their point of view, abrogation of disputable acts will create vacuum in the taxation system.

Representatives of the Ministry of Protection of Environment and Natural Resources of Georgia noted, that with the President's Decree N52 of January 13, 1996, the Ministry was assigned to work out a bill on taxes on the environmental influence. The bill was submitted in August of 1996, but its adoption was not considered appropriate, because adoption of Tax Code was planned. Taxes provided by disputable acts comprises a great income for the state budget. And thus their abolishment would cause negative consequences.

According to the testimony of the representative of the Ministry of Finance, taxes provided by the disputable acts are legal, their conformity with the Constitution of Georgia must be made in two years. Also, according to the law of December 27, 1996 "on changes and additions in the regulating acts of taxation system", disputable acts partially were given the action force of the law. The mentioned taxes are envisaged in the budget and abolishment of disputable acts is harmful.

The representative of the Taxation Agency noted, that disputable normative acts are in effect since 1992, and the Parliament has not adopted any relative law. In his point of view, forthcoming from Article 106, clause 2 of the Constitution of Georgia, the efficiency of normative acts is legal.

Constitutional Court of Georgia clarified the following circumstances:

according to Article 3, clause 1(g) of the Constitution of Georgia, tax legislature is applied only to special management of Georgian supreme bodies, as well as other concurrent issues. Issues related to taxes are regulated by Article 94 of the Constitution.

"1.Every one is obliged to pay taxes to the amount and right determined by law.

2.The structure of taxes and their introduction are determined by law.

3.Exemption from state taxes and payments from the state treasury is permissible only by law."

The Parliament of Georgia is the authorized body for the adoption of a law – it exercises the legislative power (Article 48 of the Constitution of Georgia).

According to Article 5 clause 1 of the law of December 21, 1993 "on the grounds of taxation system of the Republic of Georgia", which is valid nowadays, the republican taxes, or the taxes, payment of which is conducted on the territory of Georgia in accordance with general tariff, include the tax on the environmental pollution. So, type of a tax – tax on the environmental influence is determined by law, but the amount and the rule of its payment in contrary with Article 94, clause 1 of the Constitution of Georgia are defined not by law, but by the Decree N1010 of October 22, 1992 of the Government of Georgia and temporal Decree confirmed by this Decree. The fact should be mentioned, that the tariffs of the tax on each liter of gasoline and diesel for the explosion of harmful substances form moving sources in the atmosphere, as well as the taxpayers and the rule of taking out of taxes were defined by the law of Georgia of December 27, 1996 "on changes and additions in the legislative acts, regulating Georgia's taxation system". In addition to this, according to the Decree of the Parliament of Georgia of December 27, 1996, relative appendix N4 of the temporal Decree confirmed by the Decree N1010 of 1992 of the Government of Georgia was abolished (norms of taxes on each liter of gasoline and diesel for the explosion of harmful substances form moving sources in the atmosphere")

Government body may not issue the acts, which determine the amount and the rule of imposing of tax. In such case, violation of the principle of the separation of powers takes place. According to Article 5, clause 4 of the Constitution of Georgia "state power is exercised and based upon legal state principles".

In the person's duty–to pay taxes and duties, state duty is included as well – that taxes and duties must be determined by law in accordance with the relative rule regarding the considering case. Otherwise, taxes always encroach the property, the rights of the owner, which are guaranteed by Article 21, clause 1 of the Constitution of Georgia.

Article 21 of the Constitution of Georgia entirely regulates the main relations regarding the property and it is not necessary to complete Article 39 in connection with the considering case.

Article 106, clause 2 of the Constitution of Georgia does not mean the unconstitutional and unconditional effect of normative acts, adopted before the enforcement of the Constitution. Otherwise, the Constitutional Court of Georgia would not judge the issue of constitutionality of such normative acts after the expire of the term, noted in the above mentioned article.

Based on Article 89, clause 1(f) of the Constitution of Georgia, and Article 19(e);Article 21, clause 1; Article 43, item 8 and Article 39 of the organic law of Georgia "on the Constitutional Court of Georgia" and Article 32 and 33 of the law "on constitutional proceedings", Constitutional Court of Georgia decides;

1. Citizen Otar Zoidze's constitutional claim shall be satisfied – Decree N1010 of October 22, 1992 of the Government of the Republic of Georgia "on imposing and taxing for environment pollution by harmful substances", and temporal regulation "on imposing and taxing for environment pollution by harmful substances, confirmed by this Decree shall be declared unconstitutional.

2. Unconstitutionally declared normative acts – Decree N1010 of October 22, 1992 of the Government of the Republic of Georgia "on imposing and taxing for environment pollution by harmful substances", and temporal regulation "on imposing and taxing for environment pollution by harmful substances, confirmed by this Decree – loose the action force from the moment of promulgation of this decision by the Constitutional Court of Georgia.

3. This decision is valid from the moment of its public promulgation at the session.

4. The decision is final and not subject to appeal of change.

5. Copies of the decision shall be forwarded to the applicant, to the President of Georgia, to the Parliament of Georgia and to the Supreme Court of Georgia.

6. The decision shall be published in the official printing body within the week after its promulgation.

J. Putkaradze; O. Benidze; N. Shashkin.

CONSTITUTIONAL COURT OF GEORGIA SECOND BOARD DECISION

N2/4-24

Tbilisi, 28 February, 1997

Composition of the court: Gia Meparishvili(chairman); Avtandil Abashidze(reporter);Lamara Chorgolashvili; Zaur Jinjolava.

Secretary of the session: Tamar Gachechiladze

Name of the case: Leonardo Devdariani vs. President of Georgia Subject of the claim: 1. Decree N5 of January 11, 1995 of the Head of State of Georgia – "on conferring of extraordinary additional rights to the Embassy of Georgia in Russian Federation; 2. Decree N468 of July 16, 1996 of the President of Georgia "on the Trade-Economical Representation of Georgia in foreign countries"; 3. Decree N315 of December 16, 1996 of the President of Georgia – "on the buildings N1 and N4 located on 42 Arbat St. in the city of Moscow"; 4. Decree N54 of June 16, 1995 of the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation "on the measures for the perfection of economical management and control of subordinated organizations"; 5. Decree N78/2 of May 24, 1996 of the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation –"on implementation of the Decree of the Head of the State of Georgia of January 11, 1995 for the subsequent estimation of material values and for protection of state property".

Participants of the case:

1. Applicant: Leonardo Devdariani and representative of the claimant, barrister–Rusudan Pitava;

2. Respondent: President of Georgia(Representative of the President of Georgia in the Constitutional Court of Georgia-Bela Sirbiladze);

3. Specialist-Juris Doctor, professor-Valeri Loria;

4. Witnesses: Vaja Lortkipanidze; Nugzar Duchidze; Teimuraz Devidze; Guram Mamulashvili.

On an open session, second Chamber of the Constitutional Court of Georgia CLARIFIED:

On December 11, 1996, citizen of Georgia Leonardo Devdariani applied to the Constitutional Court of Georgia with a claim.

In his constitutional claim Leonardo Devdariani notes, that on November 25, 1993 the Council of Ministers of the Republic of Georgia issued the Decree N835 – "on the establishment of Trade-Economical Representation of Georgia in Russian Federation", by which the Trade-Economical Representation of Georgia was formed in Russian Federation, concretely in Moscow.

On January 11, 1995, Head of State of Georgia issued the Decree N5 – "on conferring extraordinary, additional rights to the Embassy of Georgia in Russian Federation". According to the Decree, the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation was given extraordinary rights, to define and confirm the structure of the Embassy independently, to appoint and dismiss the Embassy workers of every rank. With the second point of the Decree, all the decrees and resolutions, issued by the Head of State of Georgia and by the Council of Ministers of the Republic of Georgia were recognized abolished and invalid, according to which, different structures, representations were formed, extraordinary and plenipotentiary representatives and trusties of the Head of State of Georgia. Thus, the Trade-Economic Representation of the Republic of Georgia in Russian Federation was admitted in the Structure and submission of the Embassy of the Republic of Georgia in Russian Federation, by transferring of its property to the Embassy's ownership.

On July 16, 1996, the President of Georgia issued Decree N468 – "on Trade-Economical Representations of Georgia in foreign countries". With the first clause of the mentioned Decree, Trade-Economical Representations of Georgia in foreign countries, established by the Decree of the Council of Ministers of the Republic of Georgia before January 1, 1997, were abolished. The third point of the Decree defined, that the work on the issues of bilateral cooperation with accredited diplomatic representations in foreign countries and with international organizations in the trade-Economical and financial spheres is conducted by the Senior Economic Adviser in economics of this Representation, who is appointed by the Ministry of Foreign Affairs of Georgia, agreed with the Ministry of Trade and Foreign Economical Relations of Georgia. In addition, the mentioned person is directly subordinated to the Head of Diplomatic Representation. With clause 6 of this Decree, Decree N300 of April 14, 1993 of the Council of Ministers of Georgia – "on temporal Trade-economical Representation of Georgia abroad and about confirming the decree on temporal proxy in trade-economical matters" and Decree N792 of November 5, 1993 of the Council of Ministers of Georgia – "on changes in the Decree on the Trade-economical Representations of the Republic of Georgia abroad", are recognized invalid. With clause 7 of the mentioned Decree, decrees of the Chairman of the Committee of Foreign-Economical Relations of the Republic of Georgia about the appointment of temporal proxy in trade-economical issues are recognized invalid.

