JURIDICAL RECOGNITION OF PROPERTY RIGHTS OVER THE FACILITIES OF REHABILITATION CENTERS IN THE SPA AND CLIMATIC SITES OF SERBIA

U radu se analizira problem određenja titulara prava svojine na specijalnim bolnicama i zavodima za rehabilitaciju u banjskim i klimatskim mestima Srbije. Ove specijalizovane zdravstvene ustanove izgrađene su najvećim delom tokom 1970-ih i 1980-ih, sredstvima doprinosa za obavezno penzijsko i invalidsko osiguranje. Bile su u društvenom vlasništvu do 1996. godine, kada su preimenovane u državnu svojinu. U skladu sa Zakonom o privatizaciji iz 2001. godine, njih dvanaest je 2008. godine proglašeno „subjekatima privatizacije“. Međutim, postupak njihove privatizacije još uvek je u fazi analize i priprema zato što je Republički fond penzijskog i invalidskog osiguranja (PIO Fond) pokrenuo sudske sporove da bi dokazao da država nije njihov vlasnik i da ih, stoga, ne može privatizovati. U radu se polazi od hipoteze da su različita stanovišta o titularu prava svojine na banjskim rehabilitacionim centrima posledica kako specifičnosti društveno-svojinskih ovlašćenja koja su postojala u vreme njihove izgradnje tako i nedorečenosti relevantnih privredno-sistemskih propisa kojima je tokom proteklih decenija ekonomske tranzicije bila regulisana materija vlasničke transformacije društvene, a zatim i državne u privatnu svojinu. Cilj rada je da ukaže na značaj izvora finansiranja investicija kao kriterijuma na osnovu kojeg se sudskim putem danas utvrđuje pravo svojine PIO Fonda na nepokretnostima banjskih rehabilitacionih centara.

Društveno-ekonomski sistem FNRJ, odnosno SFRJ bio je tako koncipiran da je država (na saveznom, republičkom i lokalnom nivou) politikom centralizovanog prikupljanja sredstava i planske alokacije investicija uticala na tokove privrednog i socijalnog razvoja. Na taj način je jedan jasno određeni deo društvene svojine bio stvoren sredstvima za investicije koja su prikupljana prinudnim putem, a ne posredstvom tržišnog mehanizma. Instrumenti centralizovanog prikupljanja sredstava i planske alokacije kapitalnih investicija bili su državni budžet i društveni investicioni fondovi. Način Defined by the Law on Healthcare as specialized hospitals and rehabilitation centers (Official Gazette of the Republic of Serbia, no. 106/2015], such healthcare institutions have been built and have been functioning as an organized healthcare service in most of the spa areas in Serbia. Within the healthcare system of Serbia, such centers actively function in 19 out of 30 spa and climatic sites. They are equipped with 3,420 beds for rehabilitation. 1 These specialized modalities of healthcare institutions were especially developed in the 1970s and 1980s, during the period of intensive construction of facilities intended for the prolonged treatment and rehabilitation of the strictly defined categories of patients [Commission for Physical Medicine and Rehabilitation and Balneoclimatology of the Republic of Serbia, 2007]. They played a key role in the overall development of the areas in which they are located. Thanks to these specialized rehabilitation institutions, which are capable of providing a complex physiotherapeutic treatment, the spas have become the bearers of the health tourism over time [Milićević, 2015].

Specific Features of Financing the Construction of Rehabilitation Centers
The construction of spa rehabilitation centers was realized within the economic system based on the non-proprietary concept of social property. This concept was derived from the principles of the FPRY Constitution of 1953 and the SFRY Constitution of 1963 and 1974, according to which no one had the right to own property, but only the right to use social assets over which there were no powers typical in economic terms. Social property encompassed all means of production, products and income generated in the social sector, as well as the natural resources and facilities in general use. The title holder of the social property rights could not be an individual or a group of citizens, a company or the State. In this sense, the specialized rehabilitation healthcare institutions built during the 1970s and 1980s in the spa areas were also socially owned.
