By Decision No. U-I-192/16, dated 7 February 2018 (Official Gazette RS, No. 15/18), the Constitutional Court, upon the petition of several companies that manage accounts holding book-entry securities, reviewed the fourth paragraph of Article 48 of the Book-Entry Securities Act, which determined the upper limit of the costs of (i.e. the price for) account management that those companies can charge natural persons. The annual cost of having an account and the fee for managing an account held by a natural person could not exceed 0.5% of the average value of the book-entry securities in that account.
The Constitutional Court reviewed the statutory regulation from the viewpoint of the first paragraph of Article 74 of the Constitution, which guarantees the right to free economic initiative. That constitutional right also guarantees the freedom to manage an economic entity in conformity with economic principles. On the basis of the first sentence of the second paragraph of Article 74 of the Constitution, the legislature is authorised to regulate the manner of exercise of the right determined by the first paragraph of Article 74 of the Constitution as regards exercising economic activities. In doing so, it enjoys a wide margin of discretion. Not only can the legislature prescribe the manner of exercise of the right to free economic initiative in accordance with the second paragraph of Article 15 of the Constitution, but it can also limit certain forms of free enterprise in accordance with the third paragraph of Article 15 of the Constitution. The basis for such is the second sentence of the second paragraph of Article 74 of the Constitution, which prohibits the pursuit of commercial activities in a manner contrary to the public interest. As the Constitutional Court has stressed a number of times, the border between the determination of the manner of exercise of free economic initiative and its limitation, i.e. an interference with this human right, is movable and difficult to determine. In accordance with the established case law, when a regulation particularly intensively narrows the field of economic freedom, then this entails a limitation of the right to free economic initiative. When determining the conditions for performing an economic activity, the manner of exercise of the right can only then be at issue when the condition has a true substantive connection to the concretely regulated economic activity. Such is the case in particular when the legislature averts a threat or mitigates the risks that follow from a certain concrete activity (e.g. in the field of safety at work or the protection of a healthy living environment). However, if the legislature limits the freedom to act enjoyed by economic entities in order to achieve general public objectives or objectives in a certain separate field of social life, then this entails an interference with the right to free economic initiative determined by the first paragraph of Article 74 of the Constitution or a limitation thereof.
The challenged regulation limited the costs (i.e. the price) for managing book-entry security accounts that the petitioners were able to charge natural persons. Hence, on the basis of the challenged regulation, the legislature limited the price that the petitioners are entitled to charge for a certain set of services, whereby it directly interfered (the effects even extended to existing relations) with the essential element of contractual relations between the petitioners and the holders of book-entry securities. According to the National Assembly, the challenged regulation entailed a manner of exercise of the right to free economic initiative, as it pursued the objective of protecting consumers from disproportionate costs in view of the value of book-entry securities. In contrast, the Constitutional Court opined that the protection of consumers entails a general objective, with regard to which in the legislative file or the reply of the National Assembly there was no evidence of a particularly tight connection between the mentioned general objective and the regulated activity of the petitioners. Similarly, from the mentioned files no risks specific to the activity of the petitioners were evident that the challenged regulation would mitigate. Since the limitation of the costs entailed a legislative limitation of contractual freedom as regards an essential component part of a contractual relation, namely the price that the petitioners are entitled to charge, the Constitutional Court opined that the challenged regulation entailed an interference with the right to free economic initiative, which is determined by the first paragraph of Article 74 of the Constitution.
Subsequently, the Constitutional Court had to assess whether there existed a public interest in such an interference with free economic initiative as determined by the first paragraph of Article 74 of the Constitution. It established that the possession of securities does not concern any particularly sensitive interests of consumers that could justify the need for special protection in the sense of a public interest. If the price for managing book-entry security accounts is too high considering their value, that can entail a reason for the holder of securities to consider that holding securities is no longer (economically) sensible, given the costs for managing an account. The Constitutional Court held that the public interest in limiting the costs for managing trading accounts was not demonstrated. Therefore, the challenged regulation was inconsistent with the right determined by the first paragraph of Article 74 of the Constitution.