by Andrei Cosma (Senior Associate); Ana-Maria Coruga (Senior Associate) și Teodora Popescu (Associate) la SCA Simion & Baciu
Since it provoked numerous discussions in the public sphere, but also multiple questions regarding the concrete application of the legal texts, we dedicate this article to the provisions of article VIII of Government Emergency Ordinance no. 48/2020 on certain fiscal financial measures (“GEO 48/2020”), with the purpose of setting out some specific considerations regarding the application in time of the provisions regarding the fees related to the authorizations for the operation of traditional games of chance.
The application in time of the law is a complex subject, which aims both at the concrete evaluation of a factual situation and at the interpretation and application of legal norms to that situation, which in itself can be extremely nuanced and complex, depending on its particularities. This is also the case for the way in which gambling fees are due and paid, as well as the effects generated by the payment of such fees, including with respect to the sanctioning nature and the validity of licenses and authorizations granted to gambling organizers.
In the absence of an official interpretation on the constitutionality of the legal provisions made by the Constitutional Court, with concrete applicability covering all the details and hypotheses of the factual situation in question, we do not consider that drastic or absolutely definitive conclusions can be drawn. All the more so, a legal provision would be deprived of its applicability in the spirit and especially in the letter in which it was provided. Therefore, we present below a series of considerations and arguments that show both the complexity of the application of art. VIII of GEO 48/2020, as well as the complexity of the interpretation of the legal provisions as they were provided.
To begin with, we present the content of the legal provisions contained in art. VIII of GEO 48/2020:
(1) In 2020, the gambling operators provided for under Government Emergency Ordinance no. 77/2009 on the organization and operation of gambling, approved with amendments and completions by Law no. 246/2010, with subsequent amendments and completions, whose gambling organization licenses fall under the incidence of art. 33, ind. 2 of Government Emergency Ordinance no. 1/1999, approved with modifications and completions by Law no. 453/2004, with the subsequent amendments and completions, may formulate requests for the reauthorization of the activity no later than 90 days from the date the decreed state of emergency terminates.
(2) In 2020, the gambling operators provided for under Government Emergency Ordinance no. 77/2009, approved with amendments and completions by Law no. 246/2010, with subsequent amendments and completions, whose gambling operating authorizations fall under the incidence of art. 33, ind. 2 of the Government Emergency Ordinance no. 1/1999, approved with modifications and completions by Law no. 453/2004, with subsequent amendments and completions, may formulate requests for the reauthorization of the activity no later than 90 days from the cessation of the decreed state of emergency.
(3) During the state of emergency decreed in 2020, the payment obligations related to the authorizations for the exploitation of traditional games of chance provided by Government Emergency Ordinance no. 77/2009, approved with amendments and completions by Law no. 246/2010, approved with amendments and completions by Law no. 246/2010, as subsequently amended and supplemented, are suspended.
(4) For the activities provided in para. (3), the sanctions provided by Government Emergency Ordinance no. 77/2009, with the subsequent amendments and completions, regarding the non-payment of the fees related to the gambling operation authorizations do not apply if the payment of the fees that fall under the provisions of para. (3) are carried out within a maximum of 30 working days from the cessation of the decreed state of emergency.
(5) Gambling operators falling under para. (3) do not owe fees related to gambling operating authorizations for the entire period of the decreed state of emergency.”
About the provisions regarding the fees corresponding to the authorizations to operate games of chance
The state of emergency was instituted on the Romanian territory by the Decree of the President of Romania no. 195 / 16.03.2020, which entered into force on the same date, namely on March 16, 2020.
For the broader context, we emphasize the fact that, based on the provisions of Military Ordinance no. 1 of March 17, 2020 (entered into force on March 18, 2020), all land-based, traditional games of chance (carried out in casinos, gaming rooms, betting agencies, etc.) were suspended.
GEO no. 48/2020 entered into force on the date of its publication in the Official Gazette, namely on April 16, 2020.
