Freedom of economic activity and environmental protection

The implementation of environmental protection programs results, in many cases, in restrictions on conducting business activity, which take the form of prohibitions or an order to behave in a certain manner. The basis for such actions of the lawmaker is a concern for the environment, however, the implementation of this goal should be preceded by an analysis of the nuisance of the introduced restriction for the individual and an assessment of anticipated benefits for the environment.

There is no doubt that in an ideal model of a state governed by the rule of law, only such legal norms would be implemented which, while taking care of the environment, would not limit the freedom of economic activity or the rights of the individual, or if such a limitation occurred, it would be equal for all citizens. However, bearing in mind the impossibility of having a perfect legal system, the difficult task of seeking relevant measures that will protect the environment and the constitutional principles of law, as well as taking into account the fact that poorly designed and ill-conceived regulations may prove to be too burdensome and go beyond what is necessary1, it has become justified to refer to this issue when other authors consider new concepts of environmental protection within the Multimedia Climate Report.

Legal basis for the freedom of economic activity

The basis for the freedom of economic activity is provided by the Constitution of the Republic of Poland, which indicates in Article 20 that "a social market economy, based on the freedom of economic activity, private ownership, and solidarity, dialogue and cooperation between social partners, shall be the basis of the economic system of the Republic of Poland". It is noteworthy that the freedom of economic activity was mentioned in the first place, which emphasizes its role as the essence of the social market economy system2. Such formulation of the norm indicates that the intention was to create the possibility of realising a social market economy, and the analysed freedom of economic activity is only a component element of this norm, next to private property, solidarity, dialogue and cooperation of social partners. It should be remembered, however, that the freedom of economic activity has not been included in Article 20 of the Constitution of the Republic of Poland as a separate value and an independent right, but as a pillar of the social market economy. Therefore, it is not an entitlement resulting directly from the will of the legislator, enabling only free and unrestricted conduct of economic activity, but a deliberate action aimed at general and comprehensive economic development.  

The literature emphasizes that economic freedom is a principle of law, which implies a presumption of freedom to undertake and carry out business activities, as well as freedom from state interference in the economy3. A more liberal position is presented by B. Banaszak, who points to the admissibility of state interference in economic rights and freedoms, provided that it is minimal4. C. Kosikowski, on the other hand, perceives the above principle of law as a constitutional principle, treating it as a freedom right5.  

Regardless of the above views expressed in the doctrine of legal sciences, the concept of freedom of economic activity requires clarification of what kind of freedom is meant - whether it is freedom understood as an absolute right, or whether it should be considered solely as a privilege. The PWN Dictionary of Polish Language defines freedom as "the possibility of making decisions according to one's own will"6. In turn, the Constitutional Tribunal stated that "freedom of economic activity" means the freedom of activity of individuals (natural persons) and non-state (or, more broadly, non-public) institutions with the right to decide independently about the participation in economic activities, about the scope and forms of this participation, including the freedom to take factual and legal actions. It includes individuals and other entities exercising human and civil rights and freedoms7.

It may be concluded, therefore, that freedom of economic activity is a constitutional right, which does not mean that it is an unlimited right. The Constitutional Tribunal confirmed that while interpreting Article 20 of the Constitution, its relationship to Article 1 and Article 2 of the Constitution should be taken into account. Article 1 provides that "the Republic of Poland shall be the common good of all its citizens". It implies the directive to put the general good above the individual good or particular group interest, if necessary. This directive should be the fundamental criterion for action in the model of the social market economy adopted by the Constitution8.

In conclusion, there is something of a (Sui Generis) presumption of non-interference by the state in the economy in a way that rectifies economic mechanisms based on objective economic laws9.

The possibility of imposing restrictions for the sake of environmental protection

Irrespective of the intentions of the authors of various concepts of environmental protection in the field of protection against emissions, waste management or protection of nature or landscapes, the solutions of an organizational and technical character introduced by the legislator frequently result in the necessity to act or refrain from specific behaviour. 

Therefore, the fact of any obligation arising causes limitations to the rights of an individual and thus limits the freedom of economic activity - these limitations may take various forms: additional administrative duties, segregation of waste, obligation to accept waste from consumers, installation of devices for improving air quality, etc. Each of these actions generates personal or investment costs that probably would not have arisen if the new obligations had not been introduced by the legislator. The question of whether such action is a restriction of the constitutional principle of freedom of economic activity should be answered affirmatively. However, it should also be remembered that the lawmaker has the power to take such action. 

Firstly, it should be pointed out that Article 22 of the Constitution of the Republic of Poland enables the legislator to intervene in situations in which there is an important social interest, while Article 31 par. 3 of the Constitution of the Republic of Poland enumerates exhaustively the situations in which limitations of freedoms and rights may be imposed, provided that they are “imposed only by statute, and only when necessary in a democratic state for the protection of its security or public order, or to protect the natural environment, health and public morals, or the freedoms and rights of others", while "such limitations shall not violate the essence of freedoms and rights".