Pravni Gnjatović D. Priznanje prava svojine na objektima rehabilitacionih centara u banjama i klimatskim mestima Srbije sudskim putem investments were the central government budget and social investment funds. The method of collecting funds for contributions for pension and disability insurance and investing surpluses from these funds in the construction of spa healthcare resorts was in line with the manner in which social investment funds operated at that time. Social investment funds existed at all levels of government: the General Investment Fund at the federal state level, the Federal Unit Investment Funds and Municipal Investment Funds at the levels of federal units and local communities, respectively. Collecting money for social investment funds was of compulsory character. The revenues of the General Investment Fund were: interest on the assets of self-managed economic enterprises, part of the mine tax and part of the business income tax. The remaining parts of these taxes were the revenues of social investment funds at the level of federal units and local communities.
In the period from 1952 to 1964, capital investments were mainly financed through social investment funds, and only a small part was financed directly from the central government budget. The money collected in social investment funds was placed under far more favorable conditions than commercial ones, as a non-refundable transfer, therefore, without the obligation of repayment [Gnjatović, 1994]. Of the total sum of money collected in these funds in the aforementioned period, 71% was the revenue of the General Investment Fund, 17% was the revenue of federal units' investment funds and 12% was the revenue of municipal investment funds [Bjelogrlić, 1973]. In addition, the assets of the General Investment Fund were primarily used to finance productive investments, and the federal units' investment funds and municipal investment funds were mostly used to finance non-industrial and non-productive investments. Non-industrial and non-productive investments included all capital investments in the so-called nonproductive activities. Namely, in the economic system of self-managed socialism, based on the material principle of production, there was a clear division into productive and nonproductive activities, whereby only productive activities were considered to contribute to the creation of national income. Healthcare and social protection were considered to be nonproductive activities, so investments in the construction, reconstruction and adaptation of healthcare institutions were treated as nonproductive investments. 2 Beginning with 1965, capital investments were to a lesser extent financed from the central government budget and social investment funds, and to a larger extent from business and personal deposits, through the banking system, on credit. 3 Although the commercial banking system was already developed in the 1970s, the most important investment decisions were still being made by the State. The only difference was that the decision-making process in the field of investment was increasingly transferred from the Federation to the federal units and municipalities. In doing so, the banks did not decide independently, on the basis of the profitability criteria, which projects should be financed. The priorities in financing were selected by the authorities of the federal units and local communities [Gnjatović, 2007].
Pored realizovanih kapitalnih investicija, u banjskim i klimatskim mestima danas se nalaze i određeni nedovršeni i zapušteni objekti zato Gnjatović D. Priznanje prava svojine na objektima rehabilitacionih centara u banjama i klimatskim mestima Srbije sudskim putem were financed with non-refundable monetary assets collected at the level of the Republic of Serbia through compulsory fundraising, not through the market mechanism. The sources of these investments were the surpluses generated from the contributions for compulsory pension and disability insurance of employees in Serbia. Their purpose was planned and defined by the decisions of the institutions of the Republic of Serbia that were the legal predecessors of the PIO Fund. The predecessors of the PIO Fund in the Republic of Serbia were: the Social Security Association (1965)(1966)(1967)(1968)(1969)(1970)(1971)(1972), the Pension and Disability Insurance Association (1972)(1973)(1974)(1975)(1976)(1977) and the Self-Management Association of the Workers' Pension and Disability Insurance (1977)(1978)(1979)(1980)(1981)(1982)(1983)(1984)(1985)(1986)(1987)(1988)(1989)(1990)(1991)(1992)(1993) Association was obliged to continuously improve the protection of the insured and in that sense empowered to decide on investing surplus funds of the contributions, based on the previously established plans and programs adopted by the Association's Assembly. The possibilities for planning the construction, reconstruction and adaptation of healthcare centers for the rehabilitation of insured persons were created thanks to the inflow of funds for the alimony of pensions being higher than its outflow. In the conditions of accelerated industrialization, the number of employees was growing steadily. In the Republic of Serbia, from 1952 to 1989, the number of employees per 1000 inhabitants increased from 87 to 264 [Federal Statistical Office, 1986]. Owing to the application of the pay-as-you-go (PAYG) system, the funds raised by the contributions for compulsory pension and disability insurance exceeded the needs related to the financing of pensions. During the 1970s and the first half of the 1980s, the surplus contributions exceeding the needs of pension funding were the result of a relatively favorable coefficient of dependency, showing the ratio of the number of employees who paid contributions for compulsory pension and disability insurance and the number of pensioners whose pensions were financed by these funds. At the beginning of the 1970s, the ratio of the number of employees and the number of pensioners was 3.5: 1. This ratio endured until the mid-1980s, with a gradual deterioration, standing at 2.5: 1 in the early 1990's [Petraković, 2007]. Starting from the 1990s, the pension and disability insurance contributions were no longer enough to finance the pensions, so they had to be partly financed from the central government budget.
