Lietuviškai
THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA
R U L I N G
On the compliance of the Republic of Lithuania Law
on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", Paragraph 3 of Article 5 of the
Republic of Lithuania Law on Tax Administration
with the Constitution of the Republic of Lithuania
and on the compliance of the Resolution of the
Seimas of the Republic of Lithuania "On the
Recognition of a Strategic Investor" with the
Constitution of the Republic of Lithuania and the
Republic of Lithuania Law on the Basics of
National Security
Vilnius, 18 October 2000
The Constitutional Court of the Republic of Lithuania,
composed of the Judges of the Constitutional Court Egidijus
Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas
Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas
Sinkevičius, and Teodora Staugaitienė,
with the secretary of the hearing-Daiva Pitrėnaitė,
in the presence of:
representatives of the petitioners-groups of members of
the Seimas of the Republic of Lithuania-Vytenis Povilas
Andriukaitis, a Seimas member, and Gediminas Bulotas, an
advocate,
representative of the party concerned-the Seimas of the
Republic of Lithuania-Darius Karvelis, a consultant to the Law
Department of the Office of the Seimas,
pursuant to Paragraph 1 of Article 102 of the Constitution
of the Republic of Lithuania and Paragraph 1 of Article 1 of
the Republic of Lithuania Law on the Constitutional Court, on
19 September 2000 in its public hearing conducted the
investigation of Case No. 29/98-16/99-3/2000 subsequent to the
petition submitted to the Court by the petitioners-groups of
members of the Seimas of the Republic of Lithuania-requesting
to investigate if the norms of the Republic of Lithuania Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis", the Republic of
Lithuania Law "On Supplementing and Amending Article 5 of the
Law on Tax Administration" and the Republic of Lithuania Law
"On Supplementing Article 12 of the Law on Foreign Capital
Investment in the Republic of Lithuania" were in conformity
with the Constitution of the Republic of Lithuania and whether
the norms of the Resolution of the Seimas of the Republic of
Lithuania "On the Recognition of a Strategic Investor" was in
compliance with the Constitution of the Republic of Lithuania
and the Republic of Lithuania Law on the Basics of National
Security.
The Constitutional Court
has established:
I
1. On 29 September 1998, the Seimas of the Republic of
Lithuania adopted the Republic of Lithuania Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" (Official Gazette Valstybės
žinios, 1998, No. 90-2482), the Republic of Lithuania Law "On
Supplementing and Amending Article 5 of the Law on Tax
Administration" (Official Gazette Valstybės žinios, 1998, No.
90-2483), the Republic of Lithuania Law "On Supplementing
Article 12 of the Law on Foreign Capital Investment in the
Republic of Lithuania" (Official Gazette Valstybės žinios,
1998, No. 90-2484) and the Resolution "On the Recognition of a
Strategic Investor" (Official Gazette Valstybės žinios, 1998,
No. 90-2485).
In its request of 9 November 1998, a group of Seimas
members requests to investigate if:
1) Articles 2, 3 and 4 of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis", Paragraph 1 of Article 1 of the Law "On
Supplementing and Amending Article 5 of the Law on Tax
Administration" and Article 1 of the Law "On Supplementing
Article 12 of the Law on Foreign Capital Investment in the
Republic of Lithuania" as to the content of the norms
established therein are in compliance with the norms pertaining
to a democratic state and separation of powers as established
in Article 1 and Paragraph 1 of Article 5 of the Constitution
and the principle of a law-governed state entrenched in the
Constitution;
2) in the light of the procedure of their adoption, the
Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", the Law
"On Supplementing and Amending Article 5 of the Law on Tax
Administration" and the Law "On Supplementing Article 12 of the
Law on Foreign Capital Investment in the Republic of Lithuania"
are in compliance with the procedure established in Paragraph 1
of Article 69 of the Constitution;
3) Paragraph 1 of Article 1 of the Law "On Supplementing
and Amending Article 5 of the Law on Tax Administration" and
Article 1 of the Law on Foreign Capital Investment in the
Republic of Lithuania are in compliance with Item 15 of Article
67 and Paragraph 1 of Article 128 of the Constitution;
4) Paragraphs 1 and 7 of Article 2 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" according to the content of
the norms established therein are in compliance with Paragraph
1 of Article 23, Paragraphs 1 and 4 of Article 46 of the
Constitution and whether Article 4 of the said law according to
the content of the norms established therein is in compliance
with Paragraph 1 of Article 23, Paragraph 1 of Article 29 and
Paragraphs 1 and 4 of Article 46 of the Constitution;
5) Paragraph 1 of Article 1 of the 29 September 1998
Seimas Resolution "On the Recognition of a Strategic Investor"
according to the content of the norms established therein is in
compliance with Paragraph 4 of Article 46 of the Constitution
and the norms established in Paragraph 2 of Chapter 4 entitled
"Economic Policy" of the annex to the Law on the Basics of
National Security.
The petition is grounded on the following motives.
Traditionally, the object of exclusive competence of the
Parliament is to approve taxes and basic financial liabilities
of the state. Delegation of this competence to the Government
or any other state institution is not provided for in the
Constitution. Paragraph 1 of Article 1 of the Law "On
Supplementing and Amending Article 5 of the Law on Tax
Administration" and Article 1 of the Law "On Supplementing
Article 12 of the Law on Foreign Capital Investment in the
Republic of Lithuania" provide for the right of the Government
to arbitrarily exempt certain entities of economy from payment
of new or changed taxes for the term of not three but ten
years. By these legal provisions an opportunity is created to
adopt a basic financial liability of the state not by an act of
the Seimas but of the Government. The said laws violate the
powers of the Seimas. Therefore the disputed legal norms
conflict with Item 15 of Article 67, Paragraph 1 of Article 128
of the Constitution and the principle of separation of state
powers.
In the opinion of the petitioner, Paragraph 1 of Article
69 of the Constitution sets requirements for the procedure of
adoption of laws. The petitioner maintains that the said laws
were adopted under procedure of urgency. The Constitution
stipulates that procedure of urgency must be regulated by the
law. This procedure is defined in the Statute of the Seimas of
the Republic of Lithuania only, which, under formal meaning, is
not a law. The Seimas had no right to deliberate upon these
laws conforming to procedure of urgency, therefore it violated
Paragraph 1 of Article 69 of the Constitution.
The petitioner notes that the Seimas, by regulating the
activities of an individual economic entity by Article 2 of the
Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", assumed a
basic competence of the executive and thus overstepped its
constitutional powers and violated the principle of separation
of powers established in the norms of Article 1 and Paragraph 1
of Article 5 of the Constitution.
According to the petitioner, the requirements set down in
Paragraphs 1 and 7 of Article 2 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" regarding reorganisation of
independent economic entities infringe the rights of the said
entities to inviolability of property, therefore the disputed
norms of this law conflict with Paragraph 1 of Article 23 of
the Constitution. They also infringe the rights of enterprises
and their shareholders and hinder fair competition, therefore
they are in conflict with the norms of Paragraphs 1 and 4 of
Article 46 of the Constitution.
In the opinion of the petitioner, the norm of Paragraph 1
of Article 4 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" providing that a certain portion of shares of the
enterprise may not belong to its shareholders, while the right
is granted to the state and the strategic investor to disregard
this restriction, violates the principle of equality of all
persons before the law and freedom of fair competition,
therefore this norm of the law conflicts with Paragraph 1 of
Article 29 and Paragraphs 1 and 4 of Article 46 of the
Constitution.
The petitioner points out that the norm of Paragraph 2 of
Article 4 of the Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
restricts the right of some shareholders to dispose of their
property freely as the state and the strategic investor enjoy
priority in acquisition of the shares sold by the shareholders.
Thus the disputed norm violates the principle of inviolability
of property and conflicts with Article 23 of the Constitution.
The petitioner maintains that by the norm of Paragraph 1
of Article 1 of the disputed Seimas resolution inequality of
economic entities before the law is established and advantages
in economic competition for certain entities are created. The
petitioner is of the opinion that freedom of fair competition
and prohibition to monopolise production are thus violated,
therefore Paragraph 1 of Article 1 of the disputed Seimas
resolution is in conflict with Paragraph 4 of Article 46 of the
Constitution.
The petitioner points out that the provision of Paragraph
2 of Article 1 of the disputed Seimas resolution by which an
opportunity to the strategic investor is granted to acquire a
certain portion of shares of the reorganised enterprise denies
a possibility for the state to retain a deciding vote,
therefore the norms of the disputed Seimas resolution conflict
with the norm set down in the Law on the Basics of National
Security that in enterprises of strategic importance for
national security the controlling decision power must be
retained by the state.
2. On 3 June 1999, the Seimas adopted the Law "On Amending
and Supplementing Article 3 of the Law on the Reorganisation of
the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" (Official Gazette Valstybės žinios, 1999,
No. 50-1606).
On 22 June 1999, a group of Seimas members appealed to the
Constitutional Court with a petition requesting to investigate
if:
1) the Law "On Amending and Supplementing Article 3 of the
Law on the Reorganisation of the Joint-stock Companies
'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'" passed on
3 June 1999 by the Seimas, regarding the procedure of its
adoption, was in compliance with the procedure established in
Article 69 of the Constitution;
2) Article 1 of the Law "On Amending and Supplementing
Article 3 of the Law on the Reorganisation of the Joint-stock
Companies 'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'"
was in compliance with the principles of a just society and
law-governed state established in the Preamble to the
Constitution, as well as Articles 1, 67 and Paragraph 3 of
Article 69 of the Constitution;
3) Article 1 of the Law "On Amending and Supplementing
Article 3 of the Law on the Reorganisation of the Joint-stock
Companies 'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'"
was in compliance with Paragraphs 3, 4 and 5 of Article 46 of
the Constitution.
The request of the petitioner is based on the following
arguments.
If the Law on the Basics of National Security is
considered a constitutional law, then its norms may only be
changed by a three-fifths majority vote of all Seimas members,
while the Law "On Amending and Supplementing Article 3 of the
Law on the Reorganisation of the Joint-stock Companies
'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'" was
adopted by simple majority vote. By this law a new norm is
created, permitting the strategic foreign investor to become a
monopoly, as in case the foreign economic entity acquires 66
percent of the shares of the enterprise, the State of Lithuania
will lose a deciding vote. This norm conflicts with the norm of
the Law on the Basics of National Security that in enterprises
of strategic importance for national security the controlling
decision power must be retained by the state. Thus, the
procedure of the adoption of the law conflicts with Article 69
of the Constitution.
In the opinion of the petitioner, by Article 1 of the Law
"On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'" new norms are created,
therefore, in case the Law on the Basics of National Security
is a constitutional law, the principle of coordination of legal
acts is violated. The fact whether a law is a constitutional
law, in the case that there is not any list of constitutional
laws, ought to be decided according to the importance of the
law and the context of its adoption. Thus Article 1 of the Law
"On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'" conflicts with the
principles of a just society and law-governed state established
in the Preamble to the Constitution, as well as Articles 1 and
67 of the Constitution.
The petitioner considers that after Article 1 of the Law
"On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'" has granted exceptional
rights to the strategic investor, the latter gets an
opportunity to control a monopoly, therefore this norm
conflicts with the norm of Paragraph 3 of Article 46 of the
Constitution stipulating that the state shall regulate economic
activity so that it serves the general welfare of the people,
the norm of Paragraph 4 of the same article stipulating that
monopolisation of production and the market shall be prohibited
and the norm of Paragraph 5 of the same article providing that
the state shall defend the interests of the consumers.
3. On 5 October 1999, the Seimas passed the Law "On
Amending and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'" (Official Gazette Valstybės
žinios, 1999, No. 86-2564).
On 20 December 1999, a group of Seimas members appealed to
the Constitutional Court with a petition requesting to
investigate if:
1) the Law "On Amending and Supplementing Articles 3 and 4
of the Law on the Reorganisation of the Joint-stock Companies
'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'" passed on
5 October 1999 by the Seimas, regarding the procedure of its
adoption, was in compliance with the procedure established in
Article 69 of the Constitution;
2) Articles 1 and 2 of the Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" were in compliance with the principles of a
just society and law-governed state established in the Preamble
to the Constitution, as well as Articles 1, 67, Paragraph 3 of
Article 69 and Paragraph 1 of Article 135 of the Constitution;
3) Articles 1 and 2 of the Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" were in compliance with Paragraphs 3, 4 and
5 of Article 46 of the Constitution;
4) Article 2 of the Law "On Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'" was in compliance with the principle of a
law-governed state established in the Preamble to the
Constitution as well as Article 23 and Paragraphs 1 and 4 of
Article 23 of the Constitution.
The request of the petitioner is based on the following
arguments.
It is directly recognised in the Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" that the joint-stock company "Mažeikių
nafta" is an object of essential importance for national
security of Lithuania. The basics of national security are
established by the Law on the Basics of National Security
which, as to its essence, must be held a constitutional law. As
a new norm is created by the Law "On Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'", conflicting with that established in the Law on
the Basics of National Security, the procedure of its adoption
is not in line with the requirements for adoption of
constitutional laws set down in Article 69 of the Constitution.
Paragraph 1 of Article 2 of the Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" grants priority to the state in acquiring
the shares of this enterprise sold or transferred in any other
way by the shareholders. By establishing the right of priority
for certain entities to acquire shares transferred by the
owners the subjective rights of ownership of these owners are
infringed. The principles of ownership and free economic
activity of individuals will also be violated. Thus the
disputed legal norm is in conflict with Article 23 and
Paragraph 1 of Article 46 of the Constitution.
