A Statement on the Public Consultation Bill (dated 17/12/2019) Defining Property, Agricultural Land Relations and the Protection of Agricultural Land (11.01.19)


On behalf of the Bulgarian Association of Agricultural Land Owners (BAALO), we hereby would like to express the following statement on the open for public consultation Bill (dated 17/12/2019) defining property, agricultural land relations and the protection of agricultural land.

BAALO shares the need for realigning and consolidating the legal framework defining public agricultural land use policy and relations as regards the ownership, the use, the conservation and management of agricultural land in Bulgaria in the light of the decision adopted by the National Assembly of the Republic of Bulgaria on 19/09/2017.

However, we consider that the draft Bill open to public consultation, to a very small extent, meets the objectives set out in the above mentioned decision of the National Assembly. In support of our claim, we would like to refer you to the transcript of the plenary session of the National Assembly dated 19/09/2017, where the main considerations were outlined and which in turn led to the adoption of a decision from the same date (as amended by the NA decision of 12/10/2018), which entrusts the Ministry of Agriculture, Food and Forestry (MAFF) with the draft legislation in question.

In this regard, we emphasize the following:

1. In no way do we support the above mentioned Bill and its proposed philosophy for regulating agricultural land relations. A number of basic provisions in the text are in principle contradiction to both the Main Law as well as to a set of other  branches of the Law

2. The Bill violates the constitutional rights of over 3.5 million Bulgarian citizens – owners of agricultural land

3. A blatant drawback of the proposed Bill is the presence of internal contradictions which instead of resolving potential disagreement issues in agricultural land relations, does quite the opposite by predisposing constant opposition between agricultural land owners and agricultural land users

4. In this sense, the Bill has not been drafted in view of its main objective, on the contrary, it carries significant risks of creating legal and administrative chaos; it barely offers any improvement of the current rules, instead, a lack of rules and the inclusion of mutually exclusive ones is evident.

5. The Bill introduces models of agricultural land management based on the administrative-rule manner, ignoring both the Principle of Privacy of Private Property and the Principle of Freedom of Negotiation, including the relations between private entities (e.g. administrative regulation of the price of rents). This forces our society to go backwards and to return to a situation which used to exist 30 years ago.

6. The Bill also introduces rules which, in our view, are contrary to the European Union rights and regulations (the Principle of Freedom of Establishment and the Free Movement of Capital, in particular), and on some other issues for which the Republic of Bulgaria is currently in a procedure for Infringement of EU Law within the meaning of Art. 258 of the Treaty on the Functioning of the EU (see the text of § 29 of the PLF attached to the Bill). Therefore, proposed rules invalidate and contradict provisions of other existing Bulgarian laws, such as the Public Offering of Securities Act and the Law on Companies with Special Investment Purpose, taking away from the civic turnover Public Companies, although they are among the most regulated and controlled legal entities.

The majority of the proposals in the special chapters and sections of the Draft Law discussed above cannot achieve the main objectives (social and economic), which undoubtedly  must be stipulated in each Bulgarian law treating regulations of agricultural land relations, namely, strengthening the fundamental link between the Bulgarian citizens and the land, a fair distribution of the main national asset- the land, and the gains provided thereafter, the protection of the right to property, ensuring that Bulgarian Agriculture is turned into an essential driving force for sustainable economic growth and national enrichment.

In this sense, the Bill proposed, if adopted, carries in itself the risk of inflicting irreparable economic damages to Bulgaria.

Considering the above and in order not to make unjustified allegations, we consider it necessary to remind ourselves of Art. 17 of the Constitution of the Republic of Bulgaria, which reads:

Art. 17. (1) The right to property and inheritance is guaranteed and protected by the law

(2) The property is private and public

(3) Private property is inviolable

(4) The regime of State and Municipal assets and property shall be determined by the law

(5) Compulsory expropriation of property for state and municipal needs must be performed if only prescribed by the law, provided that such needs cannot be met otherwise and after a prior and equivalent compensation.

The Constitution also stipulates that, “The Republic of Bulgaria is a Constitutional State adhering to the rule of law” (Art. 4, para. 1) and that, “The Constitution is the supreme law, and other laws cannot take precedence over it” (Art. 5, para. 1).

The Bill proposed clearly strays away from the aforementioned constitutionally articulated principles, which should be respected in every piece of legislation that is hierarchically under the Constitution.