During the 1970s and 1980s, the construction of facilities of specialized hospitals and rehabilitation centers, medical centers, gerontology institutions, specialized schools for the disabled children, water supply and sewerage facilities and protective workshops for the employment of the disabled persons were financed by the surpluses of the contributions for compulsory pension and disability insurance. In sum, the value of these capital investments, converted into 2011 prices, has been estimated at several billion EUR. Specifically, the value of capital investments in the construction of facilities of specialized hospitals and rehabilitation centers in the spa areas has been estimated at around EUR 500 million [Working Group for the Pension Fund Restructuring, 2012].
The institutions of the Republic of Serbia -the legal predecessors of the PIO Fund have invested the surpluses of the contributions for compulsory insurance in the construction of rehabilitation centers, in accordance with the ]. Na taj način je bila prekinuta realizacija programa stvaranja materijalne osnove za prevenciju invalidnosti i rehabilitaciju radnika. Ovaj zakon je bio donet u sklopu mera smanjivanja javne potrošnje kao uslova za prevazilaženje tada teško narušene makroekonomske stabilnosti u zemlji [Gnjatović, 2007].

Problem definisanja oblika svojine na RH centrima u procesu vlasničke transformacije
Proces vlasničke transformacije u Republici Srbiji traje već tri decenije i još uvek nije dovršen. Kao što je to bio slučaj i u drugim ekonomijama u tranziciji, praćen je mnogim nedoumicama i lutanjima institucionalnog karaktera [Sukharev, 2015]. Ovaj proces je započeo u periodu [1988][1989][1990] Thereby, the realization of the program of creating a material basis for the prevention of disability and rehabilitation of workers was interrupted. This law was adopted as a measure of reducing public spending as the condition for overcoming the seriously disturbed macroeconomic stability in the country at the time [Gnjatović, 2007].

The Problem of Defining the Form of Property of the Rehabilitation Centers in the Ownership Transformation Process
The process of ownership transformation in the Republic of Serbia lasts for three decades and has not yet been completed. As was the case in other transition economies, it has been accompanied by many dilemmas and ambiguities of institutional character [Sukharev, 2015]. This process started in the period from 1988  The privatization of social ownership was primarily based on the partial privatization model by means of issuing internal shares for recapitalization and selling companies to the employees. Those employed in the enterprises were the ones who decided autonomously on the partial privatization.
The Law on Assets in the Property of the Republic of Serbia [Official Gazette of the Republic of Serbia, no. 53/1995, 54/1996, 32/1997], constitutes state ownership "over natural resources, goods in general use, means of state authorities and organizations and authorities of territorial units, as well as funds of public enterprises and institutions founded by the State or territorial units, except for funds used by the organizations of compulsory social security." It can be concluded that, using this formulation, the legislator explicitly exempted the assets used by the Pension Fund from the scope of the state property and confirmed that those assets remain to be socially owned.
