Case No. 64/06
THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA
RULING
ON THE COMPLIANCE OF THE PROVISION "THE VALIDITY OF THE
LICENCE SHALL BE ABOLISHED IF <
> 42.10. A COURT RULING
TO INSTITUTE THE BANKRUPTCY CASE AGAINST THE ENTERPRISE
COMES INTO EFFECT <
>" OF ITEM 42 (WORDING OF 31
JANUARY 2006) OF THE RULES FOR LICENSING TRADE IN
UNPREPACKED PETROLEUM PRODUCTS APPROVED BY RESOLUTION
OF THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA NO. 113
"ON LICENSING TRADE IN UNPREPACKED PETROLEUM PRODUCTS"
OF 28 JANUARY 2003 WITH THE CONSTITUTION OF THE
REPUBLIC OF LITHUANIA AND THE PROVISION OF PARAGRAPH 7
(WORDING OF 12 MARCH 2001) OF ARTICLE 10 OF THE
REPUBLIC OF LITHUANIA ENTERPRISE BANKRUPTCY LAW
8 October 2009
Vilnius
The Constitutional Court of the Republic of Lithuania,
composed of the Justices of the Constitutional Court Armanas
Abramavičius, Toma Birmontienė, Pranas Kuconis, Kęstutis
Lapinskas, Zenonas Namavičius, Ramutė Ruškytė, Egidijus Šileikis,
Algirdas Taminskas, and Romualdas Kęstutis Urbaitis,
with the secretary of the hearingDaiva Pitrėnaitė,
in the presence of the representatives of the Government of
the Republic of Lithuania, the party concerned, who were Inga
Ignatavičiūtė, Deputy Head of the Legal Division of the Ministry
of Energy of the Republic of Lithuania, and Gintautas Danaitis,
Chief Specialist of the Division for Energy Resources,
Electricity and Heat of the Ministry of Energy 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 29 September 2009 heard case No. 64/06 subsequent to
the petition of the Vilnius Regional Administrative Court, the
petitioner, requesting to investigate whether the provision "The
validity of the licence shall be abolished if <
> 42.10. a court
ruling to institute the bankruptcy case against the enterprise
comes into effect <
>" of Item 42 (wording of 31 January 2006) of
the Rules for Licensing Trade in Unprepacked Petroleum Products
approved by Resolution of the Government of the Republic of
Lithuania No. 113 "On Licensing Trade in Unprepacked Petroleum
Products" of 28 January 2003 is not in conflict with Paragraphs
1, 2, and 3 of Article 46 of the Constitution of the Republic of
Lithuania, with the constitutional principles of justice and a
state under the rule of law, and with Item 5 (wording of 20 March
of 2001) of Paragraph 7 of Article 10 of the Republic of
Lithuania Enterprise Bankruptcy Law.
The Constitutional Court
has established:
I
The Vilnius Regional Administrative Court, the petitioner,
was investigating an administrative case. By its ruling the said
court suspended the consideration of the case and applied to the
Constitutional Court with a petition requesting to investigate
whether the provision "The validity of the licence shall be
abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect <
>" of
Item 42 (wording of 31 January 2006) of the Rules for Licensing
Trade in Unprepacked Petroleum Products approved by Government
Resolution No. 113 "On Licensing Trade in Unprepacked Petroleum
Products" of 28 January 2003 is not in conflict with Paragraphs
1, 2, and 3 of Article 46 of the Constitution, with the
constitutional principles of justice and a state under the rule
of law, and with Item 5 (wording of 20 March of 2001) of
Paragraph 7 of Article 10 of the Enterprise Bankruptcy Law.
II
The petition of the Vilnius Regional Court, the petitioner,
is substantiated by the following arguments.
1. Item 4 of Paragraph 2 of Article 5 (wording of 15
November 2005) of the Republic of Lithuania Energy Law
commissioned the Government to establish the procedure for
licensing trade in unprepacked petroleum products, which are one
of energy resources. This law does not regulate the procedure for
abolishing the validity of the licences.