During consideration of the constitutional claim, on the basis of Article 13, clause 2 of the law of Georgia "on constitutional proceedings", applicant Leonardo Devdariani enlarged the scale of the request and additionally required the Constitutional Court to declare three more acts as unconstitutional:

1. Order N315 of December 16, 1996 of the President of Georgia-"on the buildings N1 and N4 located on 42 Arbat St. in Moscow";

2. Order N54 of June 16, 1995 of the Ambassador Extraordinary and Plenipotentiary of Georgia in Russian Federation "on the measures for the efficiency of economical management and control of subordinated organizations";

3. Order N78/2 of May 24, 1996, of the Ambassador Extraordinary and Plenipotentiary of Georgia in Russian Federation – "on the carry out of the Decree of the Head of the Georgia of January 11, 1995 for the corresponding estimation of material values and for protection of state property".

With point one of the Decree of the President of Georgia of December 16, 1996, the property of the State of Georgia – N1 building on 42 Arbat St, Moscow, where the Trade-economical Representation of Georgia in Russian Federation is located, was transferred to the balance of the Agency for State Provision. Issues of management of building N4 on 42 Arbat St. Moscow was also transferred to the balance of the same Agency. According to clause 2 of the mentioned Decree, the commission with the composition of different ministries and state agencies was formed, which was assigned to transfer the property of noted buildings and Trade-economical Representations to the Agency for State Provision of Georgia. And in addition, to learn the condition of formation of the rights on the property of building N1, and on the use of corresponding land of building N4 with the appropriate rule.

With clause 2 of the Decree N54 of June 16, 1995 of the Ambassador Extraordinary and Plenipotentiary of Georgia in Russian Federation, all the main sources and material values of Trade-Economical Representations were accepted in the ownership of the Embassy, including the property, which was earlier in the ownership of Cultural-Commercial Center "Mziuri" and was on the balance of the Trade-Economical Representation. Clause 5 of the mentioned Decree states, that Trade-economical Representation uses the property (including for commercial reasons) only with the permission of the Ambassador. In addition, the Embassy confirms annual normative of deductions, belonging to Trade-economical Representation of the Embassy, from the amount received as a result of the use of property, and the balance shit of the Trade-economical Representation is approved by the Ambassador.

With the first clause of the Decree N78/2 of 1996 of the Ambassador Extraordinary and Plenipotentiary of Georgia in Russian Federation, main sources and material values of Trade-Economical Representation and Cultural-Commercial Center "Mziuri" were transferred to the Embassy's balance, envisaging factual condition, on the basis of the results of conducted inventarization. With clause 2 of the Decree, the mentioned property was transferred to Trade-Economical Representation and were assigned to calculate appropriately on this organization's balance. With the third clause of this Decree, the Trade-economical Representation was assigned: to ensure protection and safety of transferred main sources and material values; exercise the leasing of the property, transferred by the right of operational management and other kind of commands only by the Embassy's assignment, necessary documentation for estimation of movement of material values should be presented in the accounting office of the Embassy once a quarter.

The applicant Leonardo Devdariani considers, that with the Decree N5 of January 11, 1995 of the Head of State of Georgia "on conferring of extraordinary additional rights to the Embassy of Georgia in Russian Federation" and with the Decree N315 of December 16, 1996 of the President of Georgia "on the buildings N1 and N4 on 42 Arbat St. Moscow", his as a clause's rights and freedoms, envisaged by Articles 21 and 30, are violated. In the applicant's point of view, the pointed legal acts violate not only the rights of the applicant Leonardo Devdariani to property and to labor, but also other constitutional provisions and principles.

In the applicant Leonardo Devdariani's point of view, Decree N5 of 1995 of the Head of State of Georgia violated his right to property, conferred by Article 21 of the Constitution, because, clause 2 of the Decree, without condition defined the deprivation of the property of the representation (Trade-economical Representation of Georgia in Russian Federation) and transferring of this property totally to the ownership of the Embassy. The applicant states, that this property did not represent Georgia's property. He thinks, that to deprive the Trade-Economical Representation of Georgia from property is in contrary with the provisions of Article 21 of the Constitution, with the third clause of which, deprivation of property is possible only with extreme necessity of the society and in cases, defined by law, with the decision of the court, or in case of urgent necessity, stated by organic law and only with concurrent reimbursement.

The Trade-Economical Representation of Georgia in Russian Federation was established according to the Decree N385 of November 16, 1993 of the Council of Ministers, Leonardo Devdariani was appointed as trade-economical representative of Georgia in Russian Federation.

In connection with the establishment of Trade-economical Representation of Georgia in Russian Federation, together with the building of Cultural-Commercial Center "Mziuri" on 42 Arbat street, Moscow, with clause 5 of the Decree N913 of December 16, 1993 of the Council of Ministers of the Republic of Georgia "on the costs of keeping the Trade-economical representation of Georgia in Russian Federation", was transferred to the ownership of Trade-economical Representation of the Republic of Georgia. With the Decision N3007 of December 19, 1986 of the City Board Executive Committee of Moscow, the building located on 42 Arbat street, Moscow was built by the Georgian Agricultural-Industrial Committee. The shop "Dari Vinograda" should be opened there. Building works of the building was finished in 1987 and was conducted by the sources drawn from Georgian budget, the amount of which was 6 500 000 Rubles, and cultural and historical monument of Moscow "Gorodskaya Usadzba e.p.Khvoshinsko", was transferred to the balance of the Department of Protection, Use and Control of Historical and Cultural Monuments of Moscow. Between the noted Department and Georgian Agricultural-Industrial Union of Cultural-commercial Center "Mziuri", agreement on lease about the use of the building was made in 1988.

On the trial, it was clarified, that after the destruction of USSR, on the basis of the agreement of the leaders of the CIS countries on October 9, 1992 in Bishkek "on mutual recognition of rights and property relations", Georgia, as an independent and sovereign country, began to take care of accelerating the process of transferring the noted building in the ownership of the State of Georgia. The trial clarified, that the Georgian side had not completed of relative works yet and the building on 42 Arbat St. Moscow had not been transferred to Georgia yet.

Cultural-Commercial Center "Mziuri" was located in the very mentioned building, which was formed at the Trade-Economical Representation of Georgia on March 1, 1995 (was registered on March 20, 1995, N706075). The founders of the Cultural-Commercial Center "Mziuri", of as closed joint-stock company became: 1. Trade-economical Representation of Georgia in Russian Federation –20%; 2. Applicant Leonardo Devdariani -20-%; 3, other individual persons-60%.

Regulation fund was formed with founders' monetary shares. For the reason of establishment of Cultural-Commercial Center "Mziuri", the applicant emphasizes the circumstance, that the Trade-Economical Representation of Georgia was not able to be financed from the state budget of Georgia. Thus, with the letter of agreement (August 3, 1994, N94/49) of Avtandil Margiani, then the Deputy Premier-Minister of Georgia, joint-stock company-Cultural-Commercial Center "Mziuri" was established, 20% of its incomes belonged to the Trade-Economical Representation of Georgia in Russian Federation. With the applicant's words, form the noted property, the income was purposed to be used for covering the costs of the representation and in this part it did not represent state property, as it exercised the function of budget on private legal basis.

In applicant Leonardo Devdariani's point of view, according to the Decrees N5 of January 11, 1995 and N468 of July 16, 1996, withdrawal of Trade-Economical Representation from the structure of one Ministry and transferring it not to any of the ministries, but in the composition of the Embassy, which itself is included in the structure of the Ministry of Foreign Affairs of Georgia, is in contrary with international practice. For, in the countries, where the embassies are not open, the Trade-economical Representations remain and is in the composition of the Ministry of Trade and Foreign Economical Relations. And Trade Representations are abolished, and Trade-economical Representatives with the status of economical adviser are subordinated to the embassies established in other countries. In the applicant's point of view, such disperse and structural principle of double subordination of ministry divisions, is in contrary with Article 81 of the Constitution of Georgia's governmental agreement of April 14, 1995 "on mutual foundation of trade representation" is also violated, according to Article 6 of it, the agreement is valid form the moment of signing, and seizes the validity on the basis of written request of one of the parties, 6 months earlier before the beginning of New Year. The applicant says, that this request is also violated. The applicant Leonardo Devdariani clarifies in his constitutional claim, that disputable decrees are in contrary with the law of Georgia "on the rule of structure and activity of the executive authority", because the latest does not foresee such principle of subordination and such cases, that are given in the decrees, in the applicant's point of view, transfer of Trade-Economical Representation to diplomatic representation by the administrative principle, violated not only constitutional principles of independence and separation of powers, but also redirects from legal principle of building state organizational system.

As the applicant thinks, Decree N5 of January 11, 1995 of the Head of State of Georgia is unconstitutional also because, when in the 2nd clause of this Decree, all the decrees, resolutions and ordinances of the Head of State and of the Council of Ministers of the Republic of Georgia are considered abolished and invalid, according to which different structures, representations are established in Russian Federation, extraordinary and plenipotentiary representatives and proxies are appointed by the Head of State and by the Council of Ministers, no list of names of legal acts are concretely pointed, to which this decree or resolution concerned, He thinks, that as far as the Decree is a normative act, it should also have normative conditions of legislative techniques and it is illegal.

In the constitutional claim, the applicant Leonardo Devdariani notifies, that with the issue of disputable normative acts, the right to property, guaranteed by Article 21 of Chapter 2 of the Constitution of Georgia and right to labor, guaranteed by Article 30 of the Constitution of Georgia are violated, the applicant Leonardo Devdariani requires to declare the following unconstitutional:

1. Decree N5 clause 2 of January 11, 1995 of the Head of State of Georgia – "on conferring of extraordinary additional rights to the Embassy of Georgia in Russian Federation;

2. Decree N468 clause 2, 3, 4, 5 of July 16, 1996 of the President of Georgia "on the Trade-Economical Representation of Georgia in foreign Countries";

3. Decree N315 clause 1 of December 16, 1996 of the President of Georgia-"on the buildings N1 and N4 located on 42 Arbat St. in the city of Moscow";

4. Decree N54 of June 16, 1995 of the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation "on the measures for the perfection of economical management and control of subordinated organizations";

5. Decree N78/2 of May 24, 1996 of the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation-"on enforcing the Decree of the Head of the State of Georgia of January 11, 1995 for the subsequent estimation of material values and for protection of state property".

