The opportuneness control: sounds weird... Or not?!..

The Law on the Local Public Administration of March 18, 2003 has a concept of opportuneness control. It's a kind of administrative control carried out over the decisions of the local public authorities by the state central authorities. If you ask me to give you a precise meaning of it I won't be able to do this. I couldn't do this even after I'd read the Law several times.

The art. 77 of the Law provides that in order to assure the realization by the local authorities of their attributes delegated by the State their acts may be modified or revoked within 15 days from the date of adoption on the basis of opportuneness. As I see this statement, the national (the state) authorities may intervene into the activity of the local public administration in any case when they consider the actions of the latter ones inappropriate. And the Law doesn't provide any criteria to determine whether a decision is opportune or not. This actually means that a high official seating in Chisinau may intervene whenever he considers it to be necessary (or whenever he wants to).

I understand that Moldova is a unitary state (in the meaning of not a federal one). That means a higher level of power over the local authorities by the central ones. But it is my strong conviction that a clear and strict separation of attributes between the central and local authorities is the only effective way of governing a country. I think only the people of a respective region who vote for their local government must have the right to decide (by voting or other democratic means of expressing their will) whether their elected representatives act opportunely or not...

What I also want again to draw attention to is the vagueness and ambiguity of the opportuneness control as it is provided by the Law on Local Public Administration. There are no certain and clear criteria for intervention provided by the Law. No definite legal ground. But at the same time a local authority is entitled to appeal against the decision of the central authority to the court. So the question that I simply can't answer is how the court is going to decide upon such a claim. We are not a common law country. Our courts have no rights to create law. They must refer to certain legal provisions when taking a decision (smth. like "...according to art. XXX of the Law YYY...", I think you catch the point). So how the court can pronounce a judgment when there are no certain legal provisions to determine whether a local authority's decision is opportune or not? There is no sense in entitling the local authorities with the right that they can't use.

Can anybody explain me this?...

The future reform of Administrative law in Moldova

A couple of days ago on the Parliament's official site I came across the draft of the new Code of Contraventions (Codul contraventional - see the text in Romanian here) that had already been given its 1st reading by members of the Parliament. I hadn't time to read it in details. But what really attracted my attention was the list of official acts that're going to be either abolished or modified when it is adopted. And the adoption of this code and modifications that are to be introduced into existing legislative acts will probably mark a significant reform in Moldavian administrative law.

The new Code of contraventions (that are considered as law infringements less harmful than crimes provided by the Criminal Code) is to replace the current Code of Administrative Contraventions, one of the few Moldavian codes that haven't been replaced by new ones since the Soviet times (of course, there were many modifications introduced into it, but anyway the basis was laid as early as in the times of the USSR).

But what is even more important is that concurrently with its adoption the significant sections of the Tax and Customs Codes are also to be abrogated. So, all provisions regarding the fiscal and customs sanctions and their application procedures will become subject to unified rules of a single Code. And other legislative acts (e.g. the Law on Administrative Contentions - Legea contenciosului administrativ) are also anticipated to be modified in order to provide the uniform procedures that relate to administrative infringements.

And that really sounds good. Because today Moldavian lawyers need to refer to different acts, to apply different procedures in different disputes the essence of which is the same (arising from administrative relationships). I think among many other reforms in Moldavian legislation that have taken place for the last several years I see this one as probably one of the most rational and logical. At least for practicing lawyers...

GUILT and GOOD FAITH in Moldavian tax law

The Tax Code of Moldova has no definitions of guilt and good faith. "So what?"-you may say. OK, let me explain the reasons for my anxiety about it.

The conceptof guilt (or culpa, culpability) in our system of law reflects the relationship between one's person intention and a breach of law. That means that a person may be found guilty/culpable for a breach of law if he had an intention (direct or indirect) to violate any legal provisions. And the action of such a person must lead to a breach. That's actually a general and superficial definition of that concept (I'm not going deep into legal theory, there's no need for this here).

The concept of good faith is directly related to the previous one. It is "the mental and moral state of honest, conviction as to ... the rectitude or depravity of a line of conduct..." In the case of a breach of law we may say that a person act in good faith when he hadn't and couldn't objectively know that his actions may lead to a breach.

Now let's come closer to the tax legislation and see how these 2 definitions (or putting it more precisely, the lack of them) influence the way that Moldavian tax authorities operate.

One of the mostly widespread types of disputes between tax authorities and economic agents in Moldova relates to the false fiscal factures/invoices (facture fiscale). The problem is as follows: when a seller (registered as a VAT-payer) supplies any goods he must under the Tax Code to write out a fiscal facture (factura fiscala) for these goods and to present one original copy to buyer. Then, during the fiscal control the tax inspection finds out that a facture transmitted to buyer is false.

And try to guess what they do... They bring THE BUYERS (!!!) to account. Can you imagine it? They make them responsible for the actions committed by others, by those who write the documents out and hand them over to buyers. And buyers often haven't even known before the control takes place that the documents are false.

And that is why I started to talk about the necessity of the guilt and good faith concepts to be introduced into the Tax Code. Because when the buyer acquires goods he usually has no possibility to verify every document received from the sellers. He can't know whether a facture is valid or not. They are not culpable. They act in good faith. And bringing them to liability is not just unfair, it has no logic. But it is exactly what happens. The tax inspections impose immense sanctions to those who do not commit any breach of law. And in most cases the courts support position of tax authorities.

