Romania

X - Financial Support

A number of member states have received direct financial assistance through balance of payments support (Hungary, Romania, Latvia), bilateral agreements/IMF (Greece), the temporary emergency funds/IMF (Ireland, Portugal, Greece), and the permanent emergency fund (Spain and Cyprus). 
(
http://ec.europa.eu/economy_finance/assistance_eu_ms/index_en.htm
)
Several member states have (also) indirectly benefited through the Securities Markets Programme (SMP) created in May 2010, a bond-buying programme of the European Central Bank that was replaced in September 2012 by the Outright Monetary Transactions (OMT) programme (Greece, Ireland, Portugal, Italy, Spain).   

(
http://www.ecb.int/mopo/liq/html/index.en.html#portfolios)

Context
X.1
If relevant, describe the political, economic and legal situation leading up to the moment of the formal request of direct financial assistance.

In early spring 2009, faced with a sharp increase in internal and external imbalances strongly aggravated on the background of the economic and financial crisis, Romania concluded a financing agreement for a two-year multilateral financial assistance package of EUR 20 billion with the IMF, EU, EBRD and World Bank.[1] The agreement was announced by both IMF[2] and EU institutions[3] on March 25, 2009. In academic literature, the agreement was presented as helping with maintaining liquidity pressures in the short term, to improve competitiveness and to redress the macroeconomic and financial imbalances.[4]

Three Balance of Payments assistance programmes (BoP) for Romania have been agreed with the EU institutions as of 2009. Under the first programme, running from 2009-2011, Romania benefited of EUR 5 billion BoP assistance, disbursed in five instalments. The second BoP programme for 2011-2013 provided for EUR 1.4 billion pre-cautionary financial assistance. The third and current BoP programme for 2013-2015 agreed to continue the pre-cautionary assistance of up to a maximum of EUR 2 billion.[5]

For the three BoP assistance programmes – please see sections X.5 and X.6 below.

The economic, political and legal context of Romania in the period was largely driven by the accession to the EU on January 1st 2007.

The 2009 economic and financial difficulty of Romania cannot be said to have come as a complete surprise. As early as 2007, alarm bells on Romania’s economic fragility were rang by International Financial Institutions, notably the IMF.[6] The signature of the treaty of accession in 2005 has generated a ‘booming’ effect on the Romanian economy, which registered unprecedented capital inflows and rapid rates of growth.[7] The positive developments were welcomed by the International Financial Institutions, however the Romanian authorities were constantly cautioned on the risks of the economic boom corroborated with national challenges identified as: a constantly increasing deficit and inflation rates, high spending and over-indebtedness, poor fiscal policies and rules, highly instable and short-term budget administration and planning, et al.[8]

The political situation preceding the financial assistance is characterised largely by two factors: a puzzled political arena and constant electoral periods. In 2007, Romania has known two referenda and one European Parliament election (following the EU accession). In 2008, national parliamentary and local elections were organised. The unstable political context did not favour a thoroughly stable and long term budgetary and fiscal policy planning as was recommended by international observers.

The legal situation was largely driven by the political and economic developments described below.

Political and economic situation leading up to the moment when Romania formally requested direct financial assistance

Political situation

Similar to the period following the financial assistance contracted in March 2009, the preceding political context was characterised by constant tensions (see section I on the post-2008 political context). On May 19, 2007 a referendum on the dismissal of the President has been held, following the President’s suspension by Parliament vote.[9] The referendum result did not meet the fifty percent plus one quorum.[10] In response, the President initiated a referendum on the introduction of the uninominal electoral system to be introduced as of the fist parliamentary elections scheduled for 2008.[11] This referendum similarly did not meet the fifty percent plus one quorum.[12] On November 25, 2007 citizens have been called to vote on their European Parliament representatives.[13]

The electoral chain continued in 2008 with the parliamentary elections held on November 30, 2008. The result of the parliamentary elections was a close call. The Social Democrats (PSD) won about 33.9% of the votes, outvoting with less than one per cent the Liberal Democrats (PDL) supported by President Băsescu, who got 32.34% of the votes.[14] The ruling National Liberal (PNL) centre right party got a mere 18.6% of the votes.

On post-2008 political context please see section I above.

With regard to the political circumstances the IMF mission to Romania held on 21 April 2008 that:

[t]he mission also takes note of several significant risks to the 2008 fiscal deficit. Reflecting fragmented politics and a series of key elections approaching, fiscal policy making seems to have shifted to a particularly short-term mode. Three risks stand out: […] [planned decrease of VAT to 5% for basic food products, pensions increase, increase of public wage bill][…]

The mission urges the authorities to strongly oppose these and other initiatives that would put at risk the fiscal targets for 2008 and undermine macroeconomic stability.[15]

The Senate had already adopted the above measures, decreasing the VAT on basic food products to 5% and increasing the pensions on February 6, 2008. Following the strong IMF recommendation, the Chamber of Deputies rejected the legislative project, but it did so only in March 2009, after the parliamentary elections held in late November 2008.[16]

The IMF later appreciated that the parliamentary elections of November 2008: “also contributed to pre-crisis fiscal vulnerabilities from large pre-electoral spending. Spending on public wages and pensions increased by 35 and 46 percent, respectively, in 2008 compared to the previous year.[17]

Economic situation

Starting with 2008, on the background of the global economic and financial crisis Romania has been closely monitored by the international financial Institutions. The following general features were characteristic of the Romanian economy in the period preceding the financial assistance:

First, Romania’s perspective of accession to EU in 2005 and the actual accession in January 2007 had a positive impact on economic growth.[18] The country has been the addressee of ‘massive capital inflows’ in the form of foreign direct investment.[19] The foreign investment generated a significantly high spending rate in comparison with the country’s growth pace.[20] As the 2008 IMF country-report notes: “[t]he massive and persistent capital inflows as EU accession prospects firmed were clearly unexpected, and led to ‘overheating’.[21]

Second, as to other macroeconomic variables, the period 2003-2008 was characterised by:

·         high growth rates amounting to 6.5-7% per year until 2008[22]

·         constantly increasing account deficit rates from 5% in 2003 to 12.4 in 2008[23]

·         rapidly increasing public debt[24]

·         the sudden increase of real wages’ rates since 2005 (especially public wage rates) which were not backed by correlative productivity growth[25]

Third, the banking system was largely dependent on external parent financial institutions (around 88% in 2008), which were highly exposed to the external shocks.[26]

As to the relation between the fiscal-budgetary policies and the political context of 2008, the IMF country-report on Romania also notes that in spite of the budgetary reforms carried out since 2000 the budgetary culture needed further reforms, especially with regard to long term budgetary planning, stronger fiscal rules and independent fiscal institutions: “[…] against a backdrop of political fragmentation, present fiscal institutions remain weak. Fiscal policy decisions are often driven by short-term political considerations, with little attention to the consequences for the functioning of the economy and the long-run sustainability of government finances. Symptoms of this short-term bias are the tendency to artificially inflate revenue forecasts, the high frequency of budget revisions, the pronounced end-year surge in government spending, the systematic underutilization of EU funds, and underfunded social commitments.”[27]

The above-enumerated challenges have been exposed by the global economic crisis, generating great imbalances and acute need for financial assistance.[28]

Mr. Jeffrey Franks, the head of the IMF mission to Romania during January 27- February 4, 2009 declared in this sense that: [i]nternational problems were the trigger for the downturn, but longstanding imbalances within the Romanian economy are aggravating its effects at home.[29]

Mr. Franks added: “[w]hile growth remained high in the first three quarters of 2008, output indicators deteriorated rapidly in the last months of the year. Exports began to tumble, credit availability tightened for firms and households, and domestic consumption and investment are poised to fall. Industrial output is dropping, and business and consumer confidence have deteriorated. Thus economic activity will be weak, and GDP growth may well turn negative in 2009, with a moderate recovery only toward the end of the year or early-2010. While it is true that uncertainties surrounding the forecast are high, we believe that the balance of risks is on the downside.[30]

On March 25, 2009 the agreement on a 24 months financial assistance programme for Romania was announced.[31]

Negotiation
X.2
Describe the public and political debate during the negotiations on the financial assistance instruments, notably the Memorandum of Understanding (MoU) and Financial Assistance Facility Agreement, in particular in relation to the implications for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process.

In early 2009, given the sharply deteriorating output indicators and the increased risks signalled by the International Financial Institutions, Romania was looking for financial support through loans, initiating the dialogue first with the EU and shortly after with the IMF.[32] An IMF Mission visited Romania between January 29 and February 4, 2009.[33] The mission did not announce a loan, IMF officials declaring that there was no formal request on the part of Romanian authorities to start financial assistance programme discussions.[34]

The public and political debate was absent during the negotiations as the public was still largely unaware of the difficulty of the situation. Again, it must be stressed that the late 2008 elections veiled Romania’s delicate economic situation and successfully distracted the public’s attention. During the electoral campaign the political leaders reassured the voters that Romania was not in crisis and that the global events do not put a threat to Romania’s stability. The radical events of the next three months came completely unexpected for the large public.

There was no relevant public debate on the agreement’s implication on budgetary sovereignty, constitutional law or socio-economic rights during the negotiation of the agreements as the list of conditionalities and the implications were explicitly made public only on April 24, 2009 together with the formal Letter of Intent and signature of the Technical MoU with the IMF.[35] The post-signature debates were largely centred on the agreement with the IMF. The conditionalities therein were presented as a ‘bad’ externality imposed by the IMF as an outside financial institution. Contrary to the agreements with the IMF, the MoU with the European Union had an ancillary role in the public debates, being seen more as an internal EU matter. After the publication of the content of the agreement with the IMF, the President tried to calm the spirits claiming that the agreement could be re-negotiated “anytime”.[36] Mr. Ponta – the PSD leader at that moment in opposition, currently the Prime Minister – had in response a public intervention stating that no re-negotiation was possible: “[President] Băsescu lied”, he declared.[37]

On March 25, 2009, the decision on financial assistance for Romania was made public.[38] A formal Letter of Intent has been signed by the Romanian Government to the IMF on April 24, 2009.[39] Several days later, the EUR 5 billion ‘rescue plan’ for Romania was also approved by the EU through Council Decision 2009/459/EC of 6 May 2009 providing Community medium-term financial assistance for Romania,[40] later amended by Council Decision 2010/183/EU of 16 March 2010.[41]

The Memorandum of Understanding (MoU) between the European Union and Romania was signed on June 18, 2009 in Bucharest and on 23 June 2009 in Luxemburg, the latter being represented by the Prime Minister, the Minister for Public Finances and the representative of the National Bank of Romania.[42] Therefore, the Government supported by the National Bank of Romania was the initiator of the formal request for international financial assistance.

The national ratification measures of the MoU between Romania and the EU were approved by the Government’s Emergency Ordinance (OUG) 89/2009 of July 1st, 2009, which left no space for parliamentary debates (please see section X.5 below).[43] Similar government emergency instruments were used to ratify the first 2009 agreements with the IMF and World Bank.[44] For the legal nature of the Government Emergency Ordinances please see section III.9 above.

In addition to the 5 billion EU assistance, the financial assistance to Romania was supplemented by the IMF, World Bank, EIB and EBRD amounting to an overall loan of € 20 billion, built up as follows:

  • EU € 5 billion
  • International Monetary Fund, SDR 11.44 billion (around € 12.95 billion) under an IMF Stand-by arrangement approved on May 4, 2009, amounting to 1,110.77 per cent of Romania’s quota
  • The World Bank, € 1 billion under a Development Policy Loan
  • The EIB and the EBRD, € 1 billion combined.

In 2011 and 2013 two other BoP pre-cautionary assistance packages have been negotiated between the EU and Romania for a pre-cautionary loan of a maximum of € 1.4 and 2 billion respectively. No comprehensive public debates during the negotiation of these instruments were held. For the parliamentary debates on the ratification of financial assistance instruments see section X.5 below.

Status instruments  
X.3
What is the status of the financial assistance instruments in the national legal order (political agreement, international treaty, etc.)?

The Memorandum of Understanding (MoU) and the Loan Agreement between the European Community and Romania were first ratified by the Romanian Government through the adoption of Government Emergency Ordinance No 82/30.06.2009.[45] The financial assistance instrument was regarded as an international treaty (international bilateral agreement, according to the view expressed by the Parliamentary Commission on Budget, Finance and Banking[46]) and it had to be ratified by the Parliament. The Government Emergency Ordinance was later on approved by the Parliament through Law no 364/20.11.2009[47].

The legal bases of the above mentioned acts are Articles 11 and 115(4) of the Constitution. Pursuant to Article 11 of the Romanian Constitution:

“(1) The Romanian State pledges to fulfil as such and in good faith its obligations as deriving from the treaties it is a party to. (2) Treaties ratified by Parliament, according to the law, are part of national law. […]”.

According to Article 115 (4) of the Romanian Constitution: “The Government can only adopt emergency ordinances in exceptional cases, the regulation of which cannot be postponed, and has the obligation to give the reasons for the emergency status within their contents.”

The Loan Agreement attached to the MoU is governed by English law as agreed by the Parties.[48] The Court of Justice of the EU was chosen as the sole competent authority having jurisdiction.[49] The disbursement of the assistance was subject to official notification in the form of a legal opinion, confirming that all the constitutional and legal requirements of the Romanian legal system for the irrevocable entry into force of the agreement were respected.[50] The legal opinion was issued by the Legal Department of the Ministry of Public Finances, confirming the constitutionality and full validity of the agreement in the national legal system.[51] The opinion expressly states that:

“11. The choice of English law as the law governing the loan agreement is a valid choice of law binding on the Borrower according to the Romanian law.

12. The Borrower has accepted legally, effectively, irrevocably the exclusive jurisdiction of the Court of Justice and Court of First Instance of the European Communities in respect of the Loan Agreement and any decision of such court shall be final and enforceable in Romania.

13. Neither the Borrower nor any of its properties are immune, on the grounds of sovereignty or otherwise, against confiscation measures – before or after a judgment, or execution of any act or procedure related to the Loan Agreement, except for those assets belonging to the public property of the Borrower under art. 136 of the Romanian Constitution, and art. 11 of Law No. 213/1998 on public property and its legal regime.”[52]

The 2009 MoU was subsequently modified 4 times. Each time the addendum was adopted following the same procedure – through a Government Emergency Ordinance, followed by a law adopted by the Parliament[53] (see also section X.4 below).

Transposition national legal order 
X.4
Considering the status of the financial assistance instruments, what procedure does the constitution prescribe for their adoption/transposition into the national legal order?

The financial assistance instruments have been transposed ad literam in the content of the ratification laws, being further implemented by specific legislative measures. Therefore in the case of Romania the act of ratification coincides with the act of transposition. The international assistance instruments were regarded as international treaties in the Romanian legal system (international bilateral agreements, according to the view expressed by the Parliamentary Committee on Budget, Finance and Banking[54]), as such, these have been ratified according to the provisions of the Romanian Constitution – Art. 11: 

“(1) The Romanian State pledges to fulfil as such and in good faith its obligations as deriving from the treaties it is a party to.

