Lietuviškai
Case No. 42/03
THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA
RULING
ON THE COMPLIANCE OF ITEMS 2.3 AND 2.4 OF RESOLUTION
OF THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA NO.
1170 "ON MEASURES FOR REGULATING THE SUGAR MARKET" OF
26 SEPTEMBER 2001 AND ITEM 2 OF RESOLUTION OF THE
GOVERNMENT OF THE REPUBLIC OF LITHUANIA NO. 879 "ON
AMENDING RESOLUTION OF THE GOVERNMENT OF THE REPUBLIC
OF LITHUANIA NO. 284 'ON THE ESTABLISHMENT OF WHITE
SUGAR PRODUCTION QUOTA' OF 12 MARCH 2001" OF 12 JUNE
2002 WITH THE CONSTITUTION OF THE REPUBLIC OF
LITHUANIA AND WITH PARAGRAPH 1 (WORDING OF 18 MAY
2000) AND PARAGRAPH 2 (WORDING OF 8 JULY 1999) OF
ARTICLE 4 OF THE REPUBLIC OF LITHUANIA LAW ON SUGAR
31 May 2006
Vilnius
The Constitutional Court of the Republic of Lithuania,
composed of the Justices of the Constitutional Court Armanas
Abramavičius, Toma Birmontienė, Egidijus Kūris, Kęstutis
Lapinskas, Zenonas Namavičius, Ramutė Ruškytė, Vytautas
Sinkevičius, Stasys Stačiokas, and Romualdas Kęstutis Urbaitis,
with the secretary of the hearingDaiva Pitrėnaitė,
in the presence of the representative of the Government of
the Republic of Lithuania, the party concerned, who was Regina
Ramutytė, Head of the Processed Products Division of the Common
Market Organisation Department of the Ministry of Agriculture of
the Republic of Lithuania,
pursuant to Articles 102 and 105 of the Constitution of the
Republic of Lithuania and Article 1 of the Law on the
Constitutional Court of the Republic of Lithuania, in its public
hearing on 17 May 2006 heard case No. 42/03 subsequent to the
petition of the Vilnius Regional Administrative Court, the
petitioner, requesting to investigate whether Items 2.3 and 2.4
of Resolution of the Government of Lithuania No. 1170 "On
Measures for Regulating the Sugar Market" of 26 September 2001
and Item 2.1 of Resolution of the Government of the Republic of
Lithuania No. 879 "On Amending Resolution of the Government of
Lithuania No. 284 'On the Establishment of White Sugar Production
Quota' of 12 March 2001" of 12 June 2002 are not in conflict with
Paragraph 2 of Article 5, Paragraph 1 of Article 46 and Item 2 of
Article 94 of the Constitution of the Republic of Lithuania, the
constitutional principle of a state under the rule of law, with
Paragraphs 1 and 2 of Article 4 of the Republic of Lithuania Law
on Sugar and with Item 4 of Paragraph 1 of Article 7 and Item 1
of Paragraph 1 of Article 8 of the Republic of Lithuania Law on
Agricultural and Rural Development.
The Constitutional Court
has established:
I
The Vilnius Regional Administrative Court, the petitioner,
was investigating an administrative case. By its ruling, the
court suspended the consideration of the case and applied to the
Constitutional Court with a petition requesting to investigate
whether Items 2.3 and 2.4 of Government Resolution No. 1170 "On
Measures for Regulating the Sugar Market" of 26 September 2001
(hereinafter also referred to as the Government resolution of 26
September 2001) and Item 2.1 of Government Resolution No. 879 "On
Amending Resolution of the Government of Lithuania No. 284 'On
the Establishment of White Sugar Production Quota' of 12 March
2001" of 12 June 2002 (hereinafter also referred to as the
Government resolution of 12 June 2002) are not in conflict with
Paragraph 2 of Article 5, Paragraph 1 of Article 46 and Item 2 of
Article 94 of the Constitution, with the constitutional principle
of a state under the rule of law, with Paragraphs 1 and 2 of
Article 4 of the Law on Sugar and with Item 4 of Paragraph 1 of
Article 7 and Item 1 of Paragraph 1 of Article 8 of the Law on
Agricultural and Rural Development.
II
The petition of the petitioner is based on the following
arguments.
The principle of legal security, as an element of the
constitutional principle of a state under the rule of law,
implies the duty of the state to guarantee the certainty and
stability of legal regulation, as well as to protect the rights
of legal subjects and acquired rights and also to respect
legitimate interests and expectations. The disputed articles of
the Government resolutions of 26 September 2001 and of 12 June
2002 established a duty for sugar manufacturers to carry out the
export tasks for quota sugar and they established sanctions for
failure to carry out these tasks, however, one is permitted to
establish this only by means of a law. The said Government
resolutions cannot compete with the Law on Sugar, the provision
of which set forth in Paragraph 2 of Article 4 providing that the
Government or an institution authorised by it may apply also
"other regulatory measures of the sugar market" does not include
the right to establish obligatory export tasks for quota sugar.
Besides, the legislator linked the establishment of regulatory
measures of the sugar market with the protection of the interests
of sugar beet growers, sugar manufacturers and users. However,
the establishment of evidently loss-making export task is not
based on the protection of the interests of sugar manufacturers,
especially as upon the establishment of this duty for them the
compensation for the damages inflicted was not provided for.
Thus, in the opinion of the petitioner, Paragraph 2 of Article 5,
Paragraph 1 of Article 46 and Item 2 of Article 94 of the
Constitution, the constitutional principle of a state under the
rule of law, Paragraphs 1 and 2 of Article 4 of the Law on Sugar,
Item 1 of Paragraph 1 of Article 8 of the Law on Agricultural and
Rural Development, according to which the Ministry of Agriculture
allocates sugar processing quotas to agricultural entities, as
well as Item 4 of Paragraph 1 of Article 7, according to which
the Government or an institution authorised by it shall, in the
manner prescribed by this Law and other laws, promote export and
establish the export and import procedure, were violated.
