Remigijus ŠIMAŠIUS
Minister of Justice of the Republic of Lithuania

I want to discuss the following two aspects related to land sales to foreigners – should it be restricted and is it restricted today, how and why has the current situation occurred in Lithuania. 

Before the 1st of May: sale of the land that is not intended for sale

On the one hand, it seemed that foreigners could not buy land in Lithuania. However, land can be purchased by legal persons, and their founders, as you know, can be foreigners. It has been several years now that the Constitutional Law makes a land purchase possible for EU nationals who have resided inLithuaniafor at least three years and have been involved in agricultural activity. Likewise, land can be leased for an unlimited period of time without any restrictions on citizenship. A formal restriction is also applicable to land used for agricultural and forestry purposes.

Therefore, it has been some time now that foreigners can if not acquire land, then at least manage it “de facto“ inLithuania. As this is possible only in a roundabout way rather than in a straight and simple way, one can guess that this possibility is used not by straight and ordinary foreigners, but by those who are prone to resort to bypassing. Not those who follow the laws, but those who know how to adapt to them.

In Lithuania some of the land sellers, who would like to sell land profitably have less possibilities to sell it to foreigners, because, as I have already mentioned, some of them are not prone to circumvent the laws, adapting to the “curvature” of these laws. Other land sellers are still waiting for the purportedly salutary day, when it would be formally allowed to sell land to foreigners, and for the increase in land prices. Who can deny that part ofLithuania’s fields are long-fallow land and the adjacent farmers cannot afford buying land because nobody sells it or asks an unrealistic cosmic price for it? Isn’t this one of the reasons why some rural residents are stuck in inefficient farms and others cannot enlarge their farms up to the economically profitable size?

And, in general, who could deny that all these restrictions and roundabout ways are most favourable to larger oligarchs who have used the situation ingeniously?

All this perverse legal-economic reality has become a political one. Somehow for a long time and until now all the political powers, except the Liberals, have thought that such a situation should be continued. And what has happened in reality?

After the 1st of May: it is allowed to sell land to foreigners but there is a lack of acceptance

On the first of May it will be seven years sinceLithuaniabecame an EU member state. During the accession period to the EU,Lithuaniamanaged to get the transitional period of seven years for land sales to EU residents and that period was embodied in the Constitutional Law. The period, let me remind you, expired on the 1st of May.

The closer was the first of  May, the more intense became the attempts ofLithuaniato prolong the transitional period up to ten years (such possibility is provided in the Treaty). Despite the disagreement of the Liberals, the respective position was presented by the Committees of the Seimas, and later, with much trouble, by the second attempt (when the first one failed) it was presented by the Government.

At that time, in early spring, the Ministry of Agriculture successfully negotiated that the Commission would allowLithuaniato prolong the transitional period.

As there are still many discussions going on, what the decision of the European Commission means, it is worth commenting on.

The decisions of the Commission are applicable directly, if it follows from the content of the decision. In the above mentioned case the decision allowedLithuaniato prolong the transition restriction period. Equally to the provisions of the Treaty – they were applicable directly, but this did not preventLithuaniafrom rejecting the restrictions to sell land prior to the first of May.

The theory of law makes a clear distinction between such methods of making a legislative provision work as compliance with prohibition and making use of an opportunity. In the abovementioned case the addressee obviously is the Republicof Lithuania, which has been provided with the possibility of extending the validity of the transitional period.

Such one and the only possible interpretation of the decision is even more proved by the fact that the decision of the Commission notes that in the transitional period the restrictions for foreigners could be gradually reduced, which would be useful not only for the agricultural market of Lithuania, but it would also add to the preparation of the market for comprehensive liberalization. If the decision would be binding automatically as the extension of the transitional period – what else wouldLithuaniabe able to reduce?…

Unfortunately, this legal logic is hardly acceptable, this was revealed during the discussions at the Seimas and in public debates. To make it clear, what and how, I will present it in chronological order.

On 5 May the Lithuanian Chamber of Notaries appealed to the Ministry of Justice, the National Land Service and the European Law Department. It is stated in the letter that according to the Chamber, today there are no restrictions for foreigners to acquire land, the opinion of the above mentioned institutions has been requested.

The Ministry of Justice confirms that opinion. The European Law Department also supports this position by adding more detailed arguments. The National Land Service, nevertheless, states that the period of restrictions on land sales has been extended. I hope very much that this answer shows just the malpractice, but not political obsequiousness.

I have informed the Minister of Agriculture, whose sphere of responsibility is to initiate or not to initiate amendments to the law for the extension of the restriction, and the Prime Minister about the situation.

Having received the replies, the Chamber of Notaries informed the Committees of Seimas on Legal Affairs, on Rural Affairs and on European Affairs about the situation on 27 May.

On 7 June, the Chairman of the Committee on Legal Affairs appealed to the Prime Minister, drawing attention to the fact that the opinions of the authorities split, and requesting “to analyze and resolve” the problem that has arisen.

On 16 June, the Office of the Prime Minister sends the request to the Ministry of Agriculture (indicated at the top of the list of recipients), to the Ministry of Justice and to the European Law Department to analyze the problem in question and tackle it together.

Finally, in the evening of 29 June, I was interviewed about this problem by the TV channel LNK and they showed a sensation on the news and on the next day the article appears in the daily Respublika on how the motherlandLithuania is being sold up.

On 30 June, the draft decision of the Seimas, the essence of which is that it is illegal to sell land to foreigners, was registered. A highly charged discussion follows at the Seimas. Finally, the legal form of the decision was changed into a resolution, though the voters understand that from the legal point of view the situation will change only after the adoption of the Constitutional Law, the resolution was approved by the votes of all the fractions, except the Liberals.

Without going back to the essential matters whether it is necessary or unnecessary to limit land sales to foreigners, in this situation I would like to sum up, what is, indeed, clear to me in legal terms:

–          Since 1 May there has been no prohibition to purchase land for foreigners.

–          The Ministry of Agriculture, which is responsible for this, the Prime Minister, and the chairmen of at least three committees of the Seimas have been aware of this.

–          The political will has been expressed in non-ambiguous terms – such prohibition should exist, and it has been even stated that it exists. One can guess that the Constitutional Law will be adopted easily in autumn.

–          There have been all the possibilities to amend the Lithuanian laws in the way that the prohibition to sell land to foreigners would be further restricted and the resolution of the Seimas is not a suitable instrument for that purpose.

–          The abovementioned resolution was adopted turning a somersault on the last day of the Seimas session not because the fact came to light only then, but because on the day before the two means of the mass media, as if they have agreed between themselves, made the respective announcements of those facts.

–          The notaries certifying the legitimacy of land sale transactions, have been put into an invidious position, where the law provides for one thing and the resolution of the Seimas states another.

–          For those who are looking for someone to blame because the Constitutional Law has not been amended it is most convenient to find them in the personality of the Minister of Justice, who does not conceal his opinion concerning the restrictions on land sales, though it was him who has made everything for the situation to be treated according to the legal principles, for the law not to be manipulated, and for the political opponents to be sufficiently informed about the legal situation of this matter.