National mechanisms for securing property rights

Ensuring the right to property in each state is an important factor in the development of the country's economy. Over time, new forms and types of property are being created, and this, in turn, poses new tasks and functions for the state to protect property rights from various threats and encroachments. Therefore, the state must create the most necessary conditions to ensure the inviolability of property.

It should be noted that over the past 5 years, comprehensive measures have been taken in Uzbekistan in the field of ensuring property rights.

First of all, in this direction, the “Strategy of Action in Five Priority Directions of Development of the Republic of Uzbekistan for 2017-2021”, approved by the Decree of the President of the Republic of Uzbekistan dated February 7, 2017, occupies a special place.

As part of the Action Strategy, the tasks of ensuring reliable protection of the rights and guarantees of private property, further expansion and simplification of procedures for the privatization of state property, and the creation of favorable conditions for the development of private entrepreneurship were identified.
As a result, 5 laws and more than 15 documents of the President of the Republic of Uzbekistan and government decrees in this direction were adopted.

Legal basis for ensuring the inviolability of property

According to Art. 164 of the Civil Code of the Republic of Uzbekistan, the right of ownership is the right of a person to own, use and dispose of his property at his discretion and in his interests, as well as to demand the elimination of any violations of his property rights, no matter who they come from.

Property in the Republic of Uzbekistan acts in a private and public form. Private property is property owned by citizens, business partnerships and companies, cooperatives, public associations, public funds, and other non-state legal entities. Public property is state property, consisting of republican property and property of administrative-territorial formations (municipal property).

It was important here not only to proclaim the existence of state and private property, but also to provide everyone with equal rights to carry out economic and other activities and, to guarantee equal protection and equal conditions for the development of all forms of property. This means the equality of all subjects of property rights before the law and the court and the right to equal protection from the state.

One of the main laws adopted during the years of independence is the Law “On Property in the Republic of Uzbekistan”. By this Law, citizens acquired the property right and the state guaranteed the inviolability of property.

The inviolability of property consists in refraining from violating property rights by all entities opposed to the owner. Seizure of property from the owner, as well as restriction of his powers, is allowed only in cases provided for by legislative acts.

According to Art. 53 of the Constitution of the Republic of Uzbekistan, adopted on December 8, 1992, private property, along with other forms of property, is inviolable and protected by the state.

The owner, at his discretion, owns, uses, and disposes of the property belonging to him. The use of property should not cause damage to the ecological environment, and violate the rights and legally protected interests of citizens, legal entities and the state.

These constitutional norms served as the basis for the creation of business legislation in Uzbekistan, and over the past period, it has developed a lot.

On September 24, 2012, the Law of the Republic of Uzbekistan "On the protection of private property and guarantees of the rights of owners" was adopted.

It should be noted that the adoption of this Law contributed to the development of economic relations in the country and strengthened the protection of property rights. This Law strengthened the mechanism for ensuring private property, in particular, it established the norms that the quantity and value of the property are not limited, the right to private property is indefinite, and the state guarantees the restoration of the violated right to private property, and all contradictions and ambiguities of the legislation that cannot be eliminated are interpreted in favor of the owner.

In further strengthening the legal mechanisms for the protection and guarantees of the inviolability of private property, the Decree of the President of the Republic of Uzbekistan, adopted on August 3, 2019, “On additional measures to strengthen the protection of private property and guarantees of the rights of owners, radically improve the system of organizing work to support entrepreneurial initiatives, and as well as expanding the access of business entities to financial resources and production infrastructure”.

This document was a logical continuation of the ongoing reforms, and at the same time ensuring the transition to a qualitatively new level of state policy in this area.

In the Decree, the primary task of state bodies is “to establish systemic supervision (control) over the inadmissibility of causing damage to private owners by violating their rights, including illegal restriction and (or) deprivation of property rights, encroachment on private property, including unreasonable demands for the transfer property or property rights, as well as the seizure of property or forcing him to waive the right to his property”.

The above norms are fully consistent with Article 17 of the Universal Declaration of Human Rights (3) (adopted by the UN General Assembly on December 10, 1948), which establishes the provisions that every person has the right to own property both individually and in common with others. At the same time, no one should be arbitrarily deprived of his property.

It should be noted that, in June 2022, a draft Constitutional Law of the Republic of Uzbekistan “On Amendments and Additions to the Constitution of the Republic of Uzbekistan” was developed and on June 24, 2022, was adopted at the first reading of the Legislative Chamber of the Oliy Majlis.

This Constitutional Law provides for norms that strengthen the protection of private property. In particular, article 53 of the Constitution stipulates that the results of denationalization and privatization are not subject to review and cancellation, and article 53¹ of the Constitution provides that no person can be deprived of his property except by a court decision.

Even though the state is implementing comprehensive measures aimed at ensuring property rights, in practice, there are some problems associated with property law, in particular, with privatization.