Articles 1 and 2 of the Law "On Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'" conflict with Paragraphs 3, 4 and 5 of Article
46 of the Constitution. The norms of these articles grant
exceptional rights to the strategic investor, therefore they
conflict with Paragraph 3 of Article 46 of the Constitution
wherein a norm is established that the state shall regulate
economic activity so that it serves the general welfare of the
people. By the disputed law the state refuses to have a
decisive vote in the company "Mažeikių nafta" and loses a
significant portion of its profit. Therefore the norms of
Articles 1 and 2 of the Law "On Amending and Supplementing
Articles 3 and 4 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'" conflict with Paragraph 4 of Article 46 of the
Constitution under which monopolisation of production and the
market shall be prohibited. Paragraph 5 of Article 46 of the
Constitution provides that the state shall defend the interests
of the consumers. After a decisive vote has been granted to the
strategic investor, possibilities are created to violate the
interests of the consumers. The state, by refusing a decisive
vote in the company "Mažeikių nafta", violates Paragraph 5 of
Article 46 of the Constitution as it will not be able to defend
the interests of the consumers.
By its decision of 28 August 2000, the Constitutional
Court joined the petitions of the petitioners into one case.
II
In the course of the preparation of the case for the
judicial investigation, an explanation of 14 December 1999 by
D. Karvelis, a consultant to the Law Department of the Office
of the Seimas, was received. It is maintained therein that,
while assessing the compliance of Article 1 of the Law "On
Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'" with the norms of the
Constitution, one has to take account of the factual
circumstances of adoption of this law. Its norms created legal
pre-conditions to evade significant economic losses and create
conditions to privatise the oil sector. They regulate special
legal relations arising in the course of the reorganisation of
the joint-stock companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis". According to the object of regulation, the
disputed law is to be considered a special normative legal act.
Adopting this law, the Seimas did not violate the provision of
Paragraph 3 of Article 46 of the Constitution that "the State
shall regulate economic activity so that it serves the general
welfare of the people": it implemented the constitutional
provision that "the State shall defend the interests of the
consumers".
D. Karvelis noted that under the Statute of the Seimas,
the laws pointed out in Article 150 of the Constitution, as
well as amendments to the Constitution, other laws
particularising the constitutional norms, which are indicated
in the law on the list of constitutional laws, shall be
considered constitutional laws. The Law "On Amending and
Supplementing Article 3 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'" does not belong to such constitutional laws.
There are no grounds to consider the Law on the Basics of
National Security a constitutional law having primacy over the
disputed law.
In the opinion of D. Karvelis, it is necessary to take
account of the fact that in the valid laws the notion "natural
monopolies" is not employed. European Union law does not
prohibit dominance of economic entities in the market.
Prohibition of dominance would mean restriction of the
competition, and, thus, the interests of the consumers might
suffer. The European Union Agreement prohibits abuse of
dominance which means establishment of unfair prices of sale
and purchase, restriction of production, the market or of
technological development or their control to the disadvantage
of the consumers, as well as discrimination of entities on the
basis of nationality.
III
In the course of the preparation of the case for the
judicial investigation, an explanation of 29 March 1999 by V.
Pakalniškis, who was then the Minister of Justice of the
Republic of Lithuania, was received. It is maintained therein
that the Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" is a
special law regulating the process of reorganisation of these
enterprises, the investments and requirements to the owners of
blocks of shares. The essence of the principle of the legal
doctrine lex specialis derogat legi generali is that in case
there is rivalry between a common and a special norm, the
special norm is to be applied. The aforesaid law itself defined
the legal relation between it and the common laws (Company Law,
Law on Privatisation of State-owned and Local Government
Property) by establishing that the procedure of reorganisation
of the aforementioned companies is regulated by the Company
Law, while their privatisation-by the Law on Privatisation of
State-owned and Local Government Property in case the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" does not provide
otherwise. Special norms might be established by the Seimas
only but not the Government. Thus the principle of separation
of powers was not violated. V. Pakalniškis is of the opinion
that the 29 September 1998 Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", the Law "On Supplementing and Amending Article 5
of the Law on Tax Administration", the Law "On Supplementing
Article 12 of the Law on Foreign Capital Investment in the
Republic of Lithuania" and the Seimas Resolution "On the
Recognition of a Strategic Investor" are in compliance with the
Constitution.
In the course of the preparation of the case for the
judicial investigation, an explanation of 26 March 1999 by V.
Babilius, who was then the Minister of Economy of the Republic
of Lithuania, was received. It is maintained therein that the
Company Law provides for a possibility of reorganisation of
joint-stock companies by way of merger, i.e. certain companies
are joined to a company which continues its activities. The
shareholders may adopt a decision to reorganise the company by
not less than a two-thirds majority vote. Before the
reorganisation the Government held the controlling block of
shares of the aforementioned enterprises and adopted a
decision, by legally sufficient majority vote, to reorganise
the said enterprises. The special law on reorganisation of the
said enterprises, if compared with the valid Company Law, does
not provide for additional restriction or limitation on the
exercise of ownership and non-ownership rights of the
shareholders. The norm of Paragraph 2 of Article 4 of the Law
on the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis", providing for
priority of the state in acquisition of the shares of the
company "Mažeikių nafta" sold or otherwise transferred by the
shareholders, does not infringe the right to inviolability of
property as it merely establishes a certain procedure of
disposal of property. In the opinion of V. Babilius, the 29
September 1998 Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
is in compliance with the Constitution.
In the course of the preparation of the case for the
judicial investigation, an explanation of 21 March 2000 by the
member of the Seimas S. Malkevičius was received. It is
maintained therein that in the context of the case at issue the
constitutional provision "property shall be inviolable" means
that the norms of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" empower the state, which is the holder of the
controlling block of shares, to exercise its rights of property
possession, transfer, sale, granting etc. The norms of the said
law are in line with system of the free market as every buyer
has the right and an opportunity to choose a supplier. In the
opinion of the member of the Seimas S. Malkevičius, the 29
September 1998 Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
is in compliance with the Constitution.
In the course of the preparation of the case for the
judicial investigation, an explanation of 15 March 2000 by V.
Milaknis, Minister of the Economy of the Republic of Lithuania,
was received. It is maintained therein that the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" is in compliance with
Article 69 of the Constitution, according to the procedure of
its adoption. The strategic interests and security of the state
are secured by special laws irrespective of the form of
ownership of economic entities. V. Milaknis is of the opinion
that the norms of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" is in compliance with the Preamble to the
Constitution and Articles 1 and 67 of the Constitution. The
statement of the petitioners that the strategic investor has
been given a decisive vote is untrue as the state still holds
59.3 percent of shares. The norm of Paragraph 1 of Article 2 of
the disputed law does not infringe the right of the
shareholders of the reorganised enterprise to dispose of their
shares. In case the Government refuses to acquire the shares
sold, the shareholders may sell them to a person they choose
for the price announced earlier. According to V. Milaknis, the
disputed law is in compliance with Paragraph 1 of Article 46 of
the Constitution.
In the course of the preparation of the case for the
judicial investigation, an explanation of 16 March 2000 by G.
Balčiūnas, Minister of Justice of the Republic of Lithuania,
was received. It is maintained therein that the petitioner
groundlessly considers the Law on the Basics of National
Security a constitutional law. It is only the Seimas that
decides matters of coordination of laws. The Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was adopted lawfully as the
common constitutional rules of adoption of laws were being
followed. Thus the procedure of the adoption of the said law
and its Articles 1 and 2 are in compliance with the
Constitution.
In the course of the preparation of the case for the
judicial investigation, an explanation of 15 March 2000 by V.
Vadapalas, Director General of the Department of European Law
under the Government of the Republic of Lithuania, was
received. It is maintained therein that it is provided in
Paragraph 6 of Article 1 of the Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" that upon acquisition of shares by the
strategic investor, and upon conclusion of agreements by the
joint-stock company "Mažeikių nafta" on the acquisition of the
right of control in the joint-stock company "Klaipėdos nafta",
the provisions of Chapter 3 of the Republic of Lithuania Law on
Competition shall not be applied. In itself, the dominance of
an economical entity in the market does not mean abuse. The
European Court of Justice has noted that the fact that an
enterprise holds a dominant position does not mean a violation
but it only means that regardless of the reasons of dominance a
respective enterprise must abstain from conduct which might
distort competition in the overall market. In another case the
said court noted that actions undermining the competitive
structure of the market may be held abuse stemming from the
dominant position in the market and, therefore, were to be
prohibited.
IV
At the Constitutional Court hearing the representatives of
the petitioners the member of the Seimas V. P. Andriukaitis and
the advocate G. Bulotas presented additional arguments
substantiating the requests of the petitioners.
At the Constitutional Court hearing the representative of
the party concerned virtually reiterated the arguments set
forth in his written explanation.
A specialist, Dr. J. Kugelevičius, an expert of the
Institute of Lithuanian Energetics, spoke at the Constitutional
Court hearing.
The Constitutional Court
holds that:
I
1. On 29 September 1998, the Seimas adopted the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis", the Law "On Supplementing
and Amending Article 5 of the Law on Tax Administration", the
Law "On Supplementing Article 12 of the Law on Foreign Capital
Investment in the Republic of Lithuania" and the Resolution "On
the Recognition of a Strategic Investor".
The Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" provides
for the procedure of reorganisation of the joint-stock
companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
the conditions and procedure of investments into the company
continuing its activities after the reorganisation and it sets
requirements for the owners of blocs of shares. The other
aforesaid laws and the Seimas resolution are linked with the
Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis".
On 9 November 1998, a group of Seimas members appealed to
the Constitutional Court with a request to investigate whether
the norms of the aforementioned legal acts were in compliance
with the Constitution as to their content, whether the said
laws were in conformity with the Constitution as to the
procedure of their adoption, as well as whether the Seimas
resolution was in compliance with the Constitution and the Law
on the Basics of National Security.
2. By the Law "On Amending and Supplementing Article 3 of
the Law on the Reorganisation of the Joint-stock Companies
'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'" passed on
3 June 1999, Article 3 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" was amended.
On 22 June 1999, a group of Seimas members appealed to the
Constitutional Court with a petition requesting to investigate
whether the said law as to its content and procedure of
adoption was in compliance with the Constitution.
3. Articles 3 and 4 of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" were amended by the 5 October 1999 Law "On
Amending and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'".
On 20 December 1999, a group of Seimas members appealed to
the Constitutional Court with a petition requesting to
investigate whether the said law as to its content and
procedure of adoption was in compliance with the Constitution.
4. Article 3 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" was amended by the 3 June 1999 Law "On Amending
and Supplementing Article 3 of the Law on the Reorganisation of
the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'", while Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" were amended by the 5
October 1999 Law "On Amending and Supplementing Articles 3 and
4 of the Law on the Reorganisation of the Joint-stock Companies
'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'". The
petitioners request the Constitutional Court to investigate the
compliance of the norms of the initial wording and subsequent
wordings of the Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
with the Constitution.
The Constitutional Court will investigate the wording of
the 5 October 1999 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" while taking account of the previous wordings of
this law.
5. Article 5 of the Law on Tax Administration was amended
and supplemented by the 29 September 1998 Law "On Supplementing
and Amending Article 5 of the Law on Tax Administration".
Taking account of the arguments presented by the petitioner,
the Constitutional Court will investigate if the provision of
Paragraph 3 of Article 5 of the Law on Tax Administration,
which is disputed by the petitioners, providing that the
Government is entitled to prolong the term of not increase of
taxes to the strategic investor for up to 10 years, is in
compliance with the Constitution.
6. By Article 16 of the Republic of Lithuania Law on
Investment passed on 7 July 1999 the Law on Foreign Capital
Investment in the Republic of Lithuania was recognised as null
and void. The petitioners appealed to the Constitutional Court
concerning the compliance of the provisions of Paragraph 4 of
Article 12 of the latter law. Under Paragraph 4 of Article 69
of the Law on the Constitutional Court, the annulment of a
disputable legal act shall be grounds to adopt a decision to
dismiss the initiated legal proceedings. Concerning this part
of the case, the initiated legal proceedings are to be
dismissed.
Alongside, the Constitutional Court notes that as for the
challenged provision of Paragraph 4 of Article 12 of the Law on
Foreign Capital Investment in the Republic of Lithuania
providing that the Government is entitled to prolong the term
of not increase of taxes to the strategic investor for up to 10
years, an analogous provision has been set forth in Paragraph 3
of Article 5 of the Law on Tax Administration. The
Constitutional Court will investigate the compliance of this
norm with the Constitution in the present case.
7. Under the Constitution, the Constitutional Court shall
decide whether laws (parts thereof) of the Republic of
Lithuania as well as resolutions (parts thereof) of the Seimas
are in conformity with the Constitution and the laws.
The Constitutional Court is not empowered to investigate
and shall not investigate in this case any agreements or
transactions signed by the Government with the strategic
investor, which are linked with the disputed laws and the
disputed Seimas resolution, nor shall it consider their
preparation and conclusion nor their implementation.
8. In the requests of the petitioners doubts are raised
whether the said laws are in conformity with the Constitution
as regards the procedure of their adoption and their content.
First of all, the Constitutional Court will investigate if
the laws pointed out by the petitioners are in compliance with
Article 69 of the Constitution which establishes the procedure
of adoption of laws, including constitutional laws.
II
On the compliance of the 29 September 1998 Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis", the 3 June 1999 Law "On
Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'", the 5 October 1999 Law "On
Amending and Supplementing Articles 3 and 4 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'" and the 29 September 1998
Law "On Supplementing and Amending Article 5 of the Law on Tax
Administration" with Article 69 of the Constitution.
1. In the opinion of the petitioners, the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" and the Law "On
Supplementing and Amending Article 5 of the Law on Tax
Administration", both of which were passed on 29 September
1998, according to the procedure of their adoption conflict
with the requirements set in Paragraph 1 of Article 69 of the
Constitution as they were deliberated under the procedure of
urgency provided for in the Statute of the Seimas but not in
the law.
Articles 3 and 4 of the 29 September 1998 Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" were amended and
supplemented by the 3 June 1999 Law "On Amending and
Supplementing Article 3 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'" and the 5 October 1999 Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" the norms whereof, according to the
petitioners, establish a different regulation than is provided
for in the Law on the Basics of National Security, which is to
be considered a constitutional law. As the norms of a
constitutional law may be amended only by at least a
three-fifths majority vote of all the Seimas members, while the
aforesaid laws were adopted by a simple majority vote, the
petitioner doubts whether the procedure of adoption of the said
laws is in conformity with the requirements set in Article 69
of the Constitution.
