CASE OF OKLEŠEN AND POKOPALIŠKO POGREBNE STORITVE LEOPOLD OKLEŠEN S.P. v. SLOVENIA
Remainder inadmissible;No violation of P1-1
Corneliu Bîrsan;Egbert Myjer;Ineta Ziemele;Josep Casadevall;Luis López Guerra
5. The first applicant, Mr Leopold Oklešen, is a Slovenian national who was born in 1947 and lives in Novo Mesto. The second applicant is a private enterprise called Leopold Oklešen Cemetery and Funeral Services s.p. (Pokopališko pogrebne storitve Leopold Oklešen s.p.) located in Novo Mesto. 6. The second applicant, which was owned, legally represented and run by the first applicant, had held a valid licence issued by Chamber of Crafts (obrtno dovoljenje) for the provision of funerals, landscaping and maintenance of exterior surfaces (zunanja ureditev) since 6 March 1995. The licence confirmed that the second applicant was in compliance with section 9 of the Crafts Act (see paragraph 22 below). The second applicant used to provide all funeral services in Novo Mesto municipality, including preparing and transporting remains, obtaining the necessary documents, arranging cremations, selling funeral items (coffins, funeral wreaths, flowers and so on) and organising ceremonies. It appears that funerals represented an important, if not the main, part of the activities of the second applicant. 7. In September 2000 a Decree on the provision of public utility as regards cemetery and funeral activities, management of cemeteries and funeral ceremonies in Novo Mesto Municipality (“the 2000 Decree”, see paragraphs 24-25 below) came into force. Subsequently, the Novo Mesto Municipal Enterprise (Komunala Novo Mesto, “KNM”) was entrusted with the provision of such services in the municipality's area. 8. According to KNM's website (http://www.komunala-nm.si/, consulted on 3 September 2007), KNM provided services concerning, inter alia, digging and organising graves, obtaining documents concerning the deceased, preparation and storage of remains, funeral home leasing, organisation and performance of funeral ceremonies and services and transportation of remains. 9. By a letter of 1 March 2002, KNM warned the second applicant to comply with the 2000 Decree. This implied, according to KNM, that “all activities relating to those deceased (...) who are to be buried in cemeteries managed by KNM should be carried out solely by KNM!” 10. On 19 April 2002, further to the second applicant's request, Novo Mesto Municipality explained that the second applicant was not eligible to provide funeral services because of the restrictions set out in the 2000 Decree, the 1993 Public Utilities Act and the Cemetery and Funeral Services and Cemetery Management Act (“the 1984 Cemetery and Funeral Act”). The Municipality further stated that the Constitutional Court decision no. U-I-48/97 had confirmed that funerals should be a mandatory public utility (see paragraphs 26-27 below). 11. On 25 November 2002 the second applicant submitted a request to the Constitutional Court for a review of the constitutionality and legality (pobuda za oceno ustavnosti in zakonitosti) of the 2000 Decree, in particular sections 1 and 16. While section 1 provided, inter alia, that funerals should be provided by a public utility, section 16 established that a provider of a public utility, namely a public-law enterprise, should be contacted in the event of a death and should be responsible for transport of the remains. 12. In its request, the second applicant argued that funeral provision should be in the free market, and requested the Constitutional Court to issue an injunction against the 2000 Decree. The second applicant further stated that, following the adoption of the 2000 Decree, KNM had obtained a monopoly in this field and did not allow it to transport remains to cemeteries. It submitted that the 2000 Decree had been introduced with the intention of closing down its successful business. 13. On 1 April 2004 the Constitutional Court rejected the second applicant's request, referring to its earlier decision no. U-I-48/97 (see paragraphs 26-27 below) finding that section 2 of the 1984 Cemetery and Funeral Act was in conformity with the Constitution. The above-mentioned provision read together with section 68 of the 1993 Public Utilities Act determined that the funeral services belonged to the mandatory public utilities. These rules were binding on the Novo Mesto Municipality, which was required to implement them. 14. According to the applicants, as a result of the above situation the second applicant has been unable to provide the core funeral services since the implementation of the 2000 Decree and has lost a large proportion of the clientele due to the 2000 Decree's restrictions. 