(2) Treaties ratified by Parliament, according to the law, are part of national law.

(3) If a treaty Romania is to become a party to comprises provisions contrary to the Constitution, its ratification shall only take place after the revision of the Constitution.”

After the ratification, the international agreements take the same status (legal force) in the national legal system as the ratification law.

The Romanian Government largely responded to the crisis by following the Emergency Ordinances procedure (see the text of Article 115 Constitution below and section III.9 above). The Emergency Ordinances are legal acts issued by the Government in extraordinary emergency circumstances. These have the same legal force in Romania’s constitutional order as the laws adopted by the Parliament and take immediate effect from the day of publication in the Official Journal upon the prior notification of the Parliament. The active involvement of the Parliament is only required at a later moment when the a posteriori parliamentary control of the Government’s acts is exercised. As such, the two Chambers of the Parliament are convoked in five days after the notification of the Emergency Ordinance. If a decision of the Parliament is not reached in thirty days the Emergency Ordinance is considered approved automatically. The Parliament in examining the Emergency Ordinances may either adopt or reject the act of the Government; further amendments are possible.

On Emergency Ordinances, the Constitution stipulates at Article 115 that:

“(4) The Government can only adopt emergency ordinances in exceptional cases, the regulation of which cannot be postponed, and has the obligation to give the reasons for the emergency status within their contents.

(5) An emergency ordinance shall only come into force after it has been submitted for debate in an emergency procedure to the Chamber having the competence to be notified, and after it has been published in the Official Gazette of Romania. If not in session, the Chambers shall be convened by all means within 5 days after submittal, or, as the case may be, after forwarding. If, within 30 days at the latest of the submitting date, the notified Chamber does not pronounce on the ordinance, the latter shall be deemed adopted and shall be sent to the other Chamber, which shall also make a decision in an emergency procedure. An emergency ordinance containing norms of the same kind as an organic law must be approved by a majority stipulated under article 76 (1).

(6) Emergency ordinances cannot be adopted in the field of constitutional laws, or affect the status of fundamental institutions of the State, the rights, freedoms and duties stipulated in the Constitution, the electoral rights, and cannot establish steps for transferring assets to public property forcibly.

(7) The ordinances the Parliament has been notified about shall be approved or rejected in a law, which must also contain the ordinance that ceased to be effective according to paragraph (3).

(8) The law approving or rejecting an ordinance shall regulate, if such is the case, the necessary steps concerning the legal effects caused while the ordinance was in force.”

For the ratification of the MoU between the EU and Romania on the First BoP programme 2009-2011 as well as the subsequent addenda, Emergency Ordinances were adopted by the Government and sent to the Parliament for approval according to the provisions of Article 115 paragraph 5 of the Constitution cited above. After the approval by the Parliament the legal force of the MoU in the national legal order was that of an ordinary law, as the Government’s Emergency Ordinance concerned an area falling in the domain of ordinary law according to Article 73(3) and 76 of the Constitution (please also see sections X.2, X.3 above and section X.5 below).

Even if during the delicate political situation of 2009 it was extremely hard to reach a political consensus in the Parliament (see section X.1 and I.1 above), the legislative proposals advanced by the Government on the approval of the ratification instruments for financial assistance were adopted with little or no opposition (the approval of Government Emergency Ordinances). The reason behind this state of affairs was the fact that the economic crisis and the need for external financial assistance was an undisputed reality on the political agenda. Blocking the ratification or having fierce debates on the ratification of the financial assistance instruments would have had a ‘boomerang effect’ on the economy of the Romania, hampering its credibility on the financial markets and clearly postponing the disbursement of the much needed financial assistance. Instead, extremely tense disputes accompanied the adoption of the concrete implementing acts of the prescribed adjustment measures. Please see sections X.5, X.6 and X.9 below.

Role Parliament        
X.5
What is the actual role of Parliament with regard to the adoption/transposition into the national legal order of the financial assistance instruments?

Adoption and transposition

The financial assistance instruments agreed between the Government of Romania, on the one hand and the EU, IMF and World Bank, on the other hand were seen as international treaties (section X.3 above). According to Article 11 of the Constitution of Romania, the international treaties produce effects into the national legal order only after ratification by the Parliament. Therefore, the Parliament was the institution to approve the ratification of the financial assistance instruments by ordinary law.

Even if as mentioned above (section X.3) the financial assistance instruments corresponding to the first two BoP assistance packages were ratified by Government Emergency Ordinances, these were subsequently subject to Parliament’s approval. In such a way, formally, the Parliamentary law of approval of the Government Emergency Ordinance on the ratification of the financial assistance instrument constituted in fact the confirmatory ex post ratification act. The act of ratification usually consisted of two parts: the first part stated that the respective law or emergency ordinance was ratifying the financial assistance instrument, whereas the second part transposed the expressis verbis content of the financial assistance instrument, together with the Loan agreement and annexes.

As of 2013, the Government coalition also enjoyed a parliamentary majority, and therefore all the financial assistance instruments were ratified and transposed in national legislation directly by law of the Parliament.

Both the ratification Emergency Ordinances and later on the ratification Laws were the initiatives of the Government. All the ratification instruments were debated and approved by parliamentary emergency procedure.[55] The procedure presupposes a rapid decision making process. All amendments to the legal proposal are made only in a written form. The committees and the specialised advisory bodies submit the reports on the legal initiative pursuant to the emergency procedure terms applicable to each of them. The general debates are limited only to parliamentary groups, each of them having a maximum of 5 minutes to express their view on the legal proposal.[56] The emergency procedure is always employed in case of Government Emergency Ordinances or in case of the legislative initiatives concerning the harmonisation of national legislation with the EU and Council of Europe legislation (EU law implementing legislation). In other cases, the initiator may ask for use of the emergency procedure subject to approval by the Parliament. In the few cases where the financial assistance instruments were approved directly by law of the Parliament, the Government as initiator asked for the emergency procedure to be employed. [57]

Implementation

As to the implementation of the adjustment measures several remarks must be made. First, as the implementing measures were fiercely opposed by Parliament, its role was circumvented by the Government, acting by the so-called ‘engagement of responsibility procedure’ according to Article 114 of the Constitution (please see section III.9 above). Nevertheless, the Parliament had an important role. It challenged systematically the constitutionality of the main implementing measures adopted between 2009 and 2010 to fulfil the conditions detailed in the MoU (please see section X.9 below).

BoP 2009-2011 assistance programme

The Memorandum of Understanding (MoU) between the European Community and Romania on the first BoP 2009-2011 programme was approved by the Parliament, after the Government adopted an Emergency Ordinance to ratify and transpose the provisions of the MoU, as described above (see section X.4).

The ratification Government Emergency Ordinance (OUG – ‘Ordonanta de Urgenta a Guvernului’) was subject to ex post Parliament approval between September-November 2009, a period marked by strong political instability and social unrest (see section I above).[58] The law on the approval of the Emergency Ordinance on the ratification of the MoU was adopted by the Chamber of Deputies on September 16, 2009 and by the Senate on November 03, 2009. The Parliament acted by emergency parliamentary procedure, having 60 days to approve the law.

In spite of political rivalries, the vote on the ratification of the MoU enjoyed a broad political consensus. The law was approved with only 2 votes against in the Chamber of Deputies and by unanimity in the Senate.

As to the debates, these were a mere formality. The stenograph of the debate in the Chamber of Deputies only records the presentation of the law by the Government representative and no further interventions.[59] The stenograph also records the statement of the chair of the session after the voting procedure, who concluded: “Distinguished colleagues, we find a tremendous support for Government’s demarche in respect of the loan made”.[60] Similarly, the stenograph of the debate in the Senate – the decisional chamber in the legislative file – records no opinion expressed by the members of the Senate, only the approval of the Committee on Budget and Finance and the point of view in favour of the legislative proposal expressed by the representative of the Government, who declared: “[o]bviously, the Government supports this bill. Romania, as you know, sent a formal request to the European Commission on a medium-term financial assistance loan worth up to 5 billion Euros. The EU Council approved this financial assistance. This agreement mentions a set of adjustment and reform measures to mitigate the effects of the crisis”.[61] The Government state agent closed his short intervention with the words: “[w]e ask you with all our heart to agree with the adoption of the legal proposal.[62]

Similarly, the subsequent 2010 ratification Emergency Ordinances on the first and second addendum to the MoU did not enjoy comprehensive debates in the Parliament neither on the substance of the agreement nor on their implications for the Romanian constitutional order. The parliamentary debates, when existent, concerned questions of procedure and necessary quorum in the committees.[63] In other instances, because the thirty days for the approval of the Emergency Ordinances had expired the Government Emergency Ordinance was automatically approved and passed to the second Chamber of the Parliament without debates, according to Article 115(5) Constitution.[64]

In March 2011, the Parliament seemed to take a stance. On the third addendum to the MoU ratified by Emergency Ordinance 5/2011, the approval law of the Parliament did not enjoy much popularity.[65] The ordinary law was finally approved, as it required only simple majority, but this time it got the negative vote of the opposition (the USL alliance formed by the PSD and PNL parties; which from May 2012 formed the governing coalition).[66] During the debates, the USL alliance representatives criticised the celerity of the decision-making, the marginalisation of the Parliament and the gravity of the adjustment measures imposed by the agreement.[67] In this sense, the PNL representative declared that the group would vote against on the basis of two considerations:

“The first issue concerns the way in which the Romanian government violates the legislative autonomy of Parliament. Ratifying such loan agreement by emergency ordinance, in my view, is a serious violation of parliamentarism and the Constitution, even if the constitution gives the government the prerogative to issue emergency ordinances. And the second aspect, indebtedness of the Romanian people without consulting elected officials. If a handful of governors consider that they represent the Romanian people they are wrong”.[68]

Contrary to the March 2011 pro-activity of the Parliament, the following Emergency Ordinance 43/2011 on the ratification of the fourth addendum to the MoU was left again with no ex post parliamentary control. The Emergency Ordinance was considered approved with no vote from the Chamber of Deputies as the legal term of thirty days expired (Article 115(5) Constitution).[69]

As to the implementation of the MoU labour market conditionality, in April 2011, the Romanian Government engaged its responsibility in front of the Parliament on Law 62/2011 in Social Dialogue.[70] The procedure is prescribed by Article 114 of the Romanian Constitution and allows the Government to adopt a law without engaging the Parliament (please see Section III.9 above).[71] As Clauwaert and Schömann show in their country-report on Romania, the law: “[…] not only governs new collective bargaining rules for all levels from national to company, but also regulates representativeness criteria for trade unions and employers’ organisations, the Economic and Social Council (CES) and labour conflicts, among other things. It extracts and somewhat modifies the relevant rules on collective bargaining contained in the Labour Code (Law No. 53/2003), the Collective Agreement Law (Law No. 130/1996) and Laws No. 54/2003 (on the establishment, structure and management of trade unions) and Law No. 356/2001 (on employers). However, the Government adopted this new law on Social Dialogue circumventing the normal parliamentary procedure. This was contested unsuccessfully by opposition parties in the Constitutional Court. There was also dissatisfaction among the social partners in particular because, for several provisions, there were no supporting impact studies, while comments and observations made by the Economic and Social Council and the International Labour Organization (ILO 2011) were not taken into consideration.”[72]

The same so-called ‘engagement of responsibility procedure’ was employed by the Government in 2009 and 2010 for the implementation of the first adjustment measures (see section IX.9 below).

BoP 2011-2013 assistance programme

The second, BoP precautionary assistance programme for Romania was ratified again by Emergency Ordinance OUG 108/2011, subject to ex post approval by the Parliament. Also in this case, the thirty days term expired[73] and the project was sent to the Senate, which approved the emergency ordinance by unanimity.[74]

As the USL coalition came into government in May 2012, the culture of using Government Emergency Ordinance for ratification of MoUs shifted to using regular laws of the Parliament. As the USL Government enjoyed also a stable majority in the Parliament, the first had no reservation to subjecting the ratification of the MoUs directly to the Parliament. Moreover, the ratification of the MoU by ordinary law needed only a fifty per cent plus one simple majority vote of the Members of the Parliament present for adoption. As such Law 27/2013 on the first and second addendum to the second MoU on the pre-cautionary assistance 2011-2013 was adopted according to emergency parliamentary procedure.[75] The law was adopted by unanimity in the Chamber of Deputies and with 144 votes for and one abstention in the Senate.[76] The debates were given five minutes in the Chamber of Deputies which none of the parliamentary groups made us of.[77] In the Senate the debates were limited to the presentation of the favourable reports of the committees and one general intervention attracting the attention of the senators that the measures prescribed for by the MoU should be taken seriously as they are to become binding after the vote.[78]

BoP 2013-2015 assistance programme

The MoU and Loan Agreement corresponding to the current BoP 2013-2015 assistance package were ratified by Law 31/2014.[79] The Chamber of Deputies approved the legislative proposal of the Government by simple majority on February 18, 2014. The proposal was adopted with 269 votes FOR, 28 votes against and 21 abstentions.[80] The debates consisted largely of political accusations between the past and present government.[81] After the representative of the Parliament presented shortly the precautionary financial assistance arrangement, the PDL opposition group announced its negative vote on the project: “PDL was not against the conclusion by Romania of a new precautionary agreement with the IMF, World Bank and European Commission. But [PDL] saw it otherwise. PDL has another vision of a new agreement with the IMF, European Commission and World Bank. An agreement for development was needed”, stated MP Gheorghe Ialomiţianu.[82]

The Senate had more constructive debates on 17 March 2013.[83]

After the formal presentation of the legislative proposal by the Government representative the Senators engaged in substantive debates on the legislative file. The questions raised regarding the role of the Parliament, the national sovereignty and the substance of the adjustment measures for Romania remained rhetorical, with no clear answer coming from the Government.

Senator Dumitru OPREA (PDL) accused the Government of disclosing only partially the information on the financial agreements to the Parliament and that the latter finds out information only from IMF press releases: “Luckily with press statements of the main actors, because otherwise, if we only read the Explanatory Memorandum, it’s all pink […]; […]it’s interesting that you never give us this information, we must [look] on the IMF website, even go to the press statements made by the International Monetary Fund for Romania […]. On February 14, 2014, in Washington D.C. it was stated very clearly by the representative for Europe that there is a big problem in Romania […]”.[84] [author’s translation from Romanian]

Senator Cristiana-Irina ANGHEL (Conservative Party): “The measures agreed in the new package detailed at length in the Memorandum of Understanding – I quote from the explanatory memorandum: “elements of fiscal policy (public financial management and strengthening fiscal institutions, stimulating the absorption of EU funds and public investment planning law pay unit and functional tests, legislation and tax administration), the health sector; public debt management, financial sector; reforms in the energy and transportation and labor market.” What is this? That we give up the national sovereignty and do what others say? Maybe I did not understand it well.”[85] After an unsatisfying answer she replied: “My question was clear. I want an answer as clear as my question […] Is there the risk or possibility? Do we give up sovereignty? Because it was about public health, it was about unitary pay. What next?”[86] [author’s translation from Romanian] No answer was given by the Government representative.

