Expropriation and New Rules for PPP Projects

At the beginning of March, the National Council of the SR approved an amendment to the Building Act. The amendment reflects the Government’s commitment to set new rules in support of public-private partnerships (PPPs) in the area of public infrastructure projects and public services. This was approved within the scope of the government programme.

An amendment to Act No. 50/1976 Zb. on land-use planning and on the building code (Building Act) has been approved with effect from 1 July 2010, mainly in response to the need to regulate the documentation of ownership rights or other rights relating to land in building proceedings and to lay down the rules of expropriation, in line with the Government’s recent analysis of legal regulations in relation to the feasibility of PPP projects.

Expropriation

Expropriation is one of the most forceful interventions in the ownership rights of citizens, therefore expropriation or restrictions on property rights may be imposed only to the extent legally justified for the protection of the public interest and must be justly compensated in accordance with Article 20 of the Constitution of the SR. The expropriation of land, buildings and the related rights are governed by the Building Act. Compensation for expropriation is payable to the property owner; if the property is the object of third persons’ rights, the compensation is to be deposited in the competent court.

The existing legal regulations did not apply to cases where the object of expropriation – a real property – was concurrently the object of a right of lien under a warrant of execution. Since compensation is intended to satisfy the person entitled, it cannot be paid to the property owner who is the obligor under the warrant of execution. Hence, compensation for a property that is the object of both expropriation and execution is to be deposited in the competent court.

For such cases, the reporting obligation of the building authority is also extended so that the commencement of expropriation, oral proceedings, and the issue of an expropriation warrant are to be reported to the bailiff. However, the bailiff will not participate in the expropriation proceedings. The simultaneous conduct of expropriation and execution proceedings will be regulated in an amendment to the Execution Order.

With a view to bringing the Building Act into harmony with Act 143/1998 Z.z. on civil aviation (Aviation Act), the purposes of justified expropriation are extended to include expropriation for the construction or operation of public airports and airport facilities, including their security zones.

Other Property Rights

The amendment also extends ‘other rights relating to land and buildings’ (hereinafter referred to as ‘other rights’) to include the use of land or buildings on the basis of an agreement on a future easement contract, laying down the right to construct or modify buildings on the site. Thus, the legislator enables a certain simplification for the documentation of other property rights, since the agreement concerned – unlike the right arising from the easement – is not associated with the entry of property in the real estate register.

Concession

Other rights relating to the use of land or buildings are also extended on the basis of a concession contract laying down the right to construct or modify buildings, while the amendment refers to the provisions governing concessions in Act No. 25/2006 Z.z. on public procurement.

Concession is a contract for construction works or services made and signed between a public procurer (public partner) and a concessionaire (private partner). The compensation for construction works (services) is either a right to use the buildings (or the services provided) for an agreed period of time or a right to financial compensation. The range of this right and the related benefits, as well as the terms and conditions of financial compensation, are to be agreed in a concession contract.

According to the justification of the said amendment, if a private partner intended to build and use a building as a contractor but had no interest in purchasing the land in which the building was situated, he could not become a contractor under the previous regulations. According to the amendment, a private partner may gain rights as a contractor on the basis of a concession contract, but this must be laid down unambiguously in the contract.

Finally, the amendment redefines the term ‘structures for the protection of the State’ and extends the term ‘structures for national security’ to include structures managed by the Railway Police.

Lucia Menkeová

ROWAN LEGAL