What the Bill does is only to confirm the tendency, ongoing for the past 15 years, to blatantly violate the right to ownership and the privacy of private property, guaranteed by the Constitution of the Republic of Bulgaria. In contradiction to these absolute and guaranteed rights, inherent and fundamental for any society that has chosen to develop according to the  rule of law and the Democratic State, the proposed Bill underlines the inclination towards the sustenance to other alien and unnatural to  peace and legal order privileges, such as:

-Entitlement to receiving agricultural subsidies

-The right to use property which is not self-owned without the explicit consent of the legal owner;

-The pre-emptive right to the rights of the legal owner without his explicit statement (consent) to enjoy the benefits coming from the use of the property

The proposed draft law would even go as far as listing texts aimed at sanctioning the owners who have acquired their rights on agricultural land according to all set of laws stipulated by the Constitution of the Republic of Bulgaria. Attempts for depriving the legal proprietor of the ability to decide how to exercise the right of ownership are consciously and deliberately exercised.

In any case, the execution of any of the attributes of the right to property such as:

-The right to make full use of property even to wasting it (lat. jus abutendi or abusus)

– The right to make use of another’s property without consuming it or destroying its substance or capacity for future profit (lat. jus utendi or usus);

-The right to gain profits from the subject of ownership (lat. Jus fruendi or fructus) or a right of enjoyment of another’s property without destroying its substance; this may take place (in life) only if  the explicit will of the owner is present.

In light of the aforementioned, in an annex to be found below, we have explicitly listed our main arguments referring to the key points of the Bill (in the same sequence followed by the Bill), defining our rigid stance that the legislative initiative proposed  is unacceptable to us.

The lack of comprehensiveness in our subsequent standpoint is deliberate and it is dictated by the fact that the sheer volume of all inconsistencies embedded in whole chapters and sections of the Bill (as currently presented), compromises the appropriateness of any further public consultation, examination and adoption under a normal legislative procedure.

Last but not least, we would like to reiterate BAALO’s readiness to participate actively in an expert debate organised by the Ministry of Agriculture, Food and Forestry, together with all stakeholders concerned, focusing on defining both the principle outline, which should be adequately drafted in view of the challenges faced by the sector, and also in the process of delineating the proposal in a transparent way.

APPENDIX: according to the text

AN ANNEX to BAALO’s position published on 17/12/2018, regarding public consultation on a proposed Bill regulating property, agricultural land relations and conservation of agricultural land

NOTES

I. Chapter Two “Ownership”

The provisions set in Art.5 are completely unacceptable in their current outline specifying a period of 7 years limiting the right of changing the purpose of agricultural land; this provision should be abolished in full while maintaining the relevant law currently in order. In its current shape, the legislative text proposed is in principle contradiction to Art. 21, para. 2, the second proposal in the Constitution, which states that a change in the purpose of use of agricultural land is feasible ‘in the case of a proven need’. The legislature has not, however, given any time constraints as to the possibility of exercising that right, nor has it indicated any restrictive hypotheses in which it may be exercised. In this respect, the necessity/the need for a change in the use of agricultural land for other purposes may be derived not only from the prerogatives of a public authority but also from the specific situation in which the owner (transferee) of the property is in. It is the owner’s duty to prove (justify) the existence of such a need before the relevant authorities. These are also the general arrangements presently in force, which enable the competent authorities to assess whether there is a ‘proven need ‘. In this respect, we consider it unacceptable to exercise a right which is allowed to take place by the Constitution to be subject to such a temporal limitation. Moreover, it is not clear what the specific considerations are in justifying the acquiescence to a 7-year period, and not such of a year or 100 years, for example.

II. Chapter Three “Consolidation of Agricultural Land Based on Ownership Rights”

We strongly oppose all proposed texts in chapter three of the draft law, in its entirety in their current wording. They are essentially a vague and overly common legal entrustment for regulation of this important issue by the executive, without any clear framework being defined by the legislature. No precise and clearly-defined basic principles are stipulated as regards the implementation of a procedure for consolidation of agricultural land property by ownership as follows: prerequisites for initiating such a procedure by the owners concerned (at least a percentage of the amount of agricultural land owned subjected to the procedure of the process), the need for the consent of all owners in the approval of the plan, etc.  The text lists the Bill’s unclear concepts such as the agreement of the owners and a plan for agricultural land consolidation.