2. Chapter IX titled "Suspension of the Validity of Licences
and Abolishment Thereof" of the Rules for Licensing Trade in
Unprepacked Petroleum Products (wording of 1 March 2004)
(hereinafter also referred to as the Rules) approved by
Government Resolution No. 113 "On Licensing Trade in Unprepacked
Petroleum Products" of 28 January 2003 establishes the procedure
for suspension of the validity of the licences and abolishment
thereof. Taking account of the legal regulation entrenched in
Items 39-41 and 4.42 of the Rules, the petitioner draws a
conclusion that when measures are applied to holders of licences
for trading in unprepacked petroleum products for violation of
the Rules, there is a general provision that these measures are
applied according to the "degree principle", i.e. from the
mildest till the strictest (warning about a possible suspension
of the validity of the licence or abolishment thereof, suspension
of the validity of the licence, abolishment of the validity of
the licence).
Item 42.10 (wording of 31 January 2006) of the Rules
provides that the validity of the licence shall be abolished if a
court ruling to institute the bankruptcy case against the
enterprise comes into effect or the meeting of creditors adopts a
decision to carry out the bankruptcy procedures by following the
extrajudicial procedure. Under the legal regulation entrenched by
this provision of the substatutory legal act, the fact of the
entry into effect of a court ruling to institute a bankruptcy
case against the enterprise is the grounds to abolish the
validity of the licence for trading in unprepacked petroleum
products and not to take account of any other circumstances.
3. The issues of the activity and property management of an
enterprise which has acquired the status of an enterprise in
bankruptcy are regulated by a special legal actthe Enterprise
Bankruptcy Law, which grants the right to such enterprise to
engage in economic-commercial activity by applying the
limitations established in this law (Items 5 and 6 of Paragraph 7
of Article 10 of the Enterprise Bankruptcy Law). This law does
not provide that after a court ruling to institute a bankruptcy
case against the enterprise becomes effective, the validity of
the licences to engage in a corresponding economic-commercial
activity, which were issued to the enterprise, must be abolished.
4. The fact of entry into effect of a court ruling to
institute a bankruptcy case against an enterprise does not mean
that the bankruptcy procedure carried out while following the
judicial procedure will end by recognising the enterprise
bankrupt and liquidation thereof due to bankruptcy.
The petitioner doubts whether the legal regulation
established in Item 42.10 (wording of 31 January 2006) of the
Rules approved by a substatutory legal acta Government
resolution, by applying which the validity of the licence is
abolished if the court ruling to institute a bankruptcy case
against the enterprise becomes effective is not in conflict with
Paragraphs 1, 2, and 3 of Article 46 of the Constitution, with
the constitutional principles of justice and a state under the
rule of law, and with the provision of Item 5 of Paragraph 7 of
Article 10 of the Enterprise Bankruptcy Law whereby after the
court decision to institute a bankruptcy case becomes effective
the enterprise shall be entitled to engage in economic-commercial
activities, provided it reduces creditor losses incurred by
reason of bankruptcy.
The petitioner makes reference to the provision of the
official constitutional doctrine formulated in the Constitutional
Court rulings of 6 October 1999 and 26 January 2004 whereby the
economic freedom of a person is not absolute. The petitioner
notes that the provisions of Paragraphs 1, 2 and 3 of Article 46
of the Constitution entrench the principle establishing the
objectives and limitations of regulation of economic activity.
III
1. By Ordinance of the Prime Minister No. 7 of 8 January
2007, Lina Lukoševičiūtė, Head of the Legal Division of the Legal
and Personnel Department of the Ministry of Economy, and Birutė
Sakalauskaitė, Senior Specialist of the Petroleum Division of the
Energy Resources Department of the Ministry of Economy, were
appointed to represent the Government, the party concerned.
2. In the course of the preparation of the case for the
Constitutional Court hearing written explanations were received
from L. Lukoševičiūtė and B. Sakalauskaitė wherein it is
maintained that the provision of Item 42.10 (wording of 31
January 2006) of the Rules is not in conflict with Paragraphs 1,
2, and 3 of Article 46 of the Constitution, with the
constitutional principles of justice and a state under the rule
of law, and with Item 5 of Paragraph 7 of Article 10 of the
Enterprise Bankruptcy Law.
2.1. The position of L. Lukoševičiūtė and B. Sakalauskaitė,
the representatives of the Government, the party concerned, is
substantiated by the following arguments.
2.1.1. The provision of Item 42.10 of the Rules is to be
construed in a systemic manner, i.e., while taking account of
other provisions of the Rules. This provision does not deprive
one of the right to engage in economic-commercial activity,
since: 1) while following the said provision, upon abolishment of
the validity of the corresponding licence, one is not deprived of
the right to engage in the economic-commercial activity which is
different from the one specified in the said licence; 2) the
disputed provision as well as other provisions of the Rules do
not prevent from issuing a new licence.