15. The second applicant continued to operate until 2006. For illustration of the effects of the 2000 Decree's restrictions on the applicants' earnings, it would appear from the first's applicant's tax forms concerning the second applicant's activity, that his taxable income was calculated as follows: in 1998, it was approximately 15,000 euros (EUR), in 1999 it was EUR 26,000, in 2000 it was EUR 39,000 and in 2001 it was 27,000. After the implementation of the 2000 Decree, his taxable income was approximately EUR 17,000 in 2003, EUR 28,000 in 2005 and EUR 18,000 in 2006. 16. On 7 August 2006 the second applicant was removed from the Slovenian register of enterprises. The first applicant retired in November 2006. 17. The relevant provisions of the Constitution of the Republic of Slovenia (Ustava Republike Slovenije, Official Gazette no. 33/91), provide as follows: “The right to private property and inheritance shall be guaranteed.” “Free economic initiative shall be guaranteed. The conditions for establishing commercial organisations shall be established by law. Commercial activities may not be pursued in a manner contrary to the public interest. Unfair competition practices and practices which restrict competition in a manner contrary to the law are prohibited.” 18. The relevant provisions of the Constitutional Court Act (Zakon o ustavnem sodišču, Official Gazette no. 15/94), which concern the review of constitutionality and legality, were at the relevant time as follows: “(1) Anyone who demonstrates a legal interest may submit a request for a procedure to be initiated for a review of the constitutionality or legality of regulations or general acts issued for the exercise of public authority. (2) A legal interest is deemed to be demonstrated if a regulation or general act issued for the exercise of public authority whose review has been requested by the petitioner directly interferes with his rights, legal interests, or legal position.” “(1) The Constitutional Court rejects a request if the procedural conditions ... have not been fulfilled. ...” “... (2) The Constitutional Court dismisses a request if it is manifestly unfounded or if it cannot be expected that an important legal question will be resolved. (3) The Constitutional Court decides by an order to accept or dismiss a request by a majority vote of judges present. The order to dismiss a request must include a statement of reasons. (4) If the Constitutional Court accepts a request, it may immediately proceed to decide on the merits of the case if the factual situation has been clarified and if during consideration of the request the opposing party has been given the opportunity to make statements.” “In deciding on the constitutionality and legality of a regulation or general act issued for the exercise of public authority, the Constitutional Court is not bound by the production of a request. The Constitutional Court may also review the constitutionality and legality of other provisions of the same or another regulation or general act issued for the exercise of public authority for which a review of constitutionality or legality has not been proposed, if such provisions are mutually related or if this is necessary to resolve the case.” “... (2) The Constitutional Court quashes regulations or general acts issued for the exercise of public authority that are unconstitutional or unlawful when it determines that it is necessary to remedy harmful consequences arising from such unconstitutionality or unlawfulness. Quashing has retroactive effect. ...” “(1) Any person who suffers harmful consequences due to a regulation or general act issued for the exercise of public authority which has been quashed is entitled to request that such consequences be remedied. ...” 19. Section 2 of the 1984 Cemetery and Funeral Act, which was adopted in 1984 and continued to be in force after the independence of Slovenia (Zakon o pokopališki in pogrebni dejavnosti ter o urejanju pokopališč, Official Gazette of the Socialist Republic of Slovenia no. 34/84), provides that cemetery and funeral services, as well as the running of cemeteries, correspond to “municipal activities of special social importance” (komunalna dejavnost posebnega družbenega pomena). According to section 6, transport of the deceased was to be provided by a specially designed vehicle of a local public organisation (komunalne organizacije) or the local community (krajevne skupnosti). 20. The 1993 Public Utilities Act (Zakon o gospodarskih javnih službah, Official Gazette no. 32/93, entered into force on 2 July 1993) provides in section 3 that mandatory public utilities should be established by law. Local decrees should regulate the way the local public utilities operate. Section 6 provides that public utilities may be ensured through the form of a public-law enterprise (javno podjetje), or through concessions (koncesija) granted to private enterprises. 21. Finally, section 68 provides that until the introduction of legislation establishing specific public utilities, “activities of special social importance” should be deemed to be public utilities. 