The Constitutional-Judicial Control of the Legislative and Executive Powers in Central and Eastern European Countries

This project looked at the nature, contents, methods, means and legal and political effects of the influence that constitutional courts exercise upon the legislative and executive powers in the newly established democracies of Central and Eastern Europe. The basic hypothesis was that these courts work to provide a limitation of political power within the framework of the principal constitutional values and that they force the legislature and executive to exercise their powers and duties in strict accordance with the constitution. Following a study of the documentary sources, including primarily the relevant constitutional and statutory provisions and decisions of constitutional courts, Mr. Cvetkovski prepared a questionnaire on various aspects of the topics researched and sent it to the respective constitutional courts. A series of direct interviews with court officials in six of the ten countries then served to clarify a large number of questions relating to differences in procedures etc. that arose from the questionnaires. As a final stage, the findings were compared with those described in recent publications on constitutional control in general and in Central and Eastern Europe in particular. The study began by considering the constitutional and political environment of the constitutional courts' activities in controlling legislative and executive powers, which in all countries studied are based on the principles of the rule of law and the separation of powers. All courts are separate bodies with special status in terms of constitutional law and are independent of other political and judicial institutions. The range of matters within their jurisdiction is set by the constitution of the country in question but in all cases can be exercised only with the framework of procedural rules. This gives considerable significance to the question of who sets these rules and different countries have dealt with it in different ways. In some there is a special constitutional law with the same legal force as the constitution itself (Croatia), the majority of countries allow for regulation by an ordinary law, Macedonia gives the court the autonomy to create and change its own rules of procedure, while in Hungary the parliament fixes the rules on procedure at the suggestion of the constitutional court. The question of the appointment of constitutional judges was also considered and of the mechanisms for ensuring their impartiality and immunity. In the area of the courts' scope for providing normative control, considerable differences were found between the different countries. In some cases the courts' jurisdiction is limited to the normative acts of the respective parliaments, and there is generally no provision for challenging unconstitutional omissions by legislation and the executive. There are, however, some situations in which they may indirectly evaluate the constitutionality of legislative omissions, as when the constitution contains provision for a time limit on enacting legislation, when the parliament has made an omission in drafting a law which violates the constitutional provisions, or when a law grants favours to certain groups while excluding others, thereby violating the equal protection clause of the constitution. The control of constitutionality of normative acts can be either preventive or repressive, depending on whether it is implemented before or after the promulgation of the law or other enactment being challenged. In most countries in the region the constitutional courts provide only repressive control, although in Hungary and Poland the courts are competent to perform both preventive and repressive norm control, while in Romania the court's jurisdiction is limited to preventive norm control. Most countries are wary of vesting constitutional courts with preventive norm control because of the danger of their becoming too involved in the day-to-day political debate, but Mr. Cvetkovski points out certain advantages of such control. If combined with a short time limit it can provide early clarification of a constitutional issue, secondly it avoids the problems arising if a law that has been in force for some years is declared to be unconstitutional, and thirdly it may help preserve the prestige of the legislation. Its disadvantages include the difficulty of ascertaining the actual and potential consequences of a norm without the empirical experience of the administration and enforcement of the law, the desirability of a certain distance from the day-to-day arguments surrounding the political process of legislation, the possible effects of changing social and economic