III
In the course of the preparation of the case for the
Constitutional Court hearing, written explanations were received
from R. Ramutytė, I. Kubišinas, Chief Specialist of the Processed
Products Division of the Common Market Organisation Department of
the Ministry of Agriculture as well as A. Kazlauskienė, Head of
the Law Division of the Law Department of the same ministry, who
were the representatives of the Government, the party concerned.
In the opinion of the representatives of the party concerned, the
disputed provisions of the said Government resolutions are not in
conflict with the Constitution. Their position is based on the
following arguments.
1. The Government resolutions of 26 September 2001 and of
12 June 2002 were adopted by following Paragraph 2 of Article 4
of the Law on Sugar, under which the Government or an institution
authorised by it may apply not only the measures enumerated in
Paragraph 1 of Article 4 of this law, but also other regulatory
measures of the sugar market, while protecting the interests of
sugar beet growers, sugar manufacturers and users. The
establishment of the obligatory amount of export quota white
sugar for the sugar manufacturers, which is proportionate to the
manufacture quota for white sugar allocated to the manufacturers,
is one of such other regulatory measures of the sugar market. The
obligatory export of excess of the accumulated sugar is in
compliance with the condition set forth in Paragraph 2 of Article
4 of the Law on Sugar, which is to protect the interests of sugar
beet growers, sugar manufacturers and users. Such obligations
were non-discriminatory to sugar manufacturers.
2. The Law on Agricultural and Rural Development came into
force on 1 January 2003. At the time when the Government
resolutions of 26 September 2001 and of 12 June 2002 were
adopted, the Republic of Lithuania Law on State Regulation of
Economic Relations in Agriculture was in force, under Item 4 of
Paragraph 1 of Article 5 whereof the regulation of export and
import of products of agriculture and foodstuffs was one of state
measures for regulating of economic relations in agriculture.
IV
In the course of the preparation of the case for the court
hearing, written explanations were received from J. Lionginas,
Chairman of the Committee on Budget and Finance of the Seimas of
the Republic of Lithuania, V. Navickas, Chairman of the Committee
on Economics of the Seimas of the Republic of Lithuania, J.
Jagminas, Chairman of the Committee on Rural Affairs of the
Seimas of the Republic of Lithuania, A. Butkevičius, Minister of
Finance of the Republic of Lithuania, K. D. Prunskienė, Minister
of Agriculture of the Republic of Lithuania, A. Z. Kaminskas,
Government Chancellor, P. Koverovas, State Secretary of the
Ministry of Justice of the Republic of Lithuania, G. Miškinis,
State Secretary of the Ministry of Economy of the Republic of
Lithuania, D. Kriaučiūnas, Director General of the European Law
Department under the Ministry of Justice, S. Silickas, Deputy
Director and the acting Director of the National Paying Agency
under the Ministry of Agriculture, K. Virketis, Director of the
Legal Department of the Office of the Seimas, R. Stanikūnas,
Director of the Competition Council of the Republic of Lithuania,
Prof. V. Pakalniškis, Head of the Civil and Commercial Law
Department of the Faculty of Law of Mykolas Romeris University,
Dr. E. Grakauskas, a lecturer of the Department of Constitutional
and Administrative Law of the Faculty of Law of Vilnius
University, and G. Radzevičius, Director of the Lithuanian
Institute of Agrarian Economics.
V
At the Constitutional Court hearing the representative of
the Government, the party concerned, R. Ramutytė virtually
reiterated the arguments set down in her written explanations.
The Constitutional Court
holds that:
I
1. The petitioner requests to investigate whether Items 2.3
and 2.4 of Government Resolution No. 1170 "On Measures for
Regulating the Sugar Market" of 26 September 2001 and Item 2.1 of
Government Resolution No. 879 "On Amending Resolution of the
Government of Lithuania No. 284 'On the Establishment of White
Sugar Production Quota' of 12 March 2001" of 12 June 2002 are not
in conflict with Paragraph 2 of Article 5, Paragraph 1 of Article
46 and Item 2 of Article 94 of the Constitution, with the
constitutional principle of a state under the rule of law, with
Paragraphs 1 and 2 of Article 4 of the Law on Sugar and with Item
4 of Paragraph 1 of Article 7 and Item 1 of Paragraph 1 of
Article 8 of the Law on Agricultural and Rural Development.
2. The Government adopted Resolution No. 1170 "On Measures
for Regulating the Sugar Market" on 26 September 2001. It came
into force on 29 September 2001.
3. It is set forth in Item 2.3 of the Government resolution
of 26 September 2001 that, upon assessment, according to the
procedure established by the Ministry of Agriculture, of the
general sugar consumption in this country, every sugar
manufacturer is obliged to export an amount of quota white sugar
proportional to the allocated quota of white sugar manufacturing.
It is set forth in Item 2.4 that if a sugar manufacturer fails to
execute the provision established in Item 2.3, the white sugar
quota for the next year shall be reduced in the amount that was
not exported, and the said quota is distributed among other sugar
manufacturers.
4. On 21 December 2002, the Government adopted Resolution
No. 2079 "On Granting Powers in Implementation of the Law of the
Republic of Lithuania on Agriculture and Rural Development",
whereby some items of Government Resolution No. 1170 "On Measures
for Regulating the Sugar Market" of 26 September 2001 were
recognised as no longer valid. Items 2.3 and 2.4 of the
Government resolution of 26 September 2001 were not amended and/
or supplemented.
5. On 12 June 2002, the Government adopted Resolution No.
879 "On Amending Resolution of the Government of Lithuania No.
284 'On the Establishment of White Sugar Production Quota' of 12
March 2001". The said Government resolution came into force on
June 20 2002 and it was not amended and/or supplemented.
6. Item 2 of the Government resolution of 12 June 2002
inter alia were provides:
"To oblige the Ministry of Agriculture:
2.1. taking into account the sugar balance of nine months
of 2002, by 20 October 2002, to prepare and confirm the procedure
and tasks for export of the white sugar manufactured from sugar
beets of the 2002 harvest, <...>."