2. Article 69 of the Constitution provides:
"Laws shall be enacted in the Seimas in accordance with
the procedure established by law.
Laws shall be deemed adopted if the majority of the Seimas
members participating in the sitting vote in favour thereof.
Constitutional laws of the Republic of Lithuania shall be
deemed adopted if more than half of all the members of the
Seimas vote in the affirmative. Constitutional laws shall be
amended by at least a three-fifths majority vote of all the
Seimas members. The Seimas shall establish a list of
constitutional laws by a three-fifths majority vote of the
Seimas members.
Provisions of the laws of the Republic of Lithuania may
also be adopted by referendum."
The fundamental rules of legislation are set in this
article of the Constitution. Deciding whether in the course of
the adoption of the disputed laws there were violations of the
Constitution, one is to take into consideration the fact that
under Article 76 of the Constitution, the structure and
procedure of activities of the Seimas shall be determined by
the Statute of the Seimas which shall have the power of law.
Determination of the procedure of activities of the Seimas
includes regulation of the procedure of legislation. Part V of
the Statute of the Seimas entitled "Legislative Procedure"
provides for registration of draft laws and other draft acts of
the Seimas, their presentation at Seimas sittings, their
deliberation in the main committee and at Seimas sittings,
consideration of a draft law under procedure of urgency and
that of special urgency, adoption of the law at Seimas sittings
etc. Thus, without violating the Constitution, the Seimas is
entitled to establish a corresponding legislative procedure as
well as consideration of draft laws under procedure of urgency
by the Statute of the Seimas which has the power of law. In its
ruling of 8 November 1993, the Constitutional Court held: "The
duty of the Seimas to act in accordance with the procedure of
law enactment established by the Statute of the Seimas not only
may be but, in fact, must be interpreted as a constitutional
duty because it is conditioned by the provision established in
Paragraph 1 of Article 69 of the Constitution."
Taking account of the motives set forth, one is to
conclude that the Seimas, while adopting laws, may consider
them under procedure of urgency provided in the Statute of the
Seimas. Therefore there are not any legal grounds to assert
that the 29 September 1998 Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", the 3 June 1999 Law "On Amending and
Supplementing Article 3 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'", the 5 October 1999 Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" and the 29 September 1998 Law "On
Supplementing and Amending Article 5 of the Law on Tax
Administration" as regards the procedure of their adoption
conflict with Paragraph 1 of Article 69 of the Constitution.
3. The petitioners ground their statement, that the laws
whereby Articles 3 and 4 of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" were amended and supplemented conflict with
Article 69 of the Constitution as regards the procedure of
their adoption, on the fact that the regulation established in
the norms of the said laws is different from that established
in the Law on the Basics of National Security, which is
considered a constitutional law by the petitioners.
The procedure of adoption of constitutional laws is set in
Paragraph 3 of Article 69 of the Constitution. As mentioned,
these laws are deemed adopted if more than half of all the
members of the Seimas vote in the affirmative, while they are
amended by at least a three-fifths majority vote of all the
Seimas members. The Seimas shall establish a list of
constitutional laws by a three-fifths majority vote of the
Seimas members.
In its ruling of 8 November 1993, the Constitutional Court
held that only after approval of a list of constitutional laws
under this procedure the laws entered into the said list shall
be constitutional laws and the rule of their adoption and
amendment by a qualified majority vote as established in the
Constitution may be applied to these laws only. Thus, in case a
law is not entered into the list of constitutional laws, the
procedure of adoption of constitutional laws defined in
Paragraph 3 of Article 69 of the Constitution may not be
applicable to the adoption of such a law.
The Law on the Basics of National Security has not been
included into the list of constitutional laws, thus it is not a
constitutional law. Alongside, it needs to be noted that this
law does not regulate relations pertaining to legislature
either, therefore it does not condition peculiarities of
adoption of the disputed laws.
Taking account of the motives set forth, one is to
conclude that the 3 June 1999 Law "On Amending and
Supplementing Article 3 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'" and the 5 October 1999 Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" as to the procedure of their adoption are in
compliance with Paragraph 3 of Article 69 of the Constitution.
III
On the compliance of Article 2 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" with the principle of a
law-governed state established in the Preamble to the
Constitution, Article 1 and Paragraph 1 of Article 5 of the
Constitution, and on the compliance of Paragraphs 1 and 7 of
Article 2 of the Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
with Paragraph 1 of Article 23 and Paragraphs 1 and 4 of
Article 46 of the Constitution.
1. Article 2 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" provides:
"1. The joint-stock companies 'Būtingės nafta', 'Mažeikių
nafta' and 'Naftotiekis' shall be reorganised by way of merger,
i.e. by joining the joint-stock companies 'Būtingės nafta' and
'Naftotiekis' to the joint-stock company 'Mažeikių nafta', the
former two ceasing their activities as legal persons.
2. The governing board of every reorganised company shall
draw up an extensive evaluation of the plan of reorganisation
and shall present it to the general meeting of the
shareholders. After the Government has approved the
reorganisation plan, the general meetings of the shareholders
of the joint-stock companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis' may, by at least a two-thirds majority vote,
adopt a decision to reorganise the company and approve this
plan and the prepared Articles of Association of the company
which will be operating after the reorganisation.
3. The approved reorganisation plan and the minutes of the
general meeting of the shareholders must be handed over to the
supervisor of the register of enterprises within 5 working days
from the day of the meeting which has approved the
reorganisation plan.
4. The reorganisation of the joint-stock companies shall
be announced publicly twice with an interval of not less than
14 days between the announcements.
5. The liabilities of the reorganised joint-stock
companies 'Būtingės nafta' and 'Naftotiekis' shall be
transferred to the joint-stock company 'Mažeikių nafta' which
will continue its activities. Every reorganised company must
provide additional guarantees as regards fulfilment of their
liabilities to every creditor who requests so. In cases when
the reorganised companies lack sufficient financial and
material resources to provide the additional guarantees, the
Government must provide the creditors with the State guarantees
under procedure provided by law.
6. The requirements of Paragraphs 9, 10, 11, 13 and 14 of
Article 10 of the Company Law shall not be applicable to the
reorganisation of the joint-stock companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'.
7. In the reorganisation plan of the joint-stock companies
'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis' it shall
be provided that the shares of the oil products sales network
(petrol stations) as well as those of the companies established
on the basis of Plinkškiai hotel-recreational centre belonging
to the joint-stock company 'Mažeikių nafta', as well as those
of the company established on the basis of the shop making
wooden articles, belonging to the joint-stock company
'Naftotiekis', shall be transferred respectively to the
shareholders of the joint-stock companies 'Mažeikių nafta' and
'Naftotiekis' in proportion to the number of shares belonging
to them, by respectively reducing the authorised capitals of
the joint-stock companies 'Mažeikių nafta' and 'Naftotiekis'.
In the course of the reorganisation, mistakes that were made in
the formation (concerning the use of State budget
appropriations for construction of dwelling-houses in the
Vsevolozhsk district of the Leningrad region of the Russian
Federation for settling the families moving from Mažeikiai) and
increase (transfer of the reservoirs of fuel stocks of the
State to the joint-stock company 'Mažeikių nafta') of the
authorised capital of the joint-stock company 'Mažeikių nafta'
must be rectified. Decisions concerning reduction of the
authorised capital shall be adopted by the general meetings of
the shareholders of the joint-stock companies 'Mažeikių nafta'
and 'Naftotiekis' where the issue regarding the reorganisation
of the said enterprises will be decided. The reduction of the
authorised capital of the joint-stock companies "Mažeikių
nafta" and "Naftotiekis" shall be announced publicly twice with
an interval of not less than 14 days between the announcements.
Due to the reduction of the authorised capital of the
joint-stock companies "Mažeikių nafta" and "Naftotiekis", the
amendments to the Articles of Association of the said companies
shall not be specially recorded in the register of enterprises.
8. The guarantees of the State for the banks as regards
the credits given to the joint-stock companies 'Būtingės
nafta', 'Mažeikių nafta' and 'Naftotiekis' are also valid for
the liabilities taken by the joint-stock company 'Mažeikių
nafta' which will continue its activities after the
reorganisation."
2. The petitioners maintain that the norms of Article 2 of
the Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" violate
the principle of a law-governed state established in the
Preamble to the Constitution, the provision of Article 1 of the
Constitution stipulating that Lithuania shall be a democratic
state, as well as the principle of separation of powers
entrenched in Paragraph 1 of Article 5 of the Constitution, and
that Paragraphs 1 and 7 of Article 2 of the said law violate
Paragraph 1 of Article 23 and Paragraphs 1 and 4 of Article 46
of the Constitution.
3. In the Preamble to the Constitution a strife for an
open, just, and harmonious civil society and law-governed state
is entrenched.
In its ruling of 23 February 2000, the Constitutional
Court held: "<...> the constitutional principle of the state
under the rule of law is a universal one upon which the whole
Lithuanian legal system as well as the Constitution of the
Republic of Lithuania itself are based and <...> the content of
the principle of the state under the rule of law reveals itself
in various provisions of the Constitution and is to be
construed inseparably from the strife for an open, just, and
harmonious civil society and law-governed state promulgated in
the Preamble of the Constitution. Along with the other
requirements, the principle of the state under the rule of law
enshrined in the Constitution also pre-supposes the fact that
human rights and freedoms must be ensured, that all state
institutions exercising state power, as well as other state
institutions, must act on the grounds of law and in compliance
with law, that the Constitution has the supreme juridical power
and that the laws, Government resolutions and other legal acts
must be in conformity with the Constitution."
The Seimas, as well as the other participants of
legislation must coordinate all drafted and adopted legal acts
with the Constitution. This is one of the most important means
of securing the constitutional order and one of the fundamental
requirements for a law-governed state.
4. Article 1 of the Constitution provides: "The State of
Lithuania shall be an independent and democratic republic."
The Constitutional Court in the said ruling of 23 February
2000 noted that "in this article of the Constitution the
fundamental principles of the Lithuanian State are established:
the Lithuanian State is free and independent; the republic is
the form of governance of the Lithuanian State; the state power
must be organised in a democratic way, and there must be a
democratic political regime in this country."
The provisions of Article 1 of the Constitution, as well
as the principle of a law-governed state established in the
Preamble to the Constitution, determines the main principles of
the organisation and activities of the state power of the State
of Lithuania.
5. Paragraph 1 of Article 5 of the Constitution provides
that in Lithuania, the powers of the State shall be exercised
by the Seimas, the President of the Republic and the
Government, and the Judiciary.
By this norm, a more detailed content of which is revealed
in the other articles of the Constitution, the principle of
separation of powers has been established. This is a
fundamental principle of the organisation and activities of a
democratic and law-governed state. In its rulings the
Constitutional Court has noted for many a time that this
principle means that the legislative, executive and judicial
powers must be separated, sufficiently independent, and that
there must be a balance between them. Every power is exercised
through its institutions which are granted the competence
corresponding to their purpose.
6. In the opinion of the petitioners, the provision of
Paragraph 6 of Article 2 of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" that certain requirements of Paragraphs 9,
10, 11, 13 and 14 of Article 10 of the Company Law shall not be
applicable to the reorganisation of the joint-stock companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" violates
the principle of a law-governed state entrenched in the
Preamble to the Constitution, which requires that legal acts be
coordinated. According to the petitioners, a special law must
extend and construe the norms of a common law but it may never
provide for a different regulation.
7. In Paragraphs 9, 10, 11, 13 and 14 of Article 10 of the
Company Law pointed out by the petitioner the relations of
reorganisation of a joint-stock company (i.e. transformation of
the company as a legal person without the liquidation
procedure) are regulated, as, for example, as to how and when
the reorganisation of the company is announced and informed
about, the manner of adoption of the decision to reorganise the
company and approve the plan of its reorganisation and its
Articles of Association, the manner of reorganisation of the
company against which bankruptcy proceedings have been
instituted or with respect to which extrajudicial bankruptcy
procedure is applied, the manner of registration of the
Articles of Association of the companies which continue their
activities after the reorganisation etc.
In the norms of Article 10 of the Company Law relations of
reorganisation of joint-stock companies and close corporations
are regulated, while the procedure of reorganisation of the
joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" is provided in disputed Article 2 of the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis". It is pointed out
in Paragraph 6 of Article 2 of this law that the requirements
set in Paragraphs 9, 10, 11, 13 and 14 of Article 10 of the
Company Law shall not be applicable to the reorganisation of
the joint-stock companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis".
It needs to be noted that the state, while taking account
of the content of the economic activity, as well as its
peculiarities, may regulate social relations in this area in a
differentiated manner, or establish certain conditions for a
certain type of activity. It is important that by such
regulation the principles and norms of the Constitution be not
violated. Therefore, singling out of respective economic
entities and peculiarities of regulation of their activities in
themselves do not violate the principle of a law-governed
state. The circumstance that the norms of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" contain a provision whereby
the norms the Company Law are not be applicable to the
reorganisation of the said companies in itself does not mean
that thereby coordination of the system of legal acts and the
principle of a law-governed state entrenched in the
Constitution are denied.
8. In the opinion of the petitioners, the Seimas, after it
had regulated the activity of one economic entity in Article 2
of the Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", exercised
competence characteristic of the executive, therefore, by such
regulation, the principle of separation of powers established
in Paragraph 1 of Article 5 of the Constitution as well as the
provision of Article 1 of the Constitution that the State of
Lithuania shall be an independent and democratic republic are
violated, because separation of powers is characteristic of a
democratic state.
