ANALYSIS OF COLLISION, RESULTING OWNERSHIP REFORMS HAVING TAKEN PLACE IN THE HOUSING SPHERE

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Development and objective-setting, performed in course of the compilation of ‘The Development Plan of the Housing Sphere 2007 – 2013’ was based on a number of studies and forecasts and results obtained during the implementation of national policy and private sector methods in the housing sphere from 2003 through 2005. It was emphasised that ‘solving of problems experienced by forced tenants and other tenants, deprived of their privatisation rights during the ownership reforms, has been given relatively little attention.’

Project implemented by the Estonian Tenants’ Union, ‘Development of Measures to be Adopted for Settling the Collisions Between Owners and Tenants, Resulting from Ownership Reforms in the Housing Sphere,’ is intended to contribute to solving of the problem. The first goal of the project is to assess the material and moral value of social collisions incurring in the society, that is, the task for developing the basics for the evaluation of damages. Further specific methods, characteristics of state based on the rule of law, adopted to settle the conflicts and collisions, must fortify the foundation of socially and legally balanced society, representing a new large-scale goal facing the Estonian society. The schedule for the implementation of the project required giving special attention to the issues regarding the restitution of property having belonged to individuals, for example the Baltic Germans, resettled to Germany under multi-national agreements.

The following individuals participated in the elaboration of the scientific basis of the project: Mr. Vladimir Koslov (DSc), Professor of Economics of Tallinn University of Technology; Mr. Aare Laanemäe (DSc), Doctor of Philosophy, administrative ethics specialist; Ms Katrin Paadam (PhD, MA), Professor of Social Economics of Tallinn University of Technology and Ms Piret Plaks (MA), acting Head of the Department of Sociology of Tallinn University; Mr. Vello Rekkaro (PhD, MSc), Professor of Economics, teaching stuff of Eurouniversity; Mr. Rein Saarma (MA), lawyer; Ms Anne Tuurand (MA), psychologist and researcher of economics and sworn advocate Mr. Jaak Oja and Law Office Paul Varul, having prepared a separate legal opinion regarding the possibilities for paying compensation to tenants living and/or having lived in premises, restituted as a result of ownership reforms.

Economic academic report ‘Ownership Politics as a Source of Collisions’ was developed by V.Koslov and V.Rekkaro, bringing first out the specificities and relationships of scientific approach compared to the so-called ‘common sense’ approach to problems; after having elaborated upon essential differences of natural and economic laws and legal acts, while simultaneously discovering economic nature of property and features characteristic of mystification, attributed to relationships between definitions regarding right of ownership, the authors reach a conclusion that ownership politics play a decisive role in our economic policies. The authors dwelled upon different cases concerning right of ownership with respect to material assets: from granting and acquiring right of ownership by giving the property (right of ownership) to a beneficiary and abducting it from an individual by commandeering or bereaving through activities destroying right to a home and conflicting with human rights that can be fitted under the definition of genocide.