7. It is evident from the case material that the
Constitutional Court has been requested to investigate whether
2.3 and 2.4 of Government Resolution No. 1170 "On Measures for
Regulating the Sugar Market" of 26 September 2001 and the
provision "To oblige the Ministry of agriculture: 2.1. taking
into account the sugar balance of nine months of 2002, by 20
October 2002, to prepare and confirm the procedure and tasks for
export of the white sugar manufactured from sugar beets of the
2002 harvest" of Item 2 of Government Resolution No. 879 "On
Amending Resolution of the Government of Lithuania No. 284 'On
the Establishment of White Sugar Production Quota' of 12 March
2001 are not in conflict with Paragraph 2 of Article 5, Paragraph
1 of Article 46 and Item 2 of Article 94 of the Constitution,
with the constitutional principle of a state under the rule of
law and with Item 4 of Paragraph 1 of Article 7, Item 1 of
Paragraph 1 of Article 8 of the Law on Agricultural and Rural
Development as well as whether the said items (provisions
thereof) of the Government resolutions of 26 September 2001 and
12 June 2002 were not in conflict with Paragraph 1 (wording of 18
May 2000) of Article 4 and Paragraph 2 (wording of 8 May 1999) of
Article 4 of the Law on Sugar (which is no longer valid).
II
1. The petitioner disputes inter alia the compliance of the
provisions of the Government resolutions of 26 September 2001 and
of 12 June 2002 with Paragraph 2 of Article 5, Paragraph 1 of
Article 46 and Item 2 of Article 94 of the Constitution, and with
the constitutional principle of a state under the rule of law.
2. It is established in Paragraph 1 of Article 46 of the
Constitution, that Lithuania's economy shall be based on the
right of private ownership, freedom of individual economic
activity and initiative. All these three values, the right of
private ownership, freedom of individual economic activity and
initiative, define the foundation of the national economy
(Constitutional Court rulings of March 2002 and of 13 May 2005).
Paragraph 1 of Article 46 is to be construed by taking account of
inter alia Paragraph 2 of this article, under which the state
shall support economic efforts and initiative that are useful to
society, and Paragraph 3 of the same article, under which the
state shall regulate economic activity so that it serves the
general welfare of the Nation.
2.1. The freedom of individual economic activity and
initiative is the whole complex of legal opportunities which
creates preconditions for an individual independently to adopt
decisions necessary for his economic activity (Constitutional
Court ruling of 13 May 2005). The freedom of individual economic
activity and initiative inter alia implies freedom of conclusion
of contracts, freedom of fair competition, opportunities to
restructure economic entities without restrictions, to change the
character of their activity, not to obstruct establishment of new
economic entities or liquidate the existing ones when one reacts
to changes in the market; it is inseparable from an opportunity
of a person, who is willing to engage in an economic activity or,
conversely, who is willing to drop it, to get into the market
without artificial barriers and to abandon it without artificial
barriers (Constitutional Court ruling of 13 May 2005). However,
freedom of economic activity is not absolute, the person makes
use of it only by following certain obligatory requirements and
limitations (Constitutional Court rulings of 20 April 1995, 18
October 2002, 14 March 2002, 9 April 2002 and 13 May 2005). On
the other hand, it is impermissible by means of established
limitations to deny such essential provisions of freedom of
economic activity as equality of rights of entities of economic
activity, fair competition etc.; under the Constitution, the
state may not unrestrictedly interfere with the economic activity
of a person (Constitutional Court rulings of 20 April 1995 and 13
May 2005).
2.2. When construing Paragraph 1 of Article 46 of the
Constitution, which entrenches the freedom of economic activity
of a person, in the context of Paragraphs 2 and 3 of this
article, it is to be held that the state obligation to support
economic efforts and initiative which are useful to society is
one of the main rules regulating the economy of this country
(Constitutional Court rulings of 27 October 1998 and 13 May
2005). The provision that the state shall support economic
efforts and initiative that are useful to society constitutes
constitutional legal preconditions for inter alia differentiated
legal regulation of economic activity, the main criterion whereof
is the common welfare of the Nation, it also implies the duty of
the state and municipal institutions and officials by no
decisions or actions to hinder the expression and development of
the initiative or economic efforts of persons, if this initiative
or economic efforts are not harmful to society, even if their
benefit to society is not evident. It should be mentioned that,
as held many a times in the acts of the Constitutional Court, in
the provision "the State shall regulate economic activity so that
it serves the general welfare of the Nation" (Paragraph 3 of
Article 46 of the Constitution) the constitutional principle,
which defines the goals, directions, means and boundaries for
regulating of economic activity, is entrenched; while regulating
economic activity, the state has to follow the principle of
coordination of interests of the person and society and has to
guarantee the interests of both the private person (a subject of
economic activity) and interests of society (Constitutional Court
rulings of 18 October 2000, 9 April 2002, 17 April 2003, 26
January 2004 and 13 May 2005). As a rule, regulation of economic
activity is linked with establishment of conditions for economic
activity, regulation of certain procedures, control of economic
activity, as well as with certain limitations and prohibitions of
this activity; when a person participates in an economic
activity, special limitations (inter alia limitations on the
right of ownership) which are established by laws can be applied
to him (Constitutional Court ruling of 13 May 2005). However, in
its rulings the Constitutional Court has held more than once that
under the Constitution it is permitted to limit the rights and
freedoms of the person, as well as the freedom of economic
activity, if the following conditions are followed: this is done
by means of legislation; the limitations are necessary in a
democratic society in order to protect the rights and freedoms of
other persons and values entrenched in the Constitution, as well
as constitutionally important objectives; the limitations do not
deny the nature and essence of the rights and freedoms; the
constitutional principle of proportionality is followed.
2.3. The Constitutional Court has held that the right of
the state to regulate economic activity which is consolidated in
Paragraph 3 of Article 46 of the Constitution creates
constitutional preconditions to pass laws by which one reacts to
a situation of national economy, the variety of and changes in
the economic and social life (Constitutional Court rulings of 28
February 1996, 15 March 1996, 18 October 2000, and 13 May 2005).
Legal regulation of economic activity is not an end in itself, it
is a means of social engineering and a way to seek welfare of the
Nation through law, it is a direction of legal regulation of
economic activity (Constitutional Court ruling of 13 May 2005).