The Board of the court considers, that the requests, stated in the constitutional claim of the citizen Leonardo Devdariani has no grounds and no substantiation forthcoming from the following circumstances:

1. With Article 89(f) of the Constitution of Georgia, according to Article 19(e) of the law of Georgia "on the Constitutional Court of Georgia", the Constitutional Court of Georgia on the basis of an individual claim of a citizen reviews the constitutionality of a normative act, only regarding the issues of Board 2 of the Constitution of Georgia. According to clause 1 of Article 21 of the Constitution of Georgia the right to inheritance and property is recognized and guaranteed. The abrogation of universal right of property, its acquisition, transfer and inheritance is prohibited.

During consideration of the constitutional claim, it was not able to clarify actually on what object was the applicant's right to property violated. During the review of the constitutional claim, the claimant himself considered the issue of N1 building on 42 Arbat St. Moscow and the issue of incomes received from the use of this building disputable. He does not make disputable the violation of private rights on other properties.

During the review of the case, according to a lot of opposition statements, legal condition of this building is not clarified. It is not disputable, that it is built according to the protection of the rules valid that time and during years it is owned by the state structures of Georgia, without any claims from any side. However, the fact is to be mentioned, that the issue of N1 building on 42 Arbat St. Moscow legally has not decided yet.

The Chamber of the court can not share the claimant's opinion, that Trade-economical Representation of Georgia, commercial structure of which, established for the means of self-financing, joint-stock company Commercial Center "Mziuri", to which N1 building on 42 Arbat St. Moscow was transferred in the rule of sublease and conducted commercial works with the incomes received from here, was deprived from the right to use the mentioned building exactly on the basis of disputable normative acts, also incomes, received from leased facility were seized, which in some way represented the company's property, by which right to property, protected by Article 21 of the Constitution of Georgia was violated.

First, if the joint-stock company was established as the means of financing the Trade-Economical Representation of Georgia, and for the fulfillment of the budget functions towards it (the legality of which of course has to be clarified), together with abolishing Trade Representation, the aim if establishing joint-stock company is lost. It should be also noted, that in the regulations of joint-stock company, the exploitation of the building, as its main activity is not presupposed at all. And second, neither the Decree of February 7, 1994 of the State Committee of Foreign Economical Relations of Georgia, nor the letter N1/179 of August 1, 1994 of the Trade-Economical Representation of Georgia in Russian Federation, on which resolution was made by Mr. Avtandil Margiani, Deputy Premier-Minister of Georgia, do not envisage the transfer of the building to a joint-stock company. The same is shown by the letter N16-18/411 of February 13, 1997 of the Department of the Protection Use and Control of Historical and Cultural Monuments, according to which the building is on their balance. Hence, one and the same building being within the cognizance of two countries at the same time, is impossible.

Forthcoming from above mentioned, the act made on November 16, 1994 between Trade-economical Representation an joint-stock company, about transferring of N1 building on 42 Arbat St. to the balance is incompatible with actual situation (to complete economic management, administration, power to dispose). Transferring of the building with the right to ownership, to use and to dispose, or to property is envisaged by leasing agreement, also made on December 20, 1994.

At that time, when Trade-Economical Representation itself did not have the right to disposition of the building, the Board of the Court considers, that transferring of it to the private structure with this right is not acceptable. Thus, statement of the applicant, that the agreement on sublease with joint-stock company was agreed upon with the testimonies of the case.

The applicant thinks, that this right to property, guaranteed by Article 21 of the Constitution of Georgia is violated, which was caused by abolishing the incomes from the building's sublease. To clarify the noted issues is not the Constitutional Court's competence. Arguments of such property type is within the competence of common courts. In the 2nd paragraph of clause 2 of the Decree of January 11, 1995 of the Head of State of Georgia, it is clearly noted, that Trade-Economical Representation of the Republic of Georgia in Russian Federation must be accepted in the structure and in the subordination of the Embassy of the Republic of Georgia in Russian Federation, by giving its property to the Embassy's ownership. Thus, in this part of disputable normative act, the property of joint-stock company is not envisaged at all.

2. The applicant notes, that before issuing Decree N5 of January 11, 1995 of the Head of State of Georgia, Trade-Economical Representation of Georgia in Russian Federation was within the subordination of State Committee of Foreign Economical Relations of Georgia and the Trade-Economical Representative was appointed by this committee.

With paragraph 2 of the clause 2 of Decree N5 of January 11, 1 1995 of the Head of State of Georgia, this representation was drawn form the subordination of the Committee of Foreign-Economical Relations of Georgia and was accepted within the structure and subordination of the Embassy of Georgia in Russian Federation. According to the applicant, Head of the State had no right to take off the sphere of activity from the State Committee of Foreign-Economical Relations of Georgia by his decree and to transfer it to the balance of the Embassy of Georgia in the Russian Federation.

It is possible, that we are dealing with exaggeration of the authority of the Head of State of Georgia. The specialist, invited on the trial-Juris Doctor, professor Valeri Loria presented his negative position towards this. Reviewing of this matter is not in the authority of the Constitutional Court yet, because first of all, if we consider, that above mentioned Decree of the Head of State, as of the Head of executive authority is not compatible with the Constitution of Georgia, then either the President of Georgia or at least one fifth of the members of the Parliament shall submit a constitutional claim on such matter, because according to Article 33, item 1 of the law of Georgia "on the Constitutional Court of Georgia", the President of Georgia and not less than one fifth of members of the Georgian Parliament have the right to introduce a constitutional claim at the Constitutional Court on correspondence of Georgian laws, the regulations of the Georgian Parliament, normative acts of the President of Georgia, Supreme State bodies of Abkhazia and Adjara and normative acts adopted by appropriate bodies with the Constitution of Georgia before enforcement of the Constitution of Georgia. And second, with the Decree N5 of January 11, 1995 of the Head of State of Georgia, Trade-economical Representation of Georgia in Russian Federation, which belonged to the composition of the Committee of Foreign-Economical Relations of Georgia, moved to the composition of the Ministry of Foreign Affairs. In fact, definite part of the competence of one body was transferred to another state body.

With Article 34, paragraph 1 of the law of Georgia "on the Constitutional Court of Georgia" the President of Georgia has the right to submit a constitutional claim to the Constitutional Court on the areas of competence among the state bodies, if he considers that his competence is violated or the areas of constitutional authority of state bodies are being violated; not less than one fifth of members of the Parliament of Georgia have the right to submit a constitutional claim to the Constitutional Court, if they consider that the areas of constitutional authority of the Parliament of Georgia or other state body are being violated, state bodies listed in Article 89 of the Constitution of Georgia also have such right if they consider their areas of constitutional authority have been violated.

As it is shown, this case constitutional claim is not submitted to the Constitutional Court by an authorized person or body.

3. With clause 2 of the Decree N468 of July 16, 1996 of the President of Georgia, Trade-economical Representation of Georgia in foreign countries, formed before January 1, 1997 by the Decree of the Council of Ministers of the Republic of Georgia were declared abolished. In the applicant's point of view, with the above mentioned Decree of the President of Georgia, applicant's labor right, guaranteed by Article 30 of the Constitution of Georgia is violated, and not only applicant's, but labor right of workers of the Trade-economical Representation of Georgia are violated.

The Board of the Court thinks, that neither the claimant's labor right nor the workers' of the Trade-economical Representation were violated by the Decree N468 of July 16, 1996 of the President of Georgia, because according to disputable acts no one in fact was dismissed from the office. Besides, first of all, Article 30 of the Constitution of Georgia, declares not the right on labor, but freedom of labor (right on free labor). With Article 30 of the Constitution of Georgia clause 1, labor is free, which means, that a person has a right to dispose his/her own abilities in the labor activity by himself/herself, he/she himself/herself shall choose any sphere of the labor activity. And second, forthcoming from Article 30 of the Constitution of Georgia, the state is not any more obliged to ensure a citizen with labor.

4. The Board of the Court considers, that the applicant's request that in Decree N5 of January 11, 1995 of the Head of State of Georgia, all the decrees, resolutions and commands of the head of State and of the Council of Ministers of the Republic of Georgia are considered abolished and invalid, according to which different structures, representations are established in Russian Federation, extraordinary and plenipotentiary representatives and proxies are appointed by the Head of State and by the Council of Ministers, no list of names of legal acts are actually pointed out, to which this decree or resolution concerned. He thinks, that as far as the Decree is a normative act, it should also have normative conditions of legislative techniques and it is illegal.

This request of the applicant does not forthcoming from Article 39 clause 1 of the law of Georgia "on the Constitutional Court of Georgia", according to which, individual persons have the right to submit a constitutional claim, if they consider, that the rights and freedoms, guaranteed by Chapter 2 of the Constitution of Georgia are violated. Because of non-perfection of legislative techniques, an individual person has no right to submit a constitutional claim in the Constitutional Court.

5. Regarding the applicant's request, on declaring the clause 1 of the Decree of December 16, 1996 of the President of Georgia "on buildings N1 and N4 on 42 Arbat St. Moscow" unconstitutional, the Board of the court considers, that the given decree being a legal act, but has no normative character and clearly represents the type of individual legal act, stating compatibility of it with the Constitution is not the competence of the Constitutional Court.