For example, according to paragraph 2 of the Decree of the President of the Republic of Uzbekistan “On measures to further improve the coordination and management of small industrial zones” dated June 21, 2019, participants in small industrial zones have the right to:

by the established procedure, formalize the right of ownership to buildings and structures (or parts thereof) erected at their own expense;

privatize buildings and structures (or parts thereof) in which reconstruction or major repairs have been carried out at their own expense, but not earlier than 3 years

from the date of acquiring the status of a participant in a small industrial zone.

However, in practice, there is no mechanism (order) for the implementation of this right. This, in turn, prevents the participants in small industrial zones from exercising their right to privatize buildings and structures, that is, the entrepreneur was allocated a land plot or an unused state facility on the territory of the SIZ (small industrial zone), the entrepreneur built the building or completely renovated it and with this fulfilled his obligations, but cannot privatize it or formalize the ownership of it due to the lack of a mechanism.

To ensure the implementation of the right of ownership by SIZ participants,
it is advisable to develop a Regulation that determines the procedure for the privatization of buildings and structures by SIZ participants on the territory of small industrial zones.

At the same time, it should be noted that the Republic of Uzbekistan does not rank high in international ratings and indices related to the provision of property rights.

In particular, according to the report of the US Strategic Research Institute of the Heritage Foundation for 2021, in terms of “Property Rights” of the Economic Freedom Index, Uzbekistan ranked 108 out of 178 countries and scored only 57.8 out of 100 points for this indicator.

To raise the place and role of Uzbekistan in terms of the “Property Right” indicator, it is advisable to carry out explanatory work among the population on the protection of property rights on an ongoing basis, as well as create a national rating for the protection of property rights in the context of the regions of the republic and stimulate employees of authorized bodies to ensure the protection of property in the regions ranked high in this ranking.

Mechanisms for the withdrawal of land plots for public needs

One of the main objects of property rights is a land plot. With the adoption of the Law of the Republic of Uzbekistan "On the privatization of land plots for non-agricultural purposes" dated November 15, 2021, the land began to be actively used by individuals and legal entities as an object of ownership.

The seizure of land plots for public needs, as well as the demolition of objects located on the withdrawn land plot, is an urgent problem not only in our country but also in many countries. The legal regulation of the withdrawal of land plots for public needs and the established mechanisms in most cases cause protests from the population. In the period up to 2019, the seizure of land and the provision of compensation to property owners in various regions of Uzbekistan had conflict cases.

To ensure the property rights of owners in this direction, Decree of the President of the Republic of Uzbekistan №5491 “On additional measures to unconditionally ensure the guarantee of the property rights of citizens and business entities” dated August 3, 2019, was adopted, which established that:

- making decisions on the withdrawal of land plots for public needs is allowed only after an open discussion with interested parties whose land plots are planned to be withdrawn, as well as an assessment of the benefits and costs;

- demolition of property owned by citizens and business entities, when land plots are withdrawn, is allowed after full compensation of the market value of the real estate and losses caused to owners in connection with such withdrawal.

Also, this Decree introduced the following mechanism for the seizure of land plots:

Stage 1 - the chairman of the Council of Ministers of the Republic of Karakalpakstan, the khakis of the regions, and the city of Tashkent submit to the Cabinet of Ministers of the Republic of Uzbekistan a collection of materials on the territory planned for demolition;

Stage 2 - the Cabinet of Ministers of the Republic of Uzbekistan prepares a conclusion on urban planning requirements and financial calculations;

Stage 3 - the prepared conclusion is submitted to the Prime Minister of the Republic of Uzbekistan for consideration and a decision on the demolition.

It should be emphasized that the adoption of this Decree helped to reduce the problems associated with demolition on the ground and improve the procedure for withdrawing land plots.

In pursuance of the above Decree of the President, on November 16, 2019, the Regulation “On the procedure for the withdrawal of land plots and the issuance of compensation to owners of real estate objects located on the withdrawn land plot” was approved.

This provision established the exact procedure for the seizure of land plots of owners and strengthened the mechanism for protecting the rights of owners to real estate.

In particular, this provision provides for the following rules:

- the decision of the Council of Ministers of the Republic of Karakalpakstan, the khokimiyats of the regions, and the city of Tashkent or district (city) on the demolition of a property located on the confiscated land plot is taken only if there is a positive conclusion from the justice authorities;

- an agreement on compensation in connection with the withdrawal of a land plot between the initiator of the withdrawal of the land plot and the owner of the property located on the withdrawn land plot is notarized without fail;

- deciding on the demolition of a property is allowed by agreement with the owner of the property located on the withdrawn land, and in the event of a dispute - by a court decision, subject to the provision of the established compensation in full;

- the study of the availability of sufficient resources (cash, land, and other property) to compensate the owners of demolished real estate.

Also, by paragraph 66 of this Regulation, it is established that control over the fulfillment of the requirements of the law when withdrawing land plots, demolishing real estate, and providing compensation are carried out by the prosecutor's office.

