Report in which the committee requests to be kept informed of development - Report No 336, March 2005

Case No 2381 (Lithuania) - Complaint date: 12-AUG-04 - Closed

Allegations: The complainant alleges that the Government interferes in its activities by preparing a law which would nationalize most of the Lithuanian trade unions’ property

1. 555. The complaint is contained in a communication dated 12 August 2004 from the Lithuanian Trade Union "Solidarumas".
2. 556. The Government forwarded its observations in a communication dated 25 October 2004.
3. 557. Lithuania has ratified 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. 558. In its communication dated 12 August 2004, the Lithuanian Trade Union “Solidarumas” alleges that following the decision of the Constitutional Court, the Government prepares a legislation, which would nationalize most of the property of the trade unions of Lithuania. The complainant contends that in so doing, the Government interferes in its activities.
2. 559. As background to the complaint, the complainant states that after regaining independence, the Supreme Soviet of the Republic of Lithuania stated that the part of the real estate that belonged to former Soviet trade unions should be granted to newly established independent trade unions. In 1993, the Parliament of Lithuania passed the Law on the property of former state trade unions of the Lithuanian SSR, which identified the property to be given to the most representative trade unions. On the basis of this Law, the Special Fund for support of the functioning trade unions and those in the process of establishing was created. This Fund regulated distribution of trade union property. The complainant states that the following properties were given to trade unions: enterprise “Autoukis” (Vilnius), part ownership of a hotel in Vilnius, one building in Vilnius, management building of the health resort which used to belong to trade unions of Lithuanian SSR, garages in Vilnius, part ownership of trade unions’ convalescence homes and resorts, Vilnius Chamber of Culture, Vilnius Palace of Concerts and Sport, Vilnius Palace of Ice and part ownership of Kaunas City Labour and Culture Chamber. These properties were granted to the Special Fund, which was controlled by national trade unions centres. The properties were distributed among national trade union centres – Lithuanian Trade Union Unification, Lithuanian Trade Union Centre (later merged to Lithuanian Trade Union Confederation), Lithuanian trade union “Solidarity” and Lithuanian Labour Federation.
3. 560. In September 2003, the Constitutional Court of the Republic of Lithuania ruled that the “Law on the property of former state trade unions of the Lithuanian SSR” did not comply with the Lithuanian Constitution, which meant that the transfer of the property to the Special Fund was unlawful and therefore the biggest part of the trade union property must be transferred back to the State. In its decision, the Court stated that trade unions of the Lithuanian SSR were a part of a Party-controlled machinery through which the Government used to implement its social policy. In these circumstances, Soviet trade unions were governmental organizations. The Court stated that the properties transferred to trade unions were state-owned and could have been granted to trade unions only if they had been fulfilling social interests. However, the Parliament of Lithuania was not able to transfer the properties of commercial nature (such as convalescence homes and health resorts) to trade unions. The complainant submits that the reasoning of the Court is false as during the Soviet regime, trade union property was always separate from the State or the Communist Party.
4. 561. The complainant further alleges that the Government is preparing a legislation, which is going to nationalize most of the properties of the Lithuanian trade unions. The complainant submits that such legislation would be contrary to the principle according to which the assets of the dissolved organization should be distributed among its former members or handed over to the organizations that succeed it, meaning the organization or organizations which pursue the aims of which the dissolved union was established and which pursue the same spirit. The complainant states that the premises granted by the Lithuanian Parliament were built by the Lithuanian SSR trade unions and financed through membership dues. After regaining independence, the party-controlled government collapsed but trade unions remained and they, as well as newly established trade unions, pursued the same aims and spirit as previous trade unions. Trade unions perform not only protection of social rights functions but also provide their members with some social service. Therefore, workers’ recreation and sanatorium treatments are included in trade unions activities.