2.1.2. The regulation of the peculiarities of a licensed
activity is not the purpose of the Enterprise Bankruptcy Law. The
Law on Energy is a special law which regulates activity in the
energy sphere. Item 4 of Paragraph 2 of Article 5 of the Law on
energy provides that when carrying out state management of the
energy sector, the Government or its authorised institutions
shall establish the procedure for licensing trade in unprepacked
petroleum products. Thus, the special law provides that the trade
in unprepacked petroleum products is a licensed activity and that
the procedure for licensing this trade is approved by the
Government or its authorised institutions, therefore, in the
opinion of the representatives of the party concerned, the
provision of Item 42.10 of the Rules is not in conflict with
legal acts of higher power.
2.1.3. The trade in unprepacked petroleum products is an
activity subject to licensing therefore a special state
regulation regime is applied to trading in such products. The
representatives of the party concerned invoke the provision of
the official constitutional doctrine formulated in the
Constitutional Court whereby the economic freedom of a person is
not absolute.
2.1.4. According to Paragraph 1 of Article 2 of the
Enterprise Bankruptcy Law, bankruptcy means the state of an
insolvent enterprise. The representatives of the party concerned
maintain that bankruptcy of an enterprise is often inseparably
associated with debts to the state budget. Item 25 of the Rules
entrench the duties of the holder of the licence, including the
duty of the holder of the licence to follow the requirements of
the legal acts which regulate accountability and payment of
taxes. Item 42.10 of the Rules establishes the sanction for
failure to follow the conditions of the licensed activity, i.e.
for violation of Item 25 of the Rulesfailure to observe the
legal acts wherein the requirements for accountability and
payment of taxes are established. The conditions of the licensed
activity help protect the rights of other persons and the
legitimate interests of the state. Therefore, Item 42.10 of the
Rules contains the provision that the licensed activity of the
enterprise which hold the licence to trade in unprepacked
petroleum products, but which is unable to properly implement its
financial obligations to the state budget, is terminated.
2.1.5. In the Rules the sanctions, while taking account of
the extent of the financial obligations, are differentiatedit is
provided for therein that the validity of the licence may be
suspended or abolished. One of the cases of suspension of the
validity of the licence is when the holder of the licence has to
pay the tax arrears to the state budget of the Republic of
Lithuania, municipal budgets or funds, the taxes paid whereto is
administered by the State Tax Inspectorate (save the cases where
the payment of the taxes, default interest and fines is postponed
under procedure established by legal acts of the Republic of
Lithuania or where there is a tax payment dispute regarding the
said payment of the taxes, default interest and fines), and is in
debt to the budget of the State Social Insurance Fund (Item 39.2
of the Rules). In cases where the debt obligations of the
enterprise determine the state of its insolvency, the enterprise
is unable to properly carry out its financial obligations to the
state budget, therefore, in pursuance of Item 42.10 of the Rules,
the validity of the licence is abolished.
3. On 15 September 2009, Ordinance of the Prime Minister No.
395 of 15 September 2009 was received at the Constitutional
Court; under the said ordinance, I. Ignatavičiūtė, Deputy Head of
the Legal Division of the Ministry of Energy, and G. Danaitis,
Chief Specialist of the Division for Energy Resources,
Electricity and Heat of the Ministry of Energy, were commissioned
to represent the Government in this constitutional justice case.
This ordinance recognised Ordinance of the Prime Minister No. 7
of 8 January 2007 (regarding the commissioning of L.
Lukoševičiūtė, Head of the Legal Division of the Legal and
Personnel Department of the Ministry of Economy, and B.
Sakalauskaitė, Senior Specialist of the Petroleum Division of the
Energy Resources Department of the Ministry of Economy, to
represent the Government) as no longer valid.
4. In the course of the preparation of the case for the
Constitutional Court hearing, written explanations were received
from I. Ignatavičiūtė and G. Danaitis, which virtually assented
to the arguments set forth in the written explanations of L.
Lukoševičiūtė and B. Sakalauskaitė, and which presented
additional arguments.
4.1. Article 2.78 of the Civil Code of the Republic of
Lithuania defines the content of the rules for licensing a
corresponding activity, which are approved by the Government.
