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Zh.S.Yelyubayev Ж.С.Елюбаев
The Hierarchy of Legal Acts
The country President’s message to the people of Kazakhstan «Kazakhstan - 2030» determines the creation of an efficient and modern public service and public administration structure as one of the key tasks of the state. This implies a systematic public administration, clearly-cut responsibilities and authorities for every level of public administration, interdepartmental coordination and a reliable legal basis, which is essential for an efficient functioning of all levels of the government. To be fair, one should admit that the Republic of Kazakhstan, as compared with other CIS countries, has achieved a tremendous success in the cause of state building, development of market economy, formation of a modern legislation regulating the new relations. However, regretfully, there are still a lot of flaws in rulemaking and law enforcement activities of the state bodies, which sometimes bring to nothing all positive achievements in the creation of the modern legal basis for the country’s movement along the path of reforms. As it used to be in recent Soviet times, many important legal relations are regulated by departmental acts, omnipotent Regulations, Instructions, Procedures, which often contradict the provisions of the Constitution and the laws of the country. Judicial and law enforcement bodies continue, in the old fashion as well, to be guided more by departmental acts ignoring sometimes the legislative provisions. This is despite the fact that we have an excellent law «On Laws and Regulations» in our country, which many generations of lawyers were dreaming of and which establishes a clear hierarchy of legal acts. This law, specifically its article 4, determines that the ROK Constitution enjoys the supreme legal force, and legal force of the acts of a lower level descends in the following order: laws making amendments to the Constitution, ROK constitutional laws and ROK presidential decrees having the force of constitutional laws, ROK codes, ROK laws and ROK presidential decrees having the force of law, regulatory decrees of the ROK President, regulatory resolutions of the ROK Parliament, regulatory resolutions of the Government, regulatory orders of ministers, regulatory resolutions of state committees, regulatory resolutions and orders of other state bodies, regulatory legal resolutions of maslikhats, regulatory legal resolutions of akimats, regulatory legal decisions of akims. At that, under the aforesaid provision, none of the legal acts of a lower level can contradict the legal acts of a higher level. It should be emphasized that pursuant to article 6 of the above-mentioned law, in the event of any contradictions in the provisions of legal acts of different level, the provisions of the acts of a higher level shall be applied. And in case of contradictions in the provisions of legal acts of the same level the provisions of the legal act that was issued later shall be applied. One can not ignore another important provision of the law under consideration. Article 37 provides that the effect of a legal act can not be extended to the relation originated before its enactment. At that, the instances when a legal act can become retroactive are strictly defined by the law. These are clear and exact legislative provisions, a strict compliance with which would ensure law and order in the country and exclude infringement on the rights and legitimate interests of individuals and legal entities. Unfortunately, there are a lot of examples of neglecting constitutional principles and the above-mentioned legislative provisions in lawmaking and law enforcement activities of the state bodies themselves. Not to be accused of making a naked assertion, I would like to draw to you attention a number of specific examples. For instance, the ROK Ministry of Environmental Protection and Natural Resources developed the «Regulations for Issuance of Permits for Environmental Protection» which were approved by ROK Government Resolution #1154 dated September 6, 2001. On the whole, this legal act was necessary for establishment of the procedure for issuance of permits for special types of nature use. Some its provisions, however, contradict the ROK Law «On Environmental Protection» and the ROK Tax Code, i.e. the acts of a higher level. In particular, items 3 and 4 of these Regulations provide that the products and materials of a temporary storage, as sources of environmental impact, shall be considered similarly to the wastes. At that, the products and materials are at issue that are placed in the natural environment in the open air for more than 3 months a year, like stripping and enclosing rock, petroleum products, coal, sulfur, pesticides, asphalt and bitumen mix, scrap metal. Pursuant to the above-mentioned Regulations, to place and store those products and materials one should obtain a Permit, a special document issued by the competent state body in charge of environmental protection. Being of a firm opinion that items 3 and 4 of the above Regulations contradict the provisions of a number of legislative acts, I dare myself to analyze the provisions of some relevant laws. Article 1 of the ROK Law «On Environmental Protection» provides an exhaustive legal definition of the term «the wastes of production and consumption» to ensure its uniform interpretation. Pursuant to this article, the «wastes of production and