Ethical aspects have been discussed in an academic report ‘Ownership Reforms and Moral Injustice’ by A.Laanemäe, where the author discussed the definition of moral injustice, relationships between moral injustice and justice, focusing the subjects of moral injustice in Estonia, that is, forced tenants and gives the pre-requisites for the assessment of moral injustice and specific suggestions for compensating the moral injustice done as the result of ownership reforms.
Contemporary disquisition of theories of justice is largely based on ethical values and standards, serving as the basis for discussing the definition of moral injustice. At least three (3) important factors have to be considered for the evaluation of moral injustice: 1) damages done to an individual’s psychic (stress, loss of feeling of security, inability to cope); 2) decline in quality of life; 3) damages to dignity, accompanying the violation of morel principles. The described evaluation methodology, deriving from the analysis of concepts of justice, contributes to the expanding on the hypostatisation of subjects of moral justice, providing to a scope that is wider than previously used in our legal practice. In addition to the deported, forced fugitives, the prisoners of former regime of occupation (the moral suffering of which has been partly compensated by the state), we should consider adding individuals coerced to join either the German or Red Army, ‘veterans’ of Chernobyl, but above all, forced tenants as the largest group pf people, suffering from moral injustice (the estimated number of people in this group is believed to be approximately 100,000), to this list. This group was created as the result of failed ownership reforms and so far the state hasn’t been giving it the attention that it needs.
Solving of the problems of forced tenants requires considerable assistance from the state. Moral injustice that they suffered from as the result of ownership reform must be finally redeemed and remedied. This required the allocation of a fund for specific purpose, in-part supplement of legislation (making forced tenants equivalent to other subjects of moral injustice, acknowledge by the state so far and extending the benefits available to other subjects to forced tenants); payment of replacement benefit for expropriated housing that would, in part, serve as the compensation for suffered material damages; writing off payments made by force tenants upon purchasing living quarters (so-called irrecoverable loan); extended building of housing, considering the requirements of a specific target group.
Adoption of the listed measures would comply with the goods practice and ‘ethics of care’ implemented in Europe and exercised in practice by several countries (Germany, Finland, etc.). Also, Estonia as a state has grown economically stronger by today and that would allow commencing upon the solving of the problem, provided that the required good will is present. This would also be a socially and politically justified statesmanlike act that would help to overcome the alienation of people from the state and the government.

Academic disquisition ‘Restitution in Comparative Perspective in Estonia and Lithuania’, depicted against the background of ownership reforms having taken place in the Eastern Europe, is written by Ms P.Plaks, supervised by K.Paadam. Restitution process, carried out in Estonia, has been described as one of the most extensive in the Eastern Europe. First of all, very little restrictions were established to the circle of entitled subjects; secondly – as the number of nationalised buildings was large, the number of restituted houses was also considerably large. In most cases physical restitution of dwelling houses was used, being, always also the most complicated method of restitution. The scope of the process conducted in Latvia and Lithuania was somewhat smaller. Main legislative difference with Lithuania was the restricted number of subjects. Property was not restituted to individuals not having the citizenship of Lithuania and not living in Lithuania at the moment of restitution.

Although in Lithuania the responsibility of the state for the regulation of restitution processes is much bigger than in Estonia, the opinion of tenants living in restituted houses and their owners with respect to the restitution process is still negative. In both countries it can be explained by widely spread ideology that recognises the status of an owner as a standard, treating tenants as losers in the sphere of housing. Therefore, people are not happy to be owners even if their situation – at least with respect to their economic status – is not really hopeless, at least in Lithuania. Stigmatising attitude regarding the tenants – demonstrated by both the owners and the society – is also a wide-spread expression of ideology. Ideology ‘status of owner as a standard’ is most acutely detectable in Estonia, where the state’s intervention in lease relationships has been rather modest. Nevertheless, the government has realised that a mistake has made and referred to the need to start representing households not being the owners of their dwellings.