The common welfare of the Nation is a rather general and broad
criterion in application of which one may follow inter alia
arguments of expediency. In this context it needs to be mentioned
that (as stated by the Constitutional Court): the welfare of the
Nation is reflected by consumption of material goods; however,
the notion "general welfare of the Nation" should not be
comprehended in the material (financial) sense and should be
construed not only by taking account of satisfaction of material
needs of the individual, but also of other criteriasocial
development of the Nation, opportunities of self-expression of
the human being etc.; the content of the notion "general welfare
of the Nation" is revealed in each concrete case by taking
account of economic, social and other important factors; by means
of regulation of economic activity the state must seek the
welfare of not individual persons but precisely the general
welfare of the Nation; the general welfare of the Nation cannot
be opposed to the welfare, rights and legitimate interests of the
economic entity itself, i.e. the entity the activity of which is
regulated, as well as those of other persons who have established
and are running the said economic entity or are otherwise related
to the said entity; one is not permitted either to ground or to
justify, by invoking the general welfare of the Nation indicated
in Paragraph 3 of Article 46 of the Constitution, any regulation
by which, in order to ensure the public interest and to protect
constitutional values, the rights and legitimate interests of a
certain economic entity are limited more than necessary; the
legal regulation where a certain economic activity is unduly
limited or prohibited due to the fact that, from the standpoint
of the legislator, it, purportedly, is not useful, although not
harmful, to society, cannot be justified by serving of the
economic activity to the welfare of the Nation, either; the
legislator and other institutions of lawmaking are
constitutionally obligated to ensure a favourable legal
environment for an economic activity which, while satisfying the
interests of the economic entity, would also serve the general
welfare of the Nation; the state, while regulating economic
activity, may not establish any such legal regulation whereby
unfavourable and unequal economic conditions are established to
economic entities, whereby their initiative is restricted and
opportunities for its manifestation are not created
(Constitutional Court rulings of 13 February 1997, 6 October
1999, 18 October 2000, 9 April 2002, 26 January 2004, and 13 May
2005).
2.4. Under the Constitution, the state, while regulating
economic activity, must pay heed to the constitutional
requirement of equality of rights of economic entities, which is
directly related to the principle of equal rights of all persons,
and which is entrenched in Article 29 of the Constitution;
otherwise, the legal regulation of economic activity would not be
considered as one serving the general welfare of the Nation
(Constitutional Court ruling of 13 May 2005).
On the other hand, in its rulings the Constitutional Court
has also held more than once that the constitutional principle of
equality of rights of persons (of economic entities in this case)
in itself does not deny an opportunity to establish diverse,
differentiated legal regulation by means of legislation with
respect to certain persons (economic entities in this case) which
belong to different categories, if there exist differences
between these persons (economic entities in this case) of such
character, which objectively justify such differentiated
regulation. Differentiated legal regulation, when it is applied
to certain groups of persons which are distinguished by the same
signs, and in case it strives for positive and socially
meaningful goals, or if the establishment of certain limitations
or conditions is linked with peculiarities of regulated social
relations, is not regarded as discrimination (Constitutional
Court rulings of 11 November 1998 and 13 May 2005).
Differentiated establishment of legal status of individual
subjects of economy with regard to nature and significance of
regulated relations as well as establishment of certain
conditions for economic activity is linked to the aims of the
state in the area of economy and aspiration to properly organise
the economy of this country (Constitutional Court rulings of 18
October 2000 and 13 May 2005). Due to a specific character,
variety and dynamism of economic activity, regulation of concrete
relations in this area cannot be the same all the time, i.e. the
ratio of prohibitions and permissions is subject to change; the
legal regulation of economic activity may also be changed in
order to ensure the public interest (Constitutional Court ruling
of 13 May 2005).
However, while changing the conditions of economic activity
or discontinuing certain economic activity, the state must pay
heed to the norms and principles of the Constitution, as well as
the principle of protection of legitimate expectations, which, as
the Constitutional Court has held, implies a duty of the state
and of other state institutions that implement state power to
follow obligations undertaken by the state; this principle also
means protection of acquired rights, i.e. persons have the right
to reasonably expect that the rights acquired under valid laws
and other legal acts which are not in conflict with the
Constitution will be retained for the established time and that
it will be possible to implement these rights in reality; under
the principle of legitimate expectations, it is permitted to
change legal regulation only according to a prior established
procedure and without violating norms and principles of the
Constitution, and that it is not permitted that by amendments to
the legal regulation the legitimate interests and legitimate
expectations of a person be violated (Constitutional Court
rulings of 18 December 2001, 4 March 2003, 3 December 2003, 13
May 2005 and 23 August 2005).
2.5. It needs to be noted that when economic activity is
legally regulated, one must pay heed to the constitutional
principle of separation of powers, the hierarchy of all legal
acts stemming from the Constitution, which implies that
regulation (by means of legal acts of lower power) of the social
relations which can be regulated by legal acts of higher power is
prohibited, also that legal acts of lower power cannot establish
any such legal regulation which would compete with that
established in legal acts of higher power, thus, it is
impermissible to establish, by means of substatutory legal acts,
any such legal regulation, which can be established only by means
of a law, and it is impermissible to establish, by means of
substatutory legal acts, any such legal regulation, which would
compete with that established in laws and which would not be
based upon the laws.
Under Item 2 of Article 94 of the Constitution, the
Government shall execute the laws and resolutions of the Seimas
on implementation of laws as well as decrees of the President of
the Republic. While construing the aforementioned provision, the
Constitutional Court has held many a time that, under the
Constitution, the Government, while adopting legal acts, must
follow the valid laws and, while enforcing certain laws, it may
not violate other laws; the legal acts adopted by the Government
may not contain any legal regulation competing with that
established in laws. On the other hand, as it has been held by
the Constitutional Court many a time, the duty of the Government
to adopt substatutory acts which are necessary so as to implement
laws stems directly from the Constitution, while in case of a
commissioning by the Seimas to do so, it also stems from the laws
and Seimas resolutions concerning implementation of laws
(Constitutional Court rulings of 30 October 2001 and 18 December
2001). However, in its substatutory legal acts the Government
does not have to make reference to particular laws, Seimas
resolutions or decrees of the President of the Republic, which
are being followed by the Government when it adopts a
corresponding substatutory legal act; it is important that the
Government adopt substatutory legal acts without exceeding its
powers, and that these substatutory acts be in conformity with
the Constitution and laws (Constitutional Court ruling of 18
December 2001). Thus, should the legal regulation established in
resolutions of the Government compete with the legal regulation
established in laws or should it be not based on laws, not only
the constitutional principles of a state under the rule of law
and separation of powers as well as Item 2 of Article 94 of the
Constitution, but also Paragraph 2 of Article 5 of the
Constitution, which provides that the scope of power shall be
limited by the Constitution, would be violated.