The three paragraphs that concern the fees corresponding to the authorizations to operate games of chance provide that:
(1) the payment obligations corresponding to the authorizations to operate traditional games of chance are suspended during the state of emergency – paragraph (3);
(2) the sanctions provided by GEO 77/2009 for nonpayment of the fees corresponding to the authorizations to operate games of chance, in what concerns the activities provided under paragraph (3), shall not be applied, if payment of the taxes covered by that paragraph is made within 30 working days from the cessation of the state of emergency – paragraph (4);
(3) no taxes corresponding to the authorizations to operate traditional games of chance are owed during the entire period of the state of emergency – paragraph (5);
More concretely, we present the situation provided by GEO 77/2009, for the fees related to authorizations, due by the organizers of traditional slot machine games of chance, which owe an authorization fee for each means of play, a fee that is paid quarterly, in 4 equal installments, until the 25th day of the last month of the quarter, for the following quarter (respectively March 25, June 25, September 25 and December 25 – in advance, for the following quarter).
GEO 77/2009 provides, in terms of sanctions, including the fact that the NOG may order, depending on the consequences produced, the measure of revocation of the license to organize games of chance in the event of default of payment obligations to the consolidated general budget or payment of these obligations more than 30 days from the date on which those obligations are due.
Therefore, taking into account the taxation mechanism, as well as the potential sanctions, we note that the applicability of the last three paragraphs of art. VIII to the situation in which an organizer can be found is not at all easy to establish.
Views have been expressed in the public sphere according to which, despite the expression used by the legal text itself, the provisions of GEO 48/2020 concern only the period from April 16, 2020 onwards, in an absolute way, which, for instance could not include the period from March 16 (the beginning of the state of emergency),respectively March 18 (the date from which traditional gambling was suspended) to April 16 (the date of entry into force of GEO 48/2020) for the application of corrections to the amounts due. We consider such views hazardous and risky from a legal perspective, without taking into consideration the contrary arguments regarding the application in time of the law, as they derive both from the applicable legal provisions, as well as from the case law of the national Constitutional Court, but also from the Court of Justice of the European Union.
The principle of non-retroactivity of the law – the Constitutional Court of Romania and the Court of Justice of the European Union
The base for this interpretation would lay in the provisions of art. 15 of the Constitution, which in paragraph (2) stipulates that The Law provides only for the future, with the exception of more favourable criminal or administrative offence law provisions.
Although this legal provision seems clear at a first glance, the interpretation of this article is not one without any nuance and in no way can an interpretation in which the intention of the legislator was obviously a reassessment of a situation that began in the past and continues in the present, in light of its future effects be ruled out de plano.
Our assertion that the provisions of article 15 of the Constitution are not so obviously applicable to a certain factual situation is supported by the large number of cases in which the Constitutional Court of Romania has been put in a position to rule precisely on this question.
Thus, in its case-law, the Constitutional Court has established that a law is not genuinely retroactive when it amends for the future a state of law previously created, nor when it alters or suppresses the future effects of a legal situation established under the old law (for example Decision 330/2001, Decision 73/2001, Decision 1321/2011).
The Court also provided interpretations of certain mechanisms which, by their way of operation, envisage the reassessment of a past situation and the modification of its effects in the future. For example with regard to the way in which pensions are recalculated, the Court determined that such inevitably concerns the past, the contribution period being completed in the past, but is carried out after the date of entry into force of the regulatory act providing for it, aiming for effects for the future (for example, Decision 120/2007).
At the same time, there are other similar accepted legislative mechanisms that re-evaluate and correct past situations for the future. A relevant example in this case is how the fiscal amnesty functions as a rule – where the legislator’s intention is precisely to modify, suppress or exonerate future legal effects of past legal situations, suppression or exoneration that occurs after the entry into force of the law, but which by excellence concerns the past. We would also point out that the fiscal amnesty to which we refer does not concern provisions of criminal law (although it operates like the institution with the same name from the criminal law sphere).
In the same vein, the Court of Justice of the European Union, in its case law, has given a very interesting perspective on the principle of legal certainty, a component of which is the non-retroactivity of the law.
First, the Court has consistently held that the principle of legal certainty and legitimate expectations (which refers to the legitimate expectations that persons have regarding the effects and predictability of a rule / legal act) do not preclude a new regulation from being applied to the future effects of situations arising under a previous regulation (Case 89/14, A2A SpA v Agenzia delle Entrate, Case 120/08 Bavaria NV v Bayerischer Brauerbund eV). This view was also supported in the case of the application of financial corrections established by a normative act which entered into force after the infringement which gave rise to the applicability of those corrections took place (infringement referring to the previous conclusion of procurement contracts with certain irregularities) – related cases C-260/14 and C-261/14 Neamț County and Bacău County v. Ministry of Regional Development and Public Administration.