Under Item 2 of Article 67 of the Constitution, the Seimas
shall enact laws. By the disputed norms of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" a group of relations is
regulated, which is linked with the reorganisation of the
joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" and the activities of the company that will
operate after the reorganisation. The legislator may, without
violating the competence of the other institutions of state
power, which is established in the Constitution, regulate
relations of varied nature by law. The relations regulated by
the disputed article of the law are not ascribed to the
exclusive competence of the Government by the Constitution,
therefore there are no legal grounds to assert that the
legislator, while adopting the disputed article of the law,
interfered with the competence of the Government established in
the Constitution and violated the constitutional principle of
separation of powers and the provision of Article 1 of the
Constitution that the State of Lithuania shall be an
independent and democratic republic.
9. Taking account of the aforementioned arguments, one is
to conclude that Article 2 of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" is in compliance with Article 1 and Paragraph
1 of Article 5 of the Constitution, as well as the principle of
a law-governed state established in the Preamble to the
Constitution.
10. Paragraph 1 of Article 2 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" provides that the
joint-stock companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" shall be reorganised by way of merger, i.e. by
joining the other said joint-stock companies to the joint-stock
company "Mažeikių nafta". Paragraph 7 of Article 2 of this law
points out that in the reorganisation plan of the said
joint-stock companies it shall be provided that the shares of
the oil products sales network (petrol stations) as well as
those of the companies established on the basis of Plinkškiai
hotel-recreational centre belonging to the joint-stock company
"Mažeikių nafta", as well as those of the company established
on the basis of the shop making wooden articles, belonging to
the joint-stock company "Naftotiekis", shall be transferred
respectively to the shareholders of the joint-stock companies
"Mažeikių nafta" and "Naftotiekis" in proportion to the number
of shares belonging to them, by respectively reducing the
authorised capitals of the joint-stock companies "Mažeikių
nafta" and "Naftotiekis". Disputed Paragraph 7 of Article 2
also provides that in the course of the reorganisation mistakes
that were made in the formation of the authorised capital of
the joint-stock company "Mažeikių nafta" must be rectified.
Decisions concerning reduction of the authorised capital shall
be adopted by the general meetings of the shareholders of the
joint-stock companies "Mažeikių nafta" and "Naftotiekis" where
the issue regarding the reorganisation of the said enterprises
will be decided.
In the opinion of the petitioners, after it had been
indicated by law as to how the joint-stock companies were to be
reorganised, the rights of the said companies as economic
entities as well as those of their shareholders were infringed.
By such regulation inviolability of property guaranteed in
Paragraph 1 of Article 23 of the Constitution is denied,
freedom of economic activity and the initiative secured by
Paragraph 1 of Article 46 of the Constitution as well as
freedom of fair competition entrenched in Paragraph 4 of
Article 46 of the Constitution are restricted.
11. Paragraph 1 of Article 23 of the Constitution provides
that property shall be inviolable. Paragraph 1 of Article 46 of
the Constitution provides that Lithuania's economy shall be
based on the right to private ownership, freedom of individual
economic activity, and initiative. Paragraph 4 of Article 46 of
the Constitution prescribes: "The law shall prohibit
monopolisation of production and the market, and shall protect
freedom of fair competition."
While assessing the compliance of Paragraphs 1 and 7 of
Article 2 of the Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
with Paragraph 1 of Article 23 of the Constitution, one is to
note that it is provided in Paragraph 2 of Article 2 of the
said law that, after the Government has approved the
reorganisation plan, the general meetings of the shareholders
of the joint-stock companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" may, by at least a two-thirds majority vote,
adopt a decision to reorganise the company and approve this
plan and the prepared Articles of Association of the company
which will be operating after the reorganisation. Disputed
Paragraph 7 of Article 2 of the law points out that decisions
concerning reduction of the authorised capital are adopted by
the general meetings of the shareholders. Thus, under the law,
the final decision on the reorganisation of the joint-stock
companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
is adopted by the shareholders. By the established legal
regulation the ownership rights of the shareholders are not
infringed. While taking account of this, one is to conclude
that the disputed norms of Paragraphs 1 and 7 of Article 2 of
the said law are in compliance with Paragraph 1 of Article 23
of the Constitution.
The purpose of the disputed norms of Paragraphs 1 and 7 of
Article 2 of the said law is only regulation of questions
linked with the reorganisation of the aforementioned companies.
Paragraph 1 of Article 2 of the said law provides for a manner
of the reorganisation of respective companies, while Paragraph
7 of the same article stipulates that in the reorganisation
plan of these companies reduction of the authorised capital
must be provided. In both cases decisions are adopted by the
general meetings of the shareholders. By such legal regulation
the provision of Paragraph 1 of Article 46 of the Constitution
that Lithuania's economy shall be based on the right to private
ownership, freedom of individual economic activity, and
initiative is not denied. The relations regulated in Paragraphs
1 and 7 of Article 2 of the Law are not directly linked with
competition relations, therefore the provisions of Paragraph 4
of Article 46 of the Constitution are not violated.
Taking account of the above arguments, one is to draw a
conclusion that Paragraphs 1 and 7 of Article 2 of the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" are in compliance
with Paragraph 1 of Article 23 and Paragraphs 1 and 4 of
Article 46 of the Constitution.
IV
On the compliance of Article 3 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" with the principle of a
law-governed state established in the Constitution, Article 1,
Article 4, Paragraph 1 of Article 5, Paragraphs 3, 4 and 5 of
Article 46, Article 67, Paragraph 1 of Article 128 and
Paragraph 1 of Article 135 of the Constitution.
1. Article 3 entitled "Procedure and Ways of the
Investment" of the Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
adopted on 29 September 1998 consisted of two paragraphs. It
was provided in Paragraph 1 of this article that the strategic
investor, recognised as such upon the recommendation of the
Government and by a decision of the Seimas, shall be granted
the right to acquire shares of the new issue of the joint-stock
company "Mažeikių nafta" which continues its activities after
the reorganisation, the total nominal value whereof does not
exceed 33 percent of the authorised capital of this company. In
such a case the authorised capital of the joint-stock company
"Mažeikių nafta" is increased without application of the
provisions of Paragraph 4 of Article 43 of the Company Law and
Article 18 of the Law on Privatisation of State-owned and Local
Government Property. It was provided in Paragraph 2 of the said
article that after the strategic investor has acquired the new
issue of shares of the joint-stock company "Mažeikių nafta",
the state-owned shares of the joint-stock company "Mažeikių
nafta" shall be privatised only under the procedure established
in the Law on Privatisation of State-owned and Local Government
Property. After the privatisation the state must, by right of
ownership, have in possession a block of shares of the
joint-stock company "Mažeikių nafta" granting more than 25
percent of votes in the general meeting of the shareholders.
The wording of Article 3 amended by the 3 June 1999 Law
"On Amending and Supplementing Article 3 of the Law on the
Reorganisation of the Joint-stock Companies 'Būtingės nafta',
'Mažeikių nafta' and 'Naftotiekis'" was set forth as follows:
"1. The strategic investor, recognised as such upon the
recommendation of the Government and by a decision of the
Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock
company 'Mažeikių nafta' which continues its activity after the
reorganisation upon the increase of the authorised capital of
this company; the general nominal value of these shares must
not exceed 33 percent of the authorised capital of the said
company;
2) within a 5-year period at any time from the acquisition
of the shares pointed out in Item 1 of Paragraph 1 of this
Article by the strategic investor, to acquire newly issued
shares of the joint-stock company 'Mažeikių nafta' upon the
increase of the authorised capital of this company, the nominal
value of which together with those pointed out in Item 1 of
Paragraph 1 of this Article does not exceed 49.5 percent of the
authorised capital of the joint-stock company 'Mažeikių nafta';
3) to purchase from the State, after the strategic
investor has acquired the shares pointed out in Item 2 of this
Article, the shares belonging to the State by right of
ownership the nominal value of which does not exceed 16.5
percent of the authorised capital of the joint-stock company
'Mažeikių nafta' which is registered at that time, and it shall
be established that the strategic investor may purchase these
shares in portions under the procedure established by the
Government of the Republic of Lithuania. The strategic investor
shall be entitled to make use of this right for 7 years from
the moment of the acquisition of the shares pointed out in Item
1 of Paragraph 1 of this Article.
2. In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Paragraph 4 of Article 43 of the Company Law and
Article 18 of the Law on Privatisation of State-owned and Local
Government Property. In the course of the sale of the shares,
belonging to the State by right of ownership, of the joint
stock-company 'Mažeikių nafta' which are pointed out in Item 3
of Paragraph 1 of this Article to the strategic investor, the
provisions of the Law on Privatisation of State-owned and Local
Government Property and those of Paragraph 2 of Article 8 and
Article 10 of the Law on Public Trading in Securities shall not
be applied. The rest of the shares of the joint-stock company
'Mažeikių nafta' which belong to the State by right of
ownership shall be privatised only under the procedure
established by the Law on Privatisation of State-owned and
Local Government Property. After the privatisation, the State
must retain in its ownership a block of shares of the
joint-stock company 'Mažeikių nafta' granting more than 25
percent of votes in the general meeting of the shareholders. If
the Seimas adopts a decision to privatise still a greater
portion of the shares of the joint-stock company 'Mažeikių
nafta', the strategic interests of the state will be secured by
law.
3. After the strategic investor has acquired the shares
under Item 1 of Paragraph 1 of this Article, state institutions
will not be permitted to present additional requirements, as
regards the period prior to the acquisition of the shares by
the strategic investor, to the joint-stock company 'Mažeikių
nafta' concerning the activities or failure of the joint-stock
company 'Mažeikių nafta' continuing its activities after the
reorganisation. The Government of the Republic of Lithuania, in
the agreement with the strategic investor, has the right to
assume liabilities in the name of the State to recover the
losses to the strategic investor, which may be incurred within
1 year from the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article due to demands of other persons
for the joint-stock company 'Mažeikių nafta' continuing its
activities after the reorganisation concerning its activities
or failure in the period prior to the acquisition of the shares
by the strategic investor.
4. The notice about the first meeting of shareholders of
the joint-stock company 'Mažeikių nafta', which will take place
after the strategic investor has acquired the shares pointed
out in Item 1 of Paragraph 1 of this Article, shall be publicly
announced no later than 10 days prior to the day of the
meeting, while the announced draft agenda of the meeting shall
not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22
of the Company Law shall not be applicable."
By Article 1 of the 5 October 1999 Law "On Amending and
Supplementing Articles 3 and 4 of the Law on the Reorganisation
of the Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta'
and 'Naftotiekis'" Article 3 of the Law on the Reorganisation
of the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" was amended and supplemented once again.
Items 2 and 3 of Paragraph 1 of the said article were set forth
as follows:
"2) after he has requested so, within a 5-year period at
any time from his acquisition of the shares pointed out in Item
1 of Paragraph 1 of this Article, to acquire newly issued
shares of the joint-stock company 'Mažeikių nafta' upon the
increase of the authorised capital of this company, the nominal
value of which together with those pointed out in Item 1 of
Paragraph 1 of this Article does not exceed 49.5 percent of the
authorised capital of the joint-stock company 'Mažeikių nafta';
3) to purchase from the State, after the strategic
investor has acquired the shares pointed out in Item 2 of this
Article, the shares belonging to the State by right of
ownership the nominal value of which does not exceed 16.5
percent of the authorised capital of the joint-stock company
'Mažeikių nafta' which is registered at that time. The
strategic investor may purchase these shares in portions under
the procedure established by the Government of the Republic of
Lithuania. The strategic investor shall be entitled to make use
of this right on request at any time within 7 years from the
moment of the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article. The Government of the Republic
of Lithuania in its agreements with the strategic investor may
stipulate that part of the shares pointed out in this Item may
be transferred to the crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions."
Besides, disputed Article 3 of the law was supplemented
with new Paragraph 2, wherein it was established:
"2. In the case that at any time until the acquisition of
the shares by the strategic investor under Item 2 of Paragraph
1 of this Article the authorised capital of the joint-stock
company is increased by additional contributions of other
persons but not the strategic investor and in case the
strategic investor requests so, the Government of the Republic
of Lithuania will transfer him gratis a corresponding portion
of shares of the joint-stock company 'Mažeikių nafta', which
belong to the State by right of ownership, so that the nominal
value of the shares of the joint-stock company 'Mažeikių
nafta', which belong to the said company by right of ownership,
would correspond to the same portion in terms of percents of
the authorised capital of this company which was possessed by
the strategic investor prior to the increase of the authorised
capital by means of the additional contributions. In the course
of the transfer of shares of the joint-stock company 'Mažeikių
nafta' in pursuance of the requirements of this Paragraph, the
provisions of the Law on Privatisation of State-owned and Local
Government Property shall not be applicable. In the course of
the acquisition of shares of the joint-stock company 'Mažeikių
nafta' by the financial institutions pointed out in the
concluded agreement between the Government of the Republic of
Lithuania and the strategic investor, the authorised capital of
the said company shall be increased without application of the
norms of Paragraph 4 of Article 43 of the Company Law and those
of the Law on Privatisation of State-owned and Local Government
Property."
It was decided to consider former Paragraphs 2, 3 and 4 of
Article 3 respectively Paragraphs 3, 4 and 5. Paragraphs 3 and
4 of Article 3 of the disputed law were also amended and set
forth as follows:
"3. In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Paragraph 4 of Article 43 of the Company Law and
Article 18 of the Law on Privatisation of State-owned and Local
Government Property. In the course of the sale of the shares,
belonging to the State by right of ownership, of the joint
stock-company 'Mažeikių nafta' which are pointed out in Item 3
of Paragraph 1 of this Article to the strategic investor or
crude oil suppliers of the joint-stock company 'Mažeikių nafta'
and/or financial institutions, the provisions of the Law on
Privatisation of State-owned and Local Government Property and
those of Paragraph 2 of Article 8 and Article 10 of the Law on
Public Trading in Securities shall not be applied. With the
exception of the cases provided for in Paragraph 2 of Article 3
and Paragraph 3 of Article 4 of this Law, the rest of the
shares of the joint-stock company 'Mažeikių nafta' which belong
to the State by right of ownership shall be privatised only
under the procedure established by the Law on Privatisation of
State-owned and Local Government Property.