Secondly, is necessary to refer to Article 68 par. 4 of the Constitution of the Republic of Poland, which states that "public authorities shall combat epidemic illnesses and prevent the negative health consequences of degradation of the environment", as well as Article 74 par. 1 and 2, stating that "public authorities shall pursue policies ensuring the ecological security of current and future generations" and that "protection of the environment shall be the duty of public authorities".

Hence, introducing restrictions by the legislator, which is consistent with the Constitution of the Republic of Poland, must be connected with the existence of the "necessity" to protect the environment and the existence of important social interest. We may speak of necessity when a certain action is indispensable to achieve the objective - however, in order to assess whether such a situation exists, an appropriate analysis must be carried out. A situation should not arise in which the legislator restricts the freedom of economic activity, and the grounds for this restriction is a solution whose effectiveness has not been verified. In other words, the introduced restrictions should be based on the certainty that the gain for the environment will be greater than the harm for the individual resulting from the restriction of the individual’s freedom.

Such a guarantee is provided by applying the principle of proportionality in creating administrative law, of which environmental law is a part. Ideal legal solutions would lead to lawmaking in the spirit of justice, which Aristotle defined as avoiding excess and privation and choosing the mean. In the philosopher's view, the golden mean is the right solution, following the proper measure, which is determined by reason. In legal language, this is called proportionality in lawmaking. The principle of proportionality is a limitation of the lawmaker's freedom - even if the means used (the effect of legislation) are useful and necessary to achieve the set objective - they cannot be used if this is not justified by the importance and nature of the objective11.

The correctness of environmental lawmaking

Drafting environmental laws is often fraught with errors, which include: 
  • excessive restrictions on the freedom of economic activity
  • impeding competition
  • establishing unnecessary administrative obligations
  • instituting fines that are disproportionate to the committed misconduct

Such situations were occasionally confirmed in the past by the Constitutional Tribunal12, for example, in a case concerning the imposition of a penalty for late filing of a collective waste data statement. The Constitutional Tribunal held that the non-measurable penalty of 10,000 PLN for committing the above offence was inconsistent with Article 2 of the Polish Constitution.  However, the Tribunal stressed one important point: the amount of the fine would not be an argument in favour of the violation of Article 2 of the Polish Constitution if, at the same time, there was a mechanism of prior summoning or urging the entrepreneur to fulfill a statutory obligation, possibly combined with the imposition of a small fine. Similarly, the automaticity of the imposed penalty would not prejudge its unconstitutionality, if the amount of penalty was adjusted to the circumstances of the case.

The Constitutional Tribunal thus provided an important guideline for lawmakers: in the event of an infringement of a legal obligation that does not directly impact the environment, the first step should be an admonition or imposition of a small fine, and only then should the power to impose sanctions on the entrepreneur be used. However, if there is to be "automaticity" in imposing penalties, the amount of the penalty should be commensurate with the offence. Additionally, one should pay attention to the real effect of the infringement: according to the Supreme Court, which considered the matter of infringement of collective consumer interests, "in order to assess whether the penalty is proportional to the gravity of the established infringement, it is important to take into account the scale of the benefit gained or likely to have been gained by the violator and the damage (even if potential) to consumers, and the fact that the entrepreneur did not use the challenged provisions in practice is not important at the stage of classifying the entrepreneur's behaviour as a practice infringing collective consumer interests but is quite significant when assessing the amount of the imposed penalty”13.

Translating this ruling into the area of the environment, the legislator's indication of the minimum administrative penalty should be implemented based on the actual or potential value of the environmental damage that could be caused by the entrepreneur's action. The circumstance whether this damage occurred or was only hypothetical should have an impact on the amount of the penalty. Legal theory has long formulated the view that criminal repression should not be used when social damage can be prevented in a less costly way14.

The analysis of the Polish environmental law in many cases seems to contradict this, and the actions of the legislator in making the environmental law stand in qualitative contrast to the assumptions indicated above. For years, the policy of new solutions undertaken by the legislator to protect the environment has been shaped in the same way: introducing a new obligation for the entrepreneur or citizen and setting a severe fine for non-compliance. The effect of such an action is that decisions concerning a particular behaviour are made based on fear of a severe penalty and not based on the concern for the common good, which is environmental protection.

The implementation of most legal obligations, although enacted in good faith and with the aim of protecting the environment, was therefore limited to meeting the requirements in the formal sphere, without being understood by the entities or persons running business activities. The introduction of high administrative fines by public administration bodies, on the other hand, does not help to build a civil society that is partly interested in climate protection but only supports the establishment of new procedures, standards and routines by entrepreneurs to avoid sanctions. An example is the Law of September 11, 2015, on Waste Electrical and Electronic Equipment, which provides the possibility of punishment in 48 cases. The lowest penalty is 5,000 PLN and the highest is 300,000 PLN and is imposed by the State Trade Inspection for failure to place a notice in a visible place that a retailer operating a store with an area of more than 400 m2 will accept, free of charge, any electronic device whose dimension does not exceed 25 cm, without the need to purchase new devices. Similar solutions have been presented by the legislator in other legal acts: in the Act on Packaging and Packaging Waste Management of 13 June 2013, the legislator introduced the possibility of punishment in 16 cases, with a maximum amount of 750,000 PLN, of which a penalty of 500 PLN to 20,000 PLN has been determined for failure to display at the point of sale information on proper handling of waste, the meaning of symbols used on packaging available in the systems of return, collection and recovery of packaging, and a penalty of 10,000 PLN to 500,000 PLN for failure to keep records of packaging launched on the market.