Senator Ákos-Daniel MORA (PNL) had a principled question on the powers of the Government to subsequently ratify amendments to the MoU: “If we, the Parliament, are called here today to ratify an agreement to approve a memorandum then I do not understand why Article 5 of this bill mandates the Government, through the Ministry of Finance, to make amendments to this agreement later on?”, he asked.[87] [author’s translation from Romanian] No answer was given.

The legal proposal was adopted with 91 votes for, 18 against and 4 abstentions.[88]

Adjustment requirements    
X.6
Describe the relevant content of the financial assistance instruments.

The financial assistance instruments imposed a series of adjustment measures to be implemented by the Romanian Government, conditioning the financial assistance and subjecting the country to constant evaluation starting with 2009.  

Strict and very clear conditions were inserted in all three Council Decisions providing precautionary EU medium-term financial assistance for Romania from 2009,[89] 2011[90] and 2013.[91] Equally the MoUs, and the addenda to these MoUs, detailed explicit conditions for the disbursement of each instalment.

The adjustment measures corresponding to the three BoP financial assistance packages for Romania were structured around four core areas: fiscal consolidation, fiscal governance, monetary and financial sector policy and structural reforms.

2009 – 2011 BoP assistance programme

According to Art. 1 of Council Decision (2009/459/EC), “the Community shall make available to Romania a medium-term loan amounting to a maximum of EUR 5 billion, with a maximum average maturity of seven year”, over a three year period.[92] The disbursement of each instalment was made dependent on the satisfactory implementation of a list of nine conditions into the new economic programme of the Government of Romania and duly reflected in the Convergence Programme and National Reform Programme. [93]

The EU financial assistance has been disbursed in 5 instalments:

·         € 1.5 billion released 27 July 2009

·         € 1 billion released 11 March 2010

·         € 1.15 billion released 22 September 2010

·         € 1.2 billion released 24 March 2011

·         € 150 million released 22 June 2011

The average interest rate on the amounts disbursed by the European Commission is around 3%, with repayments starting in 2015.[94]

The MoU signed in June 2009 further clarified the list of adjustments. These concerned:[95]

A.    Fiscal consolidation

·         Gradual deficit reduction from 5.1% in 2008, 4.1% in 2010 to 3% in 2011 by reducing public sector expenditure, public sector wage bill, subsidies and improving the quality of public spending

B.     Fiscal Governance

·         Prepare a fiscal responsibility law including a medium term budgetary framework, limitation of budget laws revisions

·         Adoption of legislation on a unified wage system in 2009; elimination of bonuses; unified qualifications; pensions sustainable

C.     Monetary and financial sector policy

·         Ensure price stability and achievement of the set inflation targets

D.    Structural reform

·         Efficiency and effectiveness of public administration, notably the reform of the Ministry of Transport and restructuring of state-owned transport companies

·         Business reform

·         Sound and increased absorption of EU Funds

·         Adoption of measures to tackle the undeclared work

·         Improve the quality of public spending

Following the Commission services mission of October 28 – November 6, 2009 a First Addendum to the MoU was signed in February 2010 complementing the list of conditions for the disbursement of the second instalment of 1 billion.[96] These asked for:

A.    Fiscal consolidation: The deficit targets for 2009 and 2010 have been replaced by 7.8% and 6.4%, respectively, given the ‘significant worsening of the economic outlook’. Strict measures to reach the targets have been prescribed, including: reduction of the public wage bill up to 8.7%, freeze of pensions at the 2009 level.

B.     Fiscal Governance: Adoption of the Fiscal Responsibility Law by the Parliament by the end of March and setting up a Fiscal Council to be fully operational by the end of April 2010; adoption of revised pensions legislation by February 2010; amendment of the Fiscal Code on tax management efficiency by Emergency Ordinance by end of April 2010; arrears monitoring mechanisms for the state-owned companies by the end of April.

C.     Monetary and financial sector policy: amendment of credit institution legislation; adoption of legislation on independence of financial supervision institutions by March 2010.

D.    Structural reforms: comprehensive functional review of public administration by February 2010; progress in the area of undeclared work.

The second addendum to the MoU was agreed in July 2010, after the April-May mission of the European Commission, IMF and World Bank to prepare the ground for the third assistance tranche:[97]

A.    Fiscal consolidation: A subsequent adjustment of the deficit target from 6.4% to 7.3% for 2010 was agreed due to the underperforming economic conditions and slippages in revenue and expenditure adjustments. A harsh set of measures were prescribed to ensure the achievement of the prior missed targets, including:

·          25% cut in public wages form July 1, 2010 up to a minimum of 600 RON (approx. 140 Euros)

·         reduction of public sector employees

·         15% reduction of social allowences

·         freeze of early retirements

·         increase in retirement age

·         increase in VAT rate from 19% to 20%

·         increase in personal income taxes

All the above measures were to be put in place until July 2010. If Romania failed to attain the prescribed targets, further fiscal consolidation measures were to be put in place.

B.     Fiscal governance: further progress in tax revenue; fighting of tax evasion by 2 billion Romanian LEI (RON); approval of the amended pension legislation by September 2010.

C.     Financial policy: entry into force by September 2010 of the legislation independent supervisory authorities, et al.

D.       Structural reforms: institution of defined targets for the reduction of arrears; privatisation of nominated state-owned companies; streamlining the number of schools and hospitals;

A third addendum to the MoU was agreed in January 2011 after the October- November 2010 mission of European Commission, IMF and World Bank:[98]

A.    Fiscal consolidation: This time the deficit level was on track. Further targets were set to 4.3 % for 2011 and 3% for 2012. Delays in the adoption of the pensions law and unified wage legislation were to be corrected. A budget bill cap for 2011 was established.

B.     Fiscal governance: elaboration and approval of a medium-debt management strategy by the Ministry of Public Finances

C.     Financial policy: Amendment of the legislation of deposit guarantee funds in banking system and ensure credit discipline.

D.       Structural reforms: Control of health sector and state-owned companies arrears; continuing of the progress in the priorly agreed measures, notably within the Ministry of Transport; increased absorption of EU Funds; 

A forth addendum to the MoU was agreed in April 2011 to set the ground for the fifth instalment disbursement and the transition towards a new MoU on pre-cautionary assistance to start from May 2011.[99] This addendum restates the priory agreed targets and insists on maintaining the achieved ones.

2011 – 2013 BoP pre-cautionary assistance programme[100]

On 12 May 2011, the Council of the European Union adopted a decision to make available a precautionary medium-term financial assistance of up to EUR 1.4 billion for Romania. The recital of Council Decision 2011/288/EU explains that: “[t]he EU assistance for Romania under the Balance of Payments (BoP) facility comes in conjunction with IMF support through a Stand-by Arrangement (SBA) in the amount of SDR 3.090 billion (about EUR 3.5 billion, 300% of Romania’s IMF quota), approved on 25 March 2011. The World Bank continued to provide the earlier committed support of EUR 400 million under its development loan programme and of EUR 750 million of results based financing for social assistance and health reforms.”[101]

The MoU between the EU and Romania signed in June 2011 put in place a comprehensive reform programme for Romania touching upon a vast number of areas including: the product and labour market reform, Labour Code reform, sustainability of the pensions system, infrastructure and efficiency of public transport, EU Structural and Investment Funds absorption and management, economic and fiscal adjustments, energy market reform, monetary stability and reserve losses monitoring mechanisms, et al.[102] The second supplementary MoU was agreed in June 2012 adding certain specific economic policy conditions after a new USL Government was in place.[103]

2013 – 2015 BoP pre-cautionary assistance programme[104]

On 4 July 2013, in the light of remaining risks to its balance of payments, the Romanian authorities requested a third EU medium-term financial assistance programme, again jointly with an IMF Stand-By Arrangement. The Union agreed a financial support to Romania of up to EUR 2 billion on a precautionary basis under the facility providing medium-term financial assistance for Member States’ balance of payments established in Regulation (EC) No 332/2002. That assistance was provided in conjunction with support from the IMF through a Stand-by Arrangement in the amount of SDR 1 751,34 million (about EUR 2 000 million, 170 % of Romania’s IMF quota), approved on 27 September 2013, which the authorities are also to treat as precautionary medium-term financial assistance. Moreover, “The World Bank has made EUR 1 000 million available under a Development Policy Loan with a deferred drawdown option valid through December 2015. In addition, the World Bank is to continue to provide earlier committed support of EUR 891 million, of which EUR 514 million is still to be disbursed.”[105]

The MoU signed between the EU and Romania in November 2013 conditions the pre-cautionary assistance on the implementation of a comprehensive and far-reaching economic social and administrative policy programme, particularly with regard to structural reforms and the implementation of European semester recommendations, as well as continuation of achieved progress in a vast policy areas, including labour markets, pensions and health sector reform.[106]

Missions
X.7
What legal changes, if any, had to be made to accommodate ‘troika’ review missions, post-programme surveillance missions, etc?

The missions conducted by the IMF, European Commission and World Bank constituted one of the main concerns of the Romanian Government as of 2009. Under the agreed Stand-by arrangements the IMF conducted eight reviews as of 26 June 2013.

No specific legal arrangements were made to accommodate the review missions. The ‘Troika’ review missions mandated for new conditionality arrangements undertaken by the existing public authorities or by the authorities explicitly designated in the amended financial assistance instruments.

During the last five years, the Romanian Government struggled to meet all the conditions imposed by the ‘Troika’ missions, with little or no concern towards public criticism. According to the most recent IMF country report, Romania has been largely a ‘good student’: “the economic program, supported by the Fund, the European Commission, and the World Bank, played an important role in stabilizing the Romanian economy, generating concrete results in maintaining growth and maintaining fiscal and financial stability. Romania’s performance under the current program continues to be strong. Extending the program by three months allowed the authorities to continue their efforts to reach the goals of a broad structural agenda, with a focus on structural reforms in the energy, transport and healthcare sectors and state-owned enterprises. Therefore, as of today all prior actions were met. Moreover, in line with their EU commitments, the authorities have reduced the fiscal deficit (in ESA terms) to below 3 per cent of GDP in 2012, which allowed Romania to exit the EU Excessive Deficit Procedure.”[107]

Case law international instruments
X.8
Have there been direct or indirect legal challenges against the financial assistance instruments before a national (constitutional) court?

There was no direct legal challenge against the financial assistance instruments before national courts, but there were a series of Constitutional Court’s decisions regarding the national legislation adopted for the implementation of the measures imposed by the MoU (see question X.9 below).

Case law implementing measures          
X.9
Is there a (constitutional) court judgment on national policy measures adopted in relation to the Memoranda of Understanding?

The national policies and legislation implementing the Memoranda of Understanding were largely contested in front of the national ordinary courts and challenged in constitutionality before the Constitutional Court. In parallel, the austerity measures have been contested in front of the European Court of Human Rights and the Court of Justice of the EU. Whereas, both European Courts declared the applications and references inadmissible, the national Constitutional Court declared some of the adopted measures unconstitutional.

Constitutional Court of Romania

The implementing measures required by the international financial assistance packages generated two major litigation waves in front of the Constitutional Court. These concerned the 2009 and 2010 national economic redress packages prescribed by the MoU.

A. The first 2009 set of decisions refers to Law 329/2009 on the reorganization of public authorities and institutions, rationalization of public expenditure, business support and compliance with the framework agreements with the European Commission and International Monetary Fund[108] and the Law 330/2009 on a unitary wage system.[109] The laws were adopted by the engagement of responsibility of the Government in front of the Parliament, thus avoiding a Parliamentary direct scrutiny (please see section III.9 above).[110] The Members of the Parliament challenged the measures in two instances.

I. Constitutional Court Decision 1414/2009 concerning the reorganisation of public institutions, prohibition to cumulate the pension with salary, progressive reduction of public sector employees, reduction of the public wage bill for certain public employees by 15% per month objection of unconstitutionality rejected with exceptions[111]

1.      NAME OF THE COURT:

Constitutional Court of Romania

2.      PARTIES

The objection of unconstitutionality was raised before the promulgation of the law – a priori – by a group of 101 Members of the Parliament pursuant to Article 146 a) of the Constitution.

3.      TYPE OF ACTION/PROCEDURE

A priori constitutional review (‘excepție de neconstituționalitate’)

4.      ADMISSIBILITY ISSUES

According to Article 146 a) of the Constitution the Constitutional Court may be invested with a constitutionality claim originating from a number of at least 50 deputies or at least 25 senators”. The condition was fulfilled by the objection of unconstitutionality, which was formulated by 101 Members of the Parliament, therefore the claim was found admissible.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The constitutional challenge was formulated against the Law on the reorganization of public authorities and institutions, rationalization of public expenditures, business and compliance support framework agreements with the European Commission and International Monetary Fund, in its entirety (Law 329/2009 after the publication in the Official Journal). The law was adopted pursuant to the so-called procedure of ‘engagement of responsibility’ of the Government in front of the Parliament (on the procedure see section III.9 above).

6.      ARGUMENTS OF THE PARTIES, ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The objections of the parties and the conclusions of the Constitutional Court may be summarized as follows:

I.                   Unconstitutionality of the provisions concerning creation of new public bodies in the subordination of the Government with no prior positive opinion of the Court of Auditors as contrary to Article 117 (2) of the Constitution – rejected. The Court found that the authorization required by Article 117 (2) of the Constitution was applicable only to the acts of the Government. As the contested law was adopted by Government through the so-called ‘engagement of responsibility procedure’, it is assimilated to the law as normative act of the Parliament and not to an act of the Government. Therefore the unconstitutionality claim was rejected.

II.                Unconstitutionality of the provisions concerning the prohibition of cumulating the salary and pension rights as contrary to Article 41(1) of the Constitution on the right to work and to pursue an occupation, Article 16(1) of the Constitution on equality and Article 44 on the right to private property – partially unconstitutional in as much as the prohibition to accumulate the salary and the pension concerns the persons for whom the length of the mandate is prescribed for expressly in the Constitution.

III.             Unconstitutionality of the provisions concerning the obligation of the public authorities to cut the personnel expenditure by 15.5% and as a consequence the obligation to renegotiate the work contract as contrary to Article 41 on the right to work and social protection- rejected. The Court noted that the measure limits the constitutional rights as enshrined by Article 41 of the Constitution. However the Court found that the right is not absolute and might be subject to limitations as prescribed for by Article 53 of the Constitution. In the view of the Court the limitations are provided by law, justified by the “budgetary constraints generated by the economic crisis” and proportionate.

 

7.      LEGAL EFFECTS OF THE JUDGMENT/DECISION

As the contested provisions prescribing for the prohibition to hold simultaneously the salary and the pension was found unconstitutional in as much as the prohibition concerned the persons for whom the length of the mandate is prescribed for expressly in the Constitution, the concerned categories were exempted form the application of the law.

