Report in which the committee requests to be kept informed of development - Report No 309, March 1998

Case No 1938 (Croatia) - Complaint date: 04-SEP-97 - Closed

Allegations: Interference in trade union activities and with trade union assets

1. 161. The Union of Autonomous Trade Unions of Croatia (UATUC) presented a complaint against the Government of Croatia in a communication dated 4 September 1997, alleging violations of trade union rights.
2. 162. In response to the allegations, the Government forwarded observations and information in a communication of 29 October 1997.
3. 163. Croatia has ratified both the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98.)

A. The complainant's allegations

1. 164. In its communication of 4 September 1997, the UATUC alleges that due to the adoption on 18 June 1997 of the Act on Associations, which deals, inter alia, with the division of trade union assets, the Government has contravened principles of freedom of association in that it interferes in trade union activities and with trade union assets.
2. 165. The complainant notes that trade unions are excluded from the application of the Act on Associations, except under article 38, entitled "Social organizations' assets". Subsection 4 of article 38 permits the use of immovable assets by associations that are the legal successors of former social organizations which had been entitled to administer or use the assets. These associations are not, however, permitted to lease, sell or alienate the assets. Under subsection 5, the provisions of subsection 4 are specifically applied to immovable assets which the Union of Autonomous Trade Unions of Croatia and trade unions registered as social organizations were entitled to administer or use. Subsection 6, which is the complainant's primary cause for concern, provides as follows:
   • Trade unions from Item 5 of this Article shall be authorized to reach a joint agreement, within 180 days from the date of enforcement of this Act, on the method of distribution of immovable assets from Item 5 of this Article. Each trade union shall become owner of the immovable assets assigned it by the agreement. Should trade unions fail to reach a joint agreement on the distribution of these immovable assets within six months, the immovable assets shall upon the expiry of the deadline become property of the Republic of Croatia, while the Government of the Republic of Croatia or a relevant Ministry of its choice shall, based on the criteria defined by the Parliament of the Republic of Croatia, transfer the ownership rights over these immovable assets to trade unions from Item 4 of this Article within one year from the date of Parliament's definition of the criteria.
3. 166. According to subsection 9 of article 38, trade unions that were registered as social organizations until the enforcement of the Labour Code, are obliged to submit to the Government, within 60 days from the date of the enforcement of the Act, a list of all the immovable assets that they were entitled to administer or use. If they fail to make such disclosure, pursuant to subsection 10, they lose the right of ownership over the assets under subsections 3 and 6 of article 38. Subsection 11 relates to movable assets and provides that the former social organizations that were entitled to use or administer movable assets gain ownership of them on the date of enforcement of the Act.
4. 167. The complainant contends that the Government's intention in passing the Act on Associations is to temporarily nationalize private trade union property acquired from trade union membership fees and voluntary contributions before the beginning of the Second World War. During the socialist regime, notes the complainant, the property had been treated as socially owned property, eventually becoming socially owned property by law. However, prior to the socialist regime, the property had been registered as trade union private property. Though the amount of property at issue is relatively small (approximately 20 trade union buildings or offices), it is nevertheless, according to the complainant, vital to the survival and free activity of the trade unions. The complainant asserts that any attempt by the State to take away these assets, even if for a temporary period of time, constitutes a flagrant violation of Conventions Nos. 87 and 98, the Croatian Constitution and the Labour Code.
5. 168. The complainant expresses concern in particular regarding subsection 6 of article 38, which gives trade unions only six months to reach an agreement on the distribution of property. In the absence of an agreement, the property is taken away from the trade unions and becomes state-owned property until it is returned to the trade unions based on criteria to be defined by the Parliament. While the Act provides for the distribution of the property within one year from the date of the criteria being defined, it does not prescribe a time frame within which Parliament is to define the criteria, thus making it possible to delay the return of assets for an indefinite period of time. According to the complainant, such delay could result in conflict among trade unions, weakening of the trade union movement, public defamation of trade unions by the state-controlled media and support and strengthening of unions under the domination of the authorities or the employers. Nor does the Act provide any clear criteria for distribution. The complainant surmises that the intention of the Government is to define through Parliament its own criteria for the distribution of trade union assets and to return them only to trade unions under the domination of the authorities or employers.
6. 169. The complainant emphasizes that the Government's motives in enacting the Act on Associations are put into question when one considers that the Government was aware that the three Croatian trade union confederations (the Union of Autonomous Trade Unions of Croatia, the Croatian Association of Unions and the Confederation of Independent Trade Unions of Croatia) had reached an agreement on 18 May 1993, under the auspices of the European Trade Union Confederation, to open up the process of distributing trade union assets. This agreement provides, inter alia, that there will be a two-year moratorium on the distribution of trade union assets, after which period a new agreement will be concluded finalizing the distribution of trade union assets in accordance with criteria that will be agreed upon. At its extraordinary congress of 29 March 1996, UATUC adopted a "Declaration on trade union assets", promoting the distribution of trade union assets in Croatia.
7. 170. On 14 May 1997, UATUC forwarded to the Government proposed amendments to the Associations Bill, asking that trade unions be excluded from its scope. The same day, the Council of UATUC sent a letter to the Prime Minister and Members of Parliament presenting a proposal for the distribution of trade union assets. The proposed amendments were rejected and the Act adopted, despite the objections expressed by numerous foreign trade union organizations, including the International Confederation of Free Trade Unions and the European Trade Union Confederation.
8. 171. On 29 July 1997, the complainant filed a motion before the Constitutional Court of the Republic of Croatia to institute proceedings challenging the constitutionality of article 38, subsections 5, 6, 9 and 10 of the Act on Associations. According to the complainant, the Constitutional Court has been delaying its decision to institute the proceedings.