B. The Government’s reply

1. 562. In its communication of 25 October 2004, the Government states that on 30 September 2003, the Constitutional Court of Lithuania adopted a Ruling on the compliance of the legal acts by which questions of the property formally possessed by trade unions which used to function in Lithuania prior to the restoration of the independent State of Lithuania with the Constitution of the Republic of Lithuania. In this decision the Court decided that certain provisions of the Law on the property of former state trade unions of the Lithuanian SSR, the Law on the establishment of the property of the sanatorium-resort establishments and rest-hotels which used to be possessed by former trade unions of the Lithuanian SSR, the Law on the distribution of property of trade unions of the Republic of Lithuania, the 1 July 1993 resolution on the implementation of the Republic of Lithuania law on the property of former state trade unions of the LSSR, the 17 February 1994 resolution on the approval of the regulations of the Special Fund for support of the functioning trade unions and those in the process of establishment are in conflict with articles 5 (paragraph 2), 7 (paragraph 2), 23 (paragraph 2), 50 (paragraph 1) and 128 (paragraph 2) of the Constitution of the Republic of Lithuania and the constitutional principle of rule of law.
2. 563. As for the status of the trade unions which functioned prior to the restoration of the independence, the Government indicates that their status was set forth in the 30 July 1990 resolution of the Supreme Council on the support to newly established trade unions and on the property of former state trade union organizations. In this resolution, it is emphasized that “trade unions, which functioned in the Lithuanian SSR while imposing membership fees by force, […] represented the interests of the system based on the State party rule and not those of the Lithuanian people. Such trade unions were state organizations and not public organizations”. Therefore, the conclusion of the resolution was that “trade unions which functioned in Lithuania before the restoration of its independence were a part of a system of the USSR trade unions, which themselves were a part of the state mechanism by which the State carried out social and other functions”.
3. 564. Referring to the Constitutional Court Ruling, the Government clarifies the status of the properties transferred to the trade unions. The Government states that in the abovementioned resolution, it was decided that on the day of the adoption of the resolution, all state enterprises, establishments and organizations which were previously allocated to trade unions were a property of the State of Lithuania (Constitutional Court Ruling of 27 May 2002). The resolution stated that “from the funds accumulated in the name of these trade unions and state subsidies, convalescent homes and sanatoriums were built as well as other properties were created. It cannot be properties of only one group of people or association, since they belongs to all the people of Lithuania. A part of these properties is to be transferred to trade unions which are in the process of establishment or newly established ones”. Thus, at the same time, an intention was expressed to support the independent trade unions by giving them part of the state-owned properties accumulated by former trade unions of Lithuanian SSR. This intention was implemented by laws and other legal acts adopted by Seimas (Parliament), including the laws which were disputed before the Constitutional Court. The Government points out that the Constitutional Court in its ruling stated that:
   • […] as it follows from other provisions of the Constitution, the State was permitted to support trade unions in the process of establishment, or those already established, by giving them only such state property (premises, etc.) which was necessary for the trade unions to establish themselves and start their activities. The State, while supporting trade unions in the process of establishment, cannot absolutely freely transfer to them any property. State institutions, which have powers to adopt decisions on the possession, use and disposal of the property belonging to the State […] are bound by the Constitution.
4. 565. The Government therefore underlines that the property necessary for the trade unions to establish themselves and to start their activities could be transferred to support trade unions. The reason is expressed in the ruling of the Court:
   • […] the State is an organization of the entire society. The property that belongs to it by right of ownership has to be possessed in such a way that it would serve the common welfare of the nation and the general interest of the whole society. The state-owned property is one of the means for guaranteeing the public interest and social harmony. It needs to be noted that institutions of state authority and other institutions, which are empowered to adopt decisions concerning the possession, use and disposal of the property which belongs to the State by right of ownership, must observe the norms and principles of the Constitution. Under the Constitution, the property of the State may not be possessed, used and disposed of in such a manner that it would satisfy the interests and needs of only one social group or separate persons, and does not comply with the public interest and needs of the society.
5. 566. Finally, the Government indicates that the Law on the property of former state trade unions of the Lithuanian SSR, the Law on the establishment of the property of the sanatorium-resort establishments and rest-hotels which used to be possessed by former trade unions of the LSSR, the Law on the distribution of property of trade unions of the Republic of Lithuania, the 1 July 1993 resolution on the implementation of the Republic of Lithuania law on the property of former state trade unions of the LSSR, the 17 February 1994 resolution on the approval of the regulations of the Special Fund for support of the functioning trade unions and those in the process of establishment provided for the transfer to trade unions of state-owned property which was not necessary for their establishment or exercise of their activities. It further stressed that under the Constitution, trade unions in order to be able to exercise their functions can possess various property, but trade unions are not economic organizations, they are not established for economic activities or public administration, therefore the state institutions cannot transfer to them state enterprises, establishments and organizations.