Constitutional Court Decision 1415/2009 on the engagement of responsibility procedure, certain exceptions, the prohibition to cumulate the public functions, exclusion of the maternity leave period from the calculation of the salary base, bonuses cut for persons with disabilities, cut of overtime hours pay – objections of unconstitutionality rejected with exceptions[112]

1.      NAME OF THE COURT:

Constitutional Court of Romania

2.      PARTIES

The objection of unconstitutionality of Law on a unitary wage system was raised a priori by a group of 62 members of the Chamber of Deputies and 27 members of the Senate, pursuant to Article 146 a) of the Constitution.

3.      TYPE OF ACTION/PROCEDURE

A priori constitutional review (‘excepție de neconstituționalitate’)

4.      ADMISSIBILITY ISSUES

According to Article 146 a) of the Constitution the Constitutional Court may be invested with a constitutionality claim originating from a number of at least 50 deputies or at least 25 senators”. The condition was fulfilled by the objection of unconstitutionality, which was formulated by 62 members of the Chamber of Deputies and 27 members of the Senate, therefore the claim was found admissible.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The constitutional challenge was formulated against the Law on a unitary wage system, in its entirety (Law 330/2009 after the publication in the Official Journal). The law was adopted pursuant to the so-called procedure of ‘engagement of responsibility’ of the Government in front of the Parliament (on the procedure see section III.9 above).

6.      ARGUMENTS OF THE PARTIES, ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

 

The objections and the reasoning of the Court can be summarized as follows:

I.                   Unconstitutionality of Law 330/2009 as the use of the ‘engagement of responsibility’ procedure by the Government before the Parliament constituted an abuse of power – rejected as ill founded. The Parliament argued that by engaging the responsibility in front of the Parliament, the Government abused its power and deprived the Parliament of its competences as the law was already examined by the Parliament in legislative procedure. The Court noted that: “[t]he role of such a procedure is to coagulate a parliamentary majority, and to overcome the obstructionist position of the opposition during legislative debates. The adoption of this law by the procedure provided by art. 114 of the Constitution was necessary to respond in a short time to the requirements of the International Monetary Fund. In light of these considerations, the Court finds that the Government has used this procedure in extremis, as Parliament’s political structure did not allow adoption of the bill either by ordinary or emergency procedure”. [113] [author’s translation from Romanian]

II.                Unconstitutionality of the provisions concerning the exemption of certain groups of public officials from the established unitary wage system as contrary to Article 16 of the Constitution on equality of rights – rejected. The Court concluded that the exceptions were justified and that these concerned autonomous public institutions as the National Bank, where the remunerations of the officials are negotiated, not established by law.

III.             Unconstitutionality of the provisions concerning the prohibition of holding simultaneously two or more public functions (cumulation) as contrary to Article 26 (2) of the Constitution on private life and Article 41(2) of the Constitution on the right to work and social protection. The Court found the provision partially unconstitutional to the extent that the cumulus of the functions is allowed expressly by the Constitution. Such was the case inter alia of the Ombudsman, judges, prosecutors, counselors of the Court of Auditors and judges of the Constitutional Court.

IV.             Unconstitutionality of the provisions concerning the exclusion of maternity leave for the calculation of the salary rights – rejected as the period is still considered in the calculation of the pension rights and does not concern the rights of the child.

V.                Unconstitutionality of the provisions concerning the maximum cap of public employees bonuses to 30% in the case of persons with disabilities as contrary to Article 50 of the Constitution on the protection of persons with disabilities. The Court stated that in the case of persons with disabilities the text is to be interpreted as comprising a maximum cap of 30% plus the bonus of 15% granted to all the persons of disabilities by law.

VI.              Unconstitutionality of the provisions freezing the pay for overtime hours work for 2010 and compensation of the work provided with free time. The Court stated that the overtime hours for 2010 must be paid as long as the Labour Code was not amended correspondingly.

VII.          Unconstitutionality of the law as contrary to Article 47 of the Constitution on a decent standard of living – rejected as manifestly ill founded.

 

7.      LEGAL EFFECTS OF THE JUDGMENT/DECISION

As the contested provisions prescribing for the prohibition to hold simultaneously two or more public functions was found unconstitutional in as much as the prohibition concerned the persons for whom the cumulus of functions is expressly allowed by the Constitution. In the outcome of the decision, the concerned categories of public officials conserved their prior rights (such was the case inter alia of the Ombudsman, judges, prosecutors, counsels of the Court of Auditors and judges of the Constitutional Court).

Similarly, the bonus rights of persons with disabilities were interpreted in a favourable manner for public employees falling in the respective category.

Lastly, the freezing the pay for overtime work for 2010 was postponed until the amendment of the Labour Code.

B. The second set of decisions concerned the 2010 adjustment measures adopted by Law 118/2010 on certain measures necessary to restore budgetary balance[114] and Law 119/2010 on certain measures in the area of pensions.[115] Again, the laws were adopted by the engagement of responsibility of the Government in front of the Parliament, thus avoiding a Parliamentary direct scrutiny (please see section III.9 above). The Parliament challenged unsuccessfully the constitutionality of the laws a priori on the basis of Article 146 a) of the Constitution (Decision 871/2010 and 874/2010).[116] So has done the Romanian Supreme Court (High Court of Cassation and Justice) on the same legal basis, both unconstitutionality claims being partially upheld by the Constitutional Court (Decisions 872/2010 and 873/2010). The two latter Decisions of the Constitutional Court represent benchmark decisions in the area. The principled reasoning in the two decisions was upheld in the following hundreds of other decisions, whereby the Constitutional Court was asked to perform an ex post constitutional review of the provisions of Law 118/2010 on budgetary balance and Law 119/2010 on special pensions, respectively.

Constitutional Court Decision 871/2010 concerning the reduction of special pensions as a consequence of their assimilation to the regime applicable to the public pensions system as regulated by Law 19/2000 – objection of unconstitutionality rejected[117]

1.      NAME OF THE COURT:

Constitutional Court of Romania

2.      PARTIES

The objection of unconstitutionality of Law on certain measures on pensions was raised by a group of 37 Senators pursuant to Article 146 a) of the Constitution (Law 119/2010 after the publication in the Official Journal).

3.      TYPE OF ACTION/PROCEDURE

A priori constitutional review (‘excepție de neconstituționalitate’)

4.      ADMISSIBILITY ISSUES

According to Article 146 a) of the Constitution the Constitutional Court may be invested with a constitutionality claim originating from a number of at least 50 deputies or at least 25 senators”. The condition was fulfilled by the objection of unconstitutionality, which was formulated by 37 Senators, therefore the complaint was found admissible.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The constitutional challenge was formulated against the Law on special pensions, in its entirety (Law 119/2010 after the publication in the Official Journal). The law was adopted pursuant to the so-called procedure of ‘engagement of responsibility’ of the Government in front of the Parliament (on the procedure see section III.9 above). The law provided for a reduction of special pensions enjoyed by public officers with a special status such as policemen, military service, judges, prosecutors, diplomats, et al. The aim was to reduce the high disparities between the special pensions and the ordinary pensions system. Contrary to the ordinary pensions system, the special pensions (or the ‘service pensions’) are formed of two components: the contributory part covered form the social assistance budget and a supplementary part provided from the state budget.

6.      ARGUMENTS OF THE PARTIES, ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The senators alleged that the cut of the special pensions violated Article 15 (2) of the Constitution on the non-retroactivity of private law, Article 20 on the respect of international law corroborated with the relevant articles on the rights to property enshrined in the UN Charter, ECHR and the EU Charter of Fundamental Rights as well as Article 44 of the Constitution on the right to private property. Furthermore, it was alleged that the law infringed Article 47 (1) and Article 135 (2) concerning the decent standard of living and the obligation of the state to create the necessary conditions for the increase of quality of life, respectively. The Court rejected all the above claims. The Constitutional Court noted that the measures responded to the increased need to ensure a sustainable pension system and equilibrate the high differences between the special pensions and ordinary ones. Moreover, the Court found that the measures were necessary in the view of the economic crisis Romania was facing. The claim of a disproportionate limitation of the right to pension pursuant to Article 53 of the Constitution and the right to equal treatment – Article 16 Constitution – was similarly rejected as ill founded.

Constitutional Court Decision 872/2010 concerning the 25% public sector salary cuts, 15% pensions cuts, 15% cuts of unemployment benefit, social allowances cuts, 15% cut of the child allowance – objection of unconstitutionality partially admitted[118]

1.      NAME OF THE COURT:

Constitutional Court of Romania

2.      PARTIES

The objection of unconstitutionality of Law on certain measures on pensions was raised by the High Court of Cassation and Justice of Romania (Inalta Curte de Casatie si Justitie, the ‘High Court’) pursuant to Article 146 a) of the Constitution.

3.      TYPE OF ACTION/PROCEDURE

A priori constitutional review (‘excepție de neconstituționalitate’)

4.      ADMISSIBILITY ISSUES

According to Article 146 a) of the Constitution the Constitutional Court may “[…] adjudicate on the constitutionality of laws, before the promulgation thereof upon notification [from][…] the High Court of Cassation and Justice”. The condition was fulfilled, therefore the complaint was found admissible.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The constitutional challenge was formulated a priori against the Law on certain measures necessary to restore budgetary balance (‘Law on budgetary balance’) on the basis of Article 146 a) of the Constitution (Law 118/2010 after the publication in the Official Journal). The law was adopted pursuant to the so-called procedure of ‘engagement of responsibility’ of the Government in front of the Parliament (on the procedure see section III.9 above). The law provided for numerous reduction measures in the public budgetary bill, including 25% public sector salary cuts, 15% pensions cuts, 15% cut of unemployment benefits, social allowances cuts, 15% cut of the child allowance.

6.      LEGAL QUESTIONS ANDARGUMENTS OF THE PARTIES

The High Court argued, citing the Constitutional Court’s decisions of 2009 (see above), that the limitation for a second time in less than a two years period of the constitutional rights to work, pension and social security is contrary to Article 20 of the Constitution on international treaties on human rights with reference to Article 1 of the first Additional Protocol to the European Convention for the Protection of Human Rights (ECHR).[119] Furthermore, the High Court held that the claimed temporary character of the measures, which is of essential importance for the legitimate limitation of certain constitutional rights, does not result unequivocally from the text of the contested law. Finally, the High Court argued that the limitation of salary rights of the magistrates would infringe the independence of justice as enshrined in Article 124(3) of the Constitution.

The president of the Senate sent his point of view on the unconstitutionality claim, supporting the objections raised by the High Court.

The Government, on the other hand, claimed that the objection of unconstitutionality is unfounded. The Government recognized that the right to work (including the right to pay), the right to pension and the right to unemployment benefits are fundamental rights guaranteed by the Constitution, but it claimed that these rights are not absolute, therefore their exercise could be restricted pursuant to Article 53 of the Constitution on the limitation of certain rights and liberties.

7.      ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The objections raised by the High Court of Cassation and Justice were analysed by the Constitutional Court as follows:

I.                   Unconstitutionality of the provisions concerning the public sector salary cut by 25 % as contrary to Article 41 of the Constitution on the right to work and social protection of labour.[120] The Constitutional Court stated that the right to work is a complex right, which includes inter alia, the right to salary. The Court further noted that reduction of the salary constituted a limitation of the right to work, however it was proportionate according to Article 53 of the Constitution relating to the restriction on the exercise of certain rights or freedoms. [121] In this sense the Court established that the limitation to the right to work was: provided by law; necessary in a democratic society; proportional to the situation which has engendered it; non-discriminatory and did not hamper the very existence of the right. The Court further noted that the measures complied with the reasons specifically provided by the constitutional text, namely safeguarding national economic stability, which referred implicitly to the safeguarding of public security. In support of the finding that there is a persistent threat to economic stability and implicitly to public security the Court cites from the evaluation of the European Commission on the economic situation of Romania.

II.                Unconstitutionality of the provisions concerning the cut of salary/allowance or other pay by 25 % as contrary to Article 124(3) of the Constitution on the independence of justice. The Constitutional Court rejected the unconstitutionality claim. In this sense, the Court held that the financial independence is only one element of the independence of justice and the magistrates, subsequently the cut of the magistrates’ salary by 25% could not be seen as limiting the right to an independent justice as enshrined in Article 124 (3) of the Constitution.

III.             Unconstitutionality claim of the provisions concerning the cut of pensions by 15 % was found as infringing Article 47(2) of the Constitution on the right to pension[122] and Article 1 of additional Protocol 1 to ECHR on the right to property. The Court found that the right to pension is contributively gained right, pursuant to the principle of contributivity and Article 53 of the Constitution concerning the limitation of rights cannot be opposed to the protection of the right to pension.

IV.             Unconstitutionality claim of the provisions concerning the reduction of the unemployment benefit by 15% as contrary to the right to unemployment benefits as provided for by Article 47 of the Constitution. The Court rejected the claim stating that the right is not absolute and may be thus limited pursuant to Article 53 of the Constitution.

V.                As for other social benefits and allowances, the Court noted that those are not explicitly enshrined in the constitutional text, therefore the legislator enjoys the discretion of limiting their quantity proportionately to the budgetary possibilities.

VI.             Final provisions. The Constitutional Court finally ordered that: “for a period of 45 days from the date of publication in the Official Gazette of Romania, Part I, of this Decision, the Government may not adopt an emergency ordinance to reconcile the provisions of Law […] found to be unconstitutional with the provisions of the Constitution, but it can initiate a bill in accordance with those established by this decision”. [123] Furthermore, the Court directly mandated the Parliament to bring the provisions of the law in line with the constitutional provisions within 45 days. According to the Constitutional Court the act adopted in the procedure of engagement of Government responsibility is still assimilated to the law as normative act of the Parliament, therefore it was for the latter to amend the provisions declared unconstitutional in the sense of Article 147(1) on the effects of Constitutional Court Decisions. Finally, the Court reminded that, if the Parliament fails to amend the law, pursuant to Article 147 (1) of the Constitution the unconstitutional provisions shall cease to have any legal effect. Article 147(1) reads as follows: “(1) The provisions of the laws and ordinances in force, as well as those of the regulations, which are found to be unconstitutional, shall cease their legal effects within 45 days of the publication of the decision of the Constitutional Court if, in the meantime, the Parliament or the Government, as the case may be, cannot bring into line the unconstitutional provisions with the provisions of the Constitution. For this limited length of time the provisions found to be unconstitutional shall be suspended de jure”.[124]

8.      LEGAL EFFECTS OF THE JUDGMENT/DECISION

In the aftermath of the decision of the Constitutional Court the law on budgetary balance was sent back to the Parliament and adopted this time pursuant to the ordinary legislative procedure, in accordance with the ‘dictum’ of the Constitutional Court within 3 days. The Constitutional Court decision subjected the legal act to the direct scrutiny of the Parliament who voted the amended act in joined session of the Chamber of Deputies and Senate on 29 June 2010.[125] The opposition also voted in favour of the austerity measures, explaining that the exclusion of the pensions rights cut from the austerity package made it acceptable for the opposition to agree to the proposed budgetary adjustments measures.[126]

9.      MAIN OUTCOME OF THE JUDGMENT/DECISION AND ITS BROADER POLITICAL IMPLICATIONS

As the contested provisions prescribing for the 15% cut of pensions rights was found unconstitutional, in the outcome of the decision, the concerned categories of pensioners conserved their prior rights. However, further adjustment measures were shortly enforced to compensate for the failure to reduce the public expenditure bill, the most important being the highly contested 5% raise in the VAT.