B. The Government's reply

1. 172. In response to the allegations, the Government in its communication of 29 October 1997 notes that during the period of 1991 to the enactment of the Act on Associations, the Government did not want in any manner to influence the distribution of property of which the former socio-political organizations -- the Confederation of Unions of Croatia and unions registered as social organizations -- had the right of disposal or usage, but not the right of ownership until the Labour Act came into effect.
2. 173. The Government explains that in the Republic of Croatia, there are 23 federations or confederations registered and approximately 180 unions, not all of which are affiliated to higher level organizations. According to the Government, all of the unions have attempted in negotiations with the UATUC to resolve the question of the distribution of "union properties", and in this respect, lawsuits have been pursued. Since the matter of the distribution of property has not been resolved, the Government submits that some unions that do not have the use of the property at issue have been placed in an unfavourable position; they are arguing that they are being prevented from operating on an equal basis with those unions that are using the property and thereby maintaining a stronger economic base. They have thus exerted pressure on the Government and Parliament to intervene to resolve the question.
3. 174. As a result, the Government enacted article 38 of the Act on Associations. Since the Government did not want to decide on the distribution of the property immediately, the Act provides for a period of 180 days during which the unions are to negotiate among themselves. If the unions agree, ownership of the property will be assigned as determined through the negotiations. Only if they cannot agree will the Parliament determine the conditions for transfer of ownership.
4. 175. The Government states that whether the distribution of the property and determination of ownership is through negotiations or conditions determined by the Parliament, the unions are entitled to continue to use the property to ensure their operations are unhindered. The distribution of the property will then make it possible for other unions who until now have been excluded from using it to operate on an equal footing.
5. 176. The Government submits in conclusion that since the UATUC has initiated a procedure before the Constitutional Court regarding the constitutionality of article 38 of the Act on Associations, the Government does not wish to prejudice the ruling of the highest court.