conditions, and the danger of placing obstacles in the way of rapid reactions to acute situations. In the case of repressive norm control, this can be either abstract or concrete. The former is initiated by the supreme state organs in order to protect abstract constitutional order and the latter is initiated by ordinary courts, administrative authorities or by individuals. Constitutional courts cannot directly oblige the legislature and executive to pass a new law and this remains a matter of legislative and executive political responsibility. In the case of Poland, the parliament even has the power to dismiss a constitutional court decision by a special majority of votes, which means that the last word lies with the legislature. As the current constitutions of Central and Eastern European countries are newly adopted and differ significantly from the previous ones, the courts' interpretative functions should ensure a degree of unification in the application of the constitution. Some countries (Bulgaria, Hungary, Poland, Slovakia and Russia) provide for the constitutional courts' decisions to have a binding role on the constitutions. While their decisions inevitably have an influence on the actions of public bodies, they do not set criteria for political behaviour, which depends rather on the overall political culture and traditions of the society. All constitutions except that of Belarus, provide for the courts to have jurisdiction over conflicts arising from the distribution of responsibilities between different organs and levels in the country, as well for impeachment procedures against the head of state, and for determining the constitutionality of political parties (except in Belarus, Hungary, Russia and Slovakia). All the constitutions studied guarantee individual rights and freedoms and most courts have jurisdiction over complaints of violation of these rights by the constitution. All courts also have some jurisdiction over international agreements and treaties, either directly (Belarus, Bulgaria and Hungary) before the treaty is ratified, or indirectly (Croatia, Czech Republic, Macedonia, Romania, Russia and Yugoslavia). In each country the question of who may initiate proceedings of norm control is of central importance and is usually regulated by the constitution itself. There are three main possibilities: statutory organs, normal courts and private individuals and the limitations on each of these is discussed in the report. Most courts are limited in their rights to institute ex officio a full-scale review of a point of law, and such rights as they do have rarely been used. In most countries courts' decisions do not have any binding force but must be approved by parliament or impose on parliament the obligation to bring the relevant law into conformity within a certain period. As a result, the courts' position is generally weaker than in other countries in Europe, with parliament remaining the supreme body. In the case of preventive norm control a finding of unconstitutionality may act to suspend the law and or to refer it back to the legislature, where in countries such as Romania it may even be overturned by a two-thirds majority. In repressive norm control a finding of unconstitutionality generally serves to take the relevant law out of legal force from the day of publication of the decision or from another date fixed by the court. If the law is annulled retrospectively this may or may not bring decisions of criminal courts under review, depending on the provisions laid down in the relevant constitution. In cases relating to conflicts of competencies the courts' decisions tend to be declaratory and so have a binding effect inter partes. In the case of a review of an individual act, decisions generally become effective primarily inter partes but is the individual act has been based on an unconstitutional generally binding normative act of the legislature or executive, the findings has quasi-legal effect as it automatically initiates special proceedings in which the law or other regulation is to be annulled or abrogated with effect erga omnes. This wards off further application of the law and thus further violations of individual constitutional rights, but also discourages further constitutional complaints against the same law. Thus the success of one individual's complaint extends to everyone else whose rights have equally been or might have been violated by the respective law. As the body whose act is repealed is obliged to adopt another act and in doing so is bound by the legal position of the constitutional court on the violation of constitutionally guaranteed freedoms and rights of the complainant, in this situation the decision of the constitutional court has the force of a precedent.

