Constitutional Court overrules interpretation

On 11 May 2015, the High Court of Justice issued Decision no. 10 stating that a definitive decision for the total or partial cancellation of a normative administrative act should also take effect over the validity of an individual administrative act issued on the basis of the original normative act if the individual act is subject to challenge under pending litigation at the time when the cancellation decision is published (“Decision 10”).

The background of this decision was the cancellation of certain tax implementing rules approved by an Order of the President of the National Health Insurance Authority (Casa Națională de Asigurări de Sănătate), and the effects of such cancellation over a tax decision issued on the basis of the Order, which was itself in the process of being challenged in court.

The legal provision on which the High Court of Justice ruled in Decision 10 was Article 23 of Law no. 554/2004 on administrative litigation law (“Law 554”) which states that a definitive court decision cancelling in whole or in part a normative administrative act is generally binding and should have effects only for the future, as from its publication date in the Official Journal of Romania.

In a nutshell, based on the interpretation of the above-mentioned article and the arguments we shall present below, the High Court of Justice decided that any individual administrative act issued on the basis of the cancelled normative one should be de plano invalidated.

The effects of Decision 10 have started being upheld only recently when some of the urban zoning plans (“PUZs”) for Bucharest Municipality were cancelled and various entities began challenging the building permits (“BPs”) issued on the basis of these PUZs.

Thus, by reference to Decision 10, the claimants started requesting cancellation of BPs (i.e., individual administrative acts) based on the previous cancellation of the PUZs (which are considered normative administrative acts as per Decision no. 12 dated 28 June 2021, issued by the High Court of Justice), on the basis of which the BPs were issued.

This situation generated a high degree of uncertainty over the real estate market, as any developer feared that although it held a valid BP, it might face, at any time, a scenario in which its BP could be challenged during construction works, requiring suspension of its activity, or even worse, after completion of the building, leading to the impossibility for the developer to sell its investment. In either case, the occurrence of such scenarios could mean for most of the affected real estate developers the collapse of their businesses.

By Decision no. 208 dated 9 April 2025 (the “RCC Decision”), the Romanian Constitutional Court decided that the interpretation given by the High Court of Justice with respect to Article 23 of Law 554 under Decision 10 is non-constitutional, for the reasons we shall outline below. 

The legal concern scrutinized under Decision 10 had as its subject matter a definitive cancellation decision of a normative administrative act and its effect over an administrative individual act issued on the basis thereof in the following scenarios: (i) if the individual act was issued after publication of the court’s cancellation decision or, (ii) if although issued prior to this decision, it was the subject of a challenge under pending litigation at the time of the cancellation decision.

The principle regulated by Law 554, and restated under Decision 10, is that the cancellation decision has general effects towards any third party, only for the future. Based on this, and with respect to the first scenario, any individual administrative act issued based on or by reference to the cancelled normative act and after the publication of the relevant decision should be considered null and void and should not produce any effects.

In terms of the second scenario, the High Court of Justice ruled that no distinction should be made (by reference to the effects of the first scenario) if the individual administrative act was subject to a pending litigation at the time when the relevant decision was published.

The High Court of Justice assimilated this situation to that of the exception of non-constitutionality, in the case of which any provisions declared non-constitutional should no longer be applicable in the file in which their scrutiny has been invoked, nor in any other pending files in which the respective provisions would otherwise be applicable.

From this perspective, the High Court of Justice considered that the contrary solution, meaning the impossibility to invoke the cancellation decision of a normative administrative act in a separate case which has as its object the challenge of an individual administrative act issued based on the first one, would constitute a violation of the right of access to courts. From this perspective, it was considered that the action of the affected person against the individual administrative act would have no practical outcome.

The opponents of the arguments presented by the High Court of Justice under Decision 10 referred to the breach of the principles of non-retroactivity and legal security of acts, as we shall detail below. 