C. The Committee's conclusions

1. 177. The Committee notes that the allegations of violations of freedom of association in this case arise out of the recent enactment of the Act on Associations, which provides for government distribution of immovable assets among trade unions if the trade unions fail to negotiate an agreement for the distribution among themselves. The complainant alleges that this is unlawful interference in trade union activities and with trade union assets.
2. 178. Firstly, regarding the Government's indication that because the Constitutional Court is seized of the matter at issue, it does not want to prejudice the decision of the Court, the Committee recalls that although the use of internal national procedures, whatever the outcome, is undoubtedly a factor to be taken into consideration, the Committee has always considered that, in view of its responsibilities, its competence to examine allegations is not subject to the exhaustion of national procedures (see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, Annex 1, para. 333).
3. 179. Regarding the substance of the case, the Committee notes that, according to the submission of the complainant, this case concerns immovable property belonging to trade unions prior to the Second World War. This property then became "socially owned" property of which unions registered as "social organizations" had the right of usage and disposal, but not the right of ownership. The distribution and ownership of this property is now regulated by the Act on Associations which provides for the trade unions to reach an agreement on the distribution within six months, failing which, the immovable assets become the property of the Republic of Croatia. In this event, the legislation provides for Parliament to define criteria for the distribution, after which time the Government is mandated to transfer the ownership of the property to the trade unions within one year.
4. 180. The Committee further notes that the issue of the distribution of property formerly owned by the trade unions has been a concern of the trade union movement in Croatia for some time. Negotiations began among three of the confederations in 1993, though no final agreement appears to have been reached; however, the complainant adopted a "Declaration on trade union assets" promoting the distribution of assets, and presented a proposal to the Government on the distribution of assets.
5. 181. Regarding the division and ownership of assets that were formerly private trade union assets, the Committee recalls the general principle applied in similar situations that the assets should be provisionally sequestered and eventually distributed among the former members of the organization that held the property originally, or handed over to the organization that succeeds it, meaning the organization or organizations that pursue the aims and in the same spirit as the original organization (see Digest, op. cit., para. 684). However, the Committee notes that over 50 years has lapsed since the property at issue was owned by the trade unions. The Committee recognizes that this extended lapse of time could lead to difficulties in distributing the property (see Case No. 1869, Latvia, 308th Report, paras. 481-500). In such a situation, the Committee recalls that it is for the Government and the trade unions to cooperate to seek an arrangement consistent with the principles of freedom of association and acceptable to the parties concerned so that the trade unions are able to carry out their activities in full independence, and on an equal footing.
6. 182. The Committee notes that in the case at hand, the decision as to the division of formerly owned trade union assets has in the first instance been left to negotiations among the trade unions concerned. The Committee notes that the issue of distribution and ownership of the property has been an issue of concern to the trade unions for a number of years, and that at least three of the confederations, including the complainant, have been attempting, it appears unsuccessfully, to conclude an agreement regarding the division of assets since 1993. However, given the complexity of the matter at issue and the difficulties that could arise due to the large number of unions concerned in the division of assets, some of which are not affiliated to the confederations that have been attempting to negotiate a settlement of this issue, the Committee considers that the six-month period of negotiation provided for in the Act may not be sufficient. The Committee, therefore, requests the Government to extend this period if no agreement is reached within six months, to ensure that the parties concerned are given a reasonable opportunity to reach an agreement, and to keep the Committee informed in this regard.
7. 183. The Committee notes the concerns expressed by the complainant as to the lack of criteria for division set out in the law should the trade unions not be able to reach an agreement, and the lack of time frame for the determination of such criteria, as well as the Government's assurance that in the event Parliament is required to determine the criteria for division, the unions will be entitled to continue to use the property to ensure their operations are unhindered until ownership is ultimately established. The Committee hopes that the Government will determine the criteria in consultation with the trade unions concerned, and will fix a clear and reasonable time frame for the completion of the division of the property once the negotiation period has passed; the Committee also requests to be kept informed of any developments in this regard.
8. 184. Finally, noting that the issues raised in this case are before the Constitutional Court, the Committee requests the Government to forward a copy of the decision as soon as it is handed down.

The Committee's recommendations

1. 185. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee requests the Government to extend the period of negotiation provided for in the Act on Associations if no agreement is reached within six months, to ensure that the parties concerned are given a reasonable opportunity to reach an agreement, and to keep the Committee informed in this regard.
   • (b) The Committee hopes that the Government will determine the criteria for the division of immovable assets formerly owned by the trade unions in consultation with the trade unions concerned should they be unable to reach an agreement among themselves, and will fix a clear and reasonable time frame for the completion of the division of the property once the period of negotiation has passed; the Committee also requests to be kept informed of any developments in this regard.
   • (c) Noting that the issues raised in this case are before the Constitutional Court, the Committee requests the Government to forward a copy of the decision as soon as it is handed down.