The Constitutional Court of the Republic of Belarus comprising of the Presiding Officer - Chairman of the Constitutional Court G.A. Vasilevich, Deputy Chairman A.V. Maryskin, judges T.S. Boiko, G.A. Vorobei, K.I. Kenik, V.V. Podgrusha, A.A. Sarkisova, A.G. Tikovenko, R.I. Filipchik, G.B. Shishko, V.Z. Shuklin

with participation of representatives:

of the House of Representatives of the National Assembly of the Republic of Belarus: V.P. Khrol - Head of Standing Commission on housing policy, construction activities, trade industry and privatization of the House of Representatives of the National Assembly of the Republic of Belarus; I.E. Demidova - Head of department of economic, labour and social legislation of Main law and expert department of the Secretariat of the House of Representatives of the National Assembly of the Republic of Belarus; of the Ministry of Economy of the Republic of Belarus: A.V. Pupko - Deputy Director of Department of antimonopoly and pricing policy of the Ministry of Economy of the Republic of Belarus; E.V. Volkova - Head of department of prices and tariffs in non-production sphere of Department of antimonopoly and pricing policy of the Ministry of Economy of the Republic of Belarus

has examined in open Court session the case "On the conformity between the Constitution of the Republic of Belarus and Instruction on procedure of forming rent rates by legal entities of non-governmental form of ownership while renting non-residential buildings (premises)". The Court session was attended by: I.A. Mironichenko -Deputy Chairman of the Supreme Court of the Republic of Belarus; L.G. Kozyreva - Deputy Chairman of the Supreme Economic Court of the Republic of Belarus; M.V. Snegir - Deputy Procurator-General of the Republic of Belarus; V.Y. Kalugin - Deputy Minister of Justice of the Republic of Belarus. The proceedings were brought by the Constitutional Court of 7 February 2001 on the proposal of the House of Representatives of the National Assembly of the Republic of Belarus on the grounds of Article 116 of the Constitution, Articles 5 and 6 of the Law "On the Constitutional Court of the Republic of Belarus", Articles 43 of the Rules of Procedure of the Constitutional Court of the Republic of Belarus.

Instruction on procedure of forming rent rates by legal entities of non-governmental form of ownership while renting non-residential buildings (premises), approved by resolution of the Ministry of Economy of the Republic of Belarus of 29 May 2001 No. 96 (hereafter referred to as Instruction) and enforced of 1 July 2001 (National register of legal acts of the Republic of Belarus, 2001, No. 62, 8/6246, 8/6316) was subject to verification.

The House of Representatives of the National Assembly of the Republic of Belarus in its proposal on verification of Instruction has noted that provisions of Instruction envisages unequal rights for carrying out economic activities by economic entities of private form of ownership in comparison with economic entities of state form of ownership, as well as create unequal conditions for development of those forms of ownership.

Having heard Judge-speaker V.Z. Shuklin, representatives as litigants, expert E.F. Kireeva - Head of Faculty of finances of branches of natural economy of Belarusian State Economic University, Candidate of economic science, Professor, analyzed provisions of the constitution, Civil Code, laws and other enforceable enactments of the Republic of Belarus, studied the materials of the case, the Constitutional Court found the following.

Under the Constitution the state shall grant equal rights to all to conduct economic and other activities, other than those prohibited by law, and guarantee equal protection and equal conditions for the development of all forms of ownership, as well as equal opportunities for free utilization of abilities and assets for business and other types of economic activities which are not banned by the law (Article13). The state shall guarantee everyone the right of property; a proprietor shall have the right to possess, enjoy and dispose of assets (Article 44).

In accordance with the specified constitutional norms the Civil Code of the Republic of Belarus (hereafter referred to as CC) shall stipulate as one of the main principles the principle of equality of all participants of civil relations under which the subject of civil law may participate in civil relations on equal terms, are equal before the law, may not enjoy advantages and privileges which are not in line with the law and shall have the right without any discrimination to equal protection of the rights and lawful interests. Parties of civil law relations are free in assertion of their rights and duties on the grounds of a contract, as well as in specification of any of the provisions of a contract which are in line with the legislation; unfounded interference in private business is inadmissible (Article 2).