6. Decree N54 of June 16, 1995 of the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation "on the measures for the effectiveness of economical management and control of subordinated organizations" and Decree N78/2 of May 24, 1996 of the same Ambassador "on the carrying of the Decree of the Head of the State of Georgia of January 11, 1995 for the subsequent estimation of material values and for protection of state property" do not have the normative character. These acts of the Ambassador lack normative character, because they forthcoming from the normative acts, are issued for the means of their fulfillment and belong to proper subjects, i.e. they are of individual character and not of normative. Thus, the Constitutional Court is not able to judge them connected to constitutionality in the scope of an individual constitutional claim (clause 1 of Article 39 of the law of Georgia "on the Constitutional Court of Georgia").

Based on Article 89 of the Constitution of Georgia, Articles 33, 34, 39 and 43 of the law of Georgia "on the Constitutional Court of Georgia", articles 10, 11 and 18 "b" and "c" of the law of Georgia "on constitutional proceedings', the Constitutional court decides:

1. The constitutional claim of citizen Leonardo Devdariani on recognizing the following as unconstitutional – 1. Decree N5 of January 11, 1995 of the Head of State of Georgia – "on conferring of extraordinary additional rights to the Embassy of Georgia in Russian Federation ; 2. Decree N468 of July 16, 1996 of the President of Georgia "on the Trade-Economical Representation of Georgia in foreign countries"; 3. Decree N315 of December 16, 1996 of the President of Georgia-"on the buildings N1 and N4 located on 42 Arbat St. in the city of Moscow"; 4. Decree N54 of June 16, 1995 of the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation "on the measures for the perfection of economical management and control of subordinated organizations"; 5. Decree N78/2 of May 24, 1996 of the Ambassador extraordinary and plenipotentiary of Georgia in Russian Federation – "on implementation of the Decree of the Head of the State of Georgia of January 11, 1995 for the subsequent estimation of material values and for protection of state property" – shall not be satisfied;

2. The decision of the Constitutional Court is valid from the moment of its promulgation at the session of the Chamber.

3. The decision of the Constitutional Court shall be published in the official printing body within a week after its promulgation.

4. Copies of the decision shall be forwarded to the parties to the proceedings, the Parliament of Georgia, to the President of Georgia and to the Supreme Court of Georgia.

5. The decision of the Constitutional Court is final and not subject to appeal or change.

G. Meparishvili; A. Abashidze; L. Chorgolashvili; Z. Jinjolava.

THE CONSTITUTIONAL COURT OF GEORGIA THE SECOND BOARD DECISION

N2/31-5

Tbilisi, 25 March, 1997

Composition of the Second chamber of the Constitutional Court of Georgia: Gia Meparishvili (chairman); Avtandil Abashidze;

Lamara Chorgolashvili; Zaur Jinjolava (reporter); Tamar Gacheshiladze (secretary of the sitting).

Subject of the claim: Article 154 of the Residential Code of Georgia.

Name of the case: citizen Levan Purtskhvanidze Vs The Parliament of Georgia

Participants of the proceeding:

1. Applicant: Levan Purtskhvanidze represented by N. Nebieridze, barrister;

2. Defendant: Parliament of Georgia (representative of the Constitutional Court of Georgia-David Mumladze, Head of the Legal Department of the Parliament of Georgia);

3. Invited specialists: Juris Doctor, Professor Shalva Chikvashvili; Juris Doctor, Professor B. Zoidze-Doctor of Legal Sciences.

The Second Board of the Constitutional Court of Georgia at an open sitting clarified:

On January 9, 1997 Levan Purtskhvanidze, a Georgian citizen submitted a constitutional claim with the Constitutional Court of Georgia, indicating that on December 11, 1991 by the decision N3/17 under Article 154 of the Residential Code of Georgia the Civil Board of the Supreme Court of Georgia (as the body of the first instance) rejected his claim for the removal of tenants from his apartment. According to Article 154 of the Residential Code leasing contract of indefinite period of time may be terminated by the owner if the Court ascertains that the premise is urgently needed for the personal use of the owner and members of his family; additionally the owner is obliged to worn the tenants three months before the termination of the contract. In such a case tenant must be removed without any right to other premise for residing.

The applicant Levan Purtskhvanidze indicated that Article 154 of the Residential Code is a legal nonsense and contradicts Article 21 of the Constitution since the owner is deprived of the constitutional right to use his property unless he proves that he urgently needs his private premise. Article 21 of the Constitution provides that the right to property and inheritance is recognized and guaranteed; abrogation of the universal right to property, its acquisition, transfer and inheritance is impermissible.

The applicant Levan Purtskhvanidze applied for declaration of Article 154 of the Residential Code of Georgia as unconstitutional.

The Board of the Constitutional Court invited specialists who presented conclusions to all parties on the essential issues of the case.

Juris Doctor, Professor Shalva Chikvashvili (Tbilisi Ivane Javakhishvili State University, Chair of Civil Code) indicated that Article 154 of the Residential Code arose from the socialistic ideology where governmental interests undermined the constitutional rights of the citizens. At the same time the disputed legal act constrains an owner's exercise of the right to property. Actually the owner is deprived of the ability to use and dispose property by his own will. Prof. Chikvashvili speculated that stipulation of Article 154 of the Residential Code on existence of urgent needs of the owner and members of his family to use and dispose a private premise should not be bases for ignoring a constitutional right.

According to Professor Shalva Chikvashvili, assertions of the Article 154 of the Residential Code of Georgia that the owner and his family in the case of the private usage necessity have the right to use and to dispose the premises, must not be the advantageous precondition for taking away the constitutional right (right to property) from the owner.

Professor Shalva Chikvashvili asserted that Article 154 of the Residential Code of Georgia contradicts Article 21 of the Constitution; however a declaration of the mentioned article unconstitutional may create some social problems as within the passage of the years it may result mass removal of tenants from private premises.

Juris Doctor, Professor B. Zoidzer (Georgian Scientific Academy, Doctor of the Institute of the State and Law) developed a profoundly controversial concept in his conclusion. He indicated that there is no absolutely unrestricted material right and therefore right to property, and in this particular case every owner has the right to use property within a contractual framework. Mechanisms for the restriction of civil rights are the basis of regulated civil society. The specialist noted that generations of people continue living in rented premises (flats), thus the law supports the right of tenants and protects them from self-willingness of owners as social interests oblige a restriction of the right to freedom to some reasonable extent. This explains restriction on the right to property in favor of tenants by Article 154 of the Residential Code of Georgia, and does not contradict the Article 21 of the Georgian Constitution.

During substantive consideration of the case, the applicant Levan Purtskhvanidze applied to the court to recognize the whole Article 154 of the Residential Code of Georgia as unconstitutional.

The defendant party – David Mumladze, Head of the Legal Department of the Parliament of Georgia – did not recognize the constitutional claim of the applicant Levan Purtskhvanidze based on Article 154 of the Residential Code of Georgia.

The defendant did not recognize constitutional claim of L. Purtskhvanidze and holds that Article 154 of the residential Code does not contradict Article 21 of the Constitution which provides that "the right to inherit and own property is recognized and guaranteed. Abrogation of the universal right to property, particularly the right to acquire, transfer, dispose property is impermissible". The defendant indicated that clause 1 of Article 21 of the Constitution concerns only the abrogation of the right to property and not its restriction. Whereas the claimant only asserts a restriction of his constitutional right, and not its abrogation. Furthermore the respondent considered that this restriction on the right was reasonable in this particular case.

The Board of the Constitutional Court declared to satisfy the claim made by L. Purtskhvanidze and declared Article 154 of the Residential Code of Georgia unconstitutional for the following reasons:

1. Clause 1 of Article 21 of the Constitution does not mention "restriction" on the right to property, although the provision stating that the right to property and inheritance is recognized and ensured must be interpreted to mean it is impermissible to restrict the right to property.

2. According to clause 2 of Article 21 of the Constitution, restriction on the right to property is permissible in cases of social necessity as directly determined by law and by legally determined order. In this particular case there is no urgent social necessity as the Constitution of Georgia does not oblige the State to provide citizens with apartments and premises.

3. The owner has the right to possess, use and dispose the property. Article 154 of the Residential Code restricts the clear right to dispose property as disposal means use of property without any preliminary reservations and stipulations (as the means of necessity of any other).

Considering Article 89 of the Constitution, Articles 39, 40 of the Law on the Constitutional Court of Georgia, Articles 10, 30,31 and 32 of Law on the Constitutional proceedings the Chamber of the Constitutional Court ruled:

1. Claim of L. Purtskhvanidze shall be satisfied. Article 154 of the Residential Code of Georgia shall be declared unconstitutional.

2. Decision of the constitutional Court is valid from the moment of its promulgation at the session of the Chamber.

3. The decision of the Constitutional Court shall be publicized in the official printing body within a week after its promulgation.

4. Copies of the decision shall be forwarded to the parties to the proceedings, the Parliament, President and Supreme Court of Georgia.

5. The Parliament of Georgia shall be requested to work out and approve a new concept of Article 154 of the Residential Code until the adoption of new Civil Code of Georgia.

6. The decision of the Constitutional Court is final and not subject to appeal or change.

G. Meparishvili; A. Abashidze; L. Chorgolashvili; Z. Jinjolava.

THE CONSTITUTIONAL COURT OF GEORGIA SECOND BOARD DECISION

N2/6-23

Tbilisi, 7 May, 1997

Composition of the Board: Gia Meparishvili (Chairman); Avtandil Abashidze (Reporter); Lamara Chorgolashvili; Zaur Jinjolava.

Secretary of the sitting: Tamar Gachechiladze;

Name of the case: Alexander Danelia and George Tsomaia Vs the Ministry of Finance of Georgia.