22. Section 9 of the Crafts Act (Obrtni zakon, Official Gazette no. 50/1994) provides the following conditions under which a licence may be issued by the Chamber of Crafts: “(1) The conditions for obtaining a licence to provide a crafts service are as follows: – title of master craftsman, – proof of fulfilment of the minimum requirements prescribed for providing a certain service. (2) The conditions for obtaining a craft licence to provide a service which is similar to a crafts service are ... (3) The minimum requirements prescribed for providing a certain service from the preceding paragraphs are as follows: – minimum technical and other conditions relating to the space where the service is provided, land and other exterior surface, facilities and equipment, – minimum sanitary and health conditions relating to the space where the service is provided, land and other exterior surface, facilities, equipment and the people who work in the workplace – minimum conditions relating to the exterior surface (land and other exterior surface).” 23. On 27 October 1994 the Novo Mesto Municipal Council adopted a Decree on the provision of public utilities (“the 1994 Decree”, Official Gazette 71/94), which listed funeral services as optional public utility. This Decree was amended on 11 May 1998 (“the 1998 Amendment”, Official Gazette 40/98). The latter listed funeral and cemetery services among the mandatory public utilities and stipulated that with respect to the cemeteries provided under special decree these services should be provided by a public-law enterprise. On 26 April 2001 the Municipal Council adopted a new Decree on the provision of public utilities (“the 2001 Decree”, Official Gazette 40/01), which quashed the previous decree and its amendment. It also listed cemetery and funeral services as mandatory public utilities and stated that a special municipal decree should determine the exact structure by means of which each of the listed public utilities should be provided. On 31 January 2002 the 2001 Decree was amended (“the 2002 Amendment”, Official Gazette 11/02), to include a provision stating that “public utilities .... funeral and cemetery services, which should be carried out by a public-law enterprise according to specific decrees, shall be provided by KNM”. The 2002 Amendment also stated that “provided that a particular public service is not entirely provided by KNM, a part of that service can be carried out by another entity on the basis of a contract signed with KNM...” 24. According to the 2000 Decree (Official Gazette no. 74/00, entered into force in September 2000), cemetery and funeral services, management of cemeteries and funeral ceremonies in Novo Mesto Municipality should be provided by a mandatory public utility in the form of a public-law enterprise (sections 1 and 2). The Decree lists 32 cemeteries situated within the Novo Mesto municipal area; it applies to all of them. Section 6 of the Decree provides: “Funerals are normally conducted outside cemeteries and include in particular the following: - obtaining the required documents; - preparation of the body and transport of the remains; - renting graves and managing the registry of cemeteries; - providing an emergency funeral service; - providing other services established by the law or this decree.” 25. Section 16 of the 2000 Decree provides that the relatives and the relevant institutions should report the death of a person to the provider of a mandatory public utility. The remains can be taken from a hospital or a retirement home only by the provider of a mandatory public utility. The latter should take the remains from the person or institution concerned and take them to a place specifically designated for this purpose...” 26. On 6 July 2000 the Constitutional Court issued a decision in a case brought by a private funeral provider, P., from Ravne na Koroškem municipality. The court found that section 2 of the 1984 Cemetery and Funeral Act was not in conflict with Article 74 of the Constitution, and neither was the impugned municipality decree, which established funeral services as a local public utility. The Constitutional Court noted that, since no new act had been adopted in this area, funeral and cemetery services were deemed to be public utility on the basis of section 68 of the 1993 Public Utilities Act read together with section 2 of the 1984 Cemetery and Funeral Act. 27. The Constitutional Court found that the restrictions resulting from the system whereby cemetery and funeral services must be provided as a public utility were justified by the public interest. In addition, the court accepted the municipality's argument that for ethical, health and sanitary and hygiene reasons funerals could not be provided in the free market. Finally, the Constitutional Court took into consideration the fact that the impugned regulation was of a transitional nature pending the adoption of a specific law, and found that the duration of this situation had not yet contravened the principle of the rule of law. 28. On 3 October 2002 the Office for Protection of Competition (Urad za