Item 11 of Paragraph 2 of this article provides that the rules
for licensing a corresponding activity, which are approved by the
Government, shall indicate procedure and cases for the suspension
and abolishment of a licence. In the opinion of the
representatives of the party concerned, the licensing rules which
are approved by the Government, must indicate all provisions
which are listed in Paragraph 2 of Article 2.78 of the Civil
Code, and, in addition, under Paragraph 3 of the same article,
other requirements and a different procedure may also be
provided. Thus, should the licensing rules not regulate the legal
relations established in Article 2.78 of the Civil Code, such
licensing rules would not be in line with the requirements of the
Civil Code.
4.2. Abolishment of a licence is applied: first, as a state
reaction to illegal behaviour of the economic entity that is
engaged in a corresponding type of licensed activity; second, in
other cases which are not related with corresponding violations
of law. As regards the first aspect (case), the representatives
of the party concerned, while invoking the jurisprudence of the
Constitutional Court and the case-law of other courts of the
Republic of Lithuania, point out that, under the Constitution, it
is allowed to establish economic sanctions to economic entities
only by means of a law. As regards the second aspect (other
cases), the position of the representatives of the party
concerned is as follows: if the cases of the abolishment of the
licence are not linked with violations of legal acts committed by
the economic entities, one should not assess such abolishment of
the licence as an economic sanction and these cases must be
established in the licensing rules approved by the Government
while following Item 11 of Article 2.78 of the Civil Code.
According to the representatives of the party concerned, the
state of an insolvent company (bankruptcy) cannot be assessed as
violation of imperative legal norms committed by the economic
entity. Therefore, the abolishment of the licence of the
enterprise against which there is an instituted bankruptcy case
should not be assessed as a sanction. The removal of an insolvent
enterprise from the market is to be assessed as a preventive
measure applied in order that no damage be inflicted upon the
values (other economic entities or consumers) protected and
defended by the law.
In addition, the representatives of the party concerned note
that the Rules provide for solvency requirements to the economic
entity which seeks to acquire the licences established in the
Rules (Item 7 of the Rules). Taking account of this, the Rules
respectively contain the provisions which ensure that the
economic entities which have already received licences would meet
the solvency requirements (Item 42.10 of the Rules), otherwise,
the principle of equality might be violated (those entities which
try to enter into the market would face strict solvency
requirements, while the economic entities which are already in
the market might be allowed to meet these requirements).
4.3. As regards the exceptional character of the economic
activity, the representatives of the party concerned note that
petroleum products are attributed to special products; special
state legal regulation is applied to the trade in such products,
to other activities related with such products and to the use
thereof: a special excise taxation procedure established by laws
is applied to petroleum products; Article 3 of the Republic of
Lithuania Law on State Stocks of Petroleum Products and Crude Oil
provides that state stocks of crude oil and petroleum products
shall be accumulated by enterprises producing petroleum products,
enterprises importing petroleum products and enterprises
delivering to the country petroleum products and state
enterprises assigned by the Government or an institution
authorised by it; strict requirements of environmental protection
are raised to petroleum products.
4.4. The representatives of the party concerned note that
the Ministry of Energy, upon conducting the review of the
compliance of the provisions of legal acts (including the Law on
Energy) with Directive 2006/123/EC of the European Parliament and
of the Council of 12 December 2006 on services in the internal
market, established that some provisions of the Law on Energy
regarding the procedure for issuance of licences (as well as
permits and certificates) are not in line with imperative
requirements of the said directive. The directive will come into
force on 28 December 2009, therefore, at present a corresponding
draft law on amending the Law on Energy is prepared.
IV
At the Constitutional Court hearing, I. Ignatavičiūtė and G.
Danaitis, the representatives of the Government, the party
concerned, virtually reiterated the arguments set forth in their
written explanations, as well as gave answers to questions and
submitted additional explanations.
The Constitutional Court
holds that:
I
1. The Vilnius Regional Administrative Court, the
petitioner, requests to investigate whether the provision "The
validity of the licence shall be abolished if <
> 42.10. a court
ruling to institute the bankruptcy case against the enterprise
comes into effect <
>" of Item 42 (wording of 31 January 2006) of
the Rules for Licensing Trade in Unprepacked Petroleum Products
approved by Resolution of the Government of the Republic of
Lithuania No. 113 "On Licensing Trade in Unprepacked Petroleum
Products" of 28 January 2003 is not in conflict with Paragraphs
1, 2, and 3 of Article 46 of the Constitution, with the
constitutional principles of justice and a state under the rule
of law, and with Item 5 (wording of 20 March of 2001) of
Paragraph 7 of Article 10 of the Enterprise Bankruptcy Law.