Subject of the claim: 1. Instruction of the State Taxation Agency of the Ministry of Finance of Georgia of October 17, 1996-"on taxation of transportation service export with value added tax"; 2. Instruction of State Taxation Agency of the Ministry of Finance of Georgia of April 12, 1996 – "on the rule of payment and calculation of value added tax" additions N 5 and changes of Instruction N2 of January 31, 1994.

Participants of the case:

1. Applicants: A. Danelia, G. Tsomaia. Representative of the applicants-lawyer Archil Kbilashvili;

2. Defendant: Ministry of Finance of Georgia (representatives: Head of the Taxation and Customs Policy Implementation Department of the Ministry of Finance of Georgia-Nona Burchuladze, Head of the Taxation Policy, International Relations and Claim Consideration Department of State Taxation Agency-Valeri Khanishvili, Deputy-Head of the same Department, Head of the Department of Claims and Protests Consideration-Anzor Jokhadze);

3. Specialists: 1) Professor Valerian Zurabishvili, Head of the Economic and Social Problems Department of the Scientific-Research lnstitute at the Ministry of Economics of Georgia, Doctor of Economic Science; 2) Juris Doctor, Lado Chanturia, Professor of the Civil Law of the Law Faculty of the State University of Tbilisi.

4. Witness: Head of the Departmental Normative Acts Registration Department of the Ministry of Justice of Georgia-Badri Metreveli.

At an open sitting the Second board of the Constitutional Court clarified"

On December 5, 1996, Alexander Danelia, General Director of Ltd "Caucastransexpeditor" of American Maritime Company -"Sea-Land" and George Tsomaia, Head of the Board of Founders of the same organization submitted a constitutional claim to the Constitutional Court of Georgia.

According to Article 42, clause 1, Article 89, clause 1 "c" of the Constitution of Georgia, Article 19 "e" Article 39, clause 1 of the Law of Georgia "on the Constitutional Court of Georgia", Article 16 of the Law of Georgia "on Constitutional Proceedings" the applicants require to declare the following unconstitutional:

1. 4th paragraph of the Instruction of October 17, 1996 of State Taxation Agency of the Ministry of Finance of Georgia-"on taxation of transportation service export with value added tax";

2. subparagraph 4 of paragraph 5 "a" of clause 5 of Instruction N2 of Additions and Changes N5 of January 31, 1994 of the Instruction of April 12, 1996 of State Taxation Agency of the Ministry of Georgia-"on the rule of Payment and calculation of value added tax."

The applicants notify in the claim, that Article 6, clause 1, paragraph 2 of the Law of Georgia of December 24, 1993 "on value added tax" states the following rule: when exporting the goods (work, service) out of the boarders of CIS zero is used for the service of transiting these goods."

The applicants notify, that as far as the law does not interpret how to understand the service export out of the boarders of CIS, the function for giving such interpretation was undertaken by State Taxation Agency of the Ministry of Finance of Georgia and had made two departmental normative acts: 1. Instruction of October 17, 1996-"on the taxation of transportation service export with value added tax" and 2. Additions and Changes N5 of the Instruction N2 of January 31, 1994 of the Instruction of April 12, 1994-"on the rule of payment and calculation of value added tax."

Subparagraph 4 of paragraph 5 "a" of clause 5 of Instruction N2 of Additions and Changes N5 of January 31, 1994 of the Instruction of April 12, 1996 of State Taxation Agency of the Ministry of Georgia-"on the rule of payment and calculation of value added tax" defines that for the purpose of taxation of value added tax when transporting the cargo and carrying the passengers, export is considered in case if departure station and the destination station are located out of the boarders of CIS".

4th paragraph of the Instruction of October 17, 1996 of State Taxation Agency of the Ministry of Finance of Georgia-"on taxation of transportation service export with value added tax" defines that "for the purpose taxation with value added tax in the sphere of transportation service the following is considered export and is taxed by zero rate:

service for cargo transportation and passenger carriage in case if the departure station an the destination station are located out or the boarders of the CIS."

In the constitutional claim the applicants notify, that being the founders and leaders of the organization, on which the validity of normative acts extend the application, as far as they do the international transportation and expeditionary service, the quoted disputable norms of above mentioned normative acts violate the right, guaranteed by Chapter 2, Article 30, clause 2 of the Constitution of Georgia, according to which the state is obliged to foster the development of free enterpreneurship and competition. Violation of the Constitutional right, guaranteed by Article 30 of the Constitution of Georgia is confirmed by the applicants in the following way: as far as the above quoted interpretation of both normative acts proves, that in the sphere of transportation service, export of service is considered the only type of service by which the departure station and the destination station are located out of the boarders of the CIS, or if among all capable forms of service, that one is considered just one of them. And the above mentioned means that practically the whole service shall be taxed with stated rate of value added tax (20%), as it is with other spheres of business. In their opinion, this does not take place in any countries, because competitiveness of the resident is lost in this sphere, for the residents of another country occupied with analogical business (transportation service) for the purpose of stimulating the service export are released from value added tax. Because of this, the resident of Georgia on the territory of Georgia is put in worth conditions than his non-resident competitor. In the applicants' point of view, as far as the disputable norms of normative acts issued by the State Taxation Agency of the Ministry of finance of Georgia limit the legally areas of privileges, Georgian residents have no right for the use of the privileges, which in the interpretation are considered as the exports of service (when the departure station and the destination station are located out of the boarders of the CIS). In particular, the applicants point out to the Agreement on International Transportation of July 30, 1992 made between the republic of Georgia and the Republic of Turkey, which was ratified by the Parliament of Georgia on May 12, 1994. According to Article 17 of this Agreement: "the forwarder is not able to carry passengers and transit the cargo between two items of another contracting side, if he does not have a special permission from a competent official." And according to Article 18 of the Agreement-"the forwarder has the right to carry ort the transitions from the territory of the second contracting side to the third country as well as from the third country to the territory of the second contracting country, if it has a special permission from a competent official of the second contracting country".

The applicants believe, that practically such permission is given only as a result of natural catastrophe and very rarely. And this, in their opinion, clarifies that carrying out of service export in the sphere of transportation, as it is understood in the interpretation of above mentioned normative acts, is excluded even theoretically. If not even this, (i.e. legally unacceptable) no country releases the owner of the cargo from value added tax, if the owner of the cargo addresses the transportation organization of foreign country for transportation service, whereas the owner of the same load is released from this tax if he addresses the transportation organization of concurrent country. Thus, Georgian residents neither legally nor because of competitiveness are able to do service in the sphere of transportation ort of the boarders of the CIS. In the applicants' point of view, all above mentioned proves that this prevents free enterprising and creates unequal competition between Georgian and non-Georgian residents.

The applicants think that with the above mentioned disputable instructions, the Ministry of Finance of Georgia virtually did the interpretation of the law, the right of which according to the Law of Georgia of December 24, 1993 "on State Taxation Agency of the Republic of Georgia" it did not have, for by the Article 3, clause 1 (g) of the Constitution of Georgia taxation legislation belongs to the special governance of Georgian supreme state bodies.

During the substantial consideration of the claim, the applicants party made doubts about the legal nature of disputable normative acts, for none of them where published in the rule of stated legislation, by which clause 8 of the Decree N31 of Georgia's Head of State of February 7, 1994 "on state registration of departmental normative acts" and the requirements of Articles 41 and 44 of the Law of Georgia of October 29, 1996 "on normative acts" (is valid since February 1, 1997) are violated.

The defendant party did not recognize the constitutional claim and noted, that the interpretation of the service export is derived from the valid legislation. The defendant party rejected the assertions from the applicant party, that disputable normative acts violated the right, guaranteed by Article 30 of the Constitution of Georgia, for thy consider, that the development of free enterpreneurship and competition is fostered by the adoption of the taxation, customs, civil and other laws, by the apportionment of state subsidies, by the stimulation of productions export, in particular as a type of taxation of value added tax zero rate and others. In the defendants' opinion, in order to limit the free enterprising or putting it in unequal conditions, in this case the normative act should state either attach privilege or differentiation of tax rate. In this particular case neither privilege nor differentiation takes place. According to their assertion, the requirement of the law on transportation service is equal for every person. So, in the defendants' opinion, the normative acts had not encroached the applicants' right, guaranteed by Article 30 of the Constitution of Georgia.

The defendant party considers, that the applicants did not have a right to submit the claim related to the issues of Chapter 2 of the Constitution of Georgia at the constitutional court in the name of an individual, for they represent the legal entity and virtually the constitutional claim is brought in the interests of a legal body (in this case "Caucastransexpeditor" LTD). The defendant party also considers, that the issues raised in the constitutional claim by the applicant party exceed the basic human rights and freedoms, guaranteed by Chapter 2 of the Georgian Constitution, because if the adoption of disputed normative acts violate the requirement of Article 94, clause 2 of the Georgian Constitution, according to which the structure of taxes and gatherings, the rule of establishment are stated by the law. In their opinion, in this case an individual shall not be the authorized person for addressing the constitutional court with a constitutional claim.

Doctor of Economic Science, Professor V. Zurabishvili, invited as a specialist, presented the written conclusion to the Constitutional Court and gave the relevant oral interpretation concerning the issues raised in the constitutional claim. Professor V. Zurabishvili thinks, that with the disputed clauses of instructional acts, because of incomplete extending of applications of privileges of value added tax on transportation service export, the state limits and not fosters the development of enterprising. In such conditions the tax may only have a fiscal function and its stimulator (economic) function is totally ignored. In the specialist's opinion with stating the disputed items of instructional acts, the Ministry of Finance of Georgia exceeded the frames of its authorization, for it actually made changes in the Law on Taxation, the right of which it did not have. In the professor Zurabishvili's point of view the demands raised in the constitutional claim are right and shall be satisfied.