It also needs to be noted that in cases when a Government
resolution containing the legal regulation conflicting with a law
is adopted prior to the adoption of the law, such a Government
resolution must be harmonised with the norms of the subsequently
adopted law (Constitutional Court rulings of 5 April 2000 and of
19 February).
2.6. Thus, certain relations of economic activity may be
regulated only by laws, whereas the others may be regulated by
Government resolutions and some of themby substatutory legal
acts of lower legal power. It should be noted in the context of
the constitutional case at issue that, under the Constitution,
the essential conditions for economic activity and prohibitions
as well as limitations having essential impact on the said
activity and various sanctions for certain violations of law
(inter alia the so-called economic sanctions ascribed to the
institute of administrative liability, which create preconditions
to make a negative impact on the economic situation of the
subjects of economy which are brought to legal liability
(Constitutional Court ruling of 3 November 2005)) may be
established only by means of a law. Thus, it is only by means of
a law that it is permitted to establish measures of economic
influence, which may have an essential impact on the economic
activity, and which may be applied when the established
obligations are not carried out or are carried out improperly.
3. It needs to be noted that law, when it regulates social
relations, defines the limits of the content of the state policy
(the economic policy as well) and it establishes permissible
legal measures and methods for executing the said policy.
However, it also needs to be stressed that in itself this does
not deny the autonomy of the political process, the formation and
specificity of execution of the state policy (the economic policy
as well), nor the independence of the legislative and executive
powers, as state political powers, and of the institutions which
are formed in a democratic way in establishment (according to
their competence) of the content of the state policy (the
economic policy as well) (by choosing inter alia its priorities),
and also the legal measures and methods for executing of the said
policy.
Under the Constitution, the Seimas as the institution of
legislative power and the Government as an institution of
executive power enjoy very broad discretion to form and execute
the economic policy of the state (each according to their
competence) and to properly regulate economic activities by means
of legal acts, by not violating the Constitution and laws, inter
alia by not exceeding the powers established in them to the said
institutions of state power and by following the requirements of
the proper legal process which stems from the Constitution and
the principles of a state under the rule of law, of separation of
powers, of responsible governance, of protection of legitimate
expectations and the principles of legal clarity, certainty and
security as entrenched in the Constitution. It should be noted in
the context of the constitutional case at issue that the
assessment of the content, measures and methods of the state
economic policy (inter alia priorities) (no matter who assesses
them), also with regard to their reasonableness and expediency,
even if it turns out later that there were better alternatives
for choosing its economic policies (thus also that the formerly
formed and executed economic policy could be assessed negatively
with regard to its reasonableness and expediency) in itself
cannot be the reason to question the compliance of the legal
regulation of the economic activity conforming to the economic
policy (formed and executed before) with the legislation of
higher power, inter alia with the Constitution (also with regard
to constitutional justice cases initiated at the Constitutional
Court), unless the said legal regulation is clearly in conflict
with the general welfare of the Nation, with the interests of
society and the State of Lithuania, or unless it denies the
values entrenched in and defended as well as protected by the
Constitution.
Moreover, neither the fact where in legal acts
differentiated legal regulation was established to a certain
sector of economy, which is different from the legal regulation
of other economic sectors, nor the fact whether the legal
regulation of a certain economic activity is changed in reacting
to changes in the market as well as the economic (as well as
international) conjuncture, in itself cannot serve as such
pretext, since, as mentioned, the legal pre-conditions of
differentiated legal regulation (when account is taken of the
importance and nature of the regulated relations) originate from
the Constitution itself (inter alia Paragraph 2 of Article 46 of
the Constitution), the differentiated establishment of the legal
situation of separate economic entities is to be related with the
objectives raised by the state in a certain sector of economy,
the striving to arrange the economy of this country in a
corresponding manner, besides, due to a specific character,
variety and dynamism of economic activity, regulation of concrete
relations in this area cannot be the same all the time, i.e. the
ratio of prohibitions and permissions is subject to change inter
alia while seeking to ensure the public interest.
III
1. While deciding whether the items (provisions thereof) of
the Government resolutions of 26 September 2001 and of 12 June
2002 disputed by the petitioner are not in conflict with the
Constitution and laws, it is to be held that growing and
processing of sugar beetsmanufacture of sugaris such area of
economic activity in Lithuania which covers a large part of
agriculture, the jobs created and maintained in this area have
guaranteed constant income, certain welfare and level of living
for large part of people (and their family members) working in
that area of agriculture for quite a while.
With regard to the scope of sugar manufacture in Lithuania,
to the significance of this sector of economy for a large part of
Lithuanian people working in agriculture and taking into account
the seasonal prevalence and other characteristics of sugar
manufacture, it needs to be held that differentiated legal
regulation could be established in legislation for this sector of
economic activity, which is different from legal regulation of
other sectors of economy, as well as that the legal regulation of
this economic activity could be changed with response to the
changing market and economic conjuncture. This differentiated
legal regulation can also be such so that sugar manufacturing as
economic activity may be supported by the state, inter alia by
using also different means and applying different measures from
those where the state supports other economic sectors (including
agriculture).
2. It also needs to be noted that there are no legal
preconditions for the Constitutional Court to assess the content
of the state sugar policy nor to assess the measures and methods
of this policy with regard to their reasonableness and
expediency, inter alia assess whether supporting (if yes, then to
what extent) sugar manufacturing (growing and processing of sugar
beets) is useful, promising or expedient in any other regard, if
yes, whether this economic activity should be supported more than
any other economic (inter alia agricultural) activity. The
formation and execution of the state sugar policy as well as
choosing the means for its execution is within the competence of
the Seimas and the Government (which must inter alia follow the
laws passed by the Seimas). In doing so, the Seimas and the
Government must observe the Constitution and laws, inter alia not
to exceed the powers established to the said institutions in the
Constitution and laws and heed the constitutional principles of a
state under the rule of law, of separation of powers, of
responsible governance, of protection of legitimate expectations
and the principles of legal clarity, certainty and security.