Constitutional Court Decision 873/2010 concerning the reduction of the special pensions as a consequence of their assimilation to the regime applicable to the public pensions system as regulated by Law 19/2000 – objection of unconstitutionality partially admitted as regards the special pensions enjoyed by the judges, prosecutors and assistant-magistrates[127]

1.      NAME OF THE COURT:

Constitutional Court of Romania

2.      PARTIES

The objection of unconstitutionality of Law on certain measures on pensions was raised by the High Court of Cassation and Justice of Romania (Inalta Curte de Casatie si Justitie, the ‘High Court’) pursuant to Article 146 a) of the Constitution.

3.      TYPE OF ACTION/PROCEDURE

A priori constitutional review (‘excepție de neconstituționalitate’)

4.      ADMISSIBILITY ISSUES

According to Article 146 a) of the Constitution the Constitutional Court may “[…] adjudicate on the constitutionality of laws, before the promulgation thereof upon notification [from][…] the High Court of Cassation and Justice”. The condition was fulfilled, therefore the complaint was found admissible.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The constitutional challenge was formulated against the Law on special pensions, in its entirety (Law 119/2010 after the publication in the Official Journal). The law was adopted pursuant to the so-called procedure of ‘engagement of responsibility’ of the Government in front of the Parliament (on the procedure see section III.9 above). The law provided for a reduction of special pensions enjoyed by public officers with a special status such as policemen, military service, judges, prosecutors, diplomats, et al. The aim was to reduce the high disparities between the special pensions and the ordinary pensions system. Contrary to the ordinary pensions system, the special pensions (or the ‘service pensions’) are formed of two components: the contributory part covered form the social assistance budget and a supplementary part provided from the state budget.

6.      LEGAL QUESTIONS, ARGUMENTS OF THE PARTIES

 

The High Court of Cassation and Justice (the ‘High Court’) challenged a priori the constitutionality of Law 119/2010 on certain measures on pensions (‘Law on special pensions’) on the basis of Article 146 a) of the Constitution. The High Court argued that the reduction of the special pensions is unconstitutional as contrary to Article 124(3) of the Constitution on the independence of justice, Article 15(2) on the non-retroactivity of law, Article 47(2) on a right to pension, Article 53 on the limitation of certain rights and liberties and Article 20 on respect of international treaties on human rights with reference to Article 1 of the first Additional Protocol to the European Convention for the Protection of Human Rights (ECHR).

The president of the Senate sent his point of view on the unconstitutionality claim, supporting the objections raised by the High Court. The Government, on the other hand, claimed that the objection of unconstitutionality is unfounded. The Government stated that the adopted measures are applied only for the future and do not infringe the principle of non-retroactivity of the law. Moreover, the unconstitutionality claim cannot be accepted as the Constitution guarantees a right to pension and not the right to a certain amount the pension, a finding also confirmed by the ECtHR. Finally the Government considered that the reductions of special pensions do not go against the independence of justice, as no causal link can be established between the reduction measure and the independence of justice.

7.      ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The objections raised by the High Court of Cassation and Justice were analysed by the Constitutional Court as follows:

I.                   Unconstitutionality of the contested provisions with regards to Article 15(2) on non-retroactivity of law. The Constitutional Court, citing its prior jurisprudence held that the provisions were compatible with Article 15(2) of the Constitution because a measure regulating for the future a certain situation which has as a consequence the modification of the legal effects given by the prior law cannot be interpreted as going contrary to the principle of non-retroactivity of law as enshrined in the Constitution.

  II.              Unconstitutionality of the contested provisions with regards to Article 20 of the Constitution and Article 1 of the Additional Protocol 1 to the ECHR. In this respect the Court notes that the special pensions consist of two components: a contributory part and a supplementary part from the state supported by the public budget. The Court held that the suppression of the supplementary part of the special pension cannot be considered an expropriation in the sense of Article 1 Protocol 1 to ECHR as long as the reduction does not touch upon the contributory part of the pension. 

III.              Unconstitutionality of the contested provisions with regard to Article 53 on the limitations allowed in case of certain rights and liberties. The Court appreciated that the limitation of the right to special pension is justified having regards to the critical economic situation of the Country and the serious adverse consequences for the Country’s economic stability absence the contested measures. The Court further noted that the adoption of the reduction measures was necessary in order to benefit form the financial support form the part of the International Financial Institutions, support which would have not been disbursed had the contested measures not been in place. Therefore the Court rejected the unconstitutionality claim.

IV.              Unconstitutionality of the contested provisions with regards to Article 124(3) on the independence of justice. The Court upheld the unconstitutionality claim of the relative provisions as conflicting with the independence of justice guaranteed by the Constitution. The Court found that the recalculation of the pensions of the judges, prosecutors and assistant-judges would be equivalent to a complete suppression of the special pensions for the latter professional categories. The Court appreciated that such a measure would affect the independence of justice as the financial stability may not be the only guarantee but constitutes an important one for the independence of judicial system. Moreover, the Court established that the special pension was not a privilege but rather a compensation for the responsibility, limitations, incompatibilities and risks of the profession. Therefore the Court concluded that the cut of the special pension for the judges, prosecutors and assistant-magistrates was contrary to the Constitution. In support of its reasoning the Court cited its prior jurisprudence (Decision 20/2000) as well as the jurisprudence of the Constitutional Court of Latvia (Decision of 18 January 2010 on the unconstitutionality of judges salary cuts), Constitutional Court of Lithuania (Decision of 12 July 2001), Constitutional Court of Czech Republic (Decision of 14 July 2005) and the Decision Cooper v UK of the ECtHR

 

8.      LEGAL EFFECTS OF THE JUDGMENT/DECISION

As the objection of unconstitutionality was partially admitted in as far as the provisions of the contested law regarded the special pensions enjoyed by the judges, prosecutors and assistant-magistrates. Therefore in the outcome of the decision, the respective categories conserved their special pensions rights.

9.      MAIN OUTCOME OF THE JUDGMENT/DECISION AND ITS BROADER POLITICAL IMPLICATIONS

Similarly to the Law on budgetary balance, in the aftermath of the decision of the Constitutional Court the law on special pensions was sent back to the Parliament. This time only the provisions found unconstitutional were amended and adopted in accordance with the ‘dictum’ of the Constitutional Court within 3 days. The Constitutional Court decision subjected the legal act to the direct scrutiny of the Parliament who voted the amendments in joined session of the Chamber of Deputies and Senate on 29 June 2010.[128] The opposition also voted in favour of the amendments.[129]

The decision generated legal uncertainty with regards to other categories of the judiciary personnel enjoying special pensions rights. Even if the Constitutional Court upheld the right to a special pension exclusively for judges, prosecutors and assistant-magistrates, the High Court mandated the ordinary courts to check on a case-by-case basis the proportionality of the limitation supported by all prior beneficiaries of special pensions. See the decision of the High Court presented below.

Constitutional Court Decision 874/2010 concerning the 25% public sector salary cuts, 15% pensions cuts, 15% cuts of unemployment benefits, social allowances cuts, 15% cut of the child allowance – objection of unconstitutionality partially admitted[130]

1.      NAME OF THE COURT:

Constitutional Court of Romania

2.      PARTIES

The objection of unconstitutionality of Law on budgetary balance was raised a priori by a group of 30 Senators and 60 members of the Chamber of Deputies pursuant to Article 146 a) of the Constitution (Law 118/2010 after the publication in the Official Journal)..

3.      TYPE OF ACTION/PROCEDURE

A priori constitutional review (‘excepție de neconstituționalitate’)

4.      ADMISSIBILITY ISSUES

According to Article 146 a) of the Constitution the Constitutional Court may be invested with a constitutionality claim originating from a number of at least 50 deputies or at least 25 senators”. The condition was fulfilled by the objection of unconstitutionality, which was formulated by 30 Senators and 60 members of the Chamber of Deputies, therefore the complaint was found admissible.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The constitutional challenge was formulated against the Law on special pensions, in its entirety (Law 119/2010 after the publication in the Official Journal). The law was adopted pursuant to the so-called procedure of ‘engagement of responsibility’ of the Government in front of the Parliament (on the procedure see section III.9 above). The law provided for a

6.      LEGAL QUESTIONS AND ARGUMENTS OF THE PARTIES

The members of the Parliament claimed that the respective law infringed Article 1(5) of the Constitution, which guarantees the supremacy of the Constitution, with reference to Article 56(2) on just fiscal policies. Moreover, the Parliament argued that the law infringed the right to a decent standard of living as guaranteed by Article 47 of the Constitution, because the measures were the basis of a ‘race to the bottom’ towards the minimum salary of 600 Romanian Lei (RON), approx. 145 Euros. Additionally, the Parliament claimed that the cut of salaries and pensions infringes the principle of legitimate expectations and the right to property enshrined by Article 44 of the Constitution. Also the infringement of Article 16 on the equality in rights has been invoked as, according to the Parliament, the law created a discriminatory situation between the public and private sectors. Finally, the Parliament claimed that the limitation to the right to property is not justified and that if the Government claimed an extraordinary emergency situation threatening the national security, the state of emergency had to be priorly declared according to the provisions of Article 93 of the Constitution and the special law.

The president of the Senate sent an address supporting the claims of unconstitutionality. The Government pleaded for rejection of the unconstitutionality pleas.

7.      ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The Constitutional Court rejected the claims of unconstitutionality of the 25% salary cut. In doing so, the Court noted that the challenged legislative provisions limited the right to a salary as guaranteed by the Romanian Constitution, nevertheless the limitation was justified by a persistent threat to the national economic and financial security, pursuant to Article 53 of the Constitution on the limits of certain rights and liberties.

With regards to the cut of pensions by 15%, the Court upheld the claim of unconstitutionality for the same reasons as evoked in the Decision 872/2010, re-stating that the right to pension is contributively ‘gained right’, established in accordance to the principle of contributivity. The pensioners contributed to the public social system throughout their life, gaining their right to pension, therefore no limitation of the right was allowed under the constitutional provisions.

Finally, with regards to the state of emergency claim, the Constitutional Court rejected the argument pursuant to which the state of emergency had to be priorly declared according to the provisions of Article 93 of the Constitution and the special law.[131] The Court reasoned that the restriction of certain rights and liberties according to Article 53 of the Constitution is a ‘distinct constitutional prerogative’ than the one prescribed for by Article 93. The Court further states that the restriction of certain rights under Article 53 does not always imply in principle the enforcement of the provisions on the state of emergency pursuant to Article 93. The Court found that the authors of the unconstitutionality claim depart form a wrong presumption in the sense that these consider the state of emergency or necessity (Article 93) a mandatory pre-condition for the limitation of certain rights and liberties (Article 53). However, the Court notes that even if in certain cases the state of emergency may result in the restriction of certain rights provided by the Constitution, the limitation of certain rights can be also enforced based on Article 53 of the Constitution alone, independent from the state of emergency situations, as article 53 comprises a much larger scope of application than Article 93.

8.      MAIN OUTCOME OF THE JUDGMENT/DECISION AND ITS BROADER POLITICAL IMPLICATIONS

Since the economic crisis, the Constitutional Court’s decisions on the legality of Government’s measures generated strong reactions in the political arena and at the level of the civil society.[132]

Following the 2010 decision on unconstitutionality (including decision 872/2010 above), the Government increased the VAT rate by 5% (from 19% to 24%).[133] The Government claimed that it has done so to compensate the prohibited cut of pensions by 15% and to compensate revenue collection necessary to stabilize the economy affected by the global crisis. Shortly after the Decisions of June 2010, the second addendum to the MoU of July 2010 was signed mandating for the increase of VAT by 5% (see section X.6 above). Economic and political implications of the Court’s decisions led to debates about the competence of the Constitutional Court to rule on the constitutionality of the tax laws and the budget.[134]

High Court of Cassation and Justice (High Court)

High Court Decision 29/2011 of 12 December 2011 on the recourse in the interest of law on the application of the provisions of Law 119/2010 corroborated to Article 20 (2) of the Constitution and Article 1 Protocol 1 of the ECHR and Article 14 of the ECHR[135]

1.      NAME OF THE COURT

The High Court of Cassation and Justice (Înalta Curte de Casație și Justiție a României)

2.      PARTIES

The High Court of Cassation and Justice (High Court) was called by the Courts of Appeal of Brasov, Cluj, Galti and Craiova as well as the General Prosecutor attached to the High Court to unify the divergent lines of jurisprudence by a ‘recourse in the interest of law’ pursuant to Article 3306 (2) of the Code of Civil Procedure.

3.      TYPE OF ACTION/PROCEDURE

The ‘recourse in the interest of law’ mandates the High Court to issue a decision on the interpretation of the legal provisions diverging in the jurisprudence of the ordinary national courts. The interpretation given by the High Court is binding on the lower courts according to 3307 (4) of the Code of Civil Procedure.

4.      ADMISSIBILITY ISSUES

Not applicable.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The Decisions of the Constitutional Court on the unconstitutionality of Law 119/2010 on special pensions with regards to judges, prosecutors and assistant-magistrates did not clarify the legal situation of the judiciary auxiliary personnel, categories who also benefited of a right to a special pension, generating divergent national jurisprudence.

6.      LEGAL QUESTIONS AND ARGUMENTS OF THE PARTIES

The Courts of Appeal claimed that there was a divergent interpretation of the provision of Law 119/2010 on special pensions, in the light of the Decision 873/2010 of the Constitutional Court (see above) and Article 14 and Article 1 Protocol 1 to the European Convention of Human Rights, as interpreted by the European Court of Human Rights.

The two claimed diverging lines of reasoning were:

A.                Certain Courts of Appeal considered that the limitation of the right to pension of auxiliary judicial personnel was a disproportionate interference with the right to a pension and moreover held that the legal provisions failed to achieve the legal objective pursued – attainment of more equality – generating in fact more inequality.

Other Courts of Appeal held that the limitation of the special pension rights fell under the state’s margin of appreciation and did not constitute an unjustified restriction of the constitutional right to pension.

 

7.      ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The High Court rejected the ‘recourse in the interest of the law’ (RIL). The Court concluded that there was no divergent interpretation of law, but rather an application and interpretation of the legal provisions of Law 119/2010 on a case-by-case basis. As such, the Court noted that even if the Constitutional Court has confirmed the compatibility of Law 119/2010 on special pensions with the provisions of the Constitution, with the exception of the special pensions enjoyed by judges, as well as the conformity of Law 119/2010 with the provisions of Article 1 Protocol 1 to the ECHR, the Constitutional Court’s reasoning proceeded to an examination in abstracto of the contested provisions. As such, the High Court held that even if the decisions of the Constitutional Court are generally binding, these decisions (Decisions 871/2010 and 873/2010) may not prohibit an examination in concreto, on a case-by-case basis whether the limitation to the rights to property was disproportionately restrained vis-à-vis the concrete circumstances of each case before the ordinary courts. The High Court held that it was for the ordinary judges to check in concreto if a just equilibrium between the imposed measures and the legitimate aim pursued by the legislator was observed. In performing the proportionality test, the High Court stated that the national judge must closely follow the jurisprudence of the ECtHR on Article 1 of the additional Protocol 1 to the ECHR, enumerating at the same time some concrete benchmark cases in the area.