The invited specialist, Juris Doctor, Professor Lado Chanturia presented the written conclusion to the Constitutional Court and gave relevant oral interpretation related to the issues raised in the constitutional claim. In the point of view of L. Chanturia, according to Article 17, part 4 and Article 18, part 1 of the Law of Georgia-"on normative acts", the Ministry is authorized to adopt a illegal normative act only for the purpose of fulfillment of only legislative act if it is directly envisaged by the legislative act.

Adoption of illegal acts for the fulfillment of legislative acts, naturally means the interpretation of separate norms of the law, checking their normative concept. This is placed as in the frames of legal science so in the principles guaranteed by legislative techniques. Use of each norm by the competent body, by all means, means the ability of interpretation of such norm. But in the sphere of Social Law, the important branch of which is Law on Taxation, such interpretation should not create hard conditions for the tax-payers.

In the specialist's point of view, 4th paragraph of the Instruction of October 17, 1996 of the State Taxation Agency of the Ministry of Finance of Georgia-"on the Taxation of transportation service export with value added tax" and 4th clause of paragraph 5 "a" of the 5th clause of the changes and additions of the Instruction N2 of January 31, 1994-"on the rule of payment and calculation of value added tax" of the Instruction of April 12, 1996 of the State Taxation Agency of the Ministry of Finance of Georgia are adopted for the execution of the particular law, actually grounds are made for the establishment of new disposition and for the imposition of relative tax for it. Forthcoming from this, the specialist considers that the part of the above mentioned instructions, which defines the conception of service export and with this creates the basis for the imposing of a tax, is not compatible with the requirements of Article 94 of the Georgian Constitution.

Concerning the issues raised in the constitutional claim by which the noted acts are in contrary with the first sentence of clause 2 of Article 30 of the Constitution of Georgia and because of this are preventing the development of free enterprising and competition, in the specialist's opinion the existing materials of case do not make basis for having such conclusion. Thus, pointing out this Article of the constitution he considers irrelevant.

Bardi Metreveli, Head of the Departmental Normative Acts Registration Department of the Ministry of Justice of Georgia, who was questioned as a witness at the court sessions, gave the testimony to the court, that both departmental acts, nominated by the applicants at the Ministry of Justice of Georgia to be recognized unconstitutional, on the basis of clause 4 of the Decree N31 of February 7, 1994 of Georgia's Head of State "on State Registration of departmental normative acts", as the departmental acts of normative nature were registered and given registration numbers (1. On November 11, 1996, registered number N152; 2. On September 20, 1996, registration number N132). Both normative acts were properly inspected at the Ministry of Justice of Georgia and their registration was considered justified.

The Board of the Court considers that he constitutional claim of the citizens of Georgia Alexander Danelia and George Tsomaia on the recognition of unconstitutionality of 4th paragraph of the Instruction of October 17, 1996 of State Taxation Agency of the Ministry of Finance of Georgia-"on taxation of transportation service export with value added tax" and subparagraph 4 of paragraph 5 "a" of clause 5 of Instruction N2 of Additions and Changes N5 of January 31, 1994 of the Instruction of April 12, 1996 of State Taxation Agency of the Ministry of Georgia-"on the rule of payment and calculation of value added tax" should not be satisfied for the following circumstances:

1. On the basis of clause 1 "f" of Article 89 of the Constitution of Georgia and also clause 1 of Article 39 of the Law of Georgia "on the Constitutional court of Georgia", Al. Danelia and G. Tsomaia as physical persons undoubtedly had the right to address the Constitutional Court of Georgia with the constitutional claim if they consider that the rights and freedoms guaranteed in the Second Board of the Constitution of Georgia are violated. Thereupon the Chamber of the court shall not share the opinions of the applicants about violation of rights guaranteed by clause 2 of Article 30 of the Constitution of Georgia. 2nd clause of the noted Article of Georgian Constitution obligated the state to foster the development of free enterpreneurship and competition, which is exercised with the establishment of appropriate legislative base. During the court consideration, the state side could not confirm actually how was the freedom of enterpreneurship and competition limited, or interference of their development. During the consideration of the case could not also be confirmed the cases when the owners were put in unequal conditions and differentiation of the imposition of privileges of taxes for some. It is equal for every person;

2. Concerning the issue of compatibility of disputable normative acts with Article 94 of the Constitution, the Constitutional Court shall not judge this, because the constitutional claim is not brought by the authorized person of body (Article 18 "b" of the law of Georgia "on the constitutional proceedings").

3. The Board of the court shall not share the assertion of the applicants that because disputable normative acts were not published, they should be recognized invalid.

The mentioned normative acts were adopted on the basis of clause 4 of the Decree N31 of February 7, 1994 Head of State of Georgia "on the state registration of departmental normative acts". With clause 9 of the Decree of the Head of State, the departmental normative act is valid from the day of conferment of registration number at the Ministry of Justice of Georgia. With the same Decree, non-publishing of departmental normative acts was not the basis for loosing the validity of a normative act. Article 50 of the Law of Georgia of October 29, 1996 "on Normative acts" (valid from February 1, 1997) exhaustively will list the cases, when a normative act, or its part looses the validity, does not point out, that the basis of recognition of a normative act invalid is its non-publishing.

Guided by Article 89 of the Constitution of Georgia, Articles 19, 34, 39, and 43 of the Law of Georgia "on the Constitutional Court", Article 11, clause 2, Article 18 "b", and Articles 32 and 33 of the Law of Georgia "on constitutional proceedings" the Constitutional Court of Georgia determines:

1. The constitutional claim of the claimants Alexander Danelia and George Tsomaia, demanding to declare the 4th paragraph of the Instruction of October 17, 1996 of State Taxation Agency of the Ministry of Finance of Georgia-"on taxation of transportation service export with value added tax" and subparagraph 4 of paragraph 5 "a" of clause 5 of Instruction N2 of Additions and Changes N5 of January 31, 1994 of the Instruction of April 12, 1996 of State Taxation Agency of the Ministry of Georgia-"on the rule of payment and calculation of value add tax" unconstitutional shall not be satisfied;

2. Decision of the Constitutional Court is valid from the time of its public announcement at the sitting;

3. Decision of the Constitutional Court shall be published in an official printing body within 7 days period;

4. Copies of the decision shall be sent to the parties of the case, to the Parliament of Georgia, to the President of Georgia, and to the Supreme Court of Georgia;

5. Decision of the Constitutional Court is final and not subject to appeal or revise.

G. Meparishvili; A. Abashidze; L. Chorgolashvili; Z. Jinjolava.

THE CONSTITUTIONAL COURT OF GEORGIA FIRST BOARD DECISION

N1/4/28

Tbilisi, 30 May, 1997

The Constitutional Court of Georgia with the composition of First Board: Jacob Putkaradze-Chairman of the Board, Chairman of the Session, members-Otar Benidze, Nicholas Shashkin, Nikoloz Cherkezishvili (judge-reporter), Darejan Chaligava-secretary of the session at an open sitting of the mentioned court considered the case–"Citizen Irakli Kordzakhia vs. the Parliament of Georgia"-with the participation of the applicant-Irakli Kordazakhia, defendant-representatives of the Parliament of Georgia-David Mumladze (Head of the Juridical Department of the Parliament of Georgia) and Victor Lortkipanidze-expert-consultant of the Financial-Budgetary Committee of the Parliament of Economic Reforms Policy of the Ministry of Economics of Georgia, witnesses-Vasil Khanishvili, Head of the Taxation Agency, International Taxation Relations and Claim considering Department of the State Taxation Agency at the Ministry of Finances of Georgia, David Maglakelidze-legal adviser of State Taxation Inspection of Saburtalo Region of Tbilisi, Paata Khotenashvili-leading lawyer of the National Bank of Georgia, Zurab Gvasalia, President of Georgian Banks Association, Vakhtang Magradze-Deputy Chairman of the Tbilinterbank Board of Directors.

The Constitutional Court with the consent of the participants of the case appraised as testimonies the written conclusions and explanatory notes of Juris Doctor, Professor Lado Chanturia (Department of Civil Law of Juridical Faculty of the Tbilisi State University) and Givi Jigauri (Vice-president of the National Bank of Georgia)-invited expert-specialists to the case who were not able to attend the court sitting.

The constitutional claim is submitted on the basis of clause 1 "f" of Article 89 of the Constitution of Georgia, clause "e" of Article 19 and Article 39 of the organic law "on the constitutional Court of Georgia."

Subject of the dispute: Constitutionality of the last rule of clause 1"a" of Article 12 of the law of the Republic of Georgia of December 21, 1993 "on the basics of taxation system" in accordance with Article 20, clause 1, Article 39 and Article 41, item 2 of the Constitution of Georgia.

The reason for addressing the Constitutional Court arose when the Tbilinterbank informed the Saburtalo Regional Taxation Inspection of Georgia about the opening of a hard currency account on December 23, 1996 by Irakli Kordzakhia, thereupon giving the corresponding number of the hard currency account.