IV
On the compliance of Items 2.3 and 2.4 of Government
Resolution No. 1170 "On Measures for Regulating the Sugar Market
", the provision "To oblige the Ministry of Agriculture: 2.1.
taking into account the sugar balance of nine months of 2002, by
20 October 2002, to prepare and confirm the procedure and tasks
for export of the white sugar manufactured from sugar beets of
the 2002 harvest" of Item 2 of Government Resolution No. 879 "On
Amending Resolution of the Government of Lithuania No. 284 'On
the Establishment of White Sugar Production Quota' of 12 March
2001" of 12 June 2002 with Paragraph 1 of Article 4 (wording of
18 May 2000) and Paragraph 2 (wording of 8 July 1999) of the Law
on Sugar, Item 4 of Paragraph 1 of Article 7 and Item 1 of
Paragraph 1 of Article 8 of the Law on Agricultural and Rural
Development.
1. It was mentioned that Item 2.3 of the Government
resolution of 26 September 2001 established that upon assessment,
according to the procedure established by the Ministry of
Agriculture, of the general sugar consumption in this country,
every sugar manufacturer is obliged to export an amount of quota
white sugar proportional to the allocated quota of white sugar
manufacturing and Item 2.4 thereof established that if a sugar
manufacturer fails to execute the provision established in Item
2.3, the white sugar quota for the next year shall be reduced in
the amount that was not exported, and the said quota is
distributed among other sugar manufacturers.
2. Therefore, the disputed items of the Government
resolution of 26 September 2001 established that: (1) every sugar
manufacturer had a duty to export the portion of the quota white
sugar in proportion to the white sugar production quota
determined for him; (2) the amount of the quota white sugar which
had to be exported by every manufacturer had to be determined
upon the procedure set by the Ministry of Agriculture, after it
had evaluated the general sugar consumption in this country; (3)
the measure of economic influence had to be applied to the sugar
manufacturer, who failed to carry out the set task of quota white
sugar exportthe white sugar production quota for the next year
for him was to be reduced in the amount of sugar he failed to
export and this part of the quota had to be re-distributed among
other sugar manufacturers.
3. It was also mentioned that Item 2 of the Government
resolution of 12 June 2002 inter alia provides:
"To oblige the Ministry of Agriculture:
2.1. taking into account the sugar balance of nine months
of 2002, by 20 October 2002, to prepare and confirm the procedure
and tasks for export of the white sugar manufactured from sugar
beets of the 2002 harvest <
>".
4. In this context it should be mentioned that on 21
October 2002, by Order No. 412 "On the Export of White Sugar",
the Minister of Agriculture confirmed white sugar export tasks of
the white sugar produced from sugar beets of the 2002 harvest for
every manufacturer of white sugar. In case of failure to comply
with the tasks, the measure of economic influence established in
Item 2.4 of the Government resolution of 26 September 2001 had to
be applied for the respective sugar manufacturer.
5. It is to be noted that the legal regulation established
in the disputed items (provisions thereof) of the Government
resolutions of 26 September 2001 and 12 June 2002 is related to
the establishment of essential economic activity conditions
(inter alia with freedom to conclude contracts, disposal of
property) and establishment of measures of economic influence
when the set obligations are not carried out or are not properly
carried out.
6. As held in this Ruling of the Constitutional Court,
while forming and implementing the state sugar policy, as well as
choosing the measures and methods for implementing this policy,
the Government must follow inter alia the laws. It has also been
held that, under the Constitution, the essential conditions for
economic activity and prohibitions as well as limitations having
essential impact on the said activity, sanctions for
corresponding violations of law, measures of economic influence,
which may have an essential impact on the economic activity, and
which may be applied when the established obligations are not
carried out or are carried out improperly may be established only
by means of a law. It should be emphasised that if such matters
are not established by a law, the Government, according to the
Constitution, may not do that by itself.
7. When the Government resolutions of 26 September 2001 and
12 June 2002 were adopted and came into force, the compliance of
certain items (provisions thereof) with the Constitution and the
laws is disputed in this constitutional justice case, the
relations between participants of the sugar market and state
institutions were regulated by the Law on Sugar (wording of 8
July 1999 with amendments and supplements made by the Law on
Amending Articles 2, 4, 5, 6 and 7 of the Law on Sugar adopted by
the Seimas on 18 May 2000), in which inter alia consolidated the
state sugar policy, defined the state regulatory measures for
growing and processing sugar beets, established the sugar
realisation, storage and transportation requirements, as well as
regulated the relations related to growing, buying up and
processing sugar beets. At that time Paragraph 1 of Article 4 of
the Law on Sugar was set forth in the wording of 18 May 2000,
while Paragraph 2 thereofin the wording of 8 July 1999.
8. Paragraph 1 of Article 4 titled "State Regulatory
Measures" of the Law on Sugar (wording of 18 May 2000) used to
provide:
"In the Republic of Lithuania sugar beet growing and
processing, purchase and sale of locally-produced sugar, import
and export of sugar, raw material, products to which the sugar
regime is applicable shall be regulated by the State and carried
out in accordance with the sugar regime approved by the
Government of the Republic of Lithuania or an institution
authorised by it. The regime shall comprise the following:
1) procedure of formation of the balance for sugar;
2) procedure of determining an annual amount of sugar
needed by the market;
3) rules related to the establishment of sugar beet amount
corresponding to a quota for white sugar production, and to the
determination of minimum marginal sugar beet prices;
4) list of sugar, raw material and products to which the
sugar regime is applicable, regulation and control of the import
thereof;
5) control of the production and sale of sugar, routine
licensing of the import and export of sugar, raw material;
6) rules related to the allocation of quotas for white
sugar production to sugar producers and sugar beet growers;
7) procedure of fixing of a minimum State price of sugar."