After the adoption of the 1995 Law on Assets in the Property of the Republic of Serbia, all institutions of the healthcare system were renamed from social to state property, and the Republic of Serbia registered ownership over them in the public books. These institutions also included rehabilitation centers located in spa and climatic sites, despite the fact that the aforementioned law left out the funds used by compulsory social security organizations from the scope of the state property. The privatization of the social property, which was based on the issuing of internal shares, was de facto conducted free of charge. In conditions of high inflation in 1992 and hyperinflation in 1993, shareholders were stimulated to pay off the total debt before its obligatory revaluation, which was legally prescribed at the end of each calendar year. Thereby, large gains were made on the part of the buyers of the shares, while the enterprises were sold for nothing. Therefore, the revision of all privatizations was carried out, retroactively, since 1 January 1990.
In order to restore and accelerate the privatization process, the Law on Ownership Transformation was adopted in 1997 [Official Gazette of FRY, no. 29/1997]. This law enabled the privatization of legal entities in both social and state ownership. Successful enterprises in social or mixed (social and private) ownership decided autonomously on the possible privatization of non-privatized capital, while the privatization of the so-called large social enterprises took place according to the special program of the Government of the Republic of Serbia [Đuričin, 1997]. The decisions on the potential privatization of public companies and institutions that were already nationalized on the basis of the 1995 Law on Assets in the Property of the Republic of Serbia were made by the Government of the Republic of Serbia as their owner.
The privatization, mostly conducted according to the model of distributing the shares to the employees and selling them at a preferential price primarily to the employees and then to a wider circle of interested citizens, yielded relatively modest results. The interest in this privatization model was short-lived due to the increasing gap between the official exchange rate of the dinar that was applied in the valuation of shares and the real exchange rate [Drašković, 2010; I. Vujačić, J.P. Vujačić, 2011].
With the intention to accelerate the ownership transformation, the Law on Privatization was adopted in 2001 [Official Gazette of the Republic of Serbia, no. 38/2001], which prescribed the privatization of socially owned and state owned capital. This law introduced the term "privatization entities" into the economic system of the Republic of Serbia. This concept covered all companies in the social and mixed (social and private) ownership, as well as those state-owned enterprises and institutions that would undergo privatization according to the relevant decision. The privatization process was planned to be completed within four years. Based on the philosophy that the privately-owned enterprises by definition are more effective than the socially-owned and state-owned ones, this law introduced the principle of mandatory privatization of socially-owned enterprises into the economic system of the Republic of Serbia [Drašković, 2010]. All socially-owned enterprises became "privatization entities", although the 1990 Constitution, which guaranteed the existence of social property, was still in force. Namely, unlike the stipulation of the 1995 Law on Assets in the Property of the Republic of Serbia, which referred to the organizations of compulsory social insurance as the users of funds that were not included in the coverage of the state property, the 2011 Law on Public Property treated the organizations of compulsory social insurance as the owners of the estate that was exempted from the coverage of the state property. This because Article 3 of the 2011 Law on Public Property no longer contains the reference to the right of usage which was the basic power in the regime of social property, but it says instead that the assets of the organizations of compulsory social security are not considered public property. Thus, the power of the PIO Fund as the title holder was for the first time indirectly recognized by the law.

Controversies Concerning the Privatization of the Spa Rehabilitation Centers
After the adoption of the 1995 Law on Assets in the Property of the Republic of Serbia, the spa rehabilitation centers continued to operate within the network of medical healthcare institutions, not any more as socially-owned but as state-owned property. Until 2006, when the media information on the preparations for mass privatization of the spa centers appeared, the transition of these specialized healthcare institutions to state ownership was not questioned.