The principles in question are the grounds for both the provisions of the Civil Code, which shall regulate the issues of rent (Articles 577 - 596), and the special provisions, concerning a rent contract of buildings or structures (Articles 621 - 626). Relations in the sphere of rent shall be also regulated by the Law "On rent" and by other acts of legislation. According to part one of Article 577 of the CC under the rent contract (property renting) a lessor shall be obliged to give a lessee (lease-holder/tenantry) the property at the pay in temporary possession and enjoy or in temporary enjoyment. Point 1 of Article 578 of CC envisages that the objects of rent may be plots of land and other detached natural objects, enterprises and other property complexes, buildings, structures, equipment and transport(ation) facilities and other things which lose no natural qualities in the process of their use (non-imput things).

According to point 1 of Article 621 of CC under the contract of rent of a building or a structure a lessor is obliged to transfer to a lessee a building or a structures in temporally possession and enjoyment. Contract of rent of a building or a structure, which has been concluded for the term of not less than one year, is subject to state registration and is considered to be concluded from the moment of that registration (point 2 of Article 622 of CC). Conformably to the contract of rent of a building or a construction rental fee shall be an obligatory condition (sine qua non). In instance of absence among the parties of co-ordinated written form of condition on the rate of rental fee the contract of rent of a building or a structure is not considered to be concluded (point 1 of article 625 of CC).

Thus, under the norms of CC, which shall regulate rent relations, the rate of rental fee while renting buildings and structures shall be fixed by the agreement of the parties by concluding the contract of rent. And the lawmaker shall not link fixation and co-ordination of rental fee with the forms of ownership to buildings and structures. One should bear in mind that according to part seven of Article 10 of the Law "On enforceable legal acts of the Republic of Belarus" the Civil Code shall have greater legal force in relation to other codes and laws which contain the norms of civil law. In accordance with Article 579 of CC the right to rent the property shall be the right of an owner. An owner shall have the right at his/her own disposal to make with the owned by him/her property any actions which are not at variance with the legislation, including to alienate his/her property in the ownership of other persons, to transfer to them, being the owner, the right of possession, enjoy and disposal of the property, as well as to dispose of the property in the other way (point 2 of Article 210 of CC).

Due to that the state as one of the owners shall have the right in authorized persons to solve in accordance with the legislation the issues of rental fee with respect to lessors of state form of ownership. In order to regulate the use of state property, to suppress offences in the field of rental relations and to protect economic interests of the state Decree of the President of the Republic of Belarus of 21 August 1996 No. 302 "On procedure of setting rates of rental fee for premises in administrative buildings and structures which are in state ownership" has approved the Procedure of specification of minimum rates of rental fee for premises in administrative buildings and structures which are in state ownership (hereafter refers to as the Procedure). According to the given Procedure minimum rates of rental fee are obligatory for all the lessors of the premises in administrative buildings and structures which are in state ownership and the fixing fee may not be lower than those rates, except for the instances specified by the President of the Republic of Belarus or by the body he authorized (point 1 of the Procedure).

The amount of minimum rates of rental fee is fixed in US dollars ($), but rental fee shall be made in belarusian roubles at the rate of the National Bank on day of pay. except for the instances when in accordance with the legislation of the Republic of Belarus the payments shall be made in foreign currency (points 2 and 4 of the Procedure). Before adoption of the Instruction there was no special enforceable enactment for regulation of the procedure of specification of the rates of rental fee by the subjects of non-governmental form of ownership.

Republican commission on regulation of use of administrative buildings, structures, productive floor spaces and other objects of state ownership before elaboration of the grounds for setting the rare of rental fee for the enterprises and organizations of non-governmental form of ownership, private entrepreneurs while renting social buildings, complexes and structures, premises in them, administrative buildings, adapted productive floor spaces were proposed to be guided by Decree of the President of the Republic of Belarus of 21 August 1996 No. 302. The procedure of setting rates of rental fee while renting non-residential buildings (premises) which are in private ownership has been envisaged by Instruction approved by resolution of the Ministry of Economy of 29 May 2001 No. 96. The given Instruction specifying the procedure of forming the rates of rental fee by legal entities of non-governmental form of ownership while renting non-residential buildings (premises) shall be obligatory for them (points 1 and 2). According to the Instruction the rates of rental fee while renting non-residential buildings (premises) shall be formed with the relevant economic grounds taken into account: depreciated (recoverable) cost of buildings, their comforty, location and other conditions (point 4); legal entities of non-governmental form of ownership shall calculate the rates of rental fee in belarusian roubles expressed by formula considering coefficient of change of cost of non-residential buildings (premises) which shall be approved my the Ministry of statistics and analysis according to the data of the Ministry of architecture and construction, as well as a number of other indicators (point 5).