Moreover, the CJEU went further and acknowledged in its case law that there may be situations in which certain exceptions to the principle of non-retroactivity of the law are allowed by admitting a retroactive effect of certain regulations.
Thus, the Court held in case law considered classic that, although, as a rule, the principle of legal certainty precludes the retroactive application of a rule or the setting of the date of entry into force of a regulation before the date of its publication, a contrary situation is allowed by exception where the purpose or objective to be achieved so requires and where the legitimate expectations of the persons concerned are duly respected (Case T-7/99, Grimm KG v. Council of the European Union, Case 98/78, Racke v. Hauptzollamt Mainz – where the object of the case is the application with retroactive effect of monetary compensatory measures for certain products). At the same time, the Court has also held that the rules of substantive law must be interpreted as meaning that they do not apply to situations existing before their entry into force except in so far as it is clear from their wording, objectives or general scheme that such effect must be given to them (Case 120/08 Bavaria NV v. Bayerischer Brauerbund eV, Case 234/83, Gesamthochschule Duisburg v. Hauptzollamt Munchen-Mitte).
As such, through its decisions, the CJEU confirmed the validity of measures with apparent retroactive effect, especially in areas such as agriculture for example, but also where they were necessary to ensure market stability or in cases where the retroactive effect gave the individual a more favorable situation (EU Law – Text, Cases and Materials, Paul Craig, Gráinne de Búrca, Ed. 6, p. 559). In other words, the Court weighed in its decisions a number of principles such as legal certainty and the principle of legitimate expectations, but also the way in which the rights of individuals are affected by a certain legal norm, when it established that a certain retroactive effect of legal rules is allowed, without constituting an absolute defeat of the principle of legal certainty.
At the same time, referring to the provisions of GEO 48/2020, we emphasize that at least with regard to the provisions of paragraph 4, which makes direct reference to the non-application of sanctions, these could be considered more favorable provisions of administrative offence law, so that even if it were concluded that there was a retroactive application, it would be one permitted even by the provisions of the Constitution (Article 15, paragraph (2)).
Finally, all the above observations and arguments aim to reveal the complex nature of the problem of the application of the law in time and to disprove categorical points of view on this issue.
The principles of legal certainty and legitimate expectations, which underlie the principle of non-retroactivity of the law, have as their ultimate purpose the protection of the legal subject in the event that his legitimate expectations and the conduct of its business and legal relations would be affected by measures not in force when those activities and reports occurred. However, there may be situations in which the legislator himself balanced and weighed the intertwining principles and gave priority to the protection of certain rights – as may be the case in our current situation, where the rights of individuals have been affected, even suppressed by exceptional circumstances – and looked at the state of emergency as a whole, regulating a number of future effects in relation to the whole ongoing situation.
As such, as mentioned before, we deem that, in the absence of a decision of the constitutional law court establishing the existence of a violation of constitutional principles in this case (a decision which we would like to remind that can only be given where the issue is referred to the Court, as per and under the conditions provided for by the law), the letter of the law cannot be considered to violate these principles. Finally, we would like to underline the fact that, in accordance with art. 147, para. (4) from the Romanian Constitution, the decisions of the Constitutional Court are generally compulsory and produce effects for the future. Thus, any possible decision of the Constitutional Court would produce effects ex nunc, where the enforceability of the so declared unconstitutional text of law would not be affected, for the period prior to it being so declared unconstitutional.
For all the reasons set out above, in the absence of and until the issuing of a decision of the competent courts, we believe that the legal provisions contained in Article VIII of GEO 48/2020 must be applied and interpreted as per their letter, as they were provided by the legislator, respectively with reference to the entire state of emergency – both for the assessment of the suspension of obligations to pay fees related to authorizations and non-application of sanctions provided by GEO 77/2009 in this context, and for the exemption from paying these fees throughout this period. In other words, in the spirit of the conclusions of the Court of Justice of the European Union, the legal text should be interpreted and applied as is made clear from its wording, objectives and general scheme. Ubi Lex Non Distinguit, Nec Nos Distinguere Debemus!, yet another principle of law!
Place your bets!