The mass privatization of rehabilitation centers in spa and climatic sites of Serbia began to be addressed as part of the implementation of healthcare rationalization measures. During the 1990s and the 2000s, the healthcare was faced with the lack of financial resources.   Zakon o privatizaciji iz 2014. godine omogućio je domaćim i stranim investitorima i strateškim partnerima da učestvuju u privatizaciji preostalog društvenog i javnog kapitala i imovine "subjekata privatizacije". Privatizacija se sprovodi modelima prodaje kapitala, prodaje imovine, strateškim partnerstvom i prenosom kapitala bez naknade. Prodaja kapitala i imovine, kao i ulaženje u strateško partnerstvo vrši se javnim prikupljanjem ponuda dok prenos kapitala bez naknade podrazumeva prenos kapitala zaposlenima ili strateškim investitorima, u skladu sa zakonskim rešenjima vezanim za privlačenje direktnih investicija [Gnjatović, 2016]. . This document, among other things, emphasized that it was necessary for spa health resorts to preserve their basic function of rehabilitation centers, that it was possible to privatize only those spa centers that were not specialized for the rehabilitation and treatment of serious patients, and that "the State must condition the buyer to comply with the Strategy for Privatization of Healthcare Institutions in the Field of Physical Medicine and Rehabilitation." However, such Strategy was not written, so that the strategic framework related to the goals and directions for the privatization of the spa rehabilitation centers could be learned about only from the sporadic statements of the Privatization Agency. One of such statements was in line with the opinion of the Commission for Physical Medicine and Rehabilitation and Balneoclimatology, as it said that "Centers in which seriously ill patients are being treated will not be offered for sale" [Daily newspaper "Glas javnosti", September 26, 2007].
Contradicting to the opinion that the problem of excess capacity in the spa rehabilitation centers should be solved through privatization procedures, the PIO Fund initiated 29 litigations to prove that the spa rehabilitation centers are property of the Fund, i.e. that they are not in the state ownership and therefore the Republic of Serbia cannot privatize them. The first litigations were launched in 2007, immediately after the Ministry of Health initiated privatization through the media.
On 16 January 2008, the Ministry of Economy and Regional Development, then in charge of privatization, made a proposal to the Government of the Republic of Serbia for the privatization of twelve spa rehabilitation centers (Table 1)  In order to suspend litigation, the Government of the Republic of Serbia then initiated an out-ofcourt settlement. The Government recommended to the Ministry of Economy and Regional Development, prior to setting on the privatization procedure, to agree with the PIO Fund on the issue of property rights over the facilities of the twelve spa rehabilitation centers, proclaimed "privatization entities" [Working Group for Restructuring of the Pension Fund, 2012]. However, the agreement was not reached. Since then, these rehabilitation centers have been operating, with varying success, under the conditions of insecurity regarding the property rights due to uncertainty as to whether and when the procedure of their privatization will be carried out.
Primarily in the intention to create the conditions for economic development and preserve social stability through the preservation of existing jobs and the opening of new ones, the new Law on Privatization was adopted in  U presudi Vrhovnog kasacionog suda se zaključuje da je tužbeni zahtev PIO Fonda osnovan u odnosu na pravo svojine na objektima predmetnog banjskog rehabilitacionog centra, imajući u vidu poreklo namenski uloženih i iskorišćenih sredstava za njihovu izgradnju, Gnjatović D. Priznanje prava svojine na objektima rehabilitacionih centara u banjama i klimatskim mestima Srbije sudskim putem assets of "privatization entities." Privatization is carried out through the models of sale of capital, sale of assets, strategic partnership and transfer of capital free of charge. The sale of capital and assets, as well as the engagement in a strategic partnership, is carried out by the public collection of offers, while the transfer of capital, without compensation, entails the transfer of capital to the employees or strategic investors, in accordance with the legal provisions for attracting direct investments [Gnjatović, 2016]. The 2014 Privatization Law did not exempt spa rehabilitation centers from the ownership transformation process. Therefore, the Privatization Agency concluded that the procedure for their privatization should be carried out in accordance with the provisions of this Law [Privatization Agency, 2015]. After the Agency ceased its operations, the Ministry of Economy of the Republic of Serbia, now in charge of privatization, accepted this position, and specialized hospitals and rehabilitation centers continued to be regarded as "privatization entities" [Ministry of Economy, 2018].