8.      LEGAL EFFECTS OF THE JUDGMENT/DECISION

The High Court rejected the ‘recourse in the interest of law’. In the view of the High Court there was no divergent interpretation of the same legal provision, rather the situation concerned the application of the law to the concrete facts of the cases pendinte in front of the respective Courts of Appeal, which led in concreto to different judicial solutions. As such, the High Court found that there was no scope for unitary interpretation in the case before it and found the application inadmissible.

9.      MAIN OUTCOME OF THE JUDGMENT/DECISION AND ITS BROADER POLITICAL IMPLICATIONS

The reasoning of the High Court concerning the variable national jurisprudence led a de facto disapplication of the provisions of Law 119/2010 on special pensions where the ordinary court considered that the interference was disproportionate (especially for the cases decided by the more than seven Courts of Appeal distinct from the ones to ask for the RIL). However the decision raised issues of equality and legal certainty for the claimants subject to the jurisdiction of other Courts of Appeal. The latter claimants challenged the divergent jurisprudence in front of the ECtHR alleging the infringement of Article 6 ECHR on legal certainty and Article 14 on equal treatment. Please see Case Frimu et al v Romania presented below.

European Court of Human Rights

After the exhaustion of the domestic judicial remedies, the claimants turned to the European Court of Human Rights (ECtHR) for judicial protection of their rights. The ECtHR held that all the cases brought before it were inadmissible. Two lines of claims have been put in discussion. Firstly the claimants alleged the violation of the right to property as protected by Article 1 of the Additional Protocol 1 to the ECHR. Secondly, the claimants complained of the infringement of the judicial certainty principle under Article 6 of the ECHR and the right to equal treatment as protected by Article 14.  

ECtHR, Felicia Mihăieş v Romania (application no. 44232/11), Adrian Gavril Senteş v Romania (application no. 44605/11) public salaries cuts, alleged violation of Article 1 Protocol 1 to the ECHR – inadmissible[136]

1.      NAME OF THE COURT

European Court of Human Rights (ECtHR)

2.      PARTIES

Applicants: Felicia Mihăieş and Adrian Gavril Senteş

Respondent High Contracting Party: Romania

3.      TYPE OF ACTION/PROCEDURE

Individual complaint

4.      ADMISSIBILITY ISSUES

The application was found inadmissible by the court for the reasons described below.

5.      LEGALLY RELEVANT FACTUAL SITUATION

In fact, the claimants, Ms Mihaies and Mr Sentes, are public employees of the Chisineu Cris city hall. Pursuant to Law 118/2010 on budgetary balance their salaries have been temporary cut by 25% for a period of six months causing the claimants a total damage of 757 RON and 3346 RON respectively (approx. 140 and 800 Euros).

6.      LEGAL QUESTIONS AND ARGUMENTS OF THE PARTIES

The claimants argued that the measures adopted by the Romanian authorities (Government and Parliament) infringed their right to enjoyment of property as prescribed by Article 1 Protocol 1 to the ECHR.

7.      ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The European Court of Human Rights held first that the Convention did not guarantee the right to continue to be paid a salary of a specific value. Second, the Court reminded that according to its well-established jurisprudence the state has discretion to set the salaries and other salary-related rights of public sector employees paid from the state budget as it considers appropriate. Nevertheless, the Court held that the State is obliged to pay a certain salary when the conditions for the payment have been met as well as when a definitive judicial decision recognised a certain value of the salary to be paid. The ECtHR found that such was not the case in the applications before it. In any case, the Court underlined that the right to a salary can hardly be defined as an ‘asset’ in the sense of the Convention and even if the Court were to find that the claimants’ right to a certain salary constituted an ‘asset’, the limitation suffered was provided by law and pursued a public interest of maintaining the budgetary balance equilibrium in times of economic crisis. Moreover, the ECtHR recognised a large margin of appreciation for national authorities, holding that these are better placed to decide on appropriate economic and social policy measures than the Court, the latter being limited to the appreciation of whether the aim pursued and the measures undertaken to achieve this aim were in a reasonable proportionality relation. Finally, the Court found that Romania acted within the limits of the state’s margin of appreciation and that it balanced in a reasonable manner the competing interests at stake.

This being established the Court declared the claim inadmissible.[137]

ECtHR, Frimu and four others v Romania (application no. 45312/11) and Ionel Panfile v. Romania (application no. 13902/11) special pensions’ cuts, alleged violation of Article 6(1) and Article 14 ECHR – manifestly ill-founded [138]

1.      NAME OF THE COURT

European Court of Human Rights (ECtHR)

2.      PARTIES

Applicants: Ana Maria FRIMU, Judita Vilma TIMAR, Edita TANKO, Marta MOLNAR, Lucia GHEŢU

Respondent High Contracting Party: Romania

 

3.      TYPE OF ACTION/PROCEDURE

Individual complaint

4.      ADMISSIBILITY ISSUES

Not applicable.

5.      LEGALLY RELEVANT FACTUAL SITUATION

The claimants were retired registrars of several courts and prosecutors’ offices in Covasna county, Romania. Their pension was calculated according the regime of the special pensions provided for the judiciary auxiliary personnel. Their special pensions amounted to a value between approx. 800 – 1200 Euros. By Law 119/2010 on certain measures on pensions, their pensions were recalculated according to the law on public pensions system and decreased to a value between approx. 250 – 350 Euros. The claimants contested the measures in front of the national courts. These measures were upheld by the Covasna Tribunal and subsequently the decision of the Tribunal upholding the claimants special pension rights was rejected under appeal by the Court of Appeal Brasov.

6.      LEGAL QUESTIONS ARGUMENTS OF THE PARTIES

The claimants argued in front of the ECtHR that the Romanian state infringed Articles 6 and 14 of the ECHR. As the jurisprudence of the national courts was highly divergent, it constituted a threat to legal certainty and subsequently put the claimants in a disadvantaged position. The claimants showed that certain individuals in similar situation successfully challenged the provisions of Law 119/2010 in front of the national courts, preserving their right to a special pension.

7.      ANSWER BY THE COURT TO THE LEGAL QUESTIONS AND LEGAL REASONING OF THE COURT

The ECtHR examined the national jurisprudence with regard to Law 119/2010 summarizing the decision of the Constitutional Court, the divergent positions of the ordinary courts and the point of view of the High Court of Cassation and Justice (see the decisions above).

Having regard to the above facts the Court dismissed the claim as manifestly ill-founded.

In doing so the ECtHR established first that the claimants enjoyed a contradictory trial and that their arguments have been duly analysed by the national courts. Moreover, the divergent jurisprudence of the national courts has been brought to the High Court. The ECtHR concluded that it shared the view of the High Court in the sense that the divergent national jurisprudence did not concern a diverging interpretation of the relevant provision but rather a different outcome generated by the application of the principle to different circumstances on a case-by-case basis. Even if a divergent jurisprudence of the national courts would have been established the Court found that it was neither serious nor persistent in the sense of its prior jurisprudence (Case Albu and sixty three others v Romania, App. 34796/09). The Court held that in line with its well-established case-law a period of up to two years to correct the national divergent jurisprudence was to be considered acceptable – in the pending case the divergence lasted from 2010 until 2012. Given the above reasoning, the Court concluded that the judicial procedure applied in the case of the claimants was neither unfair nor discriminatory in the sense of Articles 6 and 14 of ECHR.

Court of Justice of the European Union

The Court of Justice of the European Union (CJEU) has also been seized on several occasions with references for a preliminary ruling regarding the consistency of public sector salary cuts with EU law and notably the provisions of the Charter of Fundamental Rights of the EU (the ‘Charter’). In all instances the Court found that the Court was manifestly lacking jurisdiction on the raised issues. One last reference of 2014 is still pending. The 2014 reference addresses explicitly the role of the European Commission in the adopted adjustment measures and the provisions of the MoU.

ECJ, Case C-434/11 Order of the Court (Sixth Chamber) of 14 December 2011 Corpul Naţional al Poliţiştilor v Ministerul Administraţiei şi Internelor (MAI) and Others – clear lack of jursidiction[139]

By decision of 28 July 2011 the Tribunal of Alba referred a question for a preliminary ruling to the CJEU regarding the consistency of the salary cuts provided by Law 118/2010 with the right to property, equality and non-discrimination as enshrined in Articles 17 (1), 20 and 21(1) of the EU Charter of Fundamental Rights.

The question was raised in proceedings between the national federation of policemen (Corpul Naţional al Poliţiştilor) and the Ministry of Interior. In this context the Court of Appeal sent a preliminary question to the CJEU asking if the relevant provisions of the Charter prohibited a salary cut as the one prescribed by Law 118/2010 on budgetary equilibrium.

The Court stated that pursuant to Article 267 TFEU it was competent to interpret EU law and respect of the fundamental rights by Member States when applying EU law measures. Also according to 51(1) of the Charter, the latter applies only to EU law or national measures implementing EU law. As the Court found the referral did not contain any element leading to the conclusion that law 118/2010 implements EU law, the Court concluded that it manifestly lacked material competence to judge on the issue.

ECJ, Case C-462/11 Order of the Court (Sixth Chamber) of 14 December 2011. Victor Cozman v Teatrul Municipal Târgovişte – Lack of connection to European Union law – clear lack of jurisdiction of the Court[140]

By decision of 7 February 2011 the Tribunal of Dâmboviţa addressed a reference for a preliminary ruling to the CJEU asking if the salary cuts of 25% provided by Law 118/2010 on budgetary balance were contrary to Article 1 Protocol 1 to the ECHR.

The Court found that it was clearly incompetent to rule on the matter. Similarly the Court noted that it was incompetent to rule on the compatibility of the contested measures with Article 17 of the Charter in view of Article 51(1) thereof. In this sense the Court stated that: “it is clear that the present referral contains no specific evidence to consider that Law No. 118/2010 aims to implement EU law. It follows that the jurisdiction of the Court to answer to this preliminary reference is not established.”[141] [author’s translation from French]

ECJ, Case C-134/12, Order of the Court (Sixth Chamber) of 10 May 2012. Ministerul Administraţiei şi Internelor (MAI), Inspectoratul General al Poliţiei Române (IGPR) and Inspectoratul de Poliţie al Judeţului Tulcea (IPJ) v Corpul Naţional al Poliţiştilor – clear lack of jurisdiction[142]

By decision of 7 February 2011 the Court of Appeal Constanţa seized the CJEU with a preliminary question on the conformity of the provisions of Law 18/2010 with the relevant Charter articles. In this sense, the referring court asked whether Articles 17(1), 20 and 21(1) of the Charter prohibited a decrease in salaries of certain public officers. As well, the referring court asked whether the failure of the Romanian Government to respect the provisions of Article 15 of the ECHR on the obligation to notify the general Secretary of the Council of Europe on the adopted salary cut measures including on their duration, were capable of invalidating the provisions of the contested national law.

The Court following the same reasoning as in the cases presented above concluded that it clearly lacked jurisdiction to rule on the referred issue.

ECJ, Case C-369/12 Order of the Court (Ninth Chamber) of 15 November 2012. Corpul Naţional al Poliţiştilor v Ministerul Administraţiei şi Internelor and Others – clear lack of jurisdiction[143]

By decision of 27 June 2012 the Court of Appeal Braşov addressed a reference for a preliminary ruling to the CJEU on the interpretation of Articles 17(1), 20, 21(1) and 51(1) of the Charter with regard to the provisions of Law 118/2010 imposing salary reductions on a number of categories of public servants.

The Court, reiterating its prior case law, restated that as none of the elements raised indicated that the provisions of Law 118/2010 aimed to implement EU law, it was manifestly incompetent.

ECJ, Case C-258/14 Florescu and others, challenging the MoU between Romania and EU of 23 June 2009 arrangements – pending[144]

The preliminary questions were raised by the Court of Appeal Alba Iulia during the proceedings between Ms Florescu and others against the County pensions authority, National pensions authority, Ministry of Labour and social protection, Romanian State represented by the Ministry of Public Finances. The questions raise several interesting issues concerning the role of the European Union and the European Commission in the adoption of pensions’ cuts. The referral court asks essentially:

·         “May a memorandum such as the Memorandum of Understanding between the European Community and Romania of 23 June 2009 […] be subject to CJEU’s interpretation?”

·         “May the MoU be interpreted as allowing the European Commission to require […] the adoption of a national law which completely and indefinitely withdraws a person’s right to receive a contributory pension […] on the ground that the person in question receives a salary for activity, carried out on the basis of an employment contract, other than the activity in respect of which he receives the pension?”

·         “[…] was it lawful for the European Commission to require, for the purposes of reducing the effects of the economic crisis, the adoption of a national law which barred retired officials of the public institutions from receiving a salary in addition to the pension?”

As well, the Court of Appeal asks to which extent the above measures are consistent with the relevant provisions of the Charter. The case is still pending before the CJEU.

Bond purchases ECB       
X.10
Describe the political, economic and legal situation leading up to the moment where the European Central Banks started buying government bonds on the secondary market (through the Securities Markets Programme, SMP).

Romania did not benefit from the SMP.

Conditionality bond purchases ECB  
X.11
What national policy measures have been requested by the ECB in exchange for the acquisition of government bonds on the secondary market? How have these requests been subject to debate in light of their implications for (budgetary)

Romania did not benefit from the SMP.

Miscellaneous
X.12
What other information is relevant with regard to the Romania and financial support?