consumption» mean the «substances and materials in any state of aggregation formed as a result of anthropogenic activities and not subject to further use». It is an important point that these substances and materials shall not be subject to further use in order to be recognized as the production and consumption wastes. I would like to lay a stress on the fact that the foregoing definition (interpretation) of the term «wastes of production and consumption» was included into the text of the Law «On Environmental Protection» on June 4, 2001, i.e. three months before the adoption of the Regulations in question, and it was made because in practice the term «production and consumption wastes» was quite often interpreted arbitrarily, at one’s own choosing. The authors of the Regulations, however, ignored this legislative provision, and, as we can see from the text of items 3 and 4 of the Regulations, some products that are subject to further use and have a certain value and are in demand in the domestic and foreign markets, are placed among the production wastes by analogy. It should be noted here that the analogy is not admissible in lawmaking in principle. It may only be applied in law enforcement - only when some relations are not directly regulated by legal acts, the provisions of legal acts regulating similar legal relations may be applied. For example, the sulfur produced by Kazakhstan oil producing companies is an important and valuable product, which is currently exported to Russia, African countries, China and is sold in small quantities in the domestic market. As a result of sulfur export, the country receives hard currency and the companies earn certain profit. Hence, the conclusion is that the challenged Regulations have groundlessly referred this product to the «production wastes» by analogy. Products that have certain value and are in demand in the market cannot be considered wastes regardless of the term and the methods of their storage in the natural environment. If any harm is inflicted on the environment as a result of the placement and storage of these products in the natural environment, the nature user should pay the damages in the procedure provided for by the civil law. Enactment of these unlawful provisions of the Regulations automatically entailed unlawful collection from the nature users of certain fees for placement and storage of the substances and products that, as described above, were referred to the production wastes by analogy. In our opinion, the collection of fees was the main reason for inclusion of these products into the category of wastes, because the fees currently paid by nature users on the basis of this unlawful legal act replenish to a considerable extent both local and the Republic’s budgets. A well known philosophic saying comes to mind in this connection: «There is no Constitution where the laws can be breached under the pretext of general salvation». Pursuant to article 29 of the ROK Law «On Environmental Protection» and article 461 of the ROK Tax Code, the subjects of taxation include, in particular, the volume of the «production wastes» placed in the environment. None of the above-mentioned legal acts which enjoy the status higher than the one of the departmental legal acts, even approved by a Government Resolution, provide for an obligatory fee to be paid by the nature user for «placement of the products of a temporary storage in the open air for a term exceeding three months a year». ROK Tax Code which came into force on January 1, 2002, i.e. after the enactment of the challenged Regulations, have not taken in the new definition of the production wastes, groundlessly and unlawfully determined by analogy by a departmental legal act. It should be noted here that beginning from January 1, 2002, the collection of all types of payment for environmental pollution, including special types of nature use, in particular, for «placement of the wastes of production and consumption», shall be performed on the basis of the ROK Tax Code. In view of this, collection of other payments for regulatory pollution of the environment, including special types of nature use (which include placement and storage of the production and consumption wastes in their legislative interpretation) on the basis of other legal acts, all the more departmental ones, shall not be allowable. Nevertheless, everywhere in Kazakhstan, competent government bodies in charge of environmental protection request of the nature users to obtain Permits (special documents) for «placement of products and materials of a temporary storage», which unlawfully and by analogy are referred to the category of the «wastes of production and consumption» on the basis of the above-mentioned provisions of the Regulations approved by ROK Government Resolution #1154 dated September 6, 2001. And, on the basis of this Permits, nature users have to make payments to the budget, which have not been provided for by the country’s tax legislation. The amounts of these groundless payments are quite significant. For example, Tengizchevroil JV only paid more than 1 billion tenge (more than 7 million US dollars) to the local budget for the sulfur storage in 2002. It is appropriate to make a reference to item 21 of the regulatory Resolution of the ROK Supreme Court #16 of December 22, 2000 «On the Practice of Application by Courts of the Environmental Protection Legislation», which contains a clarification that the «collection of