4. After the strategic investor has acquired the shares
under Item 1 of Paragraph 1 of this Article, state and local
government institutions will not be permitted to present
additional requirements, as regards the period prior to the
acquisition of the shares by the strategic investor, either to
the joint-stock company 'Mažeikių nafta' or its subsidiaries
concerning the activities or failure of the joint-stock company
'Mažeikių nafta' or its subsidiaries or other events. The
Government of the Republic of Lithuania, in the agreements with
the strategic investor and/or the joint-stock company 'Mažeikių
nafta', has the right to assume basic property liabilities in
the name of the State, including recovery of losses. Such
losses include or may be incurred due to that fact that the
Government of the Republic of Lithuania may not carry out its
agreement obligations because of changes in the laws of the
Republic of Lithuania and because of the fact that the
information, statements and/or confirmations pointed out in the
agreements concluded by the Government of the Republic of
Lithuania and annexes thereto (including the presented
information revealing documents of the joint-stock company
'Mažeikių nafta') were false or inexact."
In addition, the said article was supplemented with new
Paragraphs 6 and 7:
"6. In the course of the acquisition of the shares by the
strategic investor under the provisions of this Article, as
well as in the course of conclusion of agreements by the
joint-stock company 'Mažeikių nafta' on acquisition of the
right of control in the joint-stock company 'Klaipėdos nafta',
the provisions of Chapter 3 of the Law on Competition shall not
be applicable. The provisions of Paragraphs 3 and 4 of Article
30 and Paragraph 6 of Article 45 of the Company Law shall not
be applicable to the joint-stock company 'Mažeikių nafta'.
7. In the agreements with the strategic investor and the
joint-stock company 'Mažeikių nafta', the Government of the
Republic of Lithuania shall be granted the right independently
to establish the method and procedure under which the
joint-stock company 'Mažeikių nafta' would compensate the
strategic investor a possible decrease of value of the said
company. The compensation sum of the joint-stock company
'Mažeikių nafta' to the strategic investor may not exceed US$75
million."
Thus, by the laws of 9 June 1999 and of 5 October 1999,
the rights of the strategic investor were particularised and
expanded.
2. Article 3 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis", after the aforementioned amendments and
supplements have been made, provides:
"1. The strategic investor, recognised as such upon the
recommendation of the Government and by a decision of the
Seimas, shall be granted the right:
1) to acquire newly issued shares of the joint-stock
company 'Mažeikių nafta' which continues its activity after the
reorganisation upon the increase of the authorised capital of
this company; the general nominal value of these shares must
not exceed 33 percent of the authorised capital of the said
company;
2) after he has requested so, within a 5-year period at
any time from his acquisition of the shares pointed out in Item
1 of Paragraph 1 of this Article, to acquire newly issued
shares of the joint-stock company 'Mažeikių nafta' upon the
increase of the authorised capital of this company, the nominal
value of which together with those pointed out in Item 1 of
Paragraph 1 of this Article does not exceed 49.5 percent of the
authorised capital of the joint-stock company 'Mažeikių nafta';
3) to purchase from the State, after the strategic
investor has acquired the shares pointed out in Item 2 of this
Article, the shares belonging to the State by right of
ownership the nominal value of which does not exceed 16.5
percent of the authorised capital of the joint-stock company
'Mažeikių nafta' which is registered at that time. The
strategic investor may purchase these shares in portions under
the procedure established by the Government of the Republic of
Lithuania. The strategic investor shall be entitled to make use
of this right on request at any time within 7 years from the
moment of the acquisition of the shares pointed out in Item 1
of Paragraph 1 of this Article. The Government of the Republic
of Lithuania in its agreements with the strategic investor may
stipulate that part of the shares pointed out in this Item may
be transferred to the crude oil suppliers of the joint-stock
company 'Mažeikių nafta' and/or financial institutions.
2. In case that at any time until the acquisition of the
shares by the strategic investor under Item 2 of Paragraph 1 of
this Article the authorised capital of the joint-stock company
is increased by additional contributions of other persons but
not the strategic investor and in case the strategic investor
requests so, the Government of the Republic of Lithuania will
transfer him gratis a corresponding portion of shares of the
joint-stock company 'Mažeikių nafta', which belong to the State
by right of ownership, so that the nominal value of the shares
of the joint-stock company 'Mažeikių nafta', which belong to
him by right of ownership, would correspond to the same portion
in terms of percents of the authorised capital of this company
which was possessed by the strategic investor prior to the
increase of the authorised capital by means of the additional
contributions. In the course of the transfer of shares of the
joint-stock company 'Mažeikių nafta' in pursuance of the
requirements of this Paragraph, the provisions of the Law on
Privatisation of State-owned and Local Government Property
shall not be applicable. In the course of the acquisition of
shares of the joint-stock company 'Mažeikių nafta' by the
financial institutions pointed out in the concluded agreement
between the Government of the Republic of Lithuania and the
strategic investor, the authorised capital of the said company
shall be increased without application of the norms of
Paragraph 4 of Article 43 of the Company Law and those of the
Law on Privatisation of State-owned and Local Government
Property.
3. In the course of the acquisition of the shares by the
strategic investor under Items 1 and 2 of Paragraph 1 of this
Article, the authorised capital of the joint-stock company
'Mažeikių nafta' shall be increased without application of the
provisions of Paragraph 4 of Article 43 of the Company Law and
Article 18 of the Law on Privatisation of State-owned and Local
Government Property. In the course of the sale of the shares,
belonging to the State by right of ownership, of the joint
stock-company 'Mažeikių nafta' which are pointed out in Item 3
of Paragraph 1 of this Article to the strategic investor or
crude oil suppliers of the joint-stock company 'Mažeikių nafta'
and/or financial institutions, the provisions of the Law on
Privatisation of State-owned and Local Government Property and
those of Paragraph 2 of Article 8 and Article 10 of the Law on
Public Trading in Securities shall not be applied. With the
exception of the cases provided for in Paragraph 2 of Article 3
and Paragraph 3 of Article 4 of this Law, the rest of the
shares of the joint-stock company 'Mažeikių nafta' which belong
to the State by right of ownership shall be privatised only
under the procedure established by the Law on Privatisation of
State-owned and Local Government Property.
4. After the strategic investor has acquired the shares
under Item 1 of Paragraph 1 of this Article, state and local
government institutions will not be permitted to present
additional requirements, as regards the period prior to the
acquisition of the shares by the strategic investor, either to
the joint-stock company 'Mažeikių nafta' or its subsidiaries
concerning the activities or failure of the joint-stock company
'Mažeikių nafta' or its subsidiaries or other events. The
Government of the Republic of Lithuania, in the agreements with
the strategic investor and/or the joint-stock company 'Mažeikių
nafta', has the right to assume basic property liabilities in
the name of the State, including recovery of losses. Such
losses include or may be incurred due to that fact that the
Government of the Republic of Lithuania may not carry out its
agreement obligations because of changes in the laws of the
Republic of Lithuania and because of the fact that the
information, statements and/or confirmations pointed out in the
agreements concluded by the Government of the Republic of
Lithuania and annexes thereto (including the presented
information revealing documents of the joint-stock company
'Mažeikių nafta') were false or inexact.
5. The notice about the first meeting of shareholders of
the joint-stock company 'Mažeikių nafta', which will take place
after the strategic investor has acquired the shares pointed
out in Item 1 of Paragraph 1 of this Article, shall be publicly
announced no later than 10 days prior to the day of the
meeting, while the announced draft agenda of the meeting shall
not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22
of the Company Law shall not be applicable.
6. In the course of the acquisition of the shares by the
strategic investor under the provisions of this Article, as
well as in the course of conclusion of agreements by the
joint-stock company 'Mažeikių nafta' on acquisition of the
right of control in the joint-stock company 'Klaipėdos nafta',
the provisions of Chapter 3 of the Law on Competition shall not
be applicable. The provisions of Paragraphs 3 and 4 of Article
30 and Paragraph 6 of Article 45 of the Company Law shall not
be applicable to the joint-stock company 'Mažeikių nafta'.
7. In the agreements with the strategic investor and the
joint-stock company 'Mažeikių nafta', the Government of the
Republic of Lithuania shall be granted the right independently
to establish the method and procedure under which the
joint-stock company 'Mažeikių nafta' would compensate the
strategic investor a possible decrease of value of the said
company. The compensation sum of the joint-stock company
'Mažeikių nafta' to the strategic investor may not exceed US$75
million."
3. The petitioners maintain that the norms of Article 3 of
the Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" violate
the principle of a just society and law-governed state
established in the Preamble to the Constitution, as well as
Article 1 of the Constitution, Paragraphs 3, 4 and 5 of Article
46 of the Constitution, Article 67 and Paragraph 1 of Article
135 of the Constitution.
While assuming that the Law on the Basics of National
Security is a constitutional law, the petitioners doubt whether
the norms of Article 3 of the disputed law, establishing a
different legal regulation, if compared with the constitutional
law, are in compliance with the principle of a just society and
law-governed state established in the Preamble to the
Constitution, Article 1 of the Constitution which promulgates
that the State of Lithuania shall be an independent and
democratic republic (as a democratic republic is a law-governed
one), and the final competence of the Seimas established in
Article 67 of the Constitution. The petitioners point out that
the Law on the Basics of National Security particularises and
interprets the norms of Chapter 3 of the Constitution,
especially its Article 135. Therefore, the petitioners doubt
whether the disputed legal norms are in compliance with
Paragraph 1 of Article 135 of the Constitution providing that
in conducting foreign policy, the Republic of Lithuania shall
pursue the universally recognized principles and norms of
international law, shall strive to safeguard national security
and independence as well as the basic rights, freedoms and
welfare of its citizens, and shall take part in the creation of
sound international order based on law and justice.
In addition, the petitioners presume that the Seimas,
while regulating activities of individual economic entities,
takes upon itself the competence characteristic of the
executive and thus violates the principle of separation of
powers entrenched in Paragraph 1 of Article 5 of the
Constitution, the provision of Article 1 of the Constitution
that Lithuania shall be a democratic state in which separation
of powers must be secured, and the principle of a law-governed
state consolidated in the Preamble to the Constitution.
The petitioners also point out that Article 3 of the Law
on the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" provides that the
norms of common laws shall not be applicable to respective
relations, and that only the disputed law must be followed.
Therefore, upon establishment of exceptions to common legal
regulation, the principle of a law-governed state established
in the Preamble to the Constitution and the provision of
Article 1 of the Constitution that Lithuania shall be a
democratic republic are violated.
4. The request of the petitioners is based on the
assumption that the Law on the Basics of the National Security
is a constitutional law. The Constitutional Court has already
held in the present ruling that the Law on the Basics of the
National Security is not a constitutional law, therefore it is
impossible to draw a conclusion that disputed Article 3 of the
law, from the aspect pointed out by the petitioner, conflicts
with the principle of a law-governed state established in the
Preamble to the Constitution, Article 1, Article 67 and
Paragraph 1 of Article 135 of the Constitution.
5. In the present ruling, the Constitutional Court, while
analysing the compliance of Article 2 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" with the Constitution, has
held that singling out of respective economic entities and
differentiated legal regulation of their reorganisation in
themselves do not violate the principle of a law-governed
state.
It needs to be noted that the legislator, while regulating
the relations of reorganisation of the joint-stock companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", did not
interfere with the powers of the other state institutions
established in the Constitution nor did he take over the
competence of the executive, established in the Constitution.
Taking account of the fact that by the disputed legal
regulation the competence of the executive has not been
interfered with, one may draw a conclusion that disputed
Article 3 of the law is in compliance with the principle of a
law-governed state entrenched in the Constitution, as well as
Article 1 and Paragraph 1 of Article 5 of the Constitution.
6. Paragraph 4 of Article 3 of the law provides that after
the strategic investor has acquired the shares under Item 1 of
Paragraph 1 of this Article, state and local government
institutions will not be permitted to present additional
requirements, as regards the period prior to the acquisition of
the shares by the strategic investor, either to the joint-stock
company "Mažeikių nafta" or its subsidiaries concerning the
activities or failure of the joint-stock company "Mažeikių
nafta" or its subsidiaries or other events. The Government of
the Republic of Lithuania, in the agreements with the strategic
investor and/or the joint-stock company "Mažeikių nafta", has
the right to assume basic property liabilities in the name of
the state, including recovery of losses.
7. Paragraph 1 of Article 128 of the Constitution provides
that decisions concerning state loans and other basic property
liabilities of the state shall be adopted by the Seimas on the
recommendation of the Government. It means that, under the
Constitution, decisions concerning basic property liabilities
may be adopted by the Seimas only, and only when there is a
recommendation of the Government. In its rulings of 3 June 1999
and of 21 December 1999, the Constitutional Court held: "In
cases when the powers of a concrete branch of power are
directly established in the Constitution, then no institution
may take over these powers, while an institution whose powers
are defined by the Constitution may neither transfer nor refuse
these powers. Such powers may neither be changed nor restricted
by the law."
As mentioned, it is provided in Paragraph 4 of Article 3
of the disputed law that the Government, in the agreements with
the strategic investor and the joint-stock "Mažeikių nafta",
has the right to assume basic property liabilities in the name
of the state, including recovery of losses. It means that the
Government was transferred the powers regarding adoption of
decisions concerning basic property liabilities of the state by
the Seimas, which are ascribed by the Constitution to the
latter.
Thus, in this case the Seimas transferred the powers to
the Government, which are ascribed to the Seimas by the
Constitution, and thereby it violated Paragraph 1 of Article
128 of the Constitution, as well as the principle of separation
of powers entrenched in Paragraph 1 of Article 5 of the
Constitution.