varstvo konkurence – “the Competition Office”) issued a decision declaring lack of jurisdiction to deal with the complaint lodged by the private funeral services provider P. The latter argued that the municipal enterprise authorised to provide funeral services on the basis of the municipal decree refused to accept at the cemetery remains transported by it. 29. The Competition Office declared lack of jurisdiction to deal with the complaint, since the impugned decree concerned the State's control of the market. Despite this, the Competition Office expressed criticism concerning the regulation of funerals in Slovenia. It was, in particular, critical of the fact that, due to a legal vacuum, the 1984 Cemetery and Funeral Act, adopted under the previous regime, was still in force. This Act did not distinguish between funerals and cemetery services. Consequently, funerals and cemetery services were automatically considered public utilities on the basis of section 68 of the 1993 Public Utilities Act. The Competition Office further noted that funerals, which could not have been provided freely and privately under the previous regime, had in fact been carried out by registered private enterprises since the independence of Slovenia and the transition of the economic system. These private enterprises had provided all services except those concerning cemeteries. 30. The Competition Office then listed the funeral products and services which should continue to be provided by private funeral enterprises. They included, inter alia, the sale of funeral articles (coffins, upholstery, cremation urns and memorials), funeral flower arrangements, transport of remains (except for emergency services which should be provided through concession), preparing obituary notices, obtaining the necessary permits and documents, organising ceremonies and graveside services, and the sale and installation of tombstones and memorials. 31. The Competition Office was of the opinion that the listed services should undoubtedly be subject to a free market regime and that the restrictions in question could not be justified on ethical, health or sanitary or hygiene grounds. 32. P. lodged a new complaint in 2003, claiming that the municipal enterprise had acted in a discriminatory manner when it refused to bury the remains transported by him while allowing the remains to be transported by some other private entrepreneurs. Further to the remittal of the case by the Supreme Court, the Competition Office issued a final decision on 13 July 2007. It found that while it was true that P. had suffered damage due to the municipal enterprise's acts, the municipal enterprise had a lawful monopoly on the territory of the respective municipality, which included the transport of remains. It has therefore protected its position by preventing P. from carrying out business which he could not have done lawfully. The other entrepreneurs who were allowed to bring remains to the cemetery were from other municipalities. As obiter dictum, the Competition Office again questioned the appropriateness and constitutionality of the system, which should operate only as a transitional measure. 33. According to the information available to the Court from a number of member States, in most of them funeral services are subject to the free market and provided by private firms. In some countries public bodies may choose to provide funeral services, however if they do they must compete with private enterprises. For example, in Austria, Belgium, Bulgaria and France, funeral services may also be provided by public bodies. If so, they are subject to market regulations and must compete on the free market with private enterprises. On the other hand, in Croatia, as in Slovenia, funeral services are listed as public utilities and are mostly provided by public bodies. 34. As far as can be seen, funeral services providers are regulated by law in some countries, as is the case in Belgium, France, Italy or Slovakia, and unregulated or self-regulated in others, like Germany, Latvia, Ireland and the United Kingdom. 35. In Austria, Croatia, France, Hungary, Italy, Lithuania and Slovakia, for example, private funeral service providers may only operate with a licence or concession from a public body. Permits or licences are granted by local authorities and subject to a number of requirements, such as professional qualifications and competence, fulfilment of technical, security and health protection standards, and analysis of the company's financial situation. 36. Unlike funerals, it would appear that cemetery and crematorium services are generally provided by public bodies, mostly the municipalities, since they are considered essential public services which are intrinsically linked to public health issues. When crematoria were nationalised in Belgium, a transitional period was provided and a certain form of compensation was paid to the private enterprises which had formerly run the country's crematoria.