Lietuviškai
THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA
RULING
On the compliance of Article 292 of the Civil Code
of the
Republic of Lithuania with the Constitution of the
Republic of Lithuania
31 March 1994, Vilnius
The Constitutional Court of the Republic of Lithuania,
composed from the Justices of the Constitutional Court Algirdas
Gailiūnas, Kęstutis Lapinskas, Zigmas Levickis, Pranas Vytautas
Rasimavičius, Stasys Stačiokas, Teodora Staugaitienė, Stasys
Šedbaras and Juozas Žilys,
the secretary of the hearing - Rolanda Stimbirytė,
pursuant to Part 1, Article 102 of the Constitution of the
Republic of Lithuania and Part 1, Article 1 of the Law on the
Constitutional Court of the Republic of Lithuania, in its
public hearing of 24 March 1994 conducted the investigation of
Case No 4/94 subsequent to the petition submitted to the Court
by College of Civil Cases of the Supreme Court of the Republic
of Lithuania requesting to investigate if Article 292 of the
Civil Code is in compliance with the Constitution of the
Republic of Lithuania.
The Constitutional Court
has established:
College of Civil Cases of the Supreme Court on 10 January
1994 investigated in cassation procedure a civil case upon the
complaint lodged by defendant Anatolijus Volkovas against the
decision passed by Klaipėda District Court on 3 December 1993
which had complied with the suit brought by plaintiff Igoris
Vysockis against defendant Anatolijus Volkovas pertaining to
repayment of the loan amounting to 457.5 litas.
College of Civil Cases while examining the lawfulness and
validity of this decision, by its ruling suspended the
investigation of the civil case and addressed the
Constitutional Court with the request to investigate if Article
292 of the Civil Code is in conformity with the Constitution.
In the ruling the College of Civil Cases grounds its
request on the fact that the Court complied with the suit
pursuant to the loan contract for the sum of $ 200 USD which
had been concluded between the parties (Article 291, Civil
Code). In the argumentation of the contracting parties as well
as complaints it is stated that the plaintiff gave the
defendant a loan of $ 50 USD and his requirements exceeding the
above mentioned sum are based on the right to take interest on
the loan, i.e. on the provisions of Article 46 of the
Constitution which establish the right to private ownership and
freedom of individual economic activity. The subject matter of
the dispute is regulated in Article 292 of the Civil Code which
limits the realization of the right to ownership. This provides
the basis for maintaining that the contents of said Article
contradicts the provision of the first part of Article 46 of
the Constitution.
In the preliminary investigation of the case, the
petitioner's representative explained that the contents of the
right to ownership includes management, use and disposal of
property. The use of money similarly to the use of any other
article (thing) manifests itself in its utilizing in order to
satisfy the owner's needs as well as to gain profit. Article
292 of the Civil Code provides for the possibility to take
interest in compliance with the loan contract, i.e. to gain
profit from the use of money only in cases prescribed by law as
well as executing loan operations with respect to public mutual
aid funds and city pawnshops. This norm restricts the
possibility to realize the right to ownership to full extent.
Chairman of the Seimas of the Republic of Lithuania,
representative of the party concerned, in the preliminary
investigation of the case informed that the draft law "On
Amending and Appending the Civil Code of the Republic of
Lithuania" is under consideration in the Seimas at present,
which establishes the following wording of Article 292 of the
Civil Code: "The amount of interest according to loan contract
may be determined by agreement between parties if the law does
not prescribe otherwise".
The Constitutional Court
holds that:
In Article 1 of the Civil Code which was adopted in 1964
and is now in force it is established that it shall regulate
property relations and related to them non-property relations.
In accordance with this Code, the basis for property relations
was socialist economic system and socialist property of means
of production, and the state had to provide conditions for the
increase of this property. The Code also provided for
individual property as one which derived from socialist
property. It was established that individual property may be
only articles of personal consumption, articles of domestic
utility and subsidiary household articles, dwelling-house and
labour savings. The basis of this property is earned income.