So, if the definitions of good faith, culpability, intention would be directly introduced to the Tax Code I think there would be much less such nonsense (cause I think it is) in such proportions. Maybe it would be easier for tax officials to understand that it's the supplier who should be brought to liability...

PS. I think I'll turn back more than once to the problems of taxation in Moldova because sometimes it reminds me the theatre of absurdity...

Zdob si Zdub and Copyright

In yesterday's issue of the Logos Press Economic Review (Экономическое обозрение Логос Пресс) I found a short article about a lawsuit brought against the most famous Moldavian band Zdob si Zdub (and my favourite one) that amazed me quite a lot (original version of the article in Russian is available here).

The lawsuit was brought against the band by Iurii Sadovnic who claimed against the breach of his copyright to the song "Draga Otee" by the band. The Chisinau Court of Appeal satisfied the claim and rewarded 100 000 lei damages to be paid to the claimant by the band (the claimant initially asked for 500 000 lei compensation). The Court's judgment wasn't appealed and came into force.

The song "Draga Otee" had been composed by Iurii Sadovnic (lyrics by Grigore Vieru) and has been performed for 20 years by the composer himself, by Anastasia Lazariuc and then by Zdob si Zdub. So, there were no problems for the claimant to prove his authorship for the song as well as to prove the fact of its performance by Zdob si Zdub in Moldova and beyond its boarders between 1999 and 2005, recording of the respective phonogram and filming the video.

The band refused during judicial proceedings to recognize the claim. One of the arguments mentiond was that the song had been preserved in its original version, no modifications had been introduced, the author's name had been indicated in all cassettes, CDs, videos. At the same time they didn't contest the author's right to get a fee. Another argument submitted by the band's representative in order to reject the lawsuit was that the band had not been registered as a legal entity and, respectively, cannot act as a party to a legal dispute. This argument was overruled by the Court and it recognized all the musicians of the band as respondents.

According to the "Zdubs" version the song had been performed basing on a verbal agreement with the composer. However, that argument was also rejected by the Court as unjustified because according to art. 25 of the Law on Copyright and Allied Rights the copyright agreement had to be concluded in a written form. As far as there was no such written agreement signed, Iurii Sadovnic was recognized to hold exclusive rights to any use of the song.

According to the composer's lawyer, Oleg Muntean, the execution procedures launched at the beginning of the current month. That means that musicians will be proposed to fulfill the judgment requirements voluntarily. Otherwise judicial executers may resort to forced collecting of the sum awarded.

Frankly speaking, I agree with the Court's judgment (at least having only this information). But anyway I really like Zdob si Zdub's performance of the song “Draga Otee". It sounds great when being performed by them. Actually thanks to them it became my favourite song in Romanian. So, I think they have to pay the sum awarded to the composer and ... must keep on performing the song in future. :)

Indices of corruption perception

I was looking through the corruption perception index tables edited by Transparancy International for 3 consecutive years (2004 - 2006). So, what I was interested in was the variation of indices for Moldova. And the tendency looks quite good at first glance. In 2004 Moldova took position between 114 and 122 (of 147 countries listed). In 2005 it climbed up to position between 88 and 97 (of 159 countries listed). And this year Moldova holds the 79th position (of 163 countries in the list).

As you can see the indices of corruption perception has been improving year after year. And that's what the government likes to demonstrate: "Look, you see the results of our work. You see, how much we have done." But is it the real success of being the 79th in the world and having an index of 3.2 (when 10 is the best)? We want to become the EU members and still have 3.2 index.

But my question is nevertheless a bit different. Despite these indices evolution has the situation with corruption in Moldova really improved? I don't know the methodology that was used by Transparancy International. What I know from daily talks with my friends who are also lawyers is that perception of corruption between them (them who face judicial and other state authorities every day) hasn't changed at all...

PS. Well, however, these indices anyway look better than previous years. :)

A competition authority: will it become a reality one day?

On last Thursday Viorel Melnic, the Deputy Minister of Economy and Trade, addressed the Parliament.

One of the issues that he touched upon was the founding of the National Agency for Protection of Competition and Monopoly Regulation. The creation of such agency had been provided by the Law on Protection of Competition adopted in 2000. But until now it hasn't been founded. So, the Parliament asked the Deputy Minister about the reasons why that hadn't been done yet.

The answer was just great: it's actually the Parliament's own fault. Because they still had not appointed the head of the Agency and his deputies.

So, just imagine, the situation. In 2000 the Parliament adopted the law that provided creation of a specialized agency on competition. All national and international officials spoke that such regulatory body was absolutely necessary for the Republic. It was one of the obligations that Moldova had undertaken when joining the Stability Pact for Southeastern Europe. And the only reason why it still doesn't exist is that the Parliament haven't find some time to appoint the agency's direction. Six years - and no result...

PS. By the way if you think it to be of any interest for you you can download the report on competition in Moldavian telecommunication market that I prepared for the seminar on competition that took place in Tartu, Estonia, more than 2 years ago. Here's the link to it: http://www.joensuu.fi/taloustieteet/ott/scandale/tarto/papers/Alexei%20Ghertescu.pdf