The above procedure has become an effective way to ensure the property rights of land owners.

However, it should be noted that the exact procedure and mechanism for the withdrawal of a land plot or part of it for public needs was not clearly defined in the Land Code of the Republic of Uzbekistan.

In several developed foreign countries such as South Korea, Norway, Hungary, etc. the process of seizure of land plots is regulated at the legislative level, the basis for the seizure of land plots is to ensure public interests (a list of grounds included in the category of “public interests” has been formed), each country has developed its dispute resolution mechanism.

After a long study, passing through democratic processes, and improving the mechanism for the seizure of land in the Republic of Uzbekistan, on June 29, 2022, the Law “On procedures for the seizure of land for public needs with compensation” was adopted, which also implies amendments to 4 codes and
20 laws.

It should be noted that this Law regulates in more detail the existing mechanism and the process of withdrawal of land plots is now fixed at the legislative level.

According to Article 4 of this Law provides for a final list of purposes that are the basis for the withdrawal of land plots for public needs and it is prohibited to withdraw land plots for other purposes. At the same time, a land plot can be confiscated only as a last resort, when there is no other way to satisfy public needs.

When a plot is withdrawn, its owner must now be compensated for:

the market value of real estate objects located on the withdrawn land plot;

the market value of the right to the withdrawn land plot;

the market value of perennial plantations located on the withdrawn land plot;

expenses related to moving, including temporary rent of another real estate object;

the lost profit that could have been received from the use of the land plot and real estate objects located on it, as well as other expenses and losses of the right holder provided for by law or agreement.

As compensation, one-time payment in the amount of 5 percent of the market value of real estate located on the land plot is also made for the inconvenience caused to the right holder in connection with the withdrawal of the land plot.

In addition, the law expanded the list of properties for which compensation will be issued in the event of seizure and demolition. Now, when demolishing houses for which cadastral documents are not issued, but at the same time they are located within the boundaries of a settlement and taxes have been paid for this land for more than 15 years, compensation will be paid.

According to the above Law, all procedures related to demolitions will be carried out through electronic systems, including accounting for decisions made, contracts and compensation.

This new Law will provide an opportunity to stop unscrupulous developers from trying to demolish people's houses under any pretext and strengthens the guarantees of the rights of owners to land plots and real estate located on this site.

 

Liability for violation of property rights

The presence of liability measures for violation of property rights ensures the inviolability of property and guarantees the development of property relations in the state.

It should be noted that in the Republic of Uzbekistan, until 2015, the regulatory documents did not establish liability for violation of property rights.

In connection with the adoption of the Law of the Republic of Uzbekistan "On amendments and additions to certain legislative acts of the Republic of Uzbekistan aimed at further strengthening the reliable protection of private property, business entities, removing barriers to their accelerated development" dated 20.08.2015, separate articles were introduced into The Code of Administrative Responsibility and the Criminal Code of the Republic of Uzbekistan, which establishes liability for violation of property rights.

According to Art. 241¹ of the Code of Administrative Liability “Infliction by an official or employee of a controlling, law enforcement and other state body and state organization of damage to private owners by violating their rights, that is, illegal restriction and (or) deprivation of property rights, encroachment on private property, imposing on the owner unacceptable conditions, including an unreasonable demand for the transfer of property or property rights, as well as the seizure of property or forcing him to renounce the right to his property in the absence of signs of petty theft - entails the imposition of a fine from forty to eighty basic settlement values”.

Also, for violation of the right to private property, criminal liability is provided after the application of an administrative penalty (Article 192¹ of the Criminal Code of the Republic of Uzbekistan).

It can be said that the establishment of liability for violation of the right to the private property required the development of property relations in society and the need to protect the rights and legitimate interests of owners.

It should be noted that the legislation of the Republic of Uzbekistan provides for liability for violation of property rights only for officials (employees) of state bodies.

However, practice shows that the right to private property is violated not only by employees of state bodies but also by individuals.

Therefore, it is necessary to establish the responsibility of individuals also for violation of property rights.

This practice also exists in the legislation of foreign countries, for example, in the Codes of Administrative Offenses of the Russian Federation and the Republic of Kazakhstan.

Based on the foregoing and to ensure further improvement in the protection of property rights, it seems appropriate to consider the following issues:

- to develop a Regulation that determines the procedure for the privatization of buildings and structures by SIZ (small industrial zone) participants on the territory of small industrial zones;

- provide for liability of individuals for violation of property rights;

- carry out explanatory work among the population on the protection of private property rights on an ongoing basis;

- create a national rating for the protection of property rights in the context of the regions of the republic and stimulate employees of authorized bodies for protection in the regions that rank high in this rating;

- strengthen control over compliance with legislation regulating the protection of property rights.

Eldor Makhkamov

Director of Research institute for legal policy under the Ministry of Justice of the Republic of Uzbekistan