Property, being private ownership of citizens, may not be the
source of unearned income. Thus, the right to private ownership
was denied. In compliance with these provisions of Article 292
of the Civil Code it was established that it is allowed to take
interest according to loan contract only in cases prescribed by
laws.
The Supreme Council of the Republic of Lithuania by 11
March 1991 Act has restored independent State of Lithuania and
on the same day confirmed the Provisional Basic Law of the
Republic of Lithuania. In Article 44 of this Law it was
stipulated that the economy of Lithuania shall be based on the
property of the Republic of Lithuania, which shall consist of
the private property of its citizens, the property of groups of
citizens, and state property. In Article 46 of the 1992
Constitution it is established that Lithuania's economy shall
be based on the right to private ownership, freedom of
individual economic activity, and initiative. Thus, by these
constitutional provisions, the right to private ownership has
found its way back into the legal system of the state.
In Article 23 of the Constitution of the Republic of
Lithuania it is set forth that property shall be inviolable,
the rights of ownership shall be protected by law. That means
the right of the owner to manage, use and dispose of this
property and the duty of other individuals to restrain from
behaviour violating ownership rights. The implementation of
property owner's rights is also guaranteed by the freedom of
individual economic activity and initiative which are
established in the first part of Article 46 of the
Constitution. Thus, the property owner does not only have the
right to freely use his property and to gain profit but also to
delegate his rights to other individuals by way of contracts.
Therefore, contracts may be concluded which would ensure use of
property (e. g. contract of insurance), confirm management of
property (e. g. lease contract), certify disposal of property
(e. g. contract of purchase). The freedom of making contracts
means that contracting parties of their free own will shall
establish mutual rights and duties.
One of the forms of civil contracts is a loan contract. By
the loan contract a loan giver transfers into the ownership of
a loan borrower the money or other articles defined by
characteristics of sort and the loan borrower takes the
responsibility of repayment to the loan giver the same sum of
money or the same amount of articles of the same kind and
quality for compensation or without it.
The right to getting payment according to loan contract
was already established in Roman civil law. Subsequently, this
right was interpreted in various ways, however, it has survived
in modern civil law which is based on private ownership. Thus,
in compliance with traditions of civil law, the contracting
parties may agree about the compensation (interest).
The freedom of concluding contracts, similarly to property
rights, has certain limits. While implementing his rights and
exercising freedoms, an individual must observe the
Constitution and the laws of the Republic of Lithuania, and
must not impair the rights and interests of other people
(Article 28 of the Constitution). Thus, in terms of protecting
the rights of a loan borrower, there might be restrictions in
the amount of compensation (interest) which, by the way, have
been applied since the times of Roman civil law. In the third
part of Article 46 of the Constitution it is established that
the State shall regulate economic activity so that it serves
the general welfare of the people. Thus, when a person, while
exercising property rights, takes part in economic activity, he
becomes one of special entities of economic relations, and then
special restrictions prescribed by laws may be applied to him.
However, even such entities according to their status may
freely conclude contracts. Thus, said restrictions do not deny
the principle of freedom in concluding contracts.
The provision of Article 292 of the Civil Code
establishing, that according to loan contract it is permissible
to take interest only in cases prescribed by laws, actually
means prohibition to freely conclude contracts and, hereby,
restricts the rights of private property owner and other
persons, their economic freedom and initiative, therefore, this
Article contradicts the first part of Article 46 of the
Constitution of the Republic of Lithuania.
Conforming to Article 102 of the Constitution of the
Republic of Lithuania as well as Articles 53, 54, 55 and 56 of
the Law on the Constitutional Court of the Republic of
Lithuania, the Constitutional Court of the Republic of
Lithuania has taken the following
ruling :
To recognize that Article 292 of the Civil Code of the
Republic of Lithuania contradicts the first part of Article 46
of the Constitution of the Republic of Lithuania.
This Constitutional Court ruling is final and not subject
to appeal.
The ruling is promulgated on behalf of the Republic of
Lithuania.