Protection of Real Property Rights in the EU: Art 295 EC Treaty (or art 345 of the Treaty of Lisbon) and its relevance.

 

In all current major property rights violation disputes directly affecting EU Citizens, whether they are victims of property confiscations in former communist countries, victims of ‘Land Grab’ in Spain or victims of rent control in Austria and Portugal the European Union is all too keen to point out that that the system of property ownership is governed by national rules and that their hands are tied. Of course, this is easy to assert, especially when dealing with ordinary citizens, unlike large scale enterprises, which are backed by powerful lobbies.

 

However, one often does wonder, up to what extent is it really true that the European Union is barred from exercising its competence in these issues.

 

According to art 295 EC Treaty and Art 345 of the Treaty of Lisbon the European Community shall in no way prejudice the rules in Members States governing the system of property ownership; questions of property restitution allegedly fall exclusively under the relevant national law.

 

The historical reason for introducing these provisions was to meet the wide-spread apprehension that the exercise of Treaty competences could deeply interfere with the national economic orders.

 

Further the ECJ’s scarce jurisprudence on Art. 295 forbids the EU to take isolated decisions about the allocation of property and thus any formal deprivation of property rights. Obviously, this acknowledges the exclusive power the Member States have over their property ownership systems.

 

However, the ECJ has also made clear in the ‘Golden Shares cases’ (ECJ 4 June 2002, Cases 367/98, C-483/99 and C-503/99 ) that Article 295 EC:

 

“merely signifies that each Member State may organise as it thinks fit the system of ownership of undertakings whilst at the same time respecting the fundamental freedoms enshrined in the Treaty.

 

Hence, Article 295 EC Treaty/ 345 Treaty of Lisbon does not mean that property law cannot be touched at all by European law.

 

Therefore, the competence to legislate also extends to measures, which have a bearing on property rights, at least as long as they serve the Treaty’s goals, in particular the completion of the internal market, and are not specifically targeted at reconstructing the national property orders.

 

Furthermore, property law is not exempt from European primary law, namely not the principle of non-discrimination. Restrictions e.g. on acquisition of real property by foreigners normally are violations of the freedom of establishment and the free movement of capital. The same applies where in some countries of transition restitution of confiscated property by national legislation might be for example limited to the nationals of the restituting state and other persons are excluded, -freedom of establishment and principle of non-discrimination require the equal treatment of victims of another European nationality-. This has not yet been fully realised everywhere in the European Union.

 

Concluding it should not be forgotten that the European Union and the European Community were created with a particular aim, i.e. the establishment of a common and internal market. The European treaties provide a framework for economic activities: the European economic constitution. An essential part of this economic constitution is freedom of ownership. Freedom of ownership should therefore be interpreted broadly and be seen as freedom of property rights, especially in the light of the case law developed by the European Court of Human Rights in Strasbourg.

Moreover, this emerges from the Hauer judgment (Case 44/79 13 December 1979) ‘that the right to property forms an integral part of the general principles of Community law, the observance of which is ensured by the Court. In safeguarding the fundamental rights, the Court is bound to draw inspiration from the constitutional traditions common to the Member States and the international Treaties for the protection of human rights on which the Member States have collaborated or of which they are signatories (in this case, the First Protocol to the European Convention for the Protection of Human Rights)’.

 

Hence, all in all it appears that Art 295 EC Treaty / Art. 345 Treaty of Lisbon is not really a limitation but a convenient excuse used by the Commission not to deal with the above mentioned issues.

 

 

Alexandra Mareschi, LL.B

Secretary-General

ILOG Foundation LTD

 

Cologne, 23.01.2011