By examining this particular aspect of the Bill proposed, it becomes clear that the procedure regarding agricultural land consolidation is to become under the direct competencies of the municipal agricultural authorities and with that we strongly disagree.  Thus, the text proposed, besides the risk of administrative arbitrariness, also poses a significant risk for violating the right to ownership; also, in no way are there any guarantees provided for its protection and no stipulation about the need for the explicit consent of each of the parties affected by the process of agricultural land consolidation is made.

Therefore, judging by the texts proposed and due to the lack of clarity, doubts appear as regards lobbying to the detriment of over 3.5 million agricultural land owners to go to the benefit of a small circle of people who could gain from them through an administrative procedure allowing them to become in possession of someone else’s property. The ambiguity regarding the source of financing of the process of agricultural land consolidation, can lead to the detriment of the owners and a loss of nearly 2 billion BGN from taxes and transfer taxes going to the benefit of the state, the local municipalities and other participants in the process of consolidation.

On the other hand, the elimination of properties with limited property rights leads to the annulment of agricultural land consolidation since rights of way, trespassing and construction of facilities for technical infrastructure are created within those land plots and as such, according to the Bill in question, they are not eligible for agricultural land consolidation.

We would like to draw the attention to the fact that the proposed mechanism for consolidation of agricultural land based on ownership is not in existence in any European country and it cannot in any way be the foundation for a prosperous economy.

III. Chapter Five “The Right Of Use Against Payments Type Agricultural Land Contracts”

The draft provision of Art. 20, para. 1, item 3, was reworded in the text of Art. 4a, para. 1, item 2 of the Law regulating agricultural land use and ownership. It practically invalidates all other texts, such as Article 20 of the Bill, and the current Art. 4a of the Law regulating agricultural land use and ownership, which both aim at ensuring that an indispensable condition for bestowing the right to use of agricultural land is the explicit statement (consent) to this by the owner (including any co-owner/s) of the land property. Such consent must be formulated in the Act granting the right of use, to which the owner is a party or in an explicit written authorisation. Proposed edited version of Art. 20, para. 1, item 3, allows for any person who is a land user (but not the land owner or an authorised person), regardless of the legal basis, to sub-lease the right to use the land property to third parties.

Thus, according to the literal reading of this text, a tenant (with essentially the right to only use the land property), under a one-year lease (in which there is not even a clause conferring the right of the user to sub-lease the right to use the land to third parties) may actually sub-lease (incl. for a 10-year rent period) this same property without the explicit consent of the legal owner. This is not just a hypothesis but a firmly established practice and an example of law infringement and abuse in recent years, to the detriment of owners of agricultural land who are virtually deprived of fundamental attributes of their rights to own property (the right to profit is usurped by unscrupulous persons).

In this chapter, although there should be, there is no mentioning of a number of hypotheses related to modern legal methods (typical for contract commencements, not an administrative ones) for the lease of agricultural land against profit.

IV. Chapter Seven “Creation of Massifs With The Purpose of Agricultural Land Use”

We believe that the mechanism proposed for the creation of massifs with the purpose of using agricultural land is to a large extent unacceptable.

Generally, we are not opposed to the existence of agreements on the creation of massifs with the purpose of using agricultural land but we believe that they must comply with their stipulated legal nature (agreements), i.e. based on an arrangement between owners and users who have an initial legal basis defining their respective rights (deed of ownership, a contract based on the right of use against payment, etc.) bestowing the right to an agreement.

An argument in support of this assertion is also the fact that the draft law does not offer a legal formulation or a definition of the widely established in recent years term “white spots”. Such a legal definition cannot be designed as it will be contradict the Constitution. Each piece of agricultural land on the territory of the country has its rightful owner. In this sense, there are no “white spots”, there are unclaimed/unknown owners from the entities, who (in the hypothesis of the proposed norms) want to use someone else’s belongings without the consent of the owner.

1. The administration and use of the so-called “white spots”, including through the creation of massifs (arrays) with the purpose of using them as agricultural land, have been established in the nearly 10- year old ongoing mechanism of violation of the right to property, the constitutional and the main legal principles. We draw attention to the fact that this mechanism was adopted as a temporary measure under different circumstances than those of today. In the present legislation, instead of seeking a permanent and equitable mechanism, a model in which the right to property is in no way respected has been established.