8. As mentioned, it is provided in Paragraph 4 of Article
3 of the disputed law that the Government, in the agreements
with the strategic investor and/or the joint-stock company
"Mažeikių nafta", has the right to assume basic property
liabilities in the name of the state, including recovery of
losses. Under the said law, such losses include the losses
incurred due to that fact that the Republic of Lithuania may
not carry out its agreement obligations because of changes in
the laws of the Republic of Lithuania and because of the fact
that the information, statements and/or confirmations pointed
out in the agreements concluded by the Government and annexes
thereto (including the presented information revealing
documents of the joint-stock company "Mažeikių nafta") were
false or inexact.
The aforesaid provisions of the law concerning obligations
to cover losses also pre-suppose the fact that the Government
has the right, in the name of the state, to obligate itself to
cover losses to the strategic investor and the joint-stock
company "Mažeikių nafta" even in such cases when the strategic
investor and/or the joint-stock company "Mažeikių nafta" are
responsible for the losses. Under the law, these losses must be
covered from the state budget. Such legal regulation is not in
line with the provision of Paragraph 3 of Article 46 of the
Constitution that the state shall regulate economic activity so
that it serves the general welfare of the people, as well as
with the constitutional principle of a law-governed state.
Taking account of the motives set forth, one is to
conclude that the provision of Paragraph 4 of Article 3 of the
disputed law that the Government, in the agreements with the
strategic investor and the joint-stock company "Mažeikių
nafta", has the right to assume basic property liabilities in
the name of the state, including recovery of losses, to the
extent that that the right of the Government is established to
obligate itself to cover losses to the strategic investor and
the joint-stock company "Mažeikių nafta" even in such cases
when the strategic investor and/or the joint-stock company
"Mažeikių nafta" are responsible for the losses conflicts with
Paragraph 3 of Article 46 of the Constitution and the principle
of a law-governed state entrenched in the Constitution.
9. As mentioned, Paragraph 4 of Article 3 of the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" provides that the
Government has the right to assume obligations to cover losses
to the strategic investor and/or the joint-stock company
"Mažeikių nafta", which may be incurred due to that fact that
the Republic of Lithuania may not carry out its agreement
obligations because of changes in the laws of the Republic of
Lithuania.
It needs to be noted that the provision of the law under
which the state will be liable to cover the losses due to
changes of the laws of the Republic of Lithuania also means
that even in cases when norms of the Constitution are attempted
to be enforced or values entrenched in the Constitution to be
protected by law, the state would be liable to cover losses to
the strategic investor and/or the joint-stock company "Mažeikių
nafta" incurred due to this. Thus, under the disputed norm of
the law the enforcement of the Constitution is impeded. The
Constitutional Court notes that enforcement of the Constitution
may not be hindered by any conditions.
Taking account of the motives set forth, one is to draw a
conclusion that the disputed provision of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" that the Government, in the
agreements with the strategic investor and/or the joint-stock
"Mažeikių nafta", has the right to assume basic property
liabilities in the name of the state, including recovery of
losses, to the extent that the Government has the right to
obligate itself to cover losses even in such cases when such
losses are incurred due to adoption of the laws enforcing norms
of the Constitution and/or protecting the values established in
the constitution conflicts with Article 4 of the Constitution
and the principle of a law-governed state entrenched in the
Constitution.
10. It is provided in Paragraph 2 of Article 3 of the Law
on the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" that in the course
of the transfer of shares of the joint-stock company "Mažeikių
nafta" in pursuance of the requirements of Paragraph 2 of
Article 3 of the said law, the provisions of the Law on
Privatisation of State-owned and Local Government Property
shall not be applicable. In addition, in the course of the
acquisition of shares of the joint-stock company "Mažeikių
nafta" by the financial institutions pointed out in the
concluded agreement between the Government and the strategic
investor, the authorised capital of the said company shall be
increased without application of the norms of Paragraph 4 of
Article 43 of the Company Law and those of the Law on
Privatisation of State-owned and Local Government Property.
It is provided in Paragraph 3 of Article 3 of the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" that in respective
cases in the course of the acquisition of the shares by the
strategic investor, the authorised capital of the joint-stock
company "Mažeikių nafta" shall be increased without application
of the provisions of Paragraph 4 of Article 43 of the Company
Law and Article 18 of the Law on Privatisation of State-owned
and Local Government Property. In the course of the sale of the
shares, belonging to the state by right of ownership, of the
joint stock-company "Mažeikių nafta" which are pointed out in
Item 3 of Paragraph 1 of Article 3 of the disputed law to the
strategic investor or crude oil suppliers of the company
'Mažeikių nafta' and/or financial institutions, the provisions
of the Law on Privatisation of State-owned and Local Government
Property and those of Paragraph 2 of Article 8 and Article 10
of the Law on Public Trading in Securities shall not be
applied.
It is provided in Paragraph 5 of Article 3 of the disputed
law that the notice about the first meeting of shareholders of
the joint-stock company "Mažeikių nafta", which will take place
after the strategic investor has acquired the shares pointed
out in Item 1 of Paragraph 1 of the said article shall be
publicly announced no later than 10 days prior to the day of
the meeting, while the announced draft agenda of the meeting
shall not be further specified. In this case the provisions of
Paragraph 6 of Article 21 and Paragraphs 1 and 3 of Article 22
of the Company Law shall not be applicable. Paragraph 6 of
Article 3 of the disputed law provides that in the course of
the acquisition of the shares by the strategic investor under
the provisions of the said article, as well as in the course of
conclusion of agreements by the joint-stock company "Mažeikių
nafta" on acquisition of the right of control in the
joint-stock company "Klaipėdos nafta", the provisions of
Chapter 3 of the Law on Competition shall not be applicable.
The provisions of Paragraphs 3 and 4 of Article 30 and
Paragraph 6 of Article 45 of the Company Law shall not be
applicable to the joint-stock company "Mažeikių nafta".
It is evident that in Paragraphs 2, 3, 5 and 6 of Article
3 of the disputed law differentiated regulation of the legal
relations regarding the reorganisation of the economic entities
pointed out in the law and of functioning of the company
continuing its activities after the reorganisation is provided
for. The Constitutional Court, on the grounds of the motives
which it has set forth in this Ruling while analysing Article 2
of the Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis", draws a
conclusion that the provisions of Paragraphs 2, 3, 5 and 6 of
Article 3, which establish differentiated legal regulation, in
themselves do not conflict with the principle of a law-governed
state established in the Constitution, as well as Article 1 of
the Constitution.
11. In the opinion of the petitioners, after the strategic
investor had been granted the exceptional rights established in
Article 3 of the Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
which permit the strategic investor to have a monopoly under
its control, the norm of Paragraph 3 of Article 46 of the
Constitution whereby the state shall regulate economic activity
so that it serves the general welfare of the people is
violated. After the state has refused the right of a decisive
vote, the strategic investor will have the joint-stock company
"Mažeikių nafta" occupying an exceptional place in the oil
sector under its control. The petitioners also maintain that
thereby Paragraph 4 of Article 46 of the Constitution
prohibiting monopolisation of production and the market is
violated. The state, after it has refused the right of a
decisive vote in the joint-stock company "Mažeikių nafta", will
not be able to defend the interests of the consumers. By such
regulation Paragraph 5 of Article 46 of the Constitution is
violated.
12. Paragraphs 3, 4 and 5 of Article 46 of the
Constitution provide:
"The State shall regulate economic activity so that it
serves the general welfare of the people.
The law shall prohibit monopolisation of production and
the market, and shall protect freedom of fair competition.
The State shall defend the interests of the consumers."
In the course of the construction of the content of
Paragraphs 3, 4 and 5 of Article 46 of the Constitution, one is
to pay attention to the fact that Lithuania's economy is based
on the right to private ownership, freedom of individual
economic activity, and initiative. The state supports economic
efforts which are useful to the community. Alongside, it needs
to be noted that freedom of individual economic activity is not
absolute. The state regulates economic activity by coordinating
the interests of individuals and society.
The Constitutional Court, while interpreting Paragraph 3
of Article 46 of the Constitution in its ruling of 6 October
1999, noted that in the constitutional provision "the State
shall regulate economic activity so that it serves the general
welfare of the people" the constitutional principle is
established which sets the guidelines and ways for as well as
limits on the regulation of economic activity. It is possible
to judge as regards the general welfare of the people according
to the social development of the people and the opportunities
of self-expression of an individual. The content of the notion
"general welfare of the people" is to be disclosed in every
particular case, while taking account of economic, social and
other important factors.
While construing Paragraph 4 of Article 46 of the
Constitution, one is to note that the provision "the law shall
prohibit monopolisation of production and the market" means
that it is not permitted to introduce a monopoly, i.e., it is
not permitted to grant exceptional rights to an economic entity
to operate in a certain sector of economy lest this sector
should become monopolised. The prohibition to monopolise
production and the market, however, does not mean that under
certain circumstances it is prohibited to state in a law the
existence of a monopoly in a particular sector of economy or to
reflect factual monopolistic relations and regulate them in a
respective manner.
Paragraph 5 of Article 46 of the Constitution provides for
a duty of the state to protect interests of the consumers. This
constitutional provision pre-supposes the fact that various
measures of protection of consumers' interests must be
established by legal norms, as well as that state institutions
must supervise how economic entities conform to the established
requirements etc.
13. While assessing the norms of Article 3 of the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" which establish the
rights of the strategic investor, the Constitutional Court
notes that the norms of Article 46 of the Constitution are
interrelated and supplementing each other. Not a single right
consolidated in this article of the Constitution is an absolute
one. The right of the state to regulate economic activity
established in Paragraph 3 of Article 46 of the Constitution
creates constitutional preconditions to pass laws that react to
a situation of the national economy as well as diversity and
changes of economic and social life.
The disputed norms of Article 3 of the law regulate
relations linked with reorganisation of one sector of the
national economy in the course of which privatisation of items
of economy becomes of great importance. The objective of the
legal regulation is creation of conditions to rearrange the
sector of economy by privatising its items, attracting
investments etc.
Peculiarities of the development of this country,
conditions of state-owned enterprises, the situation in the
national economy and other factors exert influence on the
choice of methods of privatisation. Implementing the economic
reform, the state may establish differentiated legal regulation
by not violating constitutional principles and requirements of
constitutional norms. Therefore, it is impossible to hold that
the norms of the law which establish differentiated legal
situation of certain entities in themselves violate Paragraph 3
of Article 46 of the Constitution. After these circumstances
have been taken into consideration, there exist no grounds to
recognise disputed Article 3 of the law from the aspect pointed
out by the petitioners as one violating Paragraph 3 of Article
46 of the Constitution.
14. Under Article 3 of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis", the strategic investor, recognised as such
upon the recommendation of the Government and by a decision of
the Seimas, shall be granted the right to acquire newly issued
shares of the joint-stock company "Mažeikių nafta" which
continues its activity after the reorganisation upon the
increase of the authorised capital of this company provided the
general nominal value of these shares does not exceed 33
percent of the authorised capital of the said company. After
the strategic investor has requested so, within a 5-year period
at any time from his acquisition of the shares pointed out in
Item 1 of Paragraph 1 of this article, he has the right to
acquire newly issued shares of the joint-stock company
"Mažeikių nafta" upon the increase of the authorised capital of
this company the nominal value of which together with those
pointed out in Item 1 of Paragraph 1 of this article does not
exceed 49.5 percent of the authorised capital of the
joint-stock company "Mažeikių nafta". Besides, it is provided
in the disputed article of this law that, after the strategic
investor has acquired the shares pointed out in Item 2 of this
article, he has the right to purchase from the state the shares
belonging to the state by right of ownership the nominal value
of which does not exceed 16.5 percent of the authorised capital
of the joint-stock company "Mažeikių nafta" which is registered
at that time. The strategic investor may purchase these shares
in portions under the procedure established by the Government
of the Republic of Lithuania. In the said article of the law
other relations of acquisition of the shares are also
regulated.
In the course of the investigation whether by the said
legal regulation a monopoly is created it is to be noted that,
until the reorganisation, in all the three joint-stock
companies subject to reorganisation the greater portion of the
shares belonged to the state. In addition, it had the right of
a decisive vote in these enterprises. Therefore, in this case
the legal regulation concerning the transfer of shares to other
entities is not to be assessed as creating a monopoly. Thus,
there are not any legal grounds to assess the disputed norms
set down in Article 3 of the law as creating a monopoly in a
certain sector of economy.
15. Under Paragraph 5 of Article 46 of the Constitution,
the state shall defend the interests of the consumers.
Assessing the compliance of the disputed norms of Article 3 of
the law with Paragraph 5 of Article 46 of the Constitution, it
needs to be noted that that virtually by the established legal
regulation the norms of the laws or other legal acts of the
Republic of Lithuania wherein the common guarantees of the
protection of the consumers' rights are consolidated are
neither abolished nor amended.
The duty of the state to defend the interests of the
consumers arises from Paragraph 5 of Article 46 of the
Constitution. Taking account of the fact that in the area of
economic relations regulated by the disputed law that the
production and the market are virtually concentrated, as well
as the fact that certain exceptions regarding application of
the Law on Competition are provided for in Paragraph 6 of
Article 3 of this law, institutions of state authority have a
duty to establish an additional legal regulation which would
secure the protection of the interests of the consumers. It
needs to be noted that the institutions of state authority have
not carried out this duty neither prior to the reorganisation
of respective companies nor after the adoption of the disputed
law. Such a situation is to be assessed as a gap of the legal
regulation. State institutions must eliminate this gap. Thus
the legal regulation consolidated in the disputed law in
respect of the consumers is inconsistent and incomplete,
however, in this case there are not any sufficient legal
grounds to assess this as violation of Paragraph 5 of Article
46 of the Constitution.
V
On the compliance of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" with the principle of a
law-governed state entrenched in the Constitution, Article 1,
Article 23, Paragraph 1 of Article 29, Paragraphs 1, 3, 4 and 5
of Article 46, Articles 67 and 135 of the Constitution.
1. It was established in Article 4, entitled "Requirements
for the Holders of Blocks of Shares", of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" passed on 29 September 1998:
"1. No shareholder of the joint-stock company "Mažeikių
nafta", save the State and the strategic investor together with
the entities under the control of the strategic investor, the
notion whereof is defined in the Law on Public Trading in
Securities, has the right to hold in possession a block of
shares granting more than 24 percent of votes.