Firstly, the Constitutional Court indicates that the High Court of Justice provides an absolute and non-tailored solution to the interpretation of Article 23 of Law 554 in relation to the effects of an individual administrative act issued based on a cancelled normative one.

The High Court does not make any distinction in terms of the actual application of the cancellation decision of the normative administrative act in the case of pending litigation files, meaning that it does not distinguish between (i) files referring to the cancellation of an individual administrative act as an effect of the cancellation of the normative one nor to (ii) files grounded on any other reasons for which these individual acts are being challenged.

Thus, based on the High Court of Justice’s interpretation, the court entitled to rule upon a pending litigation under which an individual administrative act has been challenged would no longer follow the merits of the case but consider the act de plano ineffective.

From this perspective the Constitutional Court considers that this interpretation would affect the act of justice. Moreover, it mentions that the relevant courts must carry out a case-by-case analysis of the application of the nullity provision and assess whether its conditions are met, while considering all legal and factual circumstances of each case.

Secondly, the Constitutional Court indicates that the legal scrutiny of an individual administrative act must be made by reference to the applicable legal provisions at the time of its issuance, as per the tempus regit actum principle.

However, in view of Decision 10, the origin of the nullity of an individual administrative act would not be established by the pre-existing or concomitant causes related to its issuance (as per the general rule), but subsequently to it – i.e., cancellation of the normative administrative act based on which the individual one was issued.

In the view of the Constitutional Court, such an interpretation could affect the legal security of acts and question the presumption of these being legally issued by the appropriate authorities. Moreover, the Court has pointed out that the legal security of acts and relationships must be one of the fundamental elements of the rule of law and a guarantee for the rights and freedoms of citizens.

From this perspective, the Constitutional Court also considers that the interpretation made by the High Court of Justice on the provisions of Article 23 of Law 554 represents not only a threat to, but an actual breach of the constitutional order.

It is important to note also that some of the judges ruling on this issue had a different view from the majority. In their separate opinion they stated that the case brought to the attention of the Constitutional Court should have been rejected, considering that the interpretation provided under Decision 10 does not exclude a tailored interpretation of the legal provision, thus falling under the attributes of the appropriate courts to analyze and decide on a case-by-case basis. 

We believe it is also important to mention certain valid arguments brought by the author of this request (i.e., the Romanian Ombudsman) and presented to the Constitutional Court, such as:

1.       Breach of the non-retroactivity principle:

The identity of effects between the exception of unconstitutionality and nullity of an administrative act, made by the High Court of Justice, breaches the non-retroactivity principle, as the cancellation of administrative acts must have effects only for the future (this exception from the general rule of the nullity provision is expressly regulated under Law 554).

2.       Unconstitutionality of a legal provision and the nullity provision under administrative law are two different legal principles:

On the one hand, the exception of unconstitutionality aims to ensure compliance of legal provisions with the fundamental law, representing a procedural exception and a specific sanction under constitutional law exclusively applied by the Constitutional Court. On the other hand, the provision of nullity has a larger sphere of application, being of relevance to all civil, administrative and criminal legislation. In terms of administrative law, the courts may apply the nullity provision if the act issued by the executive authorities breaches the rules set out by the legislative forum. From this perspective, one cannot put an equal mark between them.

3.       Breach of the right to ownership and its guarantees:

In practice, from a commercial standpoint, it seems that Decision 10 had a higher impact in the case of construction documents (e.g., building permits) than in the case of any other administrative acts. From this perspective, the effects of Decision 10 over these documents tend to impact the right to ownership, as the beneficiaries of building permits are affected in their ability to capitalize the properties and seem not to benefit from predictability and security of acts regulating the framework in which such capitalization may be carried out. 

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In conclusion to the above, the RCC Decision seems to create a more secure and predictable framework for the application of administrative acts. The new environment should provide a more trustful and business-oriented legal framework, while contributing to a more stable market for both national and international investors operating in Romania.