In the applicant's point of view, the bank acted on the basis of the norm of Article 12, clause 1 "a" of the law "on the basics of taxation system", which states, that the banks, Financial-Credit organizations and others are obliged to inform the appropriate State Taxation Inspection within a 5 days period about accountancy or other accounts of the taxpayers. The applicant believes, that this norm violates his rights, which are provided by Article 20, clause 1 of the constitution of Georgia ("Every Individual's private life…is inviolable"), by Article 39 ("The Constitution does not deny other universally recognized rights…but are the natural outcome of the principles contained within the Constitution"-which, in the applicant's opinion, can be defined as the right of banking-financial secret) and by Article 41, clause 2 ("Information existing in official papers connected with …finances…are not available to other individuals without the prior consent of the affected individual, except incases determined by law…")

The applicant declared that at the time of opening the account at the bank, he did not present the confirming document on registration to the Taxation Agency, although this was presupposed by the law for the tax payer. He is a taxpayer, according to the laws "about the tax on the incomes of an individual" and "about the tax on the property of an individual," but is not registered at the Taxation Agency because he is not a manufacturer. Individuals who are not owners are not registered because of the lack of computer technology. The banks inform the Taxation Inspections about the opening of accounts by the registered legal entities and individuals who are manufacturers, but information about individuals who are not owners is not given.

The applicant considers that disputable norm is contrary with Article 17, item 2 of the law of 1996 "on the activity of commercial banks" ("information…about the operations and accounts of the individuals are given to Taxation Agencies, to the courts and investigation bodies only by the decision of the court. "According to the disputable norm, the information must be given without condition, and in any other cases-with the decision of the court. This conflict must be resolved for the interest of later adopted and special law (i.e. the law "on the activity of the commercial banks"). According to the definition of the claimant, expressions in the laws about the basics of taxation system and the activity of commercial banks ("about opening of the account…shall be informed" and "information…about the existence of the account at the bank shall be given to the Taxation Agency only after the court decision is made.

The applicant demands to annul the disputable norm.

In the opinion of the defendants, representatives of the Parliament of Georgia-David Mumladze and V. Lortkipanidze, the demand of the applicant is groundless. The disputable norm is not contrary with either the provisions of the Constitution or with Article 17, clause 2 of the law "about the activity of commercial banks". The applicant wrongly raises the issue: If it is raised as contrary with the Constitution, then not the last norm of Article 12 clause 1, sub-clause "a" of the law "on the basics of taxation system" should be disputable, but rather the whole sub-clause, i.e. the mechanism of the registration of taxpayers. This is one whole process, which should start and end in the Taxation Agency. If any ring is taken from this mechanism, then the registration of taxpayers will be impossible. Essentially important also is what information is given to the Taxation Agency. According to the law, the taxation Agency should be informed about opening of accountancy and other accounts, i.e. the fact of opening the account and he account number, which is not a bank secret. This is not contrary with the requirement of the constitution, as far as it does not give the information about finances. Tbilinterbank does not defend the requirement of the law and gave information to the Taxation Agency about opening of the account by a physical person who is not a manufacturer. With this, the bank violated the law and a citizen's constitutional right. The information is sent to the Taxation Inspection only about persons, who are registered in the State Taxation Agency. Physical persons who are not manufacturers are not registered there, and so the information about opening of their bank account is not sent to the taxation Inspection. This is not required by the disputable norm. Proceeding from this, the representatives of the defendant do not agree with the applicant's position. They consider that the disputable norm is entirely compatible with the constitution, but despite this, the law still needs perfection.

The witness V. Khanishvili notified that the bank should not inform the taxation Agency about the opening of an account by a physical person who is not a manufacturer. The interests of the applicant are violated. It is true that the law provides giving the information to the Taxation Inspections after the opening of the accounts in banks, but this does no concern the physical person who is not an owner. Such did not take place. This is a complication created by the applicant himself to submit the claim to the Constitutional Court. The law does not require the banks to inform the Taxation Agency about the opening of accounts by physical persons who are not manufacturers. Registration of such persons is not the obligation of the Taxation Agency, although it has a technical possibility for it. The information is sent in case the account is opened by legal entities or physical persons who conduct the enterprising activity. The account number is not a secret. The witness declared that the banks have never informed the taxation Inspections about the opening of the accounts by physical persons who are not owners. The bank was not oblige to do it: it violated the law.

The witness D. Maglakelidze declared that on December 23, 1996 the Taxation Inspection of Saburtalo Region received the information from Tbilinterbank about the opening of the information from Tbilinterbank about the opening of the account by 1. Kordzakhia. Such fact did not take place earlier; anyway he had no such information before. The Taxation Inspections do not require the information about physical person who are not manufacturers, because the law does not give them a right to do so.

The witness Z. Gvasalia notified that the bank was wrong when it informed the Taxation Agency about the opening of an account by the applicant. Such information is given when a physical person presents to the bank a proving document of registration at the Taxation Inspection. For those physical persons who do not conduct the enterprising activity, deposit of only national or foreign currency will be open at the bank and, in such case, the information about the accounts is not sent to the taxation bodies. The disputable norm is contrary with Article 17, clause 2 of the law "on the activity of commercial banks."

In the point of view of the witness P. Khotenashvili, the disputable norm does not extend its application on the claimant. It concerns the taxpayers, who present the reference to the bank about the registration at the State Taxation Agency. The account opened y the claimant represents the deposit and it is not charged with interest rates. The category of the taxpayers is defined by the law "on the basics of taxation system " Conflict between this law and the law "on the activity of commercial banks" does not exist.

The witness V. Magradze (Deputy chairman of the Directory) declared that on December 23, 1996, I. Kordzakhia (the head of Legal-contracting Agency of this bank) opened a hard currency account at "Tbilinterbank" and taking into consideration Article 12, clause 1, sub-clause "a" of the law "on the basics of taxation system" sent the corresponding information to the Taxation Inspection. Before this particular case, they had not sent the information to the Taxation Inspection about the opening of an account by a physical person who is not a manufacturer. They thought, that at some time someone might inquire about such information, so for the insuring purpose they sent it to the Taxation Inspection and created a precedent.

In the opinion of an expert-specialist, A. Gabisonia, Article 12, sub-clause "a" of clause 1 of the law "on the basics of taxation system" does not violate the rights of citizens, guaranteed by Articles 20, 39 and 41, clause 2 of the Georgian Constitution. I. Kordzakhia is not a physical person who conducts the business activity, proceeding from this, the disputable norm does not exercise its application on him and his own bank made a mistake towards him. The rights of I. Kordzakhia are violated and he had a perfect right to claim at the constitutional Court There is no conflict between the laws "on the basics of taxation system" and the law "on the activity of commercial banks." Therefore, first paragraph of Article 3 of the law "on the basics of taxation system" is formed in an incomplete addition and this might become basis for a mistake.

According to the conclusion of L. Chanturia, the analysis of the case materials does not give basis for considering the disputable norm is contrary with the Constitution. The norm of Article 12, clause 1 "a" of the law "on the basics of taxation system" regulates the issues concerning the procedures of opening accounts in banks. But it does not give state bodies, in this case Taxation Inspection, the right to inspect the movement of an amount on the opened account. This right is given to them only when defending the requirements of the law "on norm unconstitutional is groundless, the existence of such norm in a valid legislature is completely unjustified.

In the explanation of G. Jigauri, it is noted, that the disputable normative act is not in the contrary with Article 17, clause 2 of the law "on the activity of commercial banks," and is compatible with the Constitution. The taxation system is authorized to know about the existence of bank accounts of the manufacturers, even because the fact when there is a relevant basis, the taxation system can bring suit at the court and demand the inspection. For those physical persons who are not manufacturers and do not represent taxpayers, deposits with national of foreign currency are opened. For opening such deposits, the permission of Taxation Inspection or sending the information to it is not necessary.

After the substantive consideration the Constitutional Court of Georgia clarified the following circumstances:

Violation of the applicant Irakli Kordzakhia's right, for what he demanded to declare the disputable norm unconstitutional, is artificially created precedent.

The last part-disputable norm of Article 12, clause 1 of the law of Georgia of December 21 1993 "on the Basics of the taxation system" concerns giving the information to the State Taxation Inspections about those taxpayers to whom the banks, the financial-credit agencies and other organs open the accounts only after presenting the confirming document on the registration at the State Taxation Agency. To the registration at the state taxation bodies, as it was clarified during the essential consideration of the case, only the manufacturers, together with the legal entities are submitted. The physical person who are not manufacturers do not submit to such registration and accordingly, the banks inform the relevant Taxation Inspections about the opening of the accounts of only manufacturer and legal entities.

The applicant notified that wen opening an account at the bank, he did not present the confirming document on the registration at the state taxation body, because the physical person who are not manufacturers are not registered by the State Taxation Agency. The materials existing in the case confirm that such practice is universally accepted with the State Taxation Agency of Georgia.

Further the representative of Tbilinterbank questioned as a witness confirmed that the bank does not give the information to the Taxation Inspection about opening an account by a physical person who is not a manufacturer, and in this particular case concerning citizen I. Kordzakhia the precedent was artificially created.

According to the stated data, the last norm of Article 12, clause 1 "a" of the law "on the basics of taxation system" does not extend its application on citizen I. Kordzakhia.

Thus, the materials existing in this case do not prove that the disputable norm violates those right of the author of the constitutional claim, which are guaranteed by the second chapter of the Georgian Constitution. Proceeding from this, the citizen I. Kordzakhia is not an authorized person to request a declaration that Article 12, clause 1, sub-clause "a" of the law of Georgia of December 21, 1993 "on the basics of taxation system" is unconstitutional: according to Article 89, clause 1 "f" of the Georgian Constitution and Article 39, clause 1 of the organic law of Georgia "on the Constitutional Court of Georgia," the Constitutional Court of Georgia, on the basis of the claim of a citizen, physical person, considers the constitutionality of a normative act (or its separate norm), if that act causes the violation of the rights and freedoms guaranteed by Chapter 2 of the Constitution of Georgia. In this situation, consideration of the issue about the violation of the right of I. Kordzakhia is not within the competence of the Constitutional Court of Georgia.