2. It is clear from the arguments of the petition that the
petitioner disputes the said legal regulation inter alia in the
aspect of the compliance thereof with the provision "After the
court decision to institute bankruptcy proceedings becomes
effective <
> 5) the enterprise shall be entitled to engage in
economic-commercial activities, provided it reduces creditor
losses incurred by reason of bankruptcy <
>" of Paragraph 7 of
Article 10 of the Enterprise Bankruptcy Law.
3. It needs to be noted that the legal regulation disputed
by the petitioner has undergone changes. On 27 August 2008, the
Government adopted Resolution No. 823 "On Amending Resolution of
the Government of the Republic of Lithuania No. 113 'On Licensing
Trade in Unprepacked Petroleum Products' of 28 January 2003",
which came into force on 5 September 2008. This resolution inter
alia amended the provision of Item 42 of the Rules, which is
disputed in the constitutional justice case at issue. It was set
forth as follows: "The validity of the licence shall be abolished
if <
> 42.10. the enterprise was liquidated due to bankruptcy
<
>;".
While the provision "The validity of the licence shall be
abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect <
>" of
Item 42 (wording of 31 January 2006) of the Rules is compared
with the provision "The validity of the licence shall be
abolished if <
> 42.10. the enterprise was liquidated due to
bankruptcy <
>" of Item 42 (wording of 27 August 2008) of the
Rules, it becomes clear that the legal regulation disputed by the
petitioner ceased to exist.
Under Paragraph 4 of Article 69 of the Law on the
Constitutional Court, the annulment of the disputed legal act
shall be grounds to adopt a decision to dismiss the instituted
legal proceedings. The Constitutional Court has held that the
same can also be said about the situations, where the disputed
legal act (part thereof) was not repealed, however, the legal
regulation established in it was changed (Constitutional Court
ruling of 4 March 2003, decisions of 14 March 2006 (cases Nos.
3/05 and 14/03), rulings of 30 March 2006, 14 April 2006 and 21
September 2006, decision of 28 May 2007, as well as ruling of 22
June 2009).
However, as it was held in the jurisprudence of the
Constitutional Court more than once, when a court investigating a
case applies to the Constitutional Court after it has doubts
concerning the compliance of a law or other legal act applicable
in the case with the Constitution (other legal act of higher
power), the Constitutional Court has a duty to investigate the
request of the court regardless of the fact whether the disputed
law or other legal act is valid or not.
4. Thus, in the constitutional justice case at issue, the
Constitutional Court will investigate whether the provision "The
validity of the licence shall be abolished if <
> 42.10. a court
ruling to institute the bankruptcy case against the enterprise
comes into effect <
>" of Item 42 (wording of 31 January 2006) of
the Rules for Licensing Trade in Unprepacked Petroleum Products
approved by Government Resolution No. 113 "On Licensing Trade in
Unprepacked Petroleum Products" of 28 January 2003 was not in
conflict with Paragraphs 1, 2, and 3 of Article 46 of the
Constitution, with the constitutional principles of justice and a
state under the rule of law, and with the provision "After the
court decision to institute bankruptcy proceedings becomes
effective <
> 5) the enterprise shall be entitled to engage in
economic-commercial activities, provided it reduces creditor
losses incurred by reason of bankruptcy <
>" of Paragraph 7
(wording of 20 March 2001) of Article 10 of the Enterprise
Bankruptcy Law.
5. In this context it needs to be noted that the legal
regulation entrenched in the provision "The validity of the
licence shall be abolished if <
> 42.10. the enterprise was
liquidated due to bankruptcy <
>" of Item 42 (wording of 27
August 2008) of the Rules is not a matter of investigation in the
constitutional justice case at issue.
II
1. On 28 January 2003, the Government adopted Resolution No.
113 "On Licensing Trade in Unprepacked Petroleum Products" which
came into force on 1 February 2003. By this resolution the
Government, while following Item 4 of Paragraph 2 of Article 5 of
the Law on Energy, approved the Rules for Licensing Trade in
Unprepacked Petroleum Products. Item 42 of the Rules established
the grounds for abolishment of the validity of the licence. The
Rules did not contain a provision whereby the abolishment of the
validity of the licence would be linked with the bankruptcy of
the enterprise.
