On Oct. 30, 2008 the Constitutional Court of the Republic of Lithuania (hereinafter 's the Constitutional Court/the Court) made a decision in case No 16/06-69/06-10/07 on the Compliance of Paragraph 2 of Article 4.96 of the Civil Code of the Republic of Lithuania with the Constitution of the Republic of Lithuania.
The decision analyzed the constitutionality of Paragraph 2 of Article 4.96 (institute of limited vindication) of the Civil Code (hereinafter 's the CC), i.e. whether this norm, providing for the possibility to vindicate real estate acquired upon payment from an acquirer in good faith when the owner has lost such real estate due to a crime committed by other persons, is in consistency with the principles of a law-governed state, the inviolability of the property and persons equality established in the Constitution of the Republic of Lithuania (hereinafter 's the Constitution).
It should be noted that issues on protecting rights of an acquirer in good faith, which are discussed in this article, were also analyzed in other decisions of the Constitutional Court, namely in the decision of the Constitutional Court as of May 27, 2002 on the compliance of the legal acts solving questions of property possessed by the former Voluntary Society for Co-operation with the Army, Air Force and Navy (DOSAAF) with the Constitution, and the decision of the Constitutional Court as of Dec. 13, 2004 on the compliance of some legal acts whereby the relations of state service and those linked thereto are regulated with the Constitution and laws.
The requests of the petitioners were based on the following arguments:
(i) the disproportionate legal regulation which is being argued upon, the violation of principle of legitimate expectations in civil circulation and constitutional principle of equal rights of persons, when uniform interests of two owners âˆ' original possessor of the rights (owner) and an acquirer in good faith âˆ' conflict;
(ii)the infringement of Article 23 of the Constitution, which states that property is inviolable and that it may be taken over only for the needs of society according to the procedure established by law and shall be justly compensated for;
(iii) petitioners also claimed that when the state loses its real estate due to a crime committed by a civil servant, the rights of the state might not be considered as priority over the rights of a person, who is an acquirer in good faith.
The Court stated that one of the fundamental conditions of the legality of the object of ownership's transfer to the ownership of another person is the statement of the owner's will (consents) toward such a transfer of the object of ownership to another person. If the real estate is transferred to another person without the statement of the owner's will, then it is considered illegitimate and the property transferred is considered illegally acquired property, unless the transfer of real estate to the ownership of another person without the owner's consent is justifiable under the Constitution.
When the owner loses his/her estate due to a crime committed by another person, this does not mean that he/she loses the rights of ownership thereto. The person remains the owner of the estate lost due to a crime committed by other persons and his/her rights of ownership according to the Constitution must be secured and protected. Therefore, the Court interpreted that in case civil servants exceeding their authority commit a crime, this does not mean that the activity of such servants might be identified with the act (omission) of the state, and it shall be considered that the right (and obligation) of the state, as an owner, to repossess the real estate that was lost due to the crime of a civil servant, is persistent.
In order to safeguard ownership rights, the Court also acknowledged that the real estate, which was lost by the owner due to a crime committed by other persons, might be sued out from the acquirer in good faith.
Based on what was mentioned previously, the Court formulated that imperatives arising from the Constitution do not apply to taking over property from the owner in those cases when the owner repossesses the property that was lost due to a crime committed by another person.
However, the Court emphasized that also the rights of a person, who sought to acquire the property legally and in good faith, but acquired it being unaware of the fact that the owner lost such property due to a crime committed by other person, must be protected. The Law shall establish all necessary legal assumptions to compensate damages for such persons, including cases when damage was caused by the illegal actions of civil servants. Consequently, the acquirer in good faith might bring claim for damages against a person who has committed a crime, or against a state, if such damage was caused by the illegal acts of a civil servant.
Therefore, based on precedent decisions the Court interpreted that the protection of owner's rights and interests (protection of ownership rights) is a priority over the protection of rights of an acquirer in good faith (property repossession).
Considering the provided arguments, the Constitutional Court acknowledged that the CC norm, providing for the possibility to vindicate real estate acquired upon payment from an acquirer in good faith, when the owner has lost such real estate due to a crime committed by other persons, is in consistency with the principles of the Constitution.
The courts hear many actions related to the rights of owners and acquirers in good faith. Attention should be paid to the fact that the courts properly interpret the provisions on application of limited vindication, which were analyzed in this article.
Karolis Juodzevicius is a lawyer at Jurevicius, Balciunas & Bartkus, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms including Glikman & Partnerid in Estonia and Kronbergs & Cukste in Latvia, dedicated to providing a quality "one-stop shop" approach to clients' needs in the Baltics.