Mr. R.Saarma is giving ownership reform related legal opinion regarding the term prescription and legal substance of restitution of material property, concluding that the institution of prescription can’t be used to settle the collisions of forced tenants. Based on an international report ‘Ownership Reforms and the Implementation of Ownership Reforms in the Republic of Estonia from 1991 through 2004’, drawn up in April 2004, one can detect a number of conflicts in our ownership reforms:
1. Ownership reform and implementation thereof in the Republic of Estonia is in conflict with the Constitution of the Republic of Estonia. Three main principles, specified in the Constitution of the Republic of Estonia have and are being ignored during this period: 1) The principle of legal certainty § 3; 2) The principle of legitimate expectations § 10;
3) The principle of equality of treatment § 12, resulting in the preach of the following nine articles of the Constitution Chapter I, § 3; Chapter II § 9; § 10, § 12, § 13, § 15, § 25,§ 32, § 33.
2. Neither current national nor international legislation has been complied with upon the implementation of ownership reforms.
3. Legislative vacuum has prevailed since October 2002 when the Supreme Court found that § 7 (3) of the Principles of Ownership Reforms Act conflicts with § 13 (2) and § 14 of the Constitution and their combined effect. None of the state institutions has expressed clear opinion regarding the durance of the legislative vacuum while people are still being evicted from their legitimate homes. (By now both the President, Supreme Court and the Riigikogu have expressed their opinion but due to the insufficiency of settlements characteristic of a state based on the rule of law local governments, required to implement the ownership reforms, refuse to execute such rulings, for example, in Tallinn, as the state has failed to allocate funds to be used for the settlement of incurring collisions.)
4. There have been mass cases of illegitimate restitution and privatisation.
5. Establishment of committees for return and compensation for unlawfully expropriated property resulted in emergence of institutions exercising the rights characteristic of courts, causing a situation conflicting with the supreme legislation of general application – the Constitution of the Republic of Estonia. committees for return and compensation for unlawfully expropriated property, located all over the country, have passed wrong decisions of restitution either deliberately or out of negligence; the only valid method for reversing such rulings is – adopted only in some cases – is to apply the court.
6. The President, Chancellor of Justice, the Prime Minister, the Minister of Justice, the Minister of Internal Affairs, the Police Board, the Security Police Board, the National Audit Office have checked the compliance with legal standards and identified breach of law; nevertheless, illegal provisions have not been repealed and the entities committing the breach have not been brought to justice. State institutions have neither wanted nor had the ability to respond in such a way as to reverse an illegal situation of criminal nature to comply with law. Statutes of city governments require repealing of illegitimate decisions and resolutions upon their detection from city governments. This hasn’t been done even once and court rulings have been the only motives initiating some action.
7. According to the Constitution, Estonian court system consists of three levels; in reality there is an institution, established at the Supreme Court, competent to grant the leave to appeal and acting as the fourth level; therefore, many disputes are never heard by the Supreme Court and have been referred to international courts, for example, the European Court of Justice, the UN International Criminal Court, etc. At the same time there are many rulings with similar basic information while the respective decisions adopted by Administrative, Circuit and Supreme Court are contradicting.
Reinstatement of rights of individuals, being owners of various properties in 1940, is understandable but it’s not quite clear what grounds are being used to divide the property belonging to Estonian people in 1990ies between all the formal legal (fictive) owners and so-called legal subjects or their extensive circle of successors. We don’t have a social agreement (law) that would allow this and reallocation of property under the sign of restitution is, in fact, economic-political violence with respect our own nation.
Ms A.Tuurand is observing psychological consequences of people having gained the status of forced tenants, describing reactions expressed by human organism with respect to frustration or, in other words, development stated of defensive mechanisms of human ego, resulting in distortion of personality and psychological indigence. Adoption of the Principles of Ownership Reforms Act in Estonia in 1991 launched both economic and psychic terror with respect to a certain part of the population, depriving these people of feeling of safety. Inability to satisfy one’s need for safety inevitably brings about regrettable consequences – alienation from the state and all the symptoms characteristic of frustration: aggressiveness, withdrawal, regression, isolation, repression, psychic and psychosomatic diseases, alcoholism, suicides, etc. the forced tenants have had to pay a very high price: weak mental health, physical disturbances, damaged relations and broken families, etc.
This kind of decision to restitute property could only be born out of cold rationalism, treating many thousands of the citizens of our country as creatures unworthy of respect. Hollow words uttered by politicians, describing Estonia as a state based on the rule of law and each individual being incredibly valuable for the state will make thousands of forced tenants – and those observing the situation – laugh but not cry. While initially the wrath of the forced tenants was aimed against the new owners and the former Prime Minister Mr. M.Laar, enforcing the aforementioned act, it was later channelled against the state apparatus as a whole, culminating, in many cases, as hostility with respect to the Republic of Estonia as a whole. The enforcement of the Principles of Ownership Reforms Act deprived many people of their faith in Estonia as a state based on the rule of law and the intent of the state apparatus to protect the most important assets of any state – citizens and their homes.
The Ministry of Economic Affairs and Communications contacted the Law Office Paul Varul and contracted for a legal opinion concerning the possibility of paying compensation to tenants living and/or having lived in premised restituted during the ownership reforms. Mr. P.Varul gave a presentation on the legal opinion at a conference ‘Fair Solutions of Ownership Reform’, taking place on February 20, 2007. The main conclusions were the following:
The governing principles of Estonian legal system allow the adoption of an act, regulating the grounds for the payment of compensation to forced tenants on the basis of restitution of premises that they were and/or are using during the ownership reforms. Nevertheless, the aforementioned act should be developed in line with, above all, the Constitution and related legal principles. According to the specialists having drawn up the opinion, most important would be to have the principles of equality of treatment and proportionality on mind.
Payment of compensation would be justified in case of forced tenants (or a family member of a forced tenant, having lived with a deceased tenant in a house that was unlawfully expropriated from a resettler), using living quarters in a house restituted to a resettler under contract of lease, concluded before the enforcement of the Principles of Ownership Reforms Act or who have used living quarters in a house under contract of lease, concluded before the enforcement of the Principles of Ownership Reforms Act, as the house was restituted to a resettler.
It is our opinion that the payment of compensation to other forced tenants is not justified and mainly due to the fact that it must have been obvious for the tenants of houses having belonged to entitled subjects of ownership reforms (therefore, subjects other that resettlers) that were unlawfully expropriated and have now been restituted after the enforcement of the Principles of Ownership Reforms Act on 20.06.1991 and the National and Municipal Premises Privatisation Act of the Republic of Estonia on 01.07.1992 that they have no opportunity for the privatisation of the aforementioned premises upon their restitution. Therefore, this does not constitute the violation of the principle of legitimate expectations. Also, the circle of forced tenants specified is not uniform; payment of compensation calculated on one and the same grounds or in the same amount to all these forced tenants would be rather complicated. Additionally, the payment of compensation to all the forced tenants – the number of whom is probably much bigger than the number of tenants, living in houses that belonged to resettlers, were unlawfully expropriated and then restituted, thus creating unproportionally heavy burden on the other members of society.
The funds required for the payment of compensation should be allocated from the state budget; also, expenses related to the processing of applications and addition of decisions should be compensated to local authorities. Payment of compensation should be organised by the Ministry of Economic Affairs and Communications or the Ministry of Finance.
We suggest the adoption of a special act that would regulate the payment of compensation to forced tenants, as this would match the principles of legal clarity in the best possible way.