C. The Committee’s conclusions

1. 567. The Committee notes that this case concerns the issue of the devolution of assets acquired by Lithuanian trade unions during the occupation by the Soviet Union.
2. 568. Following the declaration of independence, the Parliament of Lithuania passed, the “Law on the property of former state trade unions of the Lithuanian SSR, according to which the property used by the trade union of the Lithuanian SSR was transferred to the newly created most representative trade unions. This property included several building, hotel, health resorts and convalescence homes, Palaces of Culture and Sport. Other legislative acts were later adopted by Parliament and included the Law on the establishment of the property of the sanatorium-resort establishments and rest-houses which used to be possessed by former trade unions of the Lithuanian SSR, and the Republic of Lithuania Law on the distribution of property of trade unions which repealed the Law on the property of former state trade unions of the Lithuanian SSR.
3. 569. The Committee notes that the complainant in this case alleges that following the ruling of the Constitutional Court, which found the abovementioned legislation unconstitutional, the Government intends to draft a legislation, which would nationalize most of the properties of the Lithuanian trade unions. The Committee notes that the observations of the Government are based on the ruling of the Constitutional Court. No information was provided by the Government in respect of the alleged new legislation.
4. 570. The Committee notes the ruling of the Constitutional Court, which may be summarized as follows:
   • - The Constitutional Court was requested to determine whether the provisions of item 8 of article 2 of the Republic of Lithuania Law on the establishment of the property of the sanatorium-resort establishments and rest-houses which used to be possessed by former trade unions of the Lithuanian SSR and paragraph 5 of article 3 of the Republic of Lithuania Law on the distribution of property of trade unions, which transferred the ownership of the Anykšciai rehabilitation centre (former rest-house "Šilelis"), including the administrative building, to trade unions, are not in conflict with article 23 of the Constitution. The petition before the Court originated in the administrative case brought by a person who is the heir of the former owner of the administrative building. Before the occupation by the Soviet Union, the administrative building in question used to be a residential house owned by the mother of the claimant in the administrative case. It was nationalized in 1940s, as all private property in the country.
   • - The Court considered the status of properties possessed by trade unions of the Lithuanian SSR. It held that until the restoration of the independent State of Lithuania, trade unions were a part of the system of the USSR trade unions, and as such, they were virtually a part of the state mechanism of the USSR through which the State carried out its social and other functions. The Court referred to the 30 July 1990 Supreme Council resolution on the support to newly established trade unions and on the property of former state trade union organizations” where it was emphasized that “trade unions which functioned in the Lithuanian SSR, while imposing membership fees by force, […] represented the interests of the system based on the state party rule, and not those of the Lithuanian people. Such trade unions were state organizations and not public organizations”. The Court further referred to the 13 March 1990 Supreme Council resolution on the status of the enterprises, establishments and organizations which are under the union or the union-republic jurisdiction” which declared that on the day of the adoption of the said resolution, all state enterprises, establishments and organisations acquired by the trade unions of the Lithuanian SSR should be considered to be the properties of the Republic of Lithuania.
   • - The Court recalled that at the time when the issue of the properties possessed by the state trade unions of Lithuanian SSR was being decided, the process of restitution of the property that had been nationalized or otherwise unlawfully seized was taking place as well. On 15 November 1990, the Supreme Council, recognizing the continuity and restoration of the rights of ownership, adopted the following principles: the continuity of the rights of ownership of citizens of Lithuania should be incontestably recognized; citizens of Lithuania have the right, within the limits and procedure defined by the law, to retrieve in kind the property which belonged to them; in the absence of such a possibility, to receive a compensation. The Court stated that no right could appear on the grounds of unlawfulness. The nationalized property or otherwise unlawfully seized by the occupation government did not become state-owned property and could merely be considered as property which was possessed by the State de facto. In these circumstances, the state trade unions, which functioned in Lithuania before the restoration of the independence, possessed not only the property belonging to the State, but also some properties, which had been nationalized or otherwise unlawfully seized by the occupation government. This property could not therefore be considered as property of the former state trade unions.
   • - The Court further examined the legislative acts concerning the issue of trade union property. It concluded that the legislation regulating the property possessed by state trade unions of the Lithuanian SSR before the restoration of independence was “inconsistent, self-contradictory and ambivalent. The provisions of laws and other legal acts adopted by the Seimas frequently den[ied]each other, the formulations [were] used in a legally incorrect manner”.