Therefore, the Constitutional Court notifies that, during substantive consideration of the case, incorrectness and disagreement of some norms of valid taxation in legislature were revealed, as well as possibility of differently understanding their contents in defining such issues as taxpayers, bank accounts, opening such accounts by the physical persons, and the rule of giving the information on it. The constitutional Court asks the Parliament of Georgia to take into consideration these circumstances in the reviewing process of the draft of the Taxation Code.

In accordance with Article 89, clause 1 "f" of the Constitution of Georgia, Article 39 clause 1 and Article 43, clause 8 of the organic law "on the Constitutional Court of Georgia," and Articles 32 and 33 of the law "on constitutional proceedings," the Constitutional Court of Georgia states:

1. The constitutional claim of citizen Irakli Kordzakhia on the constitutionality of the last norm of article 12, clause 1 "a" of the law of the Republic of Georgia of December 21, 1993 "on the basics of taxation system," in accordance with Article 20, clause 1, Article 39 and Article 41, clause 2 of the Constitution of Georgia shall be rejected;

2. This decision is in force from the moment of its announcement of the session of the Constitutional Court;

3. The decision is final and not subject to review or appeal;

4. Copies of this decision shall be sent to the parties of the case, to the President of Georgia, and to the supreme Court of Georgia;

5. The decision shall be published in an official printing body in 7 days period.

J.Putkaradze; O.Benidze; N.Shashkin; N.Cherkezishvili.

DECISION OF THE PLENUM OF THE CONSTITUTIONAL COURT OF GEORGIA

N1/51

Tbilisi, 21 July, 1997

The Plenum of the Constitutional Court of Georgia with the composition of: Avtandil Demetrashvili (chairman of the sitting);

Nikoloz Cherkezishvili (judge-reporter); Avtandil Abashidze; Otar Benidze; Gia Meparishvili; Jacob Putkaradze; Nicholas Shashkin; Lamara Chorgolashvili; Zaur Jinjolava,

Secretary of the session – Lili Melashvili, with the participation of invited specialists at an open session-Juris Doctor, Professor George Tkeshelashvili, and Juris Doctor, Professor Lado Chanturia,

considered the case, "constitutional submission of Tbilisi Chugureti District Court".

In accordance with Article 42 of the law of Georgia "on the Constitutional Court of Georgia," the Constitutional Court considered the case without attendance of the author of the submission and the adopter body of the disputed act.

The subject of the dispute is the essential constitutionality of property confiscation as an additional punishment provided for in Articles 23 and 96 of the Georgian Criminal Code with regard to Article 21 of the Georgian Constitution.

The Chugureti District Court of Tbilisi addressed the Constitutional Court of Georgia with regards to the matter, whether the criminal case of A. Omarashvili, D. Khutsishvili, M. Tvauri, M. Tkabladze, Z. Khurtsilava and B. Gogeliani is under the District Court's jurisdiction. The above mentioned persons are accused of the crime, envisaged by Article 96, part 2, clause 1, 5 and 6 of the Criminal Code. In Article 23 and 96 of the Criminal Code, property confiscation is determined as additional punishment, the use of which is considered unconstitutional by the Chugureti District Court of Tbilisi. According to Article 20 of the law of Georgia "on the Constitutional Court of Georgia" the case was suspended by the Chugureti District Court and the constitutional submission was filed to the Constitutional Court of Georgia.

The constitutional petition notifies that "according to Article 21 of the Georgian Constitution, abrogation of universal right to property is prohibited. Restriction of property is possible in case of necessary social need, only with appropriate compensation. Property confiscation means the abrogation of the property of the accused and of their family members, or restriction of it which is not caused by social needs and their compensation is not made". According to the above mentioned, Chugureti District Court requires the determination of the essential constitutionality of the issue of property confiscation as additional punishment in Articles 23 and 96 of Georgian Criminal Code.

According to the constitutional submission, the Constitutional Court should review the property confiscation with regard to its constitutionality as an additional punishment, and this Court's decision is limited only to this issue. It will not concern, in particular, so-called special confiscation.

In the point of view of Professor G. Tkeshelashvili, the invited specialist, definition of property confiscation according to Article 34 of the Georgian Criminal Code gives full grounds to conclude that, when applying the noted additional punishment, the accused person may be deprived only of the property, that may be legally obtained ("private property"). That means that illegal, criminally obtained property is not private property, so it shall not be recognized as the subject of criminal punishment-property confiscation. Criminally obtained property and confiscation. Types of punishment are defined in the frames of values of the accused person, such as human life, health, freedom and property. Among these values, property confiscation especially is not of a personal character. This circumstance acquires great importance in the modern world, where there are provisions in many international-legal acts emphasizing that criminal charges may be imposed and punishments made on offenders and not on not-guilty persons. Furthermore, property confiscation usually is materially harmful for innocent relatives and family members of the accused. Establishment of a private-market economy in Georgia, when private property was legalized, created such conditions, and according to Article 21 of the Constitution of Georgia the right to inherit and own property shall be recognized and guaranteed. Restriction of the right to property is possible for social necessity as determined by law and established right, but only if corresponding compensation is made.

Invited specialist Professor Lado Chanturia noted that according to clause 3, Article 21 of the Constitution, property confiscation is permissible only if corresponding compensation is made. Whereas confiscation is uncompensated deprivation of property. On the one hand, contradiction is obvious, but this is not enough to confirm the unconstitutionality of confiscation. When reviewing the issue of the constitutionality of confiscation, we must remember that confiscation is punishment and, because of this, its constitutionality with regards to Article 21, clause 3 of the Constitution should not be checked. Confiscation of the instrument and subject of crime is never compensated, and this with the consideration of formal logic is contrary to the requirements of Article 21 of the Constitution. But no one will think that the confiscation of a weapon when carrying it illegally is in contradiction with the Constitution. Thus, confiscation as a type of punishment shall not be considered itself as in the contrary with the Constitution. Its content may be in the contrary with the Constitution, precisely with respect to the extent of confiscation, i.e. the constitutionality of confiscating the whole property of the accused and not only the subject and weapon of the crime. As far as confiscation is a type of punishment, the issue of constitutionality of this punishment shall be determined. Confiscation as a whole does not contradict the Constitution. Any punishment may create an illusion of unconstitutionality: arrest, exile and the like. Each of them clearly limits or fully restricts constitutionally guaranteed rights and freedoms. But the feature of punishment if exactly this: it is a return from the state side. And thus, confiscation is not in the contrary with the Constitution, except when it extends to the total property of the offender.

The constitutional Court of Georgia verified the following circumstances:

The institution of property confiscation is derived from the Soviet system. In the Soviet system it was retained up to the end, and consequently it was incorporated into the criminal law of Georgia.

Regarding universally recognized principles and norms of Georgian Constitution and international law, the right to property is irrevocable and supreme value, as well as fundamental of a social and law-based state. Property is an essential basis for the existence of a human being. Development of free enterpreneurship in Georgia strengthens constitutional protection of the right to property. Clause 1 of Article 21 of the Constitution provides that the right to property and property inheritance is recognized and ensured. Abolishment of the right to property, to acquire, transfer or inherit property, is impermissible. Legalization of confiscation of property ignores the right to property. Thus, existence of the confiscation of property as a means of additional punishment contradicts clause 1 of Article 21 of the Constitution.

Thereupon, the Constitutional Court considers that the Constitution of Georgia imparts some social functions to property. Exercise of the right to property should not violate rights and freedoms of others. Moreover, use of property should serve the public welfare. If these requirements are not met, or there are no proper circumstances envisaged by law, the Constitution of Georgia does not rule out restriction and sequestration of the right to property. According to clause 2 and 3 of Article 21 of the Constitution, sequestration of property in case of public necessity is permissible in occasions directly determined by law, by a decision of a court or in case of emergency, defined by law only with appropriate compensation.

Clause 1 of section 5 of Article 23 of the Criminal Code envisages confiscation of property as additional means of punishment which may be applied by clause 2 of Article 96 and other articles of the Code. Article 34 of the Criminal Code of Georgia provides that "confiscation of property is the compulsory transfer of entire property or of its part of the accuse to the state property."

Thus, confiscation of property defined by Article 23 of the Criminal Code of Georgia is inconsistent with deprivation of property as provided by clause 3 of Article 21 of the Constitution, which stipulates proper compensation for confiscation.

Moreover, it should be noted that confiscation of property is not consistent with the main principle of individual punishment, for it affects not only the offender but also his innocent family.

Guided by the clauses 1 and 2 of Article 89 of the Constitution of Georgia, Article 20, clause 1 of Article 42 of the law "on the Constitutional Court of Georgia," Articles 24, 32 and 33 of the law "on Constitutional Proceedings," the Constitutional Court of Georgia ruled.

1. Clause 1 of Section 5 of Article 23, and the part of clause 2 of Article 96 of the Criminal Code which envisages confiscation of property shall be declared unconstitutional.

2. Unconstitutionally declared normative acts (Clause 1 of Section 5 of Article 23, and the part of clause 2 of Article 96 of the Criminal Code which envisages confiscation of property shall be invalidated from the date of the present decision of the Constitutional Court of Georgia is published.

3. The decision is valid from the moment of its public promulgation at the court sitting.

4. The decision is final and not subject to appeal or change.

5. The Parliament shall be requested to amend the legislation with the consideration of the resolutionary part, clause 1 of the present decision.

6. Copies of the decision shall be forwarded to the body which filed constitutional petition, the Parliament of Georgia, the President of Georgia, and the Supreme Court of Georgia.

7. The decision shall be published in the official printing body within seven days.

Avtandil Demetrashvili; Nikoloz Cherkezishvili; Avtandil Abashidze; Otar Benidz; Gia Meparishvili; Jacob Putkaradze; Nicholas Shashki; Lamara Chorgolashvili; Zaur Jinjolava.