As part of the obligations imposed by the international lenders, the Romanian budgetary, fiscal, social, financial and structural environment has known tremendous transformations in a very short period of time. Even if adopted with celerity, the effects of the crisis-driven changes tend to preserve a long-term character if not a permanent one. As such, the Government undertook severe reforms of the public revenues and spending frameworks. The public wage bill decreased to below 7 per cent of GDP, from its peak of over 9 per cent of GDP in 2009. The public personnel reductions continued throughout the crisis period, employment being still modestly encouraged in the public sector. Special salaries, pensions rights and bonuses have been largely supressed. A functional review of line ministries has been undertaken and is further currently complemented by an increased effort towards administrative capacity building. Comprehensive reforms have been undertaken in fiscal and budgetary discipline. Improved oversight of state-owned enterprises was another outcome of the financial assistance agreements. The attached structural reform conditions led to the introduction into national legislation of concepts unknown before as for instance the Emergency Ordinance no. 46/2013 regarding the financial crisis and the insolvency of the administrative-territorial unities on 24th May 2013.[145] The current 2013-2015 BoP financial assistance programme for Romania extends the transformative practice to a far-reaching list of conditions touching upon a vast number of policy areas.[146]

[1] Ministry of Public Finances, external financial packages 2009-2015, available at: http://www.mfinante.ro/pachete.html?pagina=pachete

[2] IMF, Press release 09/86 of 25.03.2009, available at:  https://www.imf.org/external/np/sec/pr/2009/pr0986.htm

[3] Joint statement by the Presidency of the Ecofin Council and the Commission on providing EU medium-term financial assistance to Romania, IP/09/475, Brussels, 25 March 2008, available at: http://europa.eu/rapid/press-release_IP-09-475_en.htm?locale=en

[4] G. Zaman and G. Georgescu, The Impact of Global Crisis on Romania’s Economic Development, Annales Universitatis Apulensis Series Oeconomica, 11(2), 2009, p. 620, available at http://www.oeconomica.uab.ro/upload/lucrari/1120092/01.pdf

[5] European Commission, available at: http://ec.europa.eu/economy_finance/assistance_eu_ms/romania/index_en.htm

[6] IMF, Romania-Fall 2007 Staff Visit — Aide Mémoire, October 2, 2007, available at: https://www.imf.org/external/np/ms/2007/100207.htm

[7] World Bank, Country Partnership Strategy for Romania for the period July 2009-June 2013, June 12, 2009, p.5, available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/07/20/000333038_20090720233846/Rendered/PDF/486650CAS0P1161C0Disclosed071171091.pdf

[8] IMF, op.cit. note 218 supra; see also: IMF Executive Board Concludes 2008 Article IV Consultation with Romania Public Information Notice (PIN) No. 08/76 June 27, 2008, https://www.imf.org/external/np/sec/pn/2008/pn0876.htm

[9] Central Electoral Bureau on Referendum for dismissal of the President, 10 of May 2007, http://www.becreferendum2007.ro

[10] Central Electoral Bureau on Referendum for dismissal of the President, results, available at: http://www.becreferendum2007.ro/document3/rezultat.pdf

[11] Decree of the President of Romania on the organization of a referendum No 909 of October 23, 2007.

[12]Central Electoral Bureau on Referendum on uninominal vote, 2007, results, http://www.becreferendum2007vu.ro/documente/rezultatefinale0001.pdf

[13]Central Electoral Bureau on European Parliament elections, 25 of November 2007, all information available in Romanian at: http://www.roaep.ro/bec_eu_07/?page_id=11

[14] Central Electoral Bureau on Parliamentary elections, 30 November 2008, results, available at: http://www.becparlamentare2008.ro/rezultate.html

[15] Romania-2008 Article IV Consultation: Concluding Statement of the Mission Bucharest, April 21, 2008, https://www.imf.org/external/np/ms/2008/042108.htm

[16] Parliament of Romania, Chamber of senate, legislative file No L828/2007, available in Romanian at: http://www.senat.ro/Legis/Lista.aspx?cod=12659

[17] IMF Country Report No. 12/64, Romania: Ex Post Evaluation of Exceptional Access Under the 2009 Stand-By Arrangement, p. 6, available at: http://www.imf.org/external/pubs/ft/scr/2012/cr1264.pdf

[18] World Bank, Country Partnership Strategy for Romania for the period July 2009-June 2013, June 12, 2009, p.5., available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/07/20/000333038_20090720233846/Rendered/PDF/486650CAS0P1161C0Disclosed071171091.pdf

[19] IMF Country Report No. 08/210, July 2008, para. 5, available at: https://www.imf.org/external/pubs/ft/scr/2008/cr08210.pdf

[20] Ibidem, para 6.

[21] Ibidem, para.43.

[22] World Bank, World Bank, Country Partnership Strategy for Romania for the period July 2009-June 2013, June 12, 2009, p.5., available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/07/20/000333038_20090720233846/Rendered/PDF/486650CAS0P1161C0Disclosed071171091.pdf, para.7.

[23] Ibidem, para.8

[24] IMF Country Report No. 08/210, IMF Country Report No. 08/210, July 2008, para. 5, available at: https://www.imf.org/external/pubs/ft/scr/2008/cr08210.pdf, supra, p.22, figure 12.

[25] Ibidem, p.27.

[26] World Bank, World Bank, Country Partnership Strategy for Romania for the period July 2009-June 2013, June 12, 2009, p.5., available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/07/20/000333038_20090720233846/Rendered/PDF/486650CAS0P1161C0Disclosed071171091.pdf, p.8 and IMF, IMF Country Report No. 08/210, July 2008, para. 5, available at: https://www.imf.org/external/pubs/ft/scr/2008/cr08210.pdf, para.24

[27] IMF Country Report No. 08/210, IMF Country Report No. 08/210, July 2008, para. 5, available at: https://www.imf.org/external/pubs/ft/scr/2008/cr08210.pdf, para.28.

[28] World Bank, World Bank, Country Partnership Strategy for Romania for the period July 2009-June 2013, June 12, 2009, p.5., available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/07/20/000333038_20090720233846/Rendered/PDF/486650CAS0P1161C0Disclosed071171091.pdf, p.1.

[29] IMF, Press Release No.09/24, Statement by the IMF Mission to Romania February 4, 2009, available at: https://www.imf.org/external/np/sec/pr/2009/pr0924.htm

[30] Ibidem.

[31] IMF, Press Release No.09/86, IMF Announces Staff-Level Agreement with Romania on €12.95 Billion Loan as Part of Coordinated Financial Support, March 25, 2009, available at: https://www.imf.org/external/np/sec/pr/2009/pr0986.htm

[32] IMF, Washington, D.C., Thursday, January 29, 2009, Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department, available at: https://www.imf.org/external/np/tr/2009/tr012909.htm

[33] IMF, Press Release No.09/24, Statement by the IMF Mission to Romania February 4, 2009, available at: https://www.imf.org/external/np/sec/pr/2009/pr0924.htm

[34] IMF, Washington, D.C., Thursday, January 29, 2009, Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department available at: https://www.imf.org/external/np/tr/2009/tr012909.htm

[35] IMF, Romania- Letter of Intent and Technical Memorandum of Understanding, 24 April 2009, https://www.imf.org/external/np/loi/2009/rou/042409.pdf

[36] http://www.romanialibera.ro/politica/institutii/basescu–acordul-cu-fmi-se-mai-poate-negocia-186159

[37] http://www.romanialibera.ro/politica/institutii/ponta–basescu-ne-a-mintit–acordul-cu-fmi-nu-poate-fi-renegociat-186633

[38] European Commission, news item, available at: http://ec.europa.eu/economy_finance/articles/financial_operations/article14634_en.htm

[39] Ministry of Public Finances, financial assistance programmes implementing legislation, available in Romanian at: http://www.mfinante.ro/pachete.html?pagina=pachete

[40] OJEU L 150, 13.6.2009, p. 8.

[41] OJEU L 83, 30.03.2010, p. 19.

[42] Memorandum of Understanding between EC and Romania, 2009, available at http://ec.europa.eu/economy_finance/publications/publication15409_en.pdf

[43] OUG 82/2009 ratifying the Memorandum of Understanding between the European Community and Romania, signed in Bucharest and Brussels on 23 June 2009 and of the Loan Agreement in the amount of up to 5.000.000.000 euro, of Romania, as borrowed, NBR, as agent of the Borrower, and the European Community, as lender, signed in Luxembourg on 23 June 2009 in Bucharest on 18 June 2009, Official Journal 455 of 01.07.2009, available in Romanian at:  http://www.mfinante.ro/pachete.html?pagina=pachete .

[44] OUG 99/2009 on the ratification of the stand-by arrangement between Romania and the IMF, agreed by letter of intent sent by the Romanian authorities, signed in Bucharest on 24 April 2009 and Decision of the Board of the International Monetary Fund in April May 2009, and a supplementary letter of intent signed by the Romanian authorities on September 8, 2009 and approved by Council Decision Director International Monetary Fund from September 21, 2009. OUG 98/2009 for the ratification of the loan (First Development Policy Loan) between Romania and the International Bank for Reconstruction and Development, signed in Bucharest on September 1, 2009 available in Romanian at:  http://www.mfinante.ro/pachete.html?pagina=pachete

[45] Ministry of Public Finances, financial assistance programmes 29009-2015, implementing legislation, OUG 82/2009, available in Romanian at: http://discutii.mfinante.ro/static/10/Mfp/pachet_acorduri/OUG82_2009.pdf

[46] Legislative file PL x 352/2009, Opinion of the Budget Committee, available at: http://www.cdep.ro/comisii/buget/pdf/2009/rp352.pdf

[47] Legislative file PL x 352/2009, Emergency Ordinance 82/2009 approved by Law 364/2009, published in the Official Journal 806/2009, available in Romanian at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?idp=10323&cam=2; The Law contains a single approval article, available at: http://www.cdep.ro/proiecte/2009/300/50/2/cd352_09.pdf

 Published in the Official Monitor no 806/25.11.2009.

[48] OUG 82/2009, Loan Agreement,  June 23, 2009, Article 12, available in Romanian at: http://discutii.mfinante.ro/static/10/Mfp/pachet_acorduri/OUG82_2009.pdf

[49] Ibidem.

[50] Ibidem, Article 13.

[51] Ibidem, Annex 3.

[52] Ibidem, Annex 3.

[53] OUG No. 11/2010 on the ratification of the Memorandum of Understanding further (the first addendum to the Memorandum of Understanding) between the EU and Romania, signed in Bucharest on 18 February 2010 and in Brussels on February 22, 2010; OUG No. 81/2010 on the ratification of the Memorandum of Understanding additional (second addendum to the Memorandum of Understanding) between the EU and Romania, signed in Brussels on 20 July 2010 in Bucharest on August 2, 2010; OUG No. 5/2011 on the ratification of additional Memorandum of Understanding (third addendum to the Memorandum of Understanding) between the EU and Romania, signed in Bucharest on 12 January 2011 and in Brussels on January 19, 2011, the Memorandum of Understanding between the European Community and Romania, Bucharest and Brussels signed on June 23, 2009; OUG No. 43/2011 on the ratification of the Memorandum of Understanding additional (fourth addendum to the Memorandum of Understanding) between the EU and Romania, signed in Brussels on 8 April 2011 in Bucharest on April 1, 2011, the Memorandum of Understanding between the European Community and Romania, Bucharest and Brussels signed on 23 June 2009. All available in Romanian at: http://www.mfinante.ro/pachete.html?pagina=pachete

[54] Legislative file PL x 352/2009, Opinion of the Budget Committee, available at: http://www.cdep.ro/comisii/buget/pdf/2009/rp352.pdf

[55] Rules of Procedure of the Chambers of Deputies, Section 4, Emergency procedure, Articles 115-120: available at: http://www.cdep.ro/pls/dic/site.page?id=235&idl=2; Rules of Procedure of the Senate, Section 4, Emergency procedure, Articles 107-112, available in Romanian at: http://www.senat.ro/pagini/reg_sen/reg_senat.htm.

[56] Ibidem.

[57] Law 27/2013 and Law 31/2014 on the second (2011-2013) and third (2013-2015) BoP programmes for Romania.

[58] Legislative file PL x 352/2009, the Emergency Ordinance 82/2009 was approved by Law 364/2009, published in the Official Journal 806/2009, available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?idp=10323&cam=2

[59] Parliament of Romania, Chamber of Deputies, session of September 16, 2009, debates, http://www.cdep.ro/pls/steno/steno.stenograma?ids=6686&idm=7

[60] Parliament of Romania, Chamber of Deputies, session of September 16, 2009, vote, http://www.cdep.ro/pls/steno/steno.stenograma?ids=6686&idm=27,04

[61]Parliament of Romania, Senate, session of November 3, 2009, debates, p.30 http://www.senat.ro/PAGINI/Stenograme/Stenograme2009/09.11.03.PDF

[62] Ibidem.

[63] Parliament of Romania, debates on the legal proposal for approval of OUG No. 11/2010 on the ratification of the Memorandum of Understanding further (the first addendum to the Memorandum of Understanding) between the EU and Romania, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6782&idm=13

[64] Parliament of Romania, debates on the legal proposal for approval of No. 81/2010 on the ratification of the Memorandum of Understanding additional (second addendum to the Memorandum of Understanding) between the EU and Romania, signed in Brussels on 20 July 2010 in Bucharest on August 2, 2010, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6901&idm=12

[65] Parliament of Romania, debates on the legal proposal for approval of OUG No. 5/2011 on the ratification of additional Memorandum of Understanding (third addendum to the Memorandum of Understanding) between the EU and Romania, signed in Bucharest on 12 January 2011 and in Brussels on January 19, 2011, the Memorandum of Understanding between the European Community and Romania, Bucharest and Brussels signed on June 23, 2009, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6974&idm=4

[66] Parliament of Romania, legal proposal for approval of OUG No. 5/2011 on the ratification of additional Memorandum of Understanding (third addendum to the Memorandum of Understanding), vote, http://www.cdep.ro/pls/steno/eVot.Nominal?idv=7678

[67] Parliament of Romania, debates on the legal proposal on the approval of OUG No. 5/2011 on the ratification of additional Memorandum of Understanding (third addendum to the Memorandum of Understanding), March 8, 2011, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6974&idm=4

[68] Parliament of Romania, debates on the legal proposal on the approval of OUG No. 5/2011 on the ratification of additional Memorandum of Understanding (third addendum to the Memorandum of Understanding), March 8, 2011, [author’s translation from Romanian] available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6974&idm=4

[69] Parliament of Romania, legislative proposal on the approval of OUG No. 43/2011 on the ratification of the Memorandum of Understanding additional (fourth addendum to the Memorandum of Understanding) Romaniahttp://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=12034

[70] Parliament of Romania, legislative file PL x- 185/2011, available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=11928

[71] Article 114 Assumption of responsibility by the Government: (1) The Government may assume responsibility before the Chamber of Deputies and the Senate, in joint sitting, upon a programme, a general policy statement, or a bill. http://www.cdep.ro/pls/steno/steno.stenograma?ids=6994&idm=1,27&idl=1

[72] Clauwaert, S. and Schömann, I. , The crisis and national labour law reforms: a mapping exercise. Country report: Romania, January 2013, p. 1

[73]Emergency Ordinance No. 108/2011 on the ratification of the Framework Agreement between the European Union loan, as the borrower, Romania, as Borrower, and the National Bank of Romania, as agent of the Borrower, a maximum of 1,400. 000.000 euros, signed in Bucharest on 28 June 2011 and in Luxembourg on 30 June 2011, and the Memorandum of Understanding between the European Union and Romania, signed in Bucharest on 28 June 2011 and in Brussels on June 29, 2011  http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=12462

[74] Parliament of Romania, Chamber of Senate, session of September 18, 2012, pp.37-40, available in Romanian at: http://www.senat.ro/pagini/stenograme/Stenograme2012/12.09.18.pdf

[75] Law No. 27/2013 on the ratification of the first additional Memorandum of Understanding between the European Union and Romania, signed in Bucharest on December 14, 2011 and in Brussels on December 27, 2011, and the Second Supplementary Memorandum of Understanding between the European Union and Romania signed in Bucharest on 22 June 2012 and in Brussels on June 29, 2012 http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=12907

[76] Parliament if Romania, Chamber of Senate, session of February 11, 2013, debates, p.11, available in Romanian at:  http://www.senat.ro/PAGINI/Stenograme/Stenograme2013/13.02.11.pdf

[77] Parliament of Romania, Chamber of Deputies, session of October 22, 2012, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=7169&idm=11

[78] Parliament of Romania, Chamber of Senate, session of February 11, 2013, pp.10-11, http://www.senat.ro/PAGINI/Stenograme/Stenograme2013/13.02.11.pdf

[79] Law No. 31/2014 on the ratification of the precautionary lending facility from the European Union and Romania as Borrower, as Borrower and the National Bank of Romania, worth more than 2 billion euros, signed on 5 November 2013 and in Luxembourg on 19 November 2013 and the Memorandum of Understanding between the European Union and Romania, signed in Bucharest on November 5, 2013 and in Brussels on November 6, 2013, legislative file available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=13907

[80] Parliament of Romania, Chamber of Deputies, session of February 18, 2014, vote, available at: http://www.cdep.ro/pls/steno/eVot.Nominal?idv=11486

[81] Parliament of Romania, Chamber of Deputies, session of February 18, 2014, debates, http://www.cdep.ro/pls/steno/steno.stenograma?ids=7349&idm=8

[82] Ibidem.