   • - The Court also examined constitutional provisions concerning the ownership rights and obligation of the State in respect of the property in its possession. It held that under the Constitution, the property of the State may not be possessed, used and disposed of in such a manner so as to satisfy the interests or needs of only one social group or separate persons, without taking into account public interest and needs of the society. However, “the fact that under the Constitution the state-owned property must be treasured and not wasted does not mean that it may not be transferred as ownership to other subjects […]. The transfer of property as ownership (also including its privatization), which belongs to the State by right of ownership, to other subjects may be constitutionally justifiable only if it renders more benefit to society, when by this transfer significant, constitutionally grounded needs/interests of society are sought to be satisfied. Such transfer, both repayable and gratuitous, would be constitutionally unjustifiable if it caused evident harm to the society, and violated the rights of other persons.” The Court noted that the situations may occur when the State for certain reasons temporarily possesses and uses the property which does not belong to it as in the case when the property was illegally nationalized or seized in other unlawful ways by the occupation government and in regard of which the rights of ownership may be restored according to law. In such a case, such property must also be possessed and used observing the same constitutional requirements.
   • - The Court considered article 50 of the Constitution concerning trade unions in the context of the Government’s efforts to create, through the legislation, necessary preconditions for the establishment and functioning of independent trade unions by rendering them material support at the initial stage of their establishment and activities. The Court held that “the status and principles of activities of trade unions established in the Constitution, together with the striving for an open, just and harmonious civil society and State under the rule of law and the democratic character of the State of Lithuania established in the Constitution, imply the principle of autonomy of trade unions with regard to the State and its institutions”. The Court considered that the provision of paragraph 1 of article 50 of the Constitution, according to which trade unions shall establish themselves freely and function independently, draws the limits of the interaction between the State and trade unions. Without violating the provisions of the Constitution and considering paragraph 2 of article 50, according to which all trade unions shall have equal rights at the initial stage of the establishment and activities of free trade unions, the State could render material (as well as financial) support to the trade unions so that they might start their activities and independently exercise their functions. This state support cannot be permanent. At this initial stage, the state support rendered to trade unions is to be linked not with the [functions of trade unions] which, according to the Constitution, act independently, but with the establishment and beginning of activities of trade unions as one of the elements of civil society. Under the Constitution, no legal regulation is permitted under which the State would render such support to trade unions, or that it would render it in such a way that legal preconditions might be created to violate the independence of activities of trade unions and to make them dependent on the State and thus to restrict the opportunities of trade unions to defend the professional, economic, and social rights and interests of employees. Also, it is not permitted to establish any such legal regulation under which the State would render such support to trade unions, or that it would render it in such ways that the equality of trade unions could be violated. The Court therefore concluded that “the State was permitted to support the trade unions which were in the process of establishment or which were established at that time only [by giving them] such property (premises, etc.) […], which was necessary for the trade unions to establish themselves and start their activities”. However, the Court once again stressed that “it is not permitted to establish legal regulation according to which the property that belongs to the State by right of ownership would be transferred as ownership to other subjects in order to satisfy the interests or needs of only one social group or individual persons, if this does not comply with the need of society, the public interest, or does not serve the welfare of the nation”. The Court also pointed out that while it was permitted to transfer some property to trade unions at the initial stage of their establishment in order to create conditions for the free exercise of their activities, this initial stage is now over. Finally, the Court stated that under the Constitution, in order to carry out their functions, trade unions could possess various property. “However, this does not mean that the state institutions can transfer as ownership enterprises establishments and organizations belonging to the State by right of ownership to trade unions: trade unions are not economic organizations; they establish themselves not for economic activities or public administration.”
   • - The Court therefore concluded that article 2 of the Law on the establishment of the property of the sanatorium-resort establishments and rest-houses which used to be possessed by former trade unions of the Lithuanian SSR, which provided that “the following objects and the property and funds registered in their balance shall be recognized as properties of trade unions of Lithuania and transferred to the Special Fund […]: (1) rest-house “Trakai”; (2) Lampedžiai rest house; (3) state enterprise “Neringos kopos” (former rest-house “Neringa”); (4) auto-transport vehicles, spare parts and inventory of the car park of the resort establishments of Druskinininkai; (5) Druskininkai sanatorium “Nemunas”; (6) Palanga sanatorium “Jurate” (save the hostels recorded in its balance); (7) Palanga healthcare chamber; (8) Anykšciai rehabilitation centre (former rest house “Šilelis”); and (9) Druskininkai centre for therapeutic physical culture and ambulatory treatment” established the legal regulation under which the property of the State or which was only temporarily possessed by it following unlawful nationalization or seizure in other unlawful ways by the occupation government and which, under the law, may be restored to the original owner, was recognized as property of the trade unions of Lithuania and transferred to the trade unions. According to the Court, this article provided for the transfer to the trade unions of property “which was not necessary for the trade unions […] to establish themselves and begin their activities”. The Court therefore found the provision of the abovementioned Law unconstitutional.