2. The State shall have the priority in acquisition of the
shares sold or transferred otherwise belonging to the other
shareholders holding not less than one percent of shares of the
joint-stock company 'Mažeikių nafta' which continues its
activities after the reorganisation. The Government shall have
the right to establish the same right of priority to the
strategic investor as well."
2. The initial wording of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" was amended by Article 2 of the 5 October
1999 the Law "On Amending and Supplementing Articles 3 and 4 of
the Law on the Reorganisation of the Joint-stock Companies
'Būtingės nafta', 'Mažeikių nafta' and 'Naftotiekis'". By the
said article Paragraph 2 of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" was supplemented and set
down as follows:
"2. The State shall have priority in acquisition of the
shares sold or transferred otherwise belonging to the other
shareholders holding not less than one percent of shares of the
joint-stock company 'Mažeikių nafta' which continues its
activities after the reorganisation. The Government shall have
the right to establish the same right of priority to the
strategic investor as well. The period during which the State
has the right of priority to acquire shares of the joint-stock
company 'Mažeikių nafta' from the strategic investor and the
procedure of implementation of this right shall be established
in the agreement between the Government of the strategic
investor. Under the procedure set down in the agreement with
the Government, the strategic investor shall have the right to
transfer the shares of the joint-stock company 'Mažeikių nafta'
which belong to the strategic investor by right of ownership to
the enterprises all the shares and/or capital whereof, either
directly or indirectly, belong to the strategic investor."
In addition, Article 4 of the Law on the Reorganisation of
the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" was supplemented with Paragraph 3 wherein it
was established:
"3. In the case that the strategic investor has not sold
or transferred otherwise the shares of the joint-stock company
'Mažeikių nafta' acquired under Item 1 of Paragraph 1 of
Article 3 of this Law (save transfer of the shares to the
enterprises all the shares and/or capital whereof, either
directly or indirectly, belong to the strategic investor) and a
decision has been adopted to privatise, sell or transfer
otherwise a certain portion of state-owned shares so that after
such privatisation, sale or transfer the nominal value of the
shares belonging to the State by right of ownership of the
joint-stock company 'Mažeikių nafta' would comprise less than
18 percent of the authorised capital of this company, while the
strategic investor shall have the right of priority to acquire
all or part of the state-owned shares privatised or otherwise
transferred without application of the Law on Privatisation of
State-owned and Local Government Property. This provision of
priority shall also be applicable in cases when the total value
of the state-owned shares of the joint-stock company 'Mažeikių
nafta' further decreases due to subsequent transfers of the
state-owned shares."
3. After the supplements, Article 4 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" provides:
"1. No shareholder of the joint-stock company "Mažeikių
nafta", save the State and the strategic investor together with
the entities under its control the notion whereof is defined in
the Law on Public Trading in Securities, has the right to hold
in possession a block of shares granting more than 24 percent
of votes.
2. The State shall have priority in acquisition of the
shares sold or transferred otherwise belonging to the other
shareholders holding not less than one percent of shares of the
joint-stock company 'Mažeikių nafta' which continues its
activities after the reorganisation. The Government shall have
the right to establish the same right of priority to the
strategic investor as well. The period during which the State
has the right of priority to acquire shares of the joint-stock
company 'Mažeikių nafta' from the strategic investor and the
procedure of implementation of this right shall be established
in the agreement between the Government of the strategic
investor. Under the procedure set down in the agreement with
the Government, the strategic investor shall have the right to
transfer the shares of the joint-stock company 'Mažeikių nafta'
which belong to the strategic investor by right of ownership to
the enterprises all the shares and/or capital whereof, either
directly or indirectly, belong to the strategic investor.
3. In the case that the strategic investor has not sold or
transferred otherwise the shares of the joint-stock company
'Mažeikių nafta' acquired under Item 1 of Paragraph 1 of
Article 3 of this Law (save transfer of the shares to the
enterprises all the shares and/or capital whereof, either
directly or indirectly, belong to the strategic investor) and a
decision has been adopted to privatise, sell or transfer
otherwise a certain portion of state-owned shares so that after
such privatisation, sale or transfer the nominal value of the
shares belonging to the State by right of ownership of the
joint-stock company 'Mažeikių nafta' would comprise less than
18 percent of the authorised capital of this company, while the
strategic investor shall have the right of priority to acquire
all or part of the state-owned shares privatised or transferred
otherwise without application of the Law on Privatisation of
State-owned and Local Government Property. This provision of
priority shall also be applicable in cases when the total value
of the state-owned shares of the joint-stock company 'Mažeikių
nafta' further decreases due to subsequent transfers of the
state-owned shares."
4. The petitioners maintain that the norms of Article 4 of
the Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" violate
the principle of a just society and law-governed state
entrenched in the Preamble to the Constitution, Articles 1 and
23, Paragraph 1 of Article 29, Paragraphs 1, 3, 4 and 5 of
Article 46, Article 67 and Paragraph 1 of Article 135 of the
Constitution.
5. The petitioners, assuming that the Law on the Basics of
National Security is a constitutional law, have doubts
concerning the compliance of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" with the principle of a just
society and law-governed state entrenched in the Preamble to
the Constitution, as well as Articles 1, 67 and Paragraph 1 of
Article 135 of the Constitution.
The Constitutional Court has already held in this Ruling
that the Law on the Basics of National Security is not a
constitutional law, therefore there are not any legal grounds
to assert that the disputed norms of Article 4 of the law
violate the principle of a law-governed state entrenched in the
Preamble to the Constitution, Articles 1 and 67 as well as
Paragraph 1 of Article 135 of the Constitution.
6. The petitioners maintain that the norms of Paragraph 1
of Article 4 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" restrict the right of the shareholders of the
joint-stock company "Mažeikių nafta", with the exception of the
state and the strategic investor, to hold a block of shares of
this company granting more than 24 percent of votes. By such
regulation the principle of equality of all persons before the
law, established in Paragraph 1 of Article 29 of the
Constitution, as well as freedom of fair competition entrenched
in Paragraph 4 of Article 46 of the Constitution, is violated.
According to the petitioners, by the norms of Paragraph 2
of Article 4 of the law the rights of the shareholders who hold
by right of ownership more than 1 percent of shares of the
joint-stock company "Mažeikių nafta" continuing its activities
after the reorganisation to freely dispose of their property,
i.e. shares, are infringed, as it is established that either
the state or the strategic investor has the right of priority
in acquisition of these shares. Such legal regulation violates
the principle of inviolability of property established in
Article 23 of the Constitution and the provision of Paragraph 1
of Article 46 of the Constitution providing that Lithuania's
economy shall be based on the right to private ownership,
freedom of individual economic activity, and initiative.
According to the petitioners, Paragraph 3 of Article 4 of the
Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" provides,
in case there are certain conditions, for the right of priority
of the strategic investor to acquire the shares sold or
transferred otherwise by the state and a possibility not to
follow the requirements established in the other laws. By such
legal regulation freedom of fair competition entrenched in
Paragraph 4 of Article 46 of the Constitution and the principle
of a law-governed state, promulgated in the Preamble to the
Constitution, are violated.
7. The Constitution is an integral legal act the
principles and norms whereof constitute a harmonious system.
Therefore, while assessing whether the disputed norms of the
law are in conformity with the provisions of Articles 29 and 23
of the Constitution, one has to take into consideration the
fact that in this case these constitutional provisions are
linked with the right of the state to regulate economic
activity so that it would serve the general welfare of the
people. The legislator, while taking account of the importance
and character of the regulated economic relations, may regulate
this activity in a differentiated manner or establish certain
conditions for it. Such conditions may be set for the
reorganisation of enterprises operating in a specific sector of
economy, terms and procedure of investments into such
enterprises, and requirements for the holders of blocks of
shares.
8. Paragraph 1 of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" provides that no shareholder
of the joint-stock company "Mažeikių nafta", save the state and
the strategic investor together with the entities under the
control of the strategic investor the notion whereof is defined
in the Law on Public Trading in Securities, has the right to
hold in possession a block of the shares granting more than 24
percent of votes.
While assessing whether the disputed norms are in
conformity with Articles 23 and 29 and Paragraphs 1 and 4 of
Article 46 of the Constitution, one has to take account of the
purpose of the law, the character of the regulated relations
and the aspiration of the state to respectively regulate the
economy of this country. As mentioned in this Ruling, singling
out of individual economic entities and differentiated
regulation of their situation is to be linked with the aims
raised by the state in the sphere of economy.
The disputed norms of Paragraph 1 of Article 4 set
requirements for the holders of blocks of shares of the
stock-joint company "Mažeikių nafta" which continues its
activities after the reorganisation, i.e., requirements as to
the size of a block of shares that they may hold. Therefore
there are not any legal grounds to assert that by such legal
regulation the guarantees established in Article 23 of the
Constitution, equality of persons before the law established in
Article 29 of the Constitution and freedom of fair competition
consolidated in Paragraph 4 of Article 46 of the Constitution
are violated.
9. Paragraph 2 of Article 4 of the Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" provides that the state
shall have priority in acquisition of the shares sold or
transferred otherwise belonging to the other shareholders
holding not less than one percent of shares of the joint-stock
company "Mažeikių nafta" which continues its activities after
the reorganisation. The Government shall have the right to
establish the same right of priority to the strategic investor
as well. Paragraph 3 of the same article provides that in the
case that "the strategic investor has not sold or transferred
otherwise the shares of the joint-stock company 'Mažeikių
nafta' acquired under Item 1 of Paragraph 1 of Article 3 of
this Law (save transfer of the shares to the enterprises all
the shares and/or capital whereof, either directly or
indirectly, belong to the strategic investor) and a decision
has been adopted to privatise, sell or transfer otherwise a
certain portion of state-owned shares so that after such
privatisation, sale or transfer the nominal value of the shares
belonging to the State by right of ownership of the joint-stock
company 'Mažeikių nafta' would comprise less than 18 percent of
the authorised capital of this company, while the strategic
investor shall have the right of priority to acquire all or
part of the state-owned shares privatised or otherwise
transferred without application of the Law on Privatisation of
State-owned and Local Government Property".
The establishment of the right of priority under certain
conditions for respective entities in itself does not deny the
principles of the right of ownership established in Article 23
of the Constitution, nor those of equality of all persons
before the law, the court and other state institutions, nor the
requirements of Paragraphs 1 and 4 of Article 46 of the
Constitution. The circumstance that the norms of Paragraphs 2
and 3 of Article 4 of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" provide for a different legal regulation from
that provided in other laws may not serve as the grounds for
drawing a conclusion that the principle of a law-governed state
established in the Constitution is violated.
Paragraph 2 of Article 4 of the law provides for the right
of priority of the state as well as that, on a decision of the
Government, of the strategic investor to acquire the shares
sold or transferred otherwise. When one considers sale of
shares, the legislator, while taking account of the purposes of
the legal regulation as well as other circumstances, may
establish entities which have the right of priority to acquire
the shares sold. In this case, the right of ownership
established in Article 23 of the Constitution is not violated
as the shareholder who sells the shares is paid the market
price. However, shares may be transferred not only by means of
sale but other ways as well, e.g., by giving them as a present.
It needs to be noted that neither the Constitution nor
universally recognised international legal norms deny an
opportunity to set certain limits on the exercise of the rights
of ownership, however, by such restrictions the essence of the
right of ownership may not be denied. Meanwhile, under the
disputed norm of the law the right of a person to give his
shares as a present or transfer them otherwise is groundlessly
restricted.
Taking account of the motives set forth, one is to
conclude that the provision of Paragraph 2 of Article 4 of the
Law on the Reorganisation of the Joint-stock Companies
"Būtingės nafta", "Mažeikių nafta" and "Naftotiekis" that the
state, and, by the decision of the Government, the strategic
investor shall have priority in acquisition of the shares sold
or transferred otherwise belonging to the other shareholders
holding not less than one percent of shares of the joint-stock
company "Mažeikių nafta" which continues its activities after
the reorganisation to the extent that the right of the
shareholders to transfer their shares otherwise is restricted
conflicts with Article 23 of the Constitution.
VI
On the compliance of Paragraph 3 of Article 5 of the Law
on Tax Administration with the principle of a law-governed
state entrenched in the Constitution, Article 1, Paragraph 1 of
Article 5, Item 15 of Article 67, Paragraph 3 of Article 127
and Paragraph 1 of Article 128 of the Constitution.
1. Paragraph 3 of Article 5 of the Law on Tax
Administration provides: "In cases when under the procedure
established by the Republic of Lithuania Law on Investment in
an investment agreement of the Government of the Republic of
Lithuania concluded with a respective strategic investor the
said strategic investor obligates himself to invest, in the
course of 3 years (36 calendar months) from the day of the
conclusion of the agreement, not less than 200 million litas
into an economic entity registered in the Republic of Lithuania
register of enterprises, at the request of the strategic
investor in the investment agreement it may be established that
in respect with the said economic entity the rates of direct
taxes (taxes listed in Paragraph 1 of this Article except
value-added and excise taxes) established on that day in valid
tax laws shall not be increased from the day after the
investment provided for in the investment agreement has reached
200 million litas. The Government of the Republic of Lithuania
shall have the right to prolong the term of not increase of
taxes for strategic investors for up to 10 years."
2. In the opinion of the petitioner, the disputed norm of
Paragraph 3 of Article 5 of the Law on Tax Administration
conflicts with the principle of a law-governed state entrenched
in the Preamble to the Constitution, Article 1, Paragraph 1 of
Article 5, Item 15 of Article 67 and Paragraph 1 of Article 128
of the Constitution.
The petitioner bases his allegation that the disputed norm
of Paragraph 3 of Article 5 of the Law on Tax Administration
conflicts with the aforesaid articles of the Constitution on
the fact that that by this norm the Government has been
delegated the competence of the Seimas to approve taxes and
assume basic property liabilities. It is from this aspect that
the Constitutional Court will consider the disputed norms of
Article 5 of the Law on Tax Administration.
