Koundourou and others v Minister of Finance and others (Joined cases no. 622/2012 and others)
Recently the Administrative Court of Cyprus issued judgement by which it held that the laws limiting the right of a civil servant or a pensioner in obtaining an increase in salary or his pension (Laws no. 192(I)/2011, 185(I)/2012 and 73(I)/2014) (hereinafter referred to as “the Law”) from 2011 until 2016 were unconstitutional, as they interfered with a person’s “Right to own property”; a right guaranteed under Article 23 of the Constitution of the Republic of Cyprus.
According to Article 23 of the Constitution, every person has the “[…] right to acquire, own, possess, enjoy or dispose of any movable or immovable property.” According to subsection 3 of Article 23, such right can only be limited or interfered with if it is “[…] absolutely necessary in the interest of the public safety or the public health or the public morals or the town and country planning or the development and utilisation of any property to the promotion of the public benefit or for the protection of the rights or others may be imposed by law on the exercise of such right.”
Having adopted the view of the Applicant’s, namely that a salary of a person, including the right to obtain an increase, constitutes a proprietary right / interest, and thus protected by Article 23 of the Constitution, the Administrative Court held that such right can only be interfered with for the reasons explicitly stated in Article 23 (3) (as stated above).
In considering whether or not the Law was unconstitutional, the Court distinguished Article 23 from Article 1 of the Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms of the European Convention on Human Rights which allows the restriction of the right to property if such restriction is for the purposes of the public interest. The Court explained that under Article 23, any reference to the public benefit is made for the purposes of developing and utilising property for the promotion of such public benefit, and that the “public interest” in general is not a reason itself that could limit the right to property guaranteed under Article 23 of the Constitution.
The Court continued by explaining that the Law was drafted due to the financial difficulties that the Republic of Cyprus was facing and for the purpose of avoiding any further financial hardship and in effect the Right to property was interfered with for the purposes of the public benefit and interest in general, which as stated above cannot be permitted under the Constitution.
This decision is very interesting as the reasoning behind the ruling differs from that related to the “haircuts” of depositors issued by the CJEU.
In recent cases, the CJEU considered that the stability of the banking and financial system of a Member State and the avoidance of the disturbance of the economy of such Member State are rights superior to the right of property and thus should be protected even if such protection interferes with the right to property. It should however be state that Article 17 of the EU Charter of Fundamental Rights allows for the restriction of the right to property if such restriction is in the public interest.
The judgement of Joined cases no. 622/2012 and others has been appealed by the Attorney General. What remains to be seen is whether the Supreme Court will adopt the reasoning of the Administrative Court or that of the CJEU.
Senior Associate Lawyer – Litigation Division
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