9. Paragraph 2 (wording of 8 July 1999) of Article 4 titled
"State Regulatory Measures" of the Law on Sugar used to provide:
"The Government of the Republic of Lithuania or an institution
authorised by it may apply other regulatory measures of the sugar
market, which protect the interests of sugar beet growers, sugar
producers and users."
10. The amendments and supplements of the Law on Sugar
(wording of 8 July 1999 with amendments and supplements made by
the Law on Amending Articles 2, 4, 5, 6 and 7 of the Law on Sugar
adopted by the Seimas on 18 May 2000) were made by the Seimas by
the Republic of Lithuania Law on Amending and Supplementing
Article 5 of the Law on Sugar adopted on 10 April 2003, however,
Article 4 of the Law on Sugar (wording of 18 May 2000) was not
amended nor supplemented.
11. On 29 April 2004, the Seimas adopted the Republic of
Lithuania Law on Amending the Law on Sugar, by Article 1 of which
the Law on Sugar (wording of 8 July 1999 with subsequent
amendments and supplements) was amended and set forth in a new
wording. The Law on Sugar of the new wording came into force on 1
May 2004. Paragraph 1 of Article 5 of the Law on Sugar of the new
wording established that growing, buying up and processing of
sugar beets, manufacturing of white sugar and sales are regulated
by legal acts of the European Union and the Republic of
Lithuania; the legal regulation established by Paragraph 1
(wording of 18 May 2000) and Paragraph 2 (wording of 8 July 1999)
of Article 4 of the Law on Sugar was annulled.
12. On 20 January 2006, the Seimas adopted the Republic of
Lithuania Law on Recognising the Law on Sugar and the Laws that
Amended It as No Longer Valid (which came into force on 11
February 2006) by Item 5 of Article 1 of which the Law on
Amending the Law on Sugar adopted by the Seimas on 29 April 2004
was recognised as no longer valid.
13. While deciding whether the disputed items (provisions
thereof) of the Government resolutions of 26 September 2001 and
12 June 2002 were not in conflict with Paragraph 1 (wording of 18
May 2000) and Paragraph 2 (wording of 8 July 1999) of Article 4
of the Law on Sugar, it needs to be noted that the elements of
the sugar regime approved by the Government or an institution
authorised by it (according to which in the Republic of Lithuania
sugar beet growing and processing, purchase and sale of locally-
produced sugar, import and export of sugar, raw material, the
products to which the sugar regime is applicable had to be
carried out) which are indicated in Paragraph 1 (wording of 18
May 2000) Article 4 (which, as it was mentioned above, was titled
"State Regulatory Measures") of the Law on Sugar included neither
the duty of sugar manufacturers to export any portion of quota
white sugar, also the amount in proportion to the white sugar
production quota allocated to the respective manufacturer (which
is established in Item 2.3 of the Government resolution of 26
September 2001), nor any measures of economic influence, which
had to be applied when the latter duty, which had not been
established in the law, was not implemented (nor did it contain
the measure provided for in Item 2.4 of the Government resolution
of 26 September 2001), nor the white sugar export tasks to sugar
manufacturers established by the act of the Ministry of
Agriculture (i.e. the order of the Minister of Agriculture, which
is indicated in Item 2.1 of the Government resolution of 12 June
2002). One is also to note that neither did the duty of sugar
manufacturers to export some portion of the quota white sugar
(also the amount in proportion to the allocated white sugar
production quota allocated to the respective sugar manufacturer),
nor the possibility, when this duty was not carried out, to apply
any measures of economic influence (also in certain amount to
reduce the white sugar production quota for the next year), nor
the possibility to establish, by an act of the Ministry of
Agriculture (i.e. by an order of the Minister of Agriculture),
white sugar export tasks to the sugar manufacturers stem from
Paragraph 2 Article 4 of the Law on Sugar (wording of 8 July
1999) according to which the Government of the Republic of
Lithuania or an institution authorised by it may apply other
regulatory measures of the sugar market, which protect the
interests of sugar beet growers, sugar producers and users, and
which (in the aspect under investigation) cannot be construed in
a broader sense.
14. In the context of the constitutional justice case at
issue, it should also be emphasised that the state sugar policy
execution measures indicated in the disputed items (provisions
thereof) of the Government resolutions of 26 September 2001 and
12 June 2002 were neither explicitly nor implicitly established
in other articles (parts thereof) of the Law on Sugar (wording of
8 July 1999 with amendments and supplements made by the Law on
Amending Articles 2, 4, 5, 6 and 7 of the Law on Sugar adopted by
the Seimas on 18 May 2000) which was valid at that time, or any
other laws.
15. Taking into consideration the arguments set forth, a
conclusion is to be drawn that Items 2.3 and 2.4 of Government
Resolution No. 1170 "On Measures for Regulating the Sugar Market
", the provision "To oblige the Ministry of Agriculture: 2.1.
taking into account the sugar balance of nine months of 2002, by
20 October 2002, to prepare and confirm the procedure and tasks
for export of the white sugar manufactured from sugar beets of
the 2002 harvest" of Item 2 of Government Resolution No. 879 "On
Amending Resolution of the Government of Lithuania No. 284 'On
the Establishment of White Sugar Production Quota' of 12 March
2001" of 12 June 2002 were in conflict with Paragraph 1 (wording
of 18 May 2000) and Paragraph 2 (wording of 8 July 1999) Article
4 of the Law on Sugar.
16. Having held this, in this constitutional justice case
Constitutional Court will not investigate whether Items 2.3 and
2.4 of the Government resolution of 26 September 2001 and the
provision "To oblige the Ministry of Agriculture: 2.1. taking
into account the sugar balance of nine months of 2002, by 20
October 2002, to prepare and confirm the procedure and tasks for
export of the white sugar manufactured from sugar beets of the
2002 harvest" of Item 2 of the Government resolution of 12 June
2002 are not in conflict with Item 4 of Paragraph 1 of Article 7
and Item 1 of Paragraph 1 of Article 8 of the Law on Agricultural
and Rural Development.