3. Under Item 15 of Article 67 of the Constitution, the
Seimas shall establish state taxes and other obligatory
payments. Paragraph 3 of Article 127 of the Constitution
provides that taxes, other budgetary payments, and dues shall
be established by the laws of the Republic of Lithuania. The
Government of the Republic of Lithuania shall implement laws
and resolutions of the Seimas concerning the implementation of
laws, as well as the decrees of the President of the Republic
(Item 2 of Article 94 of the Constitution) and discharge other
duties prescribed to the Government by the Constitution and
other laws (Item 7 of Article 94 of the Constitution).
Tax relations are liability legal relations between the
state and the taxpayer. Taxes are established by laws. It is
only in the norms of legal acts of such type that the object of
a tax, entities of tax relations, their rights and duties,
sizes of taxes, term of payment, exceptions and deductions may
be established. By substatutory acts the procedure of
enforcement of such laws may be regulated and particular norms
of tax laws may be implemented.
4. As mentioned, it is provided in Paragraph 3 of Article
5 of the Law on Tax Administration that the Government shall
have the right to prolong the term of not increase of taxes to
a strategic investor for up to 10 years.
Under Paragraph 3 of Article 127 of the Constitution,
taxes, other budgetary payments, and dues shall be established
by the laws of the Republic of Lithuania. Item 15 of Article 67
of the Constitution provides that the Seimas shall establish
state taxes and other obligatory payments. Thus only a law may
provide for the term of payment, exceptions and deductions. As
mentioned in this Ruling, the Constitutional Court has noted
that in cases when concrete powers are ascribed to one or
another state institution, then this institution may not
transfer these powers to another institution, while the other
state institution may not take over these powers. Under
Paragraph 3 of Article 5 of the disputed Law on Tax
Administration, the Government has been granted the right to
prolong the term of not increase of taxes for a strategic
investor for up to 10 years, i.e. the Seimas transferred the
powers to the Government which are directly ascribed to the
Seimas in the Constitution.
It is provided for in Paragraph 1 of Article 128 of the
Constitution that decisions concerning State loans and other
basic property liabilities of the state shall be adopted by the
Seimas on the recommendation of the Government. Taking account
of the fact that the said article of the Constitution does not
regulate tax relations, one is to conclude that the disputed
provision of Paragraph 3 of Article 5 of the Law on Tax
Administration is in compliance with Paragraph 1 of Article 128
of the Constitution.
Taking account of the motives set forth, one is to
conclude that the provision of Paragraph 3 of Article 5 of the
Law on Tax Administration whereby the right is granted to the
Government to prolong the term of not increase of taxes for a
strategic investor for up to 10 years conflicts with Item 15 of
Article 67, Paragraph 3 of Article 127 of the Constitution, as
well as Paragraph 1 of Article 5 of the Constitution and the
principle of a law-governed state entrenched in the
Constitution.
VII
On the compliance of Paragraph 1 of Article 1 of the 29
September 1998 Seimas Resolution "On the Recognition of a
Strategic Investor" with Paragraph 4 of Article 46 of the
Constitution, as well as on the compliance of Item 1 of
Paragraph 2 of Article 1 of the said resolution with the Law on
the Basics of National Security.
1. In the opinion of the petitioners, the compliance of
Paragraph 1 of Article 1 of the 29 September 1998 Seimas
Resolution "On the Recognition of a Strategic Investor" with
the Constitution is to be assessed in connection with the Law
on the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis". By granting the
status of a strategic investor to a concrete entity, one
establishes advantages in the competition of economic activity,
while an actual opportunity for a strategic investor to
monopolise production is created. Thus Paragraph 1 of Article 1
of the disputed law violates the freedom of fair competition
and the prohibition to monopolise production established in
Paragraph 4 of Article 46 of the Constitution.
Besides, according to the petitioners, the provision of
Item 1 of Paragraph 2 of the disputed Seimas resolution,
whereby the agreement between the Government and the strategic
investor is approved so that the strategic investor might
acquire 33 percent of shares of the authorised capital of the
company, as in such a case the state will lose a decisive vote
in adopting positive decisions, violates the provision of the
section entitled "Economic Policy" of Chapter 4 of the Law on
the Basics of National Security stipulating that in enterprises
of strategic importance for national security the controlling
decision power must be retained by the state.
2. Paragraph 1 of Article 1 of the Seimas resolution
recognises the United States of America company "Williams
International Company" a strategic investor and grants it the
right to acquire a portion of shares of the joint-stock company
"Mažeikių nafta" which continues its activity after the
reorganisation.
The petitioner links the alleged non-compliance of the
resolution with the Constitution to the fact that the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis" allegedly conflicts
with Paragraph 4 of Article 46 of the Constitution.
The Constitutional Court has held in this Ruling that the
disputed norms of the Law on the Reorganisation of the
Joint-stock Companies "Būtingės nafta", "Mažeikių nafta" and
"Naftotiekis" are in conformity with Paragraph 4 of Article 46
of the Constitution, therefore, in this case it is impossible
to draw a conclusion that from the aspect pointed out by the
petitioner Paragraph 1 of Article 1 of the Seimas resolution
which is being linked with the aforementioned law conflicts
with Paragraph 4 of Article 46 of the Constitution.
3. The section "Economic Policy" of Chapter 4 entitled
"Principal Provisions of Lithuania's Domestic Policy to Ensure
Security" of the annex to the Law on the Basics of National
Security establishes the fundamentals of ensuring security in
the economy of this country.
4. The Constitutional Court notes that the Seimas
resolution disputed by the petitioner is directly linked not
with the Law on the Basics of National Security but the Law on
the Reorganisation of the Joint-stock Companies "Būtingės
nafta", "Mažeikių nafta" and "Naftotiekis". The latter law
provides for the procedure of reorganisation of the joint-stock
companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
the conditions and procedure of investments into the company
which continues its activity after the reorganisation, as well
as requirements for the holders of blocks of shares.
The provisions of the section "Economic Policy" of Chapter
4 of the Law on the Basics of National Security establish the
basics of ensuring security but they do not regulate the
reorganisation of the joint-stock companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis".
The disputed Seimas resolution is designed for the
enforcement of the Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
and is not linked with the Law on the Basics of National
Security. Therefore, one is to conclude that the norms of Item
1 of Paragraph 2 of Article 1 of the disputed Seimas resolution
are in compliance with the Law on the Basics of National
Security.
5. The Seimas adopted both the Law on the Reorganisation
of the Joint-stock Companies "Būtingės nafta", "Mažeikių nafta"
and "Naftotiekis" and the Resolution "On the Recognition of a
Strategic Investor" on 29 September 1998. The said law went
into effect on 14 October 1998. Thus the Government had
exercised its powers established in this law concerning
presentation a proposal to the Seimas as to the recognition of
the strategic investor before the said law went into effect. In
this case, the Seimas had adopted the resolution concerning
recognition of a particular entity as a strategic investor
before the said law came into force. Thus, the law had been
applied before it went into effect.
The Constitutional Court notes that such practice of
adoption of a substatutory act, i.e. a Seimas resolution, is a
vicious one, as the Seimas resolution regarding the application
of the law was adopted regardless of the fact that the law had
not gone into effect yet.
Although the disputed Seimas resolution had been adopted
before the law came into force, however, the said resolution
went into effect after the 29 September 1998 Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" had come into force. After
these circumstances have been taken account of, there remain no
legal grounds to assert that the disputed Seimas resolution as
to the procedure of its adoption conflicts with the
Constitution.
6. A concrete entity is recognised a strategic investor in
Paragraph 1 of Article 1 of the Seimas Resolution "On the
Recognition of a Strategic Investor". It was established in
Paragraph 2 of Article 1 of the resolution as to what
provisions of the agreement between the Government and the
strategic investor "Williams International Company" are
approved by the Seimas. Taking into consideration this fact,
one is to conclude that the Seimas resolution was adopted in
order to carry out the agreement reached in principle.
It needs to be noted that that such practice of
legislation when legal norms following which agreements ought
to be concluded are not set but, rather, agreements are reached
first, and legal norms are determined later, reflecting the
agreement, is a vicious one as it denies one of the most
important principles of adoption of laws and other legal acts,
meaning that legal acts must establish rules of conduct, which
must be followed by entities in the future only. However, the
aforementioned vicious character of the adoption of the
disputed Seimas resolution, while one takes account of the fact
that the disputed Seimas resolution went into effect only after
the law had come into force, may not be held sufficient grounds
to recognise that this Seimas resolution is in conflict with
the Constitution.
7. Taking account of the motives set forth, one is to draw
a conclusion that Paragraph 1 of Article 1 of the 29 September
1998 Seimas Resolution "On the Recognition of a Strategic
Investor" is in compliance with Paragraph 4 of Article 46 of
the Constitution. Item 1 of Paragraph 2 of Article 1 of the
said resolution is compliance with the Law on the Basics of
National Security.
Conforming to Article 102 of the Constitution of the
Republic of Lithuania and Articles 53, 54 and 56 of the
Republic of Lithuania Law on the Constitutional Court, the
Constitutional Court has passed the following
ruling:
1. To recognise that Article 2 of the Republic of
Lithuania Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis"
is in compliance with the Constitution of the Republic of
Lithuania.
2. To recognise that the provision of Paragraph 4 of
Article 3 of the Republic of Lithuania Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" that the Government of the
Republic of Lithuania, in the agreements with the strategic
investor and/or the joint-stock "Mažeikių nafta", has the right
to assume basic property liabilities in the name of the state
for the strategic investor and/or the joint-stock company
"Mažeikių nafta" conflicts with Paragraph 1 of Article 5 and
Paragraph 1 of Article 128 of the Constitution of the Republic
of Lithuania.
3. To recognise that the provision of Paragraph 4 of
Article 3 of the Republic of Lithuania Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" that the Government of the
Republic of Lithuania, in the agreements with the strategic
investor and the joint-stock company "Mažeikių nafta", has the
right to assume basic property liabilities in the name of the
state, including recovery of losses, to the extent that that
the right of the Government of the Republic of Lithuania is
established to obligate itself to cover losses to the strategic
investor and the joint-stock company "Mažeikių nafta" even in
such a case when the strategic investor and/or the joint-stock
company "Mažeikių nafta" are responsible for the losses
conflicts with Paragraph 3 of Article 46 of the Constitution of
the Republic of Lithuania and the principle of a law-governed
state entrenched in the Constitution of the Republic of
Lithuania.
4. To recognise that the provision of Paragraph 4 of
Article 3 of the Republic of Lithuania Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" that the Government of the
Republic of Lithuania, in the agreements with the strategic
investor and/or the joint-stock "Mažeikių nafta", has the right
to assume basic property liabilities in the name of the state,
including recovery of losses, to the extent that the Government
of the Republic of Lithuania has the right to obligate itself
to cover losses even in such a case when such losses are
incurred due to adoption of the laws enforcing norms of the
Constitution of the Republic of Lithuania and/or protecting the
values established in the Constitution conflicts with Article 4
of the Constitution of the Republic of Lithuania and the
principle of a law-governed state entrenched in the
Constitution of the Republic of Lithuania.
5. To recognise that the provision of Paragraph 2 of
Article 4 of the Republic of Lithuania Law on the
Reorganisation of the Joint-stock Companies "Būtingės nafta",
"Mažeikių nafta" and "Naftotiekis" that the state, and, by a
decision of the Government of the Republic of Lithuania, the
strategic investor shall have priority in acquisition of the
shares sold or transferred otherwise belonging to the other
shareholders holding not less than one percent of shares of the
joint-stock company "Mažeikių nafta" which continues its
activities after the reorganisation to the extent that the
right of the shareholders to transfer their shares otherwise is
restricted conflicts with Article 23 of the Constitution of the
Republic of Lithuania.
6. To recognise that the provision "the Government shall
have the right to prolong the term of not increase of taxes for
strategic investors for up to 10 years" of Paragraph 3 of
Article 5 of the Republic of Lithuania Law on Tax
Administration conflicts with Paragraph 1 of Article 5, Item 15
of Article 67, Paragraph 3 of Article 127 of the Constitution
of the Republic of Lithuania, as well as the principle of a
law-governed state entrenched in the Constitution of the
Republic of Lithuania.
7. To recognise that the 29 September 1998 Republic of
Lithuania Law on the Reorganisation of the Joint-stock
Companies "Būtingės nafta", "Mažeikių nafta" and "Naftotiekis",
the 3 June 1999 Republic of Lithuania Law "On Amending and
Supplementing Article 3 of the Law on the Reorganisation of the
Joint-stock Companies 'Būtingės nafta', 'Mažeikių nafta' and
'Naftotiekis'", the 5 October 1999 Republic of Lithuania Law
"On Amending and Supplementing Articles 3 and 4 of the Law on
the Reorganisation of the Joint-stock Companies 'Būtingės
nafta', 'Mažeikių nafta' and 'Naftotiekis'" and the 29
September 1998 Republic of Lithuania Law "On Supplementing and
Amending Article 5 of the Law on Tax Administration" as to the
procedure of their adoption are in compliance with the
Constitution of the Republic of Lithuania.
8. To recognise that Paragraph 1 of Article 1 of the 29
September 1998 Resolution of the Seimas of the Republic of
Lithuania "On the Recognition of a Strategic Investor" is in
compliance with the Constitution of the Republic of Lithuania.
9. To recognise that Item 1 of Paragraph 2 of Article 1 of
the 29 September 1998 Resolution of the Seimas of the Republic
of Lithuania "On the Recognition of a Strategic Investor" is in
compliance with the Law on the Basics of National Security.
10. To dismiss the initiated legal proceedings concerning
the compliance of the Republic of Lithuania Law "On
Supplementing Article 12 of the Law on Foreign Capital
Investment in the Republic of Lithuania" with 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.