Bearing in mind the constitutional obligation to make laws using the principle of proportionality, it would be consistent with this principle if the legislator differentiated between offences in terms of their threat to the environment, indicating at the same time the amount of the penalty determined by the hierarchy of risks. In its ruling on 30 November 2004, ref. SK 31/04, the Constitutional Tribunal unequivocally stated that "sanctions that are clearly inadequate or unreasonable or disproportionately burdensome cannot be applied". 

An inadequate sanction constitutes a restriction on the freedom of economic activity, particularly when it is imposed despite the lack of danger to the environment and when its amount may be the basis for destabilisation of the entrepreneur's financial liquidity. This does not prejudge the fact that coercive administrative measures are not needed - their necessity should not, however, exempt the state from conducting educational activities so that the public, including persons conducting economic activity, are aware of the importance of the obligations imposed on them. 

A rational legislator must take on the burden of "citizen-friendly" communication of legal norms and reasons for their enactment, instead of handing it over to entrepreneurs and obliging them to transfer an amount equivalent to 2% of the net value of the packaging placed on the market in the preceding year15 or 0.1% of net revenues from the marketing of electrical and electronic devices in the preceding calendar year16, to public education campaigns for citizens or the account of the Marshal of the Province. 

If the goal of the legislator is to improve the quality of the environment and to meet the objectives imposed by the European Union, it is necessary to truly involve the public and to assume social responsibility, the foundation of which is reliable education and information.

Such activities can be undertaken regularly by public authorities, by using mass media, mounting information campaigns and actively cooperating with entrepreneurs and non-governmental organisations. There is no doubt it will be helpful to draw on the experience of public education that government representatives have gained in communicating the reasons why compliance with COVID-19 restrictions was so important to public health. Such efforts will be far more effective than a slip of paper hung in the center of a store, informing in small print about the type of labelling used on packages or the opportunity to donate an old phone to an electrical store.

Author: dr Marcin Żurowski, legal advisor

1K. Celarek, Legislacja administracyjna, Dąbrowa Górnicza 2011, str. 14
2A. Domańska, Konstytucyjne podstawy ustroju gospodarczego Polski, Warszawa 2001, str. 111.
3P. Korzeniowski, Ograniczenia i uwarunkowania zasady wolności gospodarczej wynikające z zasady zrównoważonego rozwoju [w:] J. Ciechanowicz – McLean, T. Bojar – Fijałkowski, Gospodarcze prawo ochrony środowiska, Gdańsk 2009, str. 136
4B. Banaszak, Prawo konstytucyjne, Warszawa 2015, str. 199
5C. Kosikowski, Wolność działalności gospodarczej i jej ograniczenia w praktyce stosowania Konstytucji, Warszawa 2005, str. 44
6Słownik Języka Polskiego PWN, Warszawa 2010, str. 1161
7Wyrok TK z dnia 8 lipca 2008 r., sygn. K 46/07, OTK-A 2008, nr  6, poz. 104
8Wyrok TK z dnia 30 stycznia 2001 r., K 17/00, OTK 2001 nr 1 poz. 4
9K. Strzyczkowski, Rola współczesnej administracji w gospodarce (zagadnienia prawne), Warszawa 1992, str. 9.
10A. Andrzejuk, Człowiek i dobro, Antropologiczne podstawy etyki, s. 4
11A. Walaszek-Pyzioł, Zasada proporcjonalności w orzecznictwie Trybunału Konstytucyjnego, „Przegląd Ustawodawstwa Gospodarczego” 1995, nr 1, s. 16; S. Jędrzejewski, D. R. Kijowski, Glosa do wyroku z 12 I 1999 r., P 2/98, „Państwo i Prawo” 56, 2001, z. 3, s. 106.
12Wyrok TK z dnia 15 października 2013 r., P26/11, OTK-A 2013 nr 7, poz. 99
13Wyrok SN z dnia 16 kwietnia 2015 r., III SK 42/14, Lex nr 1710374
14J. Bentham, Wprowadzenie do zasad moralności i ustawodawstwa, Warszawa 1959, str. 236
15Art. 19 ust. 4 ustawy z dnia 13 czerwca 2013 roku o gospodarce opakowaniami i odpadami opakowaniowymi (Dz. U. z 2013 r., poz. 888 z późn. zm.)
16Art. 15 ust. 3 ustawy z dnia 11 września 2015 roku o zużytym sprzęcie elektrycznym i elektronicznym (t.j. na podst. Dz. U z 2020, poz. 1893, 2361)