This mechanism, rather than being fully rethought, is substantially developed further and placed as a central point in the public discussion of the Bill. By its means, the right to own property is practically placed under an inadmissible administrative condition: submission of an annual declaration (under Article 73 of the Bill, respectively under article 37 B of the current Law regulating agricultural land use and ownership). Failure to submit this declaration by the owner practically deprives him of all the principal attributes of the right to own property and subsequently through the succeeding procedures of creating the so-called creation of massifs or arrays with the purpose of using them as agricultural land, which allows for the property to accommodate third parties without the rightful owner’s consent.

From a similar manner, the legal structure of the mechanism for administering the “white spots”, for the purposes of the example, it can be extrapolated that any Bulgarian citizen who does not submit an annual declaration of whether and how he will visit his ancestral country house (presumably built by his ancestors), can find out (in peace time) that other people have permanently settled in his own land without his consent whatsoever. In order to seek equitable retribution for this unjust situation, the same citizen would have to go to another city and ask the administrative authority there (against the presentation of a set of documents) to be compensated by an amount, of which value he is unaware, with which he may disagree and in the arrangement of which he has not been involved. As a result, and if, however, the amount in question is paid to the owner (the Bill does not set a time limit for this), the Bulgarian citizen will understand that the administrative body has withheld a hidden tax amounting to five percent of the amount payable to him.

The Bulgarian citizen- owner of agricultural land, who account to over 3.5 million Bulgarians, is the only one who can enjoy such “privilege”. Such a mechanism of de facto civil expropriation (in peace time) does not exist in any other EU country, or perhaps in any other country or territory in the world.

Proposed in Art. 95, para. Al. 2 and 3 of the legal project hidden fee of 5 percent, in addition to not complying with the principle of cost-justification of state fees (because the cost of administering a parcel of 5 acres and a parcel of 50 acres is the same, and the proposed fee will not be) , is directed to the wrong entity (the owner) and not to the entity that is actually favoured by the mechanism of administering the white spots in the role of the beneficiary given the right to work the land and gain the profits from someone else’s property without the consent of the owner.

Historically, the mechanism of administering the so-called “white spots” through agreements of use is nothing more than a try on the legislature’s part, in a drastic divergence to all constitutional principles, to seek a method by which certain persons who prior to the existence of Art. 37 B and Art. 37 in the current Law regulating agricultural land use and ownership, have improperly used agricultural land legally belonging to another party without a legal basis for justification and giving them the rights to continue to do so, but in addition to also be able to legally receive European subsidies.

The Bill proposed builds upon this unconstitutional mechanism by allowing the use of contract agreements to be longer than one year (see aArt. 69, para 2 of the Bill). Thus, there is a potential legal and administrative chaos created, with no conflicting norm in view regulating the cases where a new entrant (owner or user) in entitled to his full legal rights to using the land, appears after the first year has passed in the administratively assigned land plot. The absence of provisions for such a fully feasible hypothesis in the Bill implies a deliberate deprivation of rights of any new owner/user in the respective massif.

The Bill proposes (see Art. 76, para. 2) a user agreement to be signed even when there is only one owner or user who has submitted a declaration and/or an application for participation in the procedure. This is not a self-legal non-sense (in English) as here the Bill provides for the only participant to enter into agreement with the Committee under Art. 77, para. 1 (from the Bill) in the process of determining which foreign property will be possible to  be used without the consent of the actual owners.

The institutionalization of the mechanism of the agreements for using agricultural land in the light of the administration of the so-called “white spots” in recent years, has practically established a purely vicious practice of circumventing the right to own property and the possibility of exercising it in practice. This further undermines the fragile but the innate connection of every Bulgarian to their agricultural land and the Bulgarian countryside, thus the further reinforcement of the ongoing tendency of depopulation of Bulgarian villages.

Today, in a number of cases, the deliberate avoidance of concluding contracts for use (rent or lease) of agricultural land by users on Bulgarian territories, is dictated precisely by the existence of the mechanism of the user agreements that provide legal basis for the processing of foreign land and obtaining subsidies for this, without the need for the explicit agreement of the rightful owner.

