The International Journal
of Not-for-Profit Law

Volume 5, Issue 1, September 2002

Croatia

Croatia Constitutional Court Denies Request to Declare Certain Provisions of the Law on Entrepreneurship Unconstitutional

by Dragan Golubovic*

The Croatia Constitutional Court has recently decided a case pertinent to freedom of association, which involved a number of articles of the Law on Entrepreneurship.[1] The plaintiff, a group of solo entrepreneurs, proposed that the Court declare unconstitutional Article 55, Article 57, Paragraph 1, Article 60, Paragraph 3 and 6, and the entire Chapter IV of the Law on Entrepreneurship.  The disputed articles provide for mandatory membership in the Croatia Chamber of Commerce and its local and regional branches.[2]

The plaintiff contended that the foregoing provisions violated freedom of association as guaranteed by Article 43 of the Croatia Constitution, which also entails the so-called negative freedom of association (i.e., the right of  “citizens and other natural persons” not to join an association).[3]

The Court rejected the challenge on the ground that the Croatia Chamber of Entrepreneurs as defined in the Law on Entrepreneurship is a legal person in public law (institution), rather than in private law (universitas personarum), and hence it does not fall within the ambit of Article 43 of the Constitution.[4] In other words, the Chamber of Entrepreneurs is not deemed an association of citizens/natural persons, which is guaranteed protection under Article 43, including the right not to join an association.  Rather, it is a public law institution, which is based on mandatory professional membership.  Because of the perceived public interest involved, the government has a legitimate interest to provide for mandatory regulations of such institutions (professional chambers).  In many countries, Croatia included, they perform certain public authority activities, including licensing.

In support of its holding, the Court invoked the European Court’s decision in Le Compte, Van Leuven and De Meyere v. Belgium.[5]   In that case, the applicant argued that the Belgium Law on the Chamber of Medical Doctors, which provided for mandatory membership of the doctors practicing in Belgium, violated freedom of association as guaranteed by Article 11 of the European Convention.  However, the European Court held that the Chamber of Medical Doctors is a legal person in public law and hence is not protected under Article 11 of the European Convention.

The Court also noted that a number of countries (for example; Great Britain, Ireland, Portugal, and the Scandinavian countries) treat professional chambers as legal persons in private law; they are organized as commercial entities, are based on voluntary membership, and are primarily designated to provide services to their members (rather than to perform public authority).  Accordingly, they are not part of the government’s structure and hence there is no need to address them in a separate piece of legislation.  However, Croatia has followed the model of those countries (e.g., Austria, Germany, Italy, France, Spain, Netherlands, Luxemburg, Hungary, Slovenia, and Greece) that have traditionally perceived professional chambers as legal persons in public law.

Finally, the Court noted that mandatory membership in professional chambers does not prevent their members from exercising freedom of association as guaranteed by Article 43 of the Constitution.  The delineation between citizens/natural persons acting in their professional capacity and citizens/natural persons acting in their capacity as private persons was made clear in Le Compte, Van Leuven and De Meyere v. Belgium, and is also recognized in Croatia.  Accordingly, mandatory membership in professional chambers does not prevent their members from establishing private law associations (trade unions included) to advance their common professional and other legitimate goals.[6]  Within the framework of private law, it is entirely up to citizens/natural persons to decide whether to establish/join an association, or for that matter give up their membership in a particular association.

The Court’s decision is consistent with its earlier judgment in a case involving mandatory membership in the Croatia Chamber of Medical Workers. [7]

Notes

[1] The decision is published in the Official Gazette of the Republic of Croatia, No. 10/2002.

[2] Article 55 of the Law of Entrepreneurship (Official Gazette of the Republic of Croatia, No. 77/93, 90/96) reads: “(1) For the purpose of promoting, coordinating and representing their common interests, entrepreneurs that engage in the same or similar economic activities in the territory of local government shall establish an association of entrepreneurs. The association of entrepreneurs shall have the status of legal entity. (2) The association of entrepreneurs shall be established on the professional and territorial principle. (3) There shall be only one association of entrepreneurs that engage in the same or similar economic activities in the territory of the respective local government”.

Article 57, Paragraph 1 of the Law reads: “(1) Associations of entrepreneurs shall form a regional umbrella organization. A regional umbrella organization shall have the status of legal entity”.

Article 60 of the Law reads: “(3) Entrepreneurs as referred to in Paragraph 1 of this Article shall become members of the Croatia Chamber of Entrepreneurs on the date of their entry into the Registry of Entrepreneurs….. (6) Membership in the Croatia Chamber of Entrepreneurs is mandatory.”

[3] Article 43 of the Constitution originally guaranteed freedom of association only to “citizens.” However, it was subsequently amended so as to include “other natural persons,” such as foreigners, refugees, and persons with no citizenship (Official Gazette, No. 135/97). It should be noted nevertheless that the Law on Associations has also extended freedom of association to “legal persons” (Article 10, Paragraph 2, of the Law on Associations, Official Gazette, No. 88/2001).

[4] Article 63 of the Law on Entrepreneurship specifically provides that the Croatia Chamber of Entrepreneurs is a legal person in public law.

[5] Case no. 1/1980/32/47-48, application number: 00006878/75; 00007238/75, Date of judgment: 23. 06. 1981.

[6] An example would be the Association of Hairdressers, which was registered under the provisions of the Law on Associations to promote hairdressers’ common professional goals.

[7] Decision No. U-1-385/1993, published in the Official Gazette no, 31/94.

* Dragan Golubovic is Senior Legal Adviser, ICNL; he can be reached at dragan@incl.org.hu