Sworn advocate Mr. J.Oja has also formed an opinion that the Riigikogu should adopt a special act concerning the compensation. When defining the forced tenants, entitled to apply for the compensation, he stresses the need to observe the tenants, finding themselves in a situation of a forced tenant after the amendment of the initial text of the Principles of Ownership Reforms Act, as a separate group, meaning that the principle of legitimate expectation with respect to stability of a legal act was violated and the situation of the group deteriorated unexpectedly. Process and decision regarding the application and payment of compensation should be the competence of a national system and not the local authority.
As provided by general legal principles, the amount of compensation payable to each forced tenant per family member should be equal for everyone to avoid accusations for unequal treatment. It could be based on the average price per square meter of living quarters in given area, specified, for example, on January 1, 2007. The number of lost square metres, serving as the basis for paying compensation to specific individual, should also be determined.
A principle, established by legal practice pursued by the Supreme Court – a victim must prove incurrence of real damages when claiming moral damages – is highlighted. This principle can be applied in cases involving forced tenants, having lost real rights of privatisation with respect to their dwellings and land, representing a real amount of money that can be assessed in reality. The principle of legitimate expectation, being one of the fundamental legal principles, has been violated as the result of repeated amendment of the text of the Principles of Ownership Reforms Act, as amendments made to a law must not go back on word given to subjects of law.
The life of many forced tenants has been insecure and disturbed during the last 15 years. The behaviour of the state has created a situation where people suffer from constant stress, both morally and physically and have lost their health. Here the only compensation can be the payment of an appropriate amount of money.
The principle laid down in § 2( 2) of the Principles of Ownership Reforms Act – ownership reform shall not cause new injustices – is, in substance, also one of the general legal principles, only serving declarative purpose for the forced tenants.


Complied by V.Rekkaro

23.05.2007


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