The privileges and even the absolutisation of the right of receiving agricultural subsidies are again evident in contrast to the one principle proclaimed under the Constitution of the Republic of Bulgaria as inviolable, guaranteed and protected right to private property. The emphasis is on private property in particular, because according to the Bill, the agreements for use of agricultural land, the status of state and municipally owned land (as opposed to the one privately owned) remains protected.

Within the texts proposed, introducing the “promissory note” as a precautionary element in case of possible claims by the injurious owners, practically nothing contributes to guaranteeing their rights as owners. Moreover, the mechanism proposed is absolutely not workable, since it does not determine the beneficiary of the promissory note and accordingly, does not take into account the administrative potential of the regional agriculture directorates and/or their sub-structures to administer this process and possibly lead enforcement proceedings for the implementation of this instrument.

2. Another mechanism in evident contradiction to whole branches of law and, above all, contradicting the principle of freedom of contract, again to the detriment of the right to own property, is the one proposed in the second heading, in chapter seven, mechanism of determining an average rent payment using administrative means and exclusively under the surveillance of representatives of the administrative bodies. The reasoning behind the Bill does not even offer any particular considerations justifying this measure, instead, its contents were simply rehashed. Without going into any further details about the insolvency of this proposal, we will only point out that the mechanism proposed for medium-scale payments, will only achieve artificial undervaluation of the agricultural annuity with the main objective being the even lower amount of payments due by the users of agricultural land for their exploited, not legally owned agricultural properties, without the consent of their effective and legal proprietors.

In this line of thought, the requested attempt to protect the rights of the owners in the framework of the contractual relations for consideration of agricultural land under chapter Five, Art. 31 of the Bill could not produce the desired effect.

On the occasion of the above, we assess as a significant omission in the Bill the absence of texts to allow the payment of fair (in view of modern market conditions) benefits to owners of agricultural land on the occasion of procedures of expropriation, as well as transferring the obligations for administrative and such fees from the owner to the state/municipality in carrying out these procedures. Currently, only the administrative costs of owners whose property is subject to expropriative procedures significantly exceed the amount of compensation due to them.

V. Chapter Fifteenth “Management and Administration of Agricultural Land Which Used To Be Part of Former Farmyards of Liquidated Organisations”

The adoption of Art. 222 in the Bill, will not only lead to administrative arbitrariness but it will also introduces obligations retroactively with unclear and indeterminable size, incl. non-existent ones

VI. Transitional and Final Provisions (TFPs)    

We express reservations against § 6 of the TFPs Bill, especially the ones mentioned in the first subparagraph. The purpose of the draft law, according to a decision of 19/09/2017, is to rearrange agricultural land relations. The retention of rights, acquired under contracts of use until the entry into force of the new law and for a period of at least 10 years (after its entry into force) in the light of the provisions of section II Chapter 5 (lease contracts), in relation to § 7 of the TFP by the Bill, does not in any way meet those objectives.

We consider that the text of § 29, proposed by the Transitional and Final Provisions to the Bill, to be unacceptable.

Under the current legal framework, the application of the limitations of article 3, Para. 7, as well as items 1 and 2 of the Law on Ownership and Use of Agricultural Land (LOUAL) for possessing the right to ownership of agricultural land in relation to the public companies, was limited by the provision of Article 121, Para. 2 of the Act on the Public Offering of Securities (POS), providing that:

“(2) (New-SG. 34, 2015) The restrictions under Art. 3, Para. 7, item 1 and 2 of the Law on Ownership and Use of Agricultural Land do not apply to companies under Art. 110 stipulated in the same law neither does it apply to companies under Art. 263 of the Law on the Activities of Collective Investment Schemes and Other Collective Investment Undertakings.

This appears to be the right, lawful and logical solution, taking into account the specific aspects of this particular type of trading companies-the public ones, namely, the shares of these companies are freely transferable by virtue of law (the Public Offering of Securities Act). This peculiarity is not inherent to Bulgaria only, rather, it is an international standard of good practice, enshrined directly in laws and regulations in all countries with existing regulated securities markets. The obligatory free transfer of shares of public companies by law is also enshrined in European legislation, which is a prerequisite for the development of regulated markets of financial instruments (modern stock Exchanges are their alternatives).

VII. Additional General Remark

We consider it inadmissible, in the context of the administrative proceedings relating to the issuance of a general or individual administrative act, for the communication to be carried out according to the order of CPC and not APC.