Department Chief of Presidential Administration: 'We were in a strange situation regarding Central Bank' - INTERVIEW

'As other banks, it is also an actor of the financial market. If a game is held in the same place, one actor neither can adopt rules for other actors nor regulate their activity.'

Baku. 9 February. REPORT.AZ/ The Head of the Department of Legislation and Legal Expertise of the Presidential Administration of the Republic of Azerbaijan, Shahin Aliyev gave an interview to AZERTAC. Report presents the interview:

- In December last year, the law 'On public legal persons' has been adopted and new structure - public legal person established in Azerbaijan. Could you please provide information regarding this issue?

- As this structure is applied for the first time there is a need to detailed explanation and description. Faculties of Law of our higher educational institutions do not provide even theoretical knowledge on public legal person in the framework of subject of civil law. I hope that after the adoption of this law, there will be some changes in the educational process and questions of society will be eliminated. Doctrine of public legal persons is newer in comparison with other legal doctrines. However, other conceptions and concepts of civil law have thousand years of history, doctrine of public legal persons has been established in France in the framework of administrative state-building nearly 200 years ago. It was applied in most European countries since the end of XX century and at least, in 1900, represented in paragraphs 80, 85 and 87 of German Civil Code, which is considered as an example for continental legal states. In former Soviet Union, laws on public legal persons was adopted in Georgia, Ukraine, Moldova and the Baltic states. In most countries, for example in Greece, public legal persons have been presented constitutional status in Article 17 of Greek Basic Law.

In general, state administration is constantly developing as a system. As you know, there are 3 branches of state power: legislative, executive and judicial power. It is not possible to make any changes or amendments. Because it is an axiomatic model. Executive power authorities cannot engage in economic governance, take profit or render paid services, because after payment of taxes and duties by citizens, state cannot require any other payment from them in order to gain profit. Desperate situation occurs in this case. As development of economy, newly established several organizations render paid services on behalf of state. Different laboratories at the State Committee on Metrology and Standardization, services at State Property Committee related with conduction of land structure works can be brought as an example to these organizations. There are a lot of such organizations and they forced to give ordinary legal person status of civil law to the structures, which render such services. Ordinary legal person is a person, which property can be left as a deposit, if court proceeding launches against this property, such organization may become insolvent, despite this organization carry out functions of state-importance. Public legal person doctrine answers to all arising questions. Public legal person implements functions that are important for state and society. Therefore, unlike ordinary legal person, it has sufficient privileges. First, public legal person never becomes insolvent. Lawsuits against public legal person is possible only in the framework of administrative proceeding, but not in civil order. Second, public legal person can render both paid and unpaid services, finance itself or be financed from budget, if necessary. Third, employees of public legal person can be civil servants, contracts signed by it can be administrative contracts, as contracts signed by state authorities, but not civil contracts. There are no restrictions for it as for ordinary legal persons of civil law. Direct founder of public legal persons is a state.

There may be such a question: Could, for example, non-profit organizations carry out those functions? No, functions, carried out by non-profit organizations are narrow. All financial proceedings, accounting reporting and registration of public legal person are implemented in the order mentioned for state authorities. Rules in private organizations do not refer to them. Therefore, the scope of this concept is too broad.

If we look at the developed European countries, we can see that kindergartens, schools and universities, state-owned medical clinics, large corporations are public legal persons. For example, railway corporations are public legal persons in Germany and in other Western European countries. They do not go bankrupt, because railway, which has vital importance for countrywide passenger transport should operate in any case. Therefore, state has undertook this issue and railway companies have been presented public legal person status as it is not managerial, but economic function. There is no such a need in Azerbaijan. Because vehicle transportation meets all demands of its population.

Or central banks of Germany and France are public legal persons. Because their functions differ from functions of state power authority. State authority can never grant loan or gain profit on account of interest. It is not the function of state power. So, central banks in those countries are public legal persons.

Public legal person creates sufficient new opportunities for Azerbaijan and it allows to establish new organizations without disturbing system of management and as a part of that system and state to get an opportunity to carry out new functions without changing current system.

- In accordance with the decree of President Ilham Aliyev, public legal person - Chamber of Control over Financial Markets of the Republic of Azerbaijan has been established. What has been done regarding preparation of charter and structure of the chamber?

- Draft charter is being worked on. This organization, created in the status of public legal person, will act under the principle of self-financing. It should be noted that no state authority can finance itself and it meets all expenses on account of state budget. But this chamber is fully independent and has no dependence on state budget. In accordance with the instruction of the president, draft charter of this organization will be ready within a month.

- Will functions of the new organization will coincide with functions of the Central Bank?

- All functions will be divided. We were in a strange situation regarding the Central Bank. As other banks, it is also an actor of the financial market. If a game is held in the same place, one actor neither can adopt rules for other actors nor regulate their activity. It is axiom of management.

- What will be functions of this organization, can its establishment affect the revival of manat?

- This issue is not related with manat's revival, it is issue of the system, in general. The system should be sufficiently modernized. Law 'On Central Bank' declares that Central Bank is a state authority. In such a case, to which branch of government does it belong: legislative, executive or juridical? Maybe it is a sparkle in state theory and invention of new branch of the government? In the Constitution of the Republic of Azerbaijan, the Central Bank is not attributed to any branch of state government, as it is not a state authority. For example, Central Bank in Russia is a legal person. If Central Bank in Azerbaijan is a branch of state government, positions of its employees should also be in classification of civil servants. But this classification does not include such positions. If Central Bank is a state authority, may state government authority grant a loan? May it take interest on loans? Of course not. Then the Central Bank is not state government authority and state authority, not implementing state government denies itself.

I'd like to bring other examples. In regulations of 44 state authorities in Azerbaijan it is written that either they are central executive power authority or their status is equal to the central executive power authority. In accordance with the constitution, heads of these organizations are members of the government. Having a look that functions of members of government are implemented by the heads of any central executive power authorities, we can see that these functions are sufficiently in a narrow framework. They are ministers, committee chairmen and several service heads, for example, head of State Border Service.

If you look at the functions of others - for example, State Procurement Agency, recently liquidated by the president -we can see that its status was identical to the status of central executive power authority. However, this authority was engaged in organization of procurements and tenders. Question appears that functions of which executive power are carried out by this structure and which field was managed by it? In fact, such organizations should be public legal persons. They have no executive functions. Giving status of central executive power authority to these organizations was due to desperation. In addition to the Cabinet of Ministers, only two types of executive power authority exist in the management - central and local.

- May establishment of public legal person beexpected to be created in other sectors, for example, in education after establishment of the chamber of control?

- Yes, it may be created. Charters of schools and higher education institutions are reviewed. Universities and educational institutions are not non-profit organizations in any country. Higher education institutions are engaged in education, which is very important area for society and state. Non-commercial activity quite another field. It has no such responsibility.

- It means that there will not be a free education?

- No, there will be free education too. Public legal persons can provide both paid and free services. As I said, they can be financed from budget or not. It is very quick, flexible form that may meet new demands in state administration. It can expands state opportunities.

- Probably, relevant changes will be made to the legislation.

- Of course, the president has instructed the Cabinet of Ministers to present proposals on coordination of existing legislation to relevant documents, signed by him. After preparation of the drafts, if necessary, it will be presented to Milli Majlis by the head of state.

-Is practice of any country is used for preparation of these documents?

- We are guided by the practice of advanced Western European countries.