[83]Parliament of Romania, Chamber of Senate, session of 17 March 2014, stenograph, pp.18-28, http://www.senat.ro/PAGINI/Stenograme/Stenograme2014/14.03.17.pdf

[84] Ibidem, p. 18-19

[85] Ibidem, p. 19-20

[86] Ibidem, p. 22

[87] Ibidem, p. 24

[88] Ibidem, p. 28, http://www.senat.ro/PAGINI/Stenograme/Stenograme2014/14.03.17.pdf

[89] Council Decision of 6 May 2009 providing Community medium-term financial assistance for Romania (2009/459/EC) published in Official Journal L 150/8 of 13.06.2009.

[90] Council Decision of 12 May 2011 providing precautionary EU medium-term financial assistance for Romania (2011/288/EU), Article 3, published in Official Journal L 138/15 of 19.05.2011.

[91] Art. 3 of Council Decision 2013/531/EU of 22 October 2013 providing precautionary Union medium-term financial assistance to Romania (2013/531/EU) published in Official Journal L 286 of 29.10.2013, reads as follows: “a) the adoption of budgets and the implementation of policies  in line with the fiscal consolidation path derived from  Romania’s obligations under the Stability and Growth Pact with a view to reaching Romania’s medium-term budgetary objective by 2015, and to maintaining it thereafter;(b) the full preservation of the measures agreed under the previous two programmes and the implementation of any remaining parts of yet unfulfilled conditionality;(c) the further strengthening of the fiscal governance framework, including through the implementation of the Treaty on Stability, Coordination, and Governance, so as to ensure that fiscal consolidation is well anchored. Particular attention shall be given to reinforcing multi- annual budgetary planning, to the implementation of an effective commitment control system, to improving tax collection, and to improving the capital budgeting process;(d) the implementation of the action plans adopted in response to the findings of the functional reviews carried out by the World Bank in 2010-2011 in a timely manner and the establishment of a central delivery unit to improve the government-wide policy prioritisation;(e) the clearing of arrears and the strengthening of budget control mechanisms in the health sector through improved reporting and monitoring frameworks; (f) the implementation of the strategic action plan for healthcare, rationalising the hospital structure and increasing the scope for primary care activities, in order to improve health outcomes; (g) the of public debt management with a view to reducing risks and to consolidating and extending the yield curve for sovereign debt; (h) the further strengthening of bank-resolution framework, the Central Bank of Romania’s contingency planning and the corporate governance of the Deposit Guarantee Fund, as well as the implementation of measures to speed up the process of national banks’ balance sheet cleaning and the preservation of credit discipline in the banking sector; (i) the alignment of the legislation on the Financial Supervisory Authority to international good practices to strengthen the supervision of the non-banking market; (j) the restructuring of state-owned enterprises (SOEs), including sales of stakes in their capital, and the corporate governance of SOEs; (k) the further implementation of measures to improve the business environment, including through the reduction of administrative burdens for the small and medium-sized enterprises (SMEs), and measures to facilitate access to finance for SMEs.”

[92] Council Decision of 6 May 2009 providing Community medium-term financial assistance for Romania (2009/459/EC) published in Official Journal L 150/8 of 13.06.2009.

[93] The list of conditions is to be found in Art. 5 of Council Decision 2009/459/EC: “a)adopting a clearly-set medium-term fiscal programme  designed to lower by 2011 the general government deficit  to not more than the Treaty reference level of 3 % of GDP; (b) adopting and executing an amended budget for 2009 (by  the second quarter of 2009), targeting a general government  deficit of no higher than 5,1 % of GDP in ESA 95 terms; (c) reducing the public sector wage bill in nominal terms  compared to the 2008 outcome by foregoing public sector wage increases (totalling 5 % in nominal terms) scheduled for 2009 (or equivalent further cuts in employment) and by reducing public employment, including by replacing only one of seven departing employees;(d) additional reductions in spending on goods and services and in subsidies to public enterprises;(e) improving the budgetary management by the adoption and implementation of a binding medium-term fiscal framework, establishing limits on budget revisions during the year, including fiscal rules and creating a fiscal council to provide independent and expert scrutiny;(f) reforming the public compensation system, including by unifying and simplifying the pay scales and reforming the bonus system;(g) reforming key parameters of the pension system by moving towards indexation of pensions to consumer prices rather than wages, gradually adjusting retirement age beyond the currently agreed plans, especially for women, and phasing in pension contributions of groups of public employees currently excluded from such contributions Structural reform measures in the areas of the Country Specific Recommendations issued in the context of the Lisbon strategy. These will include measures improving the efficiency and effectiveness of public administration, enhancing the quality of public expenditure, sound use and increased absorption of EU funds, reducing administrative, fiscal and legal burdens on business and tackling undeclared work, thereby broadening the tax base.”

[94] European Commission, Balance-of-payments assistance to Romania, available at: http://ec.europa.eu/economy_finance/assistance_eu_ms/romania/index_en.htm

[95]Memorandum of Understanding between European Community and Romania, signed on 23 June 2009, available at: http://ec.europa.eu/economy_finance/publications/publication15409_en.pdf

[96] First addendum to the Memorandum of Understanding between European Union and Romania, signed on 22 February 2010, available at: http://ec.europa.eu/economy_finance/articles/financial_operations/pdf/2010-02-25-smou_romania_en.pdf

[97] Second addendum to the Memorandum of Understanding between European Union and Romania, July 2010, available at: http://ec.europa.eu/economy_finance/articles/financial_operations/pdf/2010-07-20-mou-romania_en.pdf

[98] Third addendum to the Memorandum of Understanding between European Union and Romania, January 2011, available at: http://ec.europa.eu/economy_finance/eu_borrower/balance_of_payments/pdf/2011-01-19-3rd-mou-romania.pdf

[99] Fourth addendum to the Memorandum of Understanding between European Union and Romania, April 2011, available at: http://ec.europa.eu/economy_finance/articles/pdf/2011-04-08-smou-romania-en.pdf

[100] Council Decision of 12 May 2011 providing precautionary EU medium-term financial assistance for Romania (2011/288/EU) published in Official Journal L 132/15 of 19.05.2011.

[101]  See recital 4 of preamble of the Council Decision 2011/288/EU, available at http://ec.europa.eu/economy_finance/assistance_eu_ms/romania/index_en.htm

[102] Memorandum of Understanding between European Union and Romania, June 2011, available at: http://ec.europa.eu/economy_finance/eu_borrower/mou/20110629-mou-romania_en.pdf

[103] Second Supplemental Memorandum of Understanding between European Union and Romania, June 2012, available at: http://ec.europa.eu/economy_finance/eu_borrower/balance_of_payments/pdf/2012-07-02-romania-mou_en.pdf

[104] Council Decision of 22 October 2013 providing precautionary Union medium-term financial assistance to Romania (2013/531/EU) published in the Official Journal L 286/1 of 29.10.2013.

[105] See recital 4 of the Council Decision 2013/531/EU preamble, available at  http://ec.europa.eu/economy_finance/assistance_eu_ms/romania/index_en.htm

[106] Memorandum of Understanding between European Union and Romania, November 2013, available at: http://ec.europa.eu/economy_finance/assistance_eu_ms/romania/pdf/mou_20131106_en.pdf

[107] IMF Country Report No. 13/204, Romania: Seventh and Eighth Reviews Under the Stand-By Arrangement and Request for Waiver of Nonobservance of Performance Criteria—Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Romania, p. 97.

[108] Law 329/2009, available in Romanian at: http://www.cdep.ro/proiecte/2009/300/90/5/pr395_09.pdf

[109] Parliament of Romania, full legislative file PL x- 394/2009 on the Law on unitary wage system, available in Romanian at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=10367

[110] Parliament of Romania, Legislative file PLx- 395/2009, available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=10368

[111] Constitutional Court Decision 1414/2009, published un Official Journal 796 of 23.11.2009.

[112] Constitutional Court Decision 1415/2009, published un Official Journal 796 of 23.11.2009.

[113] Ibidem.

[114] Parliament of Romania, Legislative file PL-x no. 367/2010 on legal initiative on certain measures necessary to restore budgetary balance, available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=11168

[115] Parliament of Romania, Legislative file PL-x no. 368/2010 on legal initiative on certain measure on pensions, available at http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=11169

[116] Constitution of Romania, Article 146: The Constitutional Court shall have the following powers: a) to adjudicate on the constitutionality of laws, before the promulgation thereof upon notification by the President of Romania, one of the presidents of the two Chambers, the Government, the High Court of Cassation and Justice, the Advocate of the People, a number of at least 50 deputies or at least 25 senators, as well as ex officio, on initiatives to revise the Constitution;, available at: http://www.cdep.ro/pls/dic/site.page?den=act2_2&par1=5#t5c0s0a146

[117] Constitutional Court of Romania, Decision 871/2010, published in the Official Journal 433 of 28.06.2010.

[118] Constitutional Court of Romania, Decision 872/2010, published in the Official Journal 433 of 28.06.2010, available in English available at: http://www.ccr.ro/files/products/D0872_101.pdf

[119] Art. 20 reads as follows: “Constitutional provisions concerning the citizens’ rights and liberties shall be interpreted and enforced in conformity with the Universal Declaration of Human Rights, with the convenants and other treaties Romania is a party to. (2) Where any inconsistencies exist between the covenants and treaties on the fundamental human rights Romania is a party to, and the national laws, the international regulations shall take precedence, unless the Constitution or national laws comprise more favourable provisions.”

[120] Article 41 has five paragraphs. Art. 41(1) reads as follows: “The right to work shall not be restricted. Everyone has a free choice of his/her profession, trade or occupation, as well as work place.” The Romanian Constitution is available in English at: http://www.cdep.ro/pls/dic/site.page?den=act2_2&par1=2#t2c2s0a41

[121] Article 53 Constitution of Romania, available at: http://www.cdep.ro/pls/dic/site.page?den=act2_2&par1=2#t2c2s0a41

[122] Art. 47(2) reads as follows: “Citizens have the right to pensions, paid maternity leave, medical care in public health centres, unemployment benefits, and other forms of public or private social securities, as stipulated by the law. Citizens have the right to social assistance, according to the law.”

[123] Decision 872/2010 available at: http://www.ccr.ro/files/products/D0872_101.pdf

[124] Constitution of Romania, available in English at: http://www.cdep.ro/pls/dic/site.page?den=act2_2&par1=5#t5c0s0a147

[125] Parliament of Romania, Legislative file Pl-x 367/2010, available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=11168

[126] Ibidem, debates, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6865&idm=2

[127] Constitutional Court of Romania, Decision 873/2010, published in the Official Journal 433 of 28.06.2010.

[128] Parliament of Romania, Legislative file Pl-x 368/2010, available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=11169

[129] Ibidem, debates, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6865&idm=3

[130] Constitutional Court of Romania, Decision 874/2010, published in the Official Journal 433 of 28.06.2010.

[131] Constitution of Romania, ARTICLE 93, Emergency Measures: “(1) The President of Romania shall, according to the law, institute the state of siege or state of emergency in the entire country or in some territorial-administrative units, and ask for the Parliament’s approval for the measure adopted, within 5 days of the date of taking it, at the latest. (2) If Parliament does not sit in a session, it shall be convened de jure within 48 hours of the institution of the state of siege or emergency, and shall function throughout this state.”

[132] The Constitutional Court decided after the decision no. 872/2010 on more than 500 challenges against the same Law no. 118/2010 on measures necessary to restore budgetary balance, according to its official database, available at http://www.ccr.ro/ccrSearch/MainSearch/SearchForm.aspx. We have chosen to analyse the above benchmark decisions because these were the first ones, no additional arguments were brought in subsequent ones.

[133] Government Emergency Ordinance no. 58/2010.

[134] This issue was discussed by Vlad Perju, Constitutional issues regarding the austerity measures generated by the economic crisis, available in Romanian at http://www.contributors.ro/fara-categorie/aspecte-constitutionale-ale-masurilor-de-austeritate-generate-de-criza-economica/

[135] High Court of Cassation and Justice (Inalta Curte de Casatie si Justitie) Decision 21/2011 on the rejection of the recourse in the interest of law, published in the Official Journal 925 of 27.12.2011, available in Romanian at: http://www.scj.ro/Decizii%20Complet%20RIL/RIL%20Decizie%20nr29%20din%202011.html

[136] ECtHR, judgement of 6 December 2011, Mihaies and Sentes v Romania, applications no 44232/11 and no. 44605/11, available in French and Romanian at: http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-108354#{“itemid”:[“001-108354”]}

[137] See also the Press Release issued by the Registrar of the Court, ECHR 088 (2012) of 02.03.2012.

[138] Frimu and four others v Romania applications no 45312/11, 45581/11 45583/11 45587/11 45588/11 and Panfile v Romania application no13902/11, Judgment of 13 November 2012, available in French and Romanian at: http://hudoc.echr.coe.int/sites/fra/pages/search.aspx?i=001-115053#{“itemid”:[“001-115053“]}

[139] Case C-434/11, Corpul Naţional al Poliţiştilor, 2011, I-00196

[140] Case C-462/11, Corpul Naţional al Poliţiştilor, 2011, I-00197

[141] Ibidem, para. 15.

[142] Case C-134/12, Corpul Naţional al Poliţiştilor, 2012, nyr

[143] Case C-369/12, Corpul Naţional al Poliţiştilor, 2012, nyr

[144] Case C-258/14, Florescu and others, case in progress

[145] http://www.legalis.ro/2013/05/28/guvernul-a-reglementat-cadrul-legislativ-privind-criza-financiara-si-insolventa-unitatilor-administrativ-teritoriale/

[146] See further on the BoPs for Romania: http://ec.europa.eu/economy_finance/assistance_eu_ms/romania/index_en.htm