additional payments for the use of natural resources, pollution of the environment, placement of the production wastes and other types of adverse impact not provided for by the Law «On Environmental Pollution» and the existing legislative acts shall not be allowable». In this connection, it also worth mentioning that according to the provision stipulated by item 8 of article 1 of the ROK Law «On Laws and Regulations», neither Government Resolutions, nor departmental acts enjoy the status of a «legislative act» and can therefore be used as a basis for collection of payments for nature use and other impact on the environment. Nature users have repeatedly brought to the notice of the Ministry of Environmental Protection and Natural Resources, Ministry of Justice, General Prosecutor’s Office, relevant departments of the Office of the Government of the Republic of Kazakhstan and the President Administration the fact that the two provisions of the Regulations (items 3 and 4) contradict legislative acts of the Republic of Kazakhstan. The things, however, are right where they started. Only the General Prosecutor’s Office, having agreed with the position of the nature users, have filed an objection with the ROK Government requesting to bring the above-mentioned provisions of the Regulations into compliance with the country’s laws. Unfortunately, this objection was withdrawn one month later, for a reason that we do not know. One can only guess why it happened. ROK Supreme Court has also taken a position not in favor of the nature users. I will give another example. «Regulations for Acquisition of Goods, Works and Services during the Conduct of Oil Operations» were approved by ROK Government Resolution #612 on June 7, 2002. Apparently, the ROK Ministry of Energy and Mineral Resources, the competent state body in charge of subsoil use, was the author of these Regulations. On the whole, these Regulations were adopted quite lawfully, because ROK Presidential Decrees having the force of law «On Subsoil and Subsoil Use» and «On Oil» provided that during the conduct of oil operations, nature users shall be obliged to use the materials, finished products, works and services of the Kazakhstan enterprises and organizations with holding bids (tenders) or without bids in the procedure determined by the ROK Government. However, along with the majority of the provisions that have reasonably concretized and specified the civil law provisions on holding bids, the Regulations, in our opinion, contain a number of provisions contradicting the Constitution, Civil Code and other ROK laws. For example, it is stipulated in item 6 of section 2 of the Regulations that the authorized state body is entitled to: approve the results of the contest (bids), consider applications of subsoil users for issuance of permits for purchase of goods, materials and services without holding bids, give permits or substantiated refusals for the purchase of materials, goods and services without holding bids. It is also provided for an obligatory participation of the authorized state body in the bids for acquisition of goods, works and services. However, none of the legislative acts applicable to the relations connected with the oil operations that are currently in force allow for a possibility of exercising of these rights by the authorized state body with regard to the subjects of private enterprise. Note that the overwhelming majority of subsoil users in Kazakhstan are the subjects of private enterprise, and in a number of cases they are major world petroleum companies. Moreover, the norms and principles of the civil law provided for by the legislative acts of the Republic of Kazakhstan either directly or indirectly reject the permission-prohibitions system of state regulation of competitive civil transactions, which is stipulated in the Regulations under criticism in respect of the subjects of private enterprise. For instance, item 4 of article 26 of the ROK Constitution provides that «everybody shall have the right to freedom of enterprise, free use of his property for any lawful business activities». Item 3 of article 910 of the ROK Civil Code, regulating the issues of the contests, provides that «a proposal to take part in a contest can be made by the initiator of the contest either directly or through a middleman/organizer» determined by himself. Item 4 of this article of the Code provides that «the contest can be open, when the proposal of the initiator of the contest is addressed to all persons interested by making an announcement in mass media, or close when the proposal to take part in the contest is addressed to a certain circle of persons at the contest initiator’s discretion». Pursuant to item 5 of the same article, «the open contest may be restricted to the interested parties that passed a preliminary qualification selection set by the initiator of the contest». Article 915 of the ROK Civil Code (items 3, 4 and 5) stipulates that the winner of the tender is selected from among its participants by the tender’s initiator or the tender commission set up by the initiator in an open or, depending on the terms of the tender, close procedure. A tender may be recognized by the initiator of the tender as missed, if less than two parties took part in it or the bids of the participants were recognized not meeting the conditions of the tender. In accordance with these provisions, a contract is to be made with the winner, etc. Nowhere, not in a single