V
On the compliance of Items 2.3 and 2.4 of Government
Resolution No. 1170 "On Measures for Regulating the Sugar Market
", the provision "To oblige the Ministry of Agriculture: 2.1.
taking into account the sugar balance of nine months of 2002, by
20 October 2002, to prepare and confirm the procedure and tasks
for export of the white sugar manufactured from sugar beets of
the 2002 harvest" of Item 2 of Government Resolution No. 879 "On
Amending Resolution of the Government of Lithuania No. 284 'On
the Establishment of White Sugar Production Quota' of 12 March
2001" of 12 June 2002 with Paragraph 2 of Article 5, Paragraph 1
of Article 46 and Item 2 of Article 94 of the Constitution and
the constitutional principle of a state under the rule of law.
1. As mentioned, while forming and implementing the state
sugar policy, as well as choosing the measures and methods for
implementing this policy, the Government must follow inter alia
the laws, that, under the Constitution, the essential conditions
for economic activity and prohibitions as well as limitations
having essential impact on the said activity, measures of
economic influence, which may have an essential impact on the
economic activity, and which may be applied when the established
obligations are not carried out or are carried out improperly,
may be established only by means of a law.
2. It has been held that the legal regulation established
in disputed Items 2.3 and 2.4 of the Government resolution of 26
September 2001, as well as in the disputed provision of Item 2 of
the resolution of 12 June 2002, is related to the establishment
of essential conditions of economic activity and measures of
economic influence to the participants of the sugar market when
the set obligations are not carried or are carried out
improperly, also that this legal regulation was in conflict with
Paragraph 1 (wording of 18 May 2000) and Paragraph 2 (wording of
8 July 1999) of Article 4 of the Law on Sugar.
3. Having held this, also taking into consideration the
close relationship of Paragraph 1 of Article 46 of the
Constitution with Paragraphs 2 and 3 of this article, one is also
to hold that Items 2.3 and 2.4 of Government Resolution No. 1170
"On Measures for Regulating the Sugar Market", the provision "To
oblige the Ministry of Agriculture: 2.1. taking into account the
sugar balance of nine months of 2002, by 20 October 2002, to
prepare and confirm the procedure and tasks for export of the
white sugar manufactured from sugar beets of the 2002 harvest" of
Item 2 of Government Resolution No. 879 "On Amending Resolution
of the Government of Lithuania No. 284 'On the Establishment of
White Sugar Production Quota' of 12 March 2001" of 12 June 2002
are in conflict with Paragraph 2 Article 5, Paragraphs 1, 2 and 3
of Article 46, Item 2 of Article 94 of the Constitution and with
the constitutional principle of a state under the rule of law.
4. Alongside, it should be also emphasised that the
statement (in this Ruling of the Constitutional Court) that the
disputed legal regulation established in the Government
resolutions of 26 September 2001 and 12 June 2002 is in conflict
with inter alia Paragraphs 1, 2 and 3 of Article 46 of the
Constitution cannot be construed as meaning that the state in
general cannot execute such economic policy, nor that the law in
general cannot provide for any such legal regulation of the
economic activity so that manufacturing of certain production
would be supported, promoted in other ways or related to other
conditions, by taking into consideration inter alia whether this
production (part thereof) is exported, nor that such legal
regulation established by the law in itself should or could be
assessed as violating the values determining the bases of the
economy of the Nationthe right of private ownership, freedom of
individual economic activity and initiative (Paragraph 1 of
Article 46 of the Constitution), the obligation of the state to
support economic efforts and initiative that are useful to
society (Paragraph 2 of Article 46 of the Constitution), and the
constitutional imperative of regulation of the economic activity
so that it would serve the general welfare of the Nation
(Paragraph 3 of Article 46 of the Constitution).
Conforming to Articles 102 and 105 of the Constitution of
the Republic of Lithuania and Articles 1, 53, 54, 55 and 56 of
Law on the Constitutional Court of the Republic of Lithuania, the
Constitutional Court of the Republic of Lithuania has passed the
following
ruling:
1. To recognise that Items 2.3 and 2.4 of Resolution of the
Government of the Republic of Lithuania No. 1170 "On Measures for
Regulating the Sugar Market" (Official Gazette Valstybės žinios,
2001, No. 83-2901), the provision "To oblige the Ministry of
Agriculture: 2.1. taking into account the sugar balance of nine
months of 2002, by 20 October 2002, to prepare and confirm the
procedure and tasks for export of the white sugar manufactured
from sugar beets of the 2002 harvest" of Item 2 of Resolution of
the Government of the Republic of Lithuania No. 879 (Official
Gazette Valstybės žinios, 2002, No. 60-2442) are in conflict with
Paragraph 2 of Article 5, Parts 1, 2 and 3 of Article 46, Item 2
of Article 94 of the Constitution of the Republic of Lithuania
and the constitutional principle of legal state.
2. To recognise that Items 2.3 and 2.4 of Resolution of the
Government of the Republic of Lithuania No. 1170 "On Measures for
Regulating the Sugar Market" (Official Gazette Valstybės žinios,
2001, No. 83-2901), the provision "To oblige the Ministry of
Agriculture: 2.1. taking into account the sugar balance of nine
months of 2002, by 20 October 2002, to prepare and confirm the
procedure and tasks for export of the white sugar manufactured
from sugar beets of the 2002 harvest" of Item 2 of Resolution of
the Government of the Republic of Lithuania No. 879 "On Amending
Resolution of the Government of Lithuania No. 284 'On the
Establishment of White Sugar Production Quota' of 12 March 2001"
of 12 June 2002 (Official Gazette Valstybės žinios, 2002, No. 60-
2442) were in conflict with Paragraph 1 (wording of 18 May 2000)
and Paragraph 2 (wording of 8 July 1999) of Article 4 of the
Republic of Lithuania Law on Sugar.
This Constitutional Court ruling is final and not subject
to appeal.
The ruling is promulgated in the name of the Republic of
Lithuania.
Justices of the Constitutional Court: Armanas Abramavičius
Toma Birmontienė
Egidijus Kūris
Kęstutis Lapinskas
Zenonas Namavičius
Ramutė Ruškytė
Vytautas Sinkevičius
Stasys Stačiokas
Romualdas Kęstutis Urbaitis