   • - As concerns paragraph 5 of article 3 of the Republic of Lithuania Law on the distribution of property of trade unions”, which provided that “the Anykšciai rehabilitation centre […] and the rest-house “Neringos kopos” […] shall be transferred, in equal portions, as commonly shared ownership of the Labour Federation of Lithuania, the Lithuanian Trade Unions Centre, the Workers’ Union of Lithuania and the Alliance of Trade Unions of Lithuania, the Court referring to its finding concerning article 2 of the Law on the establishment of the property of the sanatorium-resort establishments and rest-houses which used to be possessed by former trade unions of the Lithuanian SSR, held that this provision was contrary to the Constitution.
5. 571. The Committee notes that the complainant submits that after regaining independence, the party-controlled government collapsed but trade unions remained and they, as well as newly established trade unions, pursued the same aims and spirit as previous trade unions. According to the complainant, trade unions perform not only functions of protection of social rights but also provide their members with some social service. Therefore, workers’ recreation and sanatorium treatments are included in trade union activities. The Committee understand that under the communist regime, the assets accumulated by the trade unions were very large because the functions exercised by the trade unions went well beyond the traditional activities carried out by workers’ organizations in the defence of the interests of their members. It appears to the Committee that the complainant’s concerns are mostly about the rest houses, resorts and sanatoriums, which were obtained by the Lithuanian SSR trade unions from the State. The Committee understands from the Government’s reply and from the ruling of the Constitutional Court that there is no intention to nationalize all the properties that were transferred to the new trade unions after the declaration of the independence by Lithuania. Indeed, the Government agrees that a property which was necessary for the trade unions to establish themselves and to start their activities could be transferred to trade unions.
6. 572. In examining this case, the Committee is fully aware of the great complexity of the matters raised. This complexity is due to several factors: the diversity and origin of the resources held by the former Lithuanian trade unions (state subsidies and contributions from their members), the nature of the functions assigned to them, and emergence of trade union pluralism. The Committee is also aware that the democratization process, along with the process of restitution of private property, which was nationalized or unlawfully seized during the communist regime in the country, and the new trade union situation, requires the introduction of measures by the Government. It is, in particular, indispensable that the question of the devolution of trade union assets accumulated by the former Lithuanian trade unions is solved without delay, on the one hand, because part of the functions which were previously assigned to trade unions would, within the framework of democratization, be restored to the State and, on the other hand, because some of the assets which were transferred to the trade unions after independence were claimed by their original owners. In these circumstances, state intervention in the question of the devolution of trade union assets may not, in the opinion of the Committee, be considered in itself as incompatible with the principles of freedom of association. Nevertheless, the Committee considers that this question can only be solved by an agreement between the Government and the trade unions concerned.
7. 573. In these circumstances, the Committee invites the Government to engage in consultations with the trade union organizations concerned in order to settle the question of the assignment of property covered by the relevant laws so that while some of the assets could be recovered by the Government or their original owners, affected trade union organizations are guaranteed the possibility of effectively exercising their activities in a fully independent manner. It requests the Government to provide information on the development of the situation and, in particular, on any agreement, which may be reached in this respect.
8. 574. The Committee further considers that if there is in fact a draft legislation on nationalization of trade union assets being prepared, consultations should be held prior to its introduction with all appropriate trade unions [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, para. 930]. The Committee requests the Government to provide a copy of any such new legislation.

The Committee's recommendations

1. 575. In the light of its forgoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee invites the Government to engage in consultations with the trade union organizations concerned in order to settle the question of the assignment of property covered by the relevant laws so that while some of the assets could be recovered by the Government or their original owners, affected trade union organizations are guaranteed the possibility of effectively exercising their activities in a fully independent manner. It requests the Government to provide information on the development of the situation and, in particular, on any agreement, which may be reached in this respect.
   • (b) The Committee further considers that if there is in fact a draft legislation on nationalization of trade union assets being prepared, consultations should be held prior to its introduction with all appropriate trade unions. The Committee requests the Government to provide a copy of any such new legislation.