Compensation, Incentives and Risk: Economic Theory and Russian Practise

Mr. Pechersky set out to examine a specific feature of the employer-employee relationship in Russian business organisations. He wanted to study to what extent the so-called "moral hazard" is being solved (if it is being solved at all), whether there is a relationship between pay and performance, and whether there is a correlation between economic theory and Russian reality. Finally, he set out to construct a model of the Russian economy that better reflects the way it actually functions than do certain other well-known models (for example models of incentive compensation, the Shapiro-Stiglitz model etc.). His report was presented to the RSS in the form of a series of manuscripts in English and Russian, and on disc, with many tables and graphs. He begins by pointing out the different examples of randomness that exist in the relationship between employee and employer. Firstly, results are frequently affected by circumstances outside the employee's control that have nothing to do with how intelligently, honestly, and diligently the employee has worked. When rewards are based on results, uncontrollable randomness in the employee's output induces randomness in their incomes. A second source of randomness involves the outside events that are beyond the control of the employee that may affect his or her ability to perform as contracted. A third source of randomness arises when the performance itself (rather than the result) is measured, and the performance evaluation procedures include random or subjective elements. Mr. Pechersky's study shows that in Russia the third source of randomness plays an important role. Moreover, he points out that employer-employee relationships in Russia are sometimes opposite to those in the West. Drawing on game theory, he characterises the Western system as follows. The two players are the principal and the agent, who are usually representative individuals. The principal hires an agent to perform a task, and the agent acquires an information advantage concerning his actions or the outside world at some point in the game, i.e. it is assumed that the employee is better informed. In Russia, on the other hand, incentive contracts are typically negotiated in situations in which the employer has the information advantage concerning outcome. Mr. Pechersky schematises it thus. Compensation (the wage) is W and consists of a base amount, plus a portion that varies with the outcome, x. So W = a + bx, where b is used to measure the intensity of the incentives provided to the employee. This means that one contract will be said to provide stronger incentives than another if it specifies a higher value for b. This is the incentive contract as it operates in the West. The key feature distinguishing the Russian example is that x is observed by the employer but is not observed by the employee. So the employer promises to pay in accordance with an incentive scheme, but since the outcome is not observable by the employee the contract cannot be enforced, and the question arises: is there any incentive for the employer to fulfil his or her promises? Mr. Pechersky considers two simple models of employer-employee relationships displaying the above type of information symmetry. In a static framework the obtained result is somewhat surprising: at the Nash equilibrium the employer pays nothing, even though his objective function contains a quadratic term reflecting negative consequences for the employer if the actual level of compensation deviates from the expectations of the employee. This can lead, for example, to labour turnover, or the expenses resulting from a bad reputation. In a dynamic framework, the conclusion can be formulated as follows: the higher the discount factor, the higher the incentive for the employer to be honest in his/her relationships with the employee. If the discount factor is taken to be a parameter reflecting the degree of (un)certainty (the higher the degree of uncertainty is, the lower is the discount factor), we can conclude that the answer to the formulated question depends on the stability of the political, social and economic situation in a country. Mr. Pechersky believes that the strength of a market system with private property lies not just in its providing the information needed to compute an efficient allocation of resources in an efficient manner. At least equally important is the manner in which it accepts individually self-interested behaviour, but then channels this behaviour in desired directions. People do not have to be cajoled, artificially induced, or forced to do their parts in a well-functioning market system. Instead, they are simply left to pursue their own objectives as they see fit. Under the right circumstances, people are led by Adam Smith's "invisible hand" of impersonal market forces to take the actions needed to achieve an efficient, co-ordinated pattern of choices. The problem is that, as Mr. Pechersky sees it, there is no reason to believe that the circumstances in Russia are right, and the invisible hand is doing its work properly. Political instability, social tension and other circumstances prevent it from doing so. Mr. Pechersky believes that the discount factor plays a crucial role in employer-employee relationships. Such relationships can be considered satisfactory from a normative point of view, only in those cases where the discount factor is sufficiently large. Unfortunately, in modern Russia the evidence points to the typical discount factor being relatively small. This fact can be explained as a manifestation of aversion to risk of economic agents. Mr. Pechersky hopes that when political stabilisation occurs, the discount factors of economic agents will increase, and the agent's behaviour will be explicable in terms of more traditional models.

Legality and Human Rights: Administrative Justice in Russia 1862-1917

The question of how far pre-revolutionary Russia was from the ideal of a lawful state has received little academic attention, particularly as relates to the legal regulation of relations between person, society and state within the state administration. Pravilova explored the methods of settling disputes between individuals and the administration, and the emergence of legal controls of the administration, analysed projects for the organisation of administrative justice and studied the particular nature of concepts from Russian administrative justice. The idea of an organisation of special bodies examining complaints by private persons against the actions of officials and state bureaucratic organs first appeared in the early 1860s. In the 1870s-1890s various projects for the reform of administrative justice (reorganisation of the Senate and local administrative institutions) were proposed by the Ministries of Justice and Finance, but none of these was put into practice, largely due to resistance from the bureaucracy. At the same time, however, the rapid development of private enterprise, the activities of the zemstvo and self-government produced new norms and mechanisms for the regulation of authorities and social relations. Despite the lack of institutional conditions, the Senate did consider complaints from private persons against illegal actions by administrative officials, playing a role similar to that of the supreme administrative courts in France and Germany. The spread of concepts of a 'lawful state' aroused support for a system of administrative justice and the establishment of administrative tribunals was seen as a condition of legality and a guarantee of human rights. The government was forced to understand that measures to maintain legality were vital to preserve the stability of the system of state power, but plans for liberal reforms were pushed into the background by constitutional reforms. The idea of guarantees of human rights in relations with the authorities was in contradiction with the idea of the monarchy and it was only when the Provisional Government took power in 1917 that the liberal programme of legal reforms had any chance of being put into practice. A law passed in June 1917 ordained the organisation of local administrative justice bodies, but its implementation was hampered by the war, the shortage of qualified judges and the existing absolute legal illiteracy, and the few administrative courts that were set up were soon abolished by the new Soviet authorities. Pravilova concluded that the establishment of a lawful state in pre-revolutionary Russia was prevented by a number of factors, particularly the autocratic nature of the supreme authority, which was incompatible with the idea of administrative justice as a guarantee of the rights of citizens in their relations with the state.