Resolution of the Ministry of Economy of 29 May 2001 No. 96, which has approved the Instruction, shall specify that the ground for its adoption was the legislation regulating law relations in the sphere of price setting. Under Article 14 of the Law "On price setting" for the violation of the fixed by the relevant state bodies of the levels of prices (tariffs) under regulation, their holding up and undercharges, as well as violation of the established procedure of their setting the legal entities and officials, entrepreneurs are subjects to the relevant sanctions.

Heads of a legal entity and other officials, entrepreneurs shall bear other responsibility for the violation of the legislation on price setting in accordance with the effective legislation. Analysis of the given Law (Articles 3, 5, 7, 8, 11 etc.), as well as Decree of the President of the Republic of Belarus of 19 May 1999 No. 285 "On some measures on stabilization of prices (tariffs) in the Republic of Belarus" which has approved the list of goods (works, services) the prices (tariffs), extra charges (discounts) for which are regulated by the republican state bodies, associations subordinated to the Government of the Republic of Belarus, by the National Bank, executive committees of oblasts and by Minsk city executive committee, as well as analysis of other acts of legislation shall signify that setting the rates of rental fee and the procedure of their specification by the subjects of non-governmental form of ownership while renting non-residential buildings (premises) are not referred to the relations which are regulated by the legislation on price setting.

The arguments of the Ministry of Economy that rent of non-residential buildings (premises) should be considered to be a service with the reference to the Basic provisions on the composition of expenses, which shall be included in the prime-cost of production (works, services) approved by ministries of economy, finance, labour, statistics and analysis in January 1998 (with further alterations and addenda), are not based on the provisions of CC. Referring of incomes drawn by lessors for renting property to another account has not changed economic essence of rental relations. Lease contracts are aimed at chargeable transfer of property in use, and not to chargeable provision of services. Consequently, the specified persons may not be subjects to the responsibility envisaged by the legislation on price setting.

Application of the legislation on price setting while fixing rent rates in accordance with point 5 of the Instruction shall lead to the fact that unlike the lessors of state form of ownership private lessors are obliged to calculate monthly those rates considering coefficient of change of cost of non-residential buildings (premises) approved my the Ministry of statistics and analysis according to the data of the Ministry of architecture and construction. Moreover, the Instruction shall stipulate additional coefficients for the calculation of the rent rate.

There is also a different approach towards the discount of taxes, dues and other compulsory payments into the budget which shall be specified while calculating rent rate. Based on the abovementioned, the Constitutional Court deems that the provisions of the Instruction, which have stipulated the procedure of forming rent rates while renting non-residential buildings (premises) by the private lessors which is differ from those for the lessors of the state form of ownership, created unequal conditions for the development of the state and private forms of ownership and that is not in line with the Constitution (Articles 13, 44, 58 etc.). with the Civil Code, with other legislative acts, which shall enshrine equal protection and equal conditions for the development of all forms of ownership.

Based on the aforestated and guided by parts one, four and seven of Article 116 of the Constitution, Articles 5, 6, 9, 34, 38, 40 and 43 of the Law "On the Constitutional Court of the Republic of Belarus", the Constitutional Court 

RULED:

1. To find Instruction on the procedure of setting rates of rental fee legal entities of non-governmental form of ownership while renting non-residential buildings (premises), approved by resolution of the Ministry of Economy of 29 May 2001 No. 96, to be not in conformity with the Constitution of the Republic of Belarus, with the Civil Code of the Republic of Belarus, with other legislative acts of the Republic of Belarus. To consider the given enforceable enactment to be null and void from the date of adoption of the present Judgement.

2. To publish the present Judgment within the period specified in the legislation in "Narodnaya gazeta" and "Zvyazda", as well as in National register of legal acts of the Republic of Belarus and in "Vesnik Kanstytutsijnaga Suda Respubliki Belarus".

3. The present Judgment shall come into legal force from the day of its proclamation, is final and subject to no appeal or protest.

Presiding Officer —

Chairman of the Constitutional Court

of the Republic of Belarus                                                                                               G.A. Vasilevich