Non-Refundable Investments as a Legal Basis for Determining Property Rights
The PIO Fund found the legal basis for lawsuits against the State in the 1995 Law on Assets in the Property of the Republic of Serbia and the 2011 Law on Public Property, according to which the assets of the organizations for compulsory social insurance were exempted from the coverage of the state property. Consequently, the PIO Fund considered the decisions on the registration of rehabilitation centers in the public books as the property of the Republic of Serbia to be unlawful. The PIO Fund found the legal basis for claiming the ownership over these properties in the powers that were already given to its legal predecessor, the Pension and Disability Insurance Association, by the above mentioned Articles 70 and 71 of the 1972 Law on Pension and Disability Insurance, to finance the improvement of the material basis for the protection of the insured from the surpluses of contributions. The PIO Fund provided evidence to the competent courts that on the basis of these powers, medium-term plans and investment programs in the spa areas were prepared and implemented after they had been adopted by the Association Assembly. Also, for each of the planned investments, the PIO Fund submitted relevant documentation on its implementation [Working Group for Restructuring of the Pension Fund, 2012]. Therefore, the PIO Fund claimed that in order to determine the ownership rights over the facilities of specialized hospitals and rehabilitation centers, the court should be guided by the fact of whose assets were used to build these facilities.
The State responded by challenging the argument of the PIO Fund on non-refundable funds for investments as a basis for determining the property rights. The State did not deny that spa rehabilitation centers were built using the surpluses of contributions for pension and disability insurance. The State, however, did find it controversial that these contributions were invested without the obligation of repayment. According to the State's claim, by granting funds, the legal predecessors of the PIO Fund entered into a business relationship that was not aimed at acquiring ownership [Daily newspaper "Večernje Novosti", March 19, 2007]. In other words, the State was of the opinion that investments in the construction of rehabilitation centers, financed with the surpluses of the contributions for compulsory pension insurance without obligation to be repaid, should be treated as donated. It is clear that such viewpoint neglected the economic and systemic specificities of investment financing within an economic system based on a non-proprietary concept of social property. One of these specificities was that social legal entities could not, on the basis of a legal transaction, acquire property, hence in the specific case there could have been neither a donor nor a donee.

Gnjatović D.
Priznanje prava svojine na objektima rehabilitacionih centara u banjama i klimatskim mestima Srbije sudskim putem construction. The reasoning of the judgment particularly stressed the specificities of these investments within the economic system based on social property. It was pointed out that the contribution funds were spent in a planned and strictly dedicated manner. Also, the judgment referred to the provisions of the 1995 Law on Assets in the Property of the Republic of Serbia and the 2011 Law on Public Property on the basis of which the assets of the organizations of compulsory social insurance were excluded from the scope of the state property. "In accordance with its legal and statutory powers, on 15  The judgment of the Supreme Court of Cassation concludes that the claim of the PIO Fund was founded in relation to the property rights on the facilities of the respective spa center, bearing in mind the origin of the funds invested and used for their construction, and that by building and using these facilities the goal of the prevention of disability and rehabilitation of the disabled people had been met.
By defining the ownership structure of the facilities of the spa rehabilitation centers within the final judgments of the competent courts of the Republic of Serbia, the conditions for deciding on the ownership transformation of those centers that were proclaimed "privatization entities" were finally met.

Conclusion
By defining the property title holder and determining the ownership structure of the spa rehabilitation centers, the economic and systemic problems which hindered the privatization of these centers for years have been overcome. According to the judgments of the competent courts the PIO Fund has been recognized as the property owner of the facilities of the spa rehabilitation centers in the percentage in which their construction was financed by means of contributions for compulsory pension and disability insurance. As the property owner of these facilities, the PIO Fund has been enabled to take part in the decision-making process of initiating the privatization procedures.
The first public call for the sale of one of the spa rehabilitation centers, which were declared "privatization entities" in 2008, was announced for the spa center "Žubor" in Kuršumlijska Banja. This call was jointly announced The announcement for the sale of this spa center facilities stated that these are owned by the Republic of Serbia and the PIO Fund. It is obvious that in this particular case, the State and the PIO Fund, as the title holders to the property, have reached an agreement on their relations concerning the realization of the real estate sale. After the completion of legal disputes, such agreements will be a condition for the implementation of the privatization procedures for all other spa rehabilitation centers, i.e. "privatization entities".