The Ministry of Economic Development assessed that there are no grounds for accepting the initiative of the company "Port of Adria" to assess the constitutionality of Article 20, paragraph 7 of the Law on Free Zones, which prohibits the trading of tobacco and tobacco products in free zones, stating that this is a legitimate measure by which the state protects fiscal security, strengthens customs supervision and prevents illegal trade.
Opinion of the department headed by the Deputy Prime Minister and Minister of Economic Development Nick Djelosaj adopted by the Government.
Article 20, paragraph 7 of the Law on Free Zones stipulates that the production, storage, processing, trade, transit and transshipment of tobacco and tobacco products are prohibited in a free zone.
“Port of Adria” in Bar is a multi-purpose port with an operational waterfront of 1.440 m, dedicated terminals for container ships, general cargo ships, RO RO ships and cruise ships. The entire area of “Port of Adria”, majority owned by the Turkish “Global Ports Holding”, is completely under the free zone regime.
The disputed provision did not deprive the initiator of any existing property rights. The concession contract did not terminate, the right to use the concession area or port infrastructure was not taken away, nor was the performance of basic port activities prevented.
The company “Port of Adria” in its initiative to the Constitutional Court states that the disputed provision is not in accordance with the Constitution of Montenegro, in particular with the provisions guaranteeing the principle of proportionality, equality before the law, prohibition of discrimination, freedom of entrepreneurship, the right to peaceful enjoyment of property, legal certainty and legitimate expectations, as well as that it infringes on the rights of the applicant arising from the concession contract. In support of its allegations, the applicant also refers to the case law of the European Court of Human Rights, believing that the disputed provision constitutes a disproportionate restriction of its property rights and legitimate expectations.
The Ministry of Economic Development believes that the allegations in the initiative are unfounded.
"Based on Article 16, point 5 of the Constitution of Montenegro, which stipulates that the law shall regulate issues of interest to Montenegro, including the economic system and the manner of exercising freedoms and rights when provided for by the Constitution, the legislator was authorized to regulate a special regime for business operations in free zones when it is necessary to protect the public interest. The disputed provision represents precisely such a norm in order to protect fiscal security, strengthen customs supervision and prevent illegal commodity and financial flows. The basic assumption on which the applicant bases the initiative is that the disputed provision represents a measure directed towards its concession relationship and its business operations. The Ministry believes that such an interpretation cannot be accepted," the Ministry assessed.
Article 20, paragraph 7 of the Law on Free Zones, as they explained, represents a general, abstract and regulatory norm by which the legislator regulates a special regime of business operations in free zones and does not regulate the legal position of "Port of Adria" or any other individual economic entity, nor does it decide on the individual rights or obligations of a certain person. "The norm applies equally to all current and future operators and users of free zones on the territory of Montenegro, whereby its application is not conditioned by the identity of the economic entity, but by the fact that a certain activity is carried out within the framework of a special legal regime of a free zone," the Ministry of Economic Development emphasized.
As they explained, free zones represent a special customs and regulatory institute whose main characteristic is the existence of a special legal regime in relation to the general customs regime, and precisely because of their special legal nature, the legislator has the authority to prescribe special business conditions, special supervision mechanisms and special restrictions for certain categories of goods when required to protect the public interest.
"In this specific case, the legislator assessed that tobacco and tobacco products, as excise goods with a high fiscal and security risk, require a special regulatory regime within free zones in order to protect the fiscal security of the state, prevent smuggling, improve customs supervision and more efficient control of goods and financial flows. Such a legal determination is not arbitrary. Tobacco and tobacco products represent goods that, due to the high fiscal burden, internationally recognized risks of smuggling, tax evasion, illegal goods and financial flows, as well as the obligations of states in the field of preventing illegal trade in tobacco products, are subject to a special regulatory regime in a large number of legal systems. Consequently, the legislator had an objective and reasonable justification to prescribe a stricter regime for business operations in free zones for this category of goods," is the position of the Ministry of Economic Development.
The initiator believes that the disputed provision represents an impermissible restriction on the freedom of entrepreneurship under Article 59 of the Constitution of Montenegro. The Ministry's position is that this allegation is also unfounded, that this article guarantees freedom of entrepreneurship, and that the disputed provision does not prohibit the performance of port activities, nor does it prevent the initiator from performing activities that are the subject of the concession agreement.
"The law only stipulates that certain activities related to tobacco and tobacco products cannot be carried out within the special regime of free zones. Neither the Constitution of Montenegro nor the European Convention for the Protection of Human Rights and Fundamental Freedoms guarantee the right to carry out certain economic activities under unchanged regulatory conditions nor the right that the existing legislative framework will not change during the duration of a business or concession relationship," the Ministry emphasized.
The adjustment period protects the economy
The Ministry explained that a transitional period of eighteen months has been prescribed for harmonizing operations with the new regulatory regime.
"This has given economic entities sufficient time to adapt their operations to the changed legal conditions, which further confirms that when adopting the disputed provision, the principle of proportionality and the protection of legal certainty were taken into account. Based on the above, the Ministry believes that there is a reasonable balance between the public interest protected by the disputed provision and the interests of economic entities to which it applies, which is why the allegations of a violation of the principle of proportionality cannot be accepted," is the Ministry's position.
The initiator believes that the disputed provision leads to discrimination of maritime transport in relation to road and rail transport, stating that the operator of the Port of Bar Free Zone suffers the greatest consequences of the ban in question.
The Ministry believes that these allegations are also unfounded.
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