clause of these articles of the Civil Code, there is a provision that the contests (bids/tenders) should be held by a state body instead of the organizer (initiator), or that the state body can somehow affect the results of the contest. Nowhere there is a provisions that the state body should determine the winner of the contest in the end, and that the organizer of the contest, complying with the will of the state body and under its permit, shall be obliged to make a relevant contract with the winner of the contest. Obviously, the Regulations grossly violate the principle of freedom of contract stipulated by article 380 of the ROK Civil Code, which sets forth that individuals and legal entities shall be free in making contracts. Article 3 of the Law «On Freedom of Economic Activities in the Kazakh SSR» (which is currently in force) provides that entrepreneurs shall be entitled to make any decisions and take any actions on the use and disposal of their property on their own initiative and that the freedom of entrepreneurial activities can be limited only by the law. Therefore, neither the governmental act nor departmental acts approved thereby can limit the freedom of economic activities. Let me also draw your attention to one more legislative provision, article 13 of the ROK Law «On Protection and Promotion of Private Enterprise», under which state bodies are prohibited to make instructions to private enterprises concerning the delivery of goods (also implying works and services) to any specific consumers. So, controversial clauses of these Regulations, in our opinion, will significantly affect the activities of oil companies, including foreign investors, which are co-owners of many companies working in oil and gas industry of Kazakhstan. The Regulations seriously restrict the right of subsoil users which perform oil operations to choose high-quality and high-technology goods, works and services. They will increase the purchase and supply time cycle. Inevitable delays needed for obtaining relevant approvals will significantly affect the most important, high-priority orders. An unprecedented increase in the number of personnel will be required to work with authorized state bodies and to maintain with them an endless correspondence. In the main, these controversial provisions of the Regulations are disadvantageous for Kazakhstan as well, because they will decrease the ability of Kazakhstan producers of goods and services to compete in the market. Since under the Regulations the government officials are to decide if something should be allowed or forbidden, it will inevitably lead to certain violations of the anticorruption legislation of the Republic of Kazakhstan. It is not accidentally that it is already rumored among businessman that in order to obtain a contract, including one with the companies performing oil operations, Kazakhstan producers have to pay certain recompense to government official valued at a certain percent of the contract price. One can certainly understand striving of the state agencies and the ROK Government to support Kazakhstan producers. But by only regulatory methods, in the old fashion, this problem cannot be solved. Since market methods of the economy development are supported at the government level, the problem of strengthening the position of the Kazakhstan producers against the competitors should be solved by the laws of market, within the framework of the existing legislative basis. There are plenty of examples when the low-level legal acts contradict legal acts of the higher level, one can cite them endlessly, but the limits of a magazine article does not allow me to do it here. The examples that I have drawn up with regard to the hierarchy of legal acts demonstrate that the time has come to stop the lawmaking boom, especially in the government departments. It is necessary to begin, at last, the revision of legal base on the whole with the purpose of revealing contradictions in legal acts of various level. Development of departmental acts should be cut down, and the already issued and necessary departmental act should be subjected to a thorough and strict expert review for the purpose of verifying their compliance with the country’s laws. During development of new legislative and regulatory legal acts, they should be «tried» on the existing legal acts in order to reveal and exclude any possible contradictions with the law in force and prevent a double regulation of the same relation. It is important to more attentively listen to the opinion of legal scholars in the process of drafting laws, regulations and departmental acts. Each new draft without fail should go through an independent expert review. This is how a high-quality of lawmaking activities of state bodies can be reached. It is also important to ensure a real independence of courts in litigations instituted by individual and legal entities’ claims to invalidate some legal acts because of their contradiction to the provisions of the Constitution or the country’s laws. Courts should be above the politics; they should be guided by the law, and not by false ideas about the interests of the state, society and people. His Majesty the Law, be it good or «bad», should rule. Bad laws, naturally, should be revised or invalidated. I would like to conclude my article by a citation from esteemed Charles Louis Motesquieu: “Useless laws weaken the necessary laws”.
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