2. On 1 March 2004, the Government adopted Resolution No.
232 "On Amending Resolution of the Government of the Republic of
Lithuania No. 113 'On Licensing Trade in Unprepacked Petroleum
Products' of 28 January 2003", which came into force on 5 March
2004. Item 1 of this resolution amended said Government
Resolution No. 133 of 28 January 2003 and the Rules approved by
it and set forth both latter acts in a new wording, however, the
grounds for abolishment of the licence (Item 42 of the Rules)
were not changed in the aspect that abolishment of the licence
was continued not to be linked with bankruptcy of the enterprise.
3. On 31 January 2006, the Government adopted Resolution No.
94 "On Amending Resolution of the Government of the Republic of
Lithuania No. 113 'On Licensing Trade in Unprepacked Petroleum
Products' of 28 January 2003" which came into force on 5 February
2006. By Item 1.3.19 of this resolution the Rules for Licensing
Trade in Unprepacked Petroleum Products (wording of 1 March 2004
with subsequent amendments and supplements) were supplemented
with this provision: "The validity of the licence shall be
abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect or the
meeting of creditors adopts a decision to carry out the
bankruptcy procedures by following the extrajudicial procedure;".
Thus, this legal regulation established the grounds for
abolishment of the validity of a licence to engage in wholesale
or retail trade in petroleum products, which is disputed by the
petitioner in the constitutional justice case at issue.
4. As mentioned, on 27 August 2008, the Government adopted
Resolution No. 823 "On Amending Resolution of the Government of
the Republic of Lithuania No. 113 'On Licensing Trade in
Unprepacked Petroleum Products' of 28 January 2003", which came
into force on 5 September 2008. This resolution inter alia
amended the provision of Item 42 of the Rules, which is disputed
in the constitutional justice case at issue. It was set forth as
follows: "The validity of the licence shall be abolished if <
>
42.10. the enterprise was liquidated due to bankruptcy <
>;".
5. As mentioned, while the provision "The validity of the
licence shall be abolished if <
> 42.10. a court ruling to
institute the bankruptcy case against the enterprise comes into
effect <
>" of Item 42 (wording of 31 January 2006) of the Rules
is compared with the provision "The validity of the licence shall
be abolished if <
> 42.10. the enterprise was liquidated due to
bankruptcy <
>" of Item 42 (wording of 27 August 2008) of the
Rules, it becomes clear that the legal regulation disputed by the
petitioner ceased to exist. Under the legal regulation
established at present, the validity of a licence to engage in
wholesale or retail trade in petroleum products may be abolished
not at the time when the procedure of bankruptcy of the
enterprise is begun, but when the said procedure is completed by
liquidating the enterprise.
6. In the context of the constitutional justice case at
issue, the following provisions of the Rules (wording of 1 march
2004 with subsequent amendments and supplements) are to be
mentioned:
- "The following types of licences shall be established: <
>
3.5. to engage in retail trade in unprepacked engine petrol,
diesel oil (diesel fuel), liquefied gas intended for vehicles,
and biodiesel oil; <
> " (Item 3 (wording of 1 March 2004));
- "The licences to engage in retail trade in unprepacked
engine petrol, diesel oil (diesel fuel), liquefied gas intended
for vehicles, biodiesel oil <
> shall be issued by the director
of the municipal administration <
> (Item 6 (wordings of 1 March
2004 and 31 January 2006));
- "The institution which issues licences must establish
whether the enterprise which intends to acquire a licence is in
arrears to the to the state budget of the Republic of Lithuania,
municipal budgets or funds, the taxes paid whereto is
administered by the State Tax Inspectorate, and to the budget of
the State Social Insurance Fund, and whether there are not any
remarks and reports submitted in writing by controlling state
institutions of supervision and of law and order regarding the
activity of the enterprise (Item 7 (wordings of 1 March 2004 and
27 August 2008);
- "Licences to engage in wholesale and retail trade in
unprepacked petroleum products shall be issued for indefinite
time" (Item 13 (wording of 1 March 2004));
- "Licences are not issued if: <
> 22.5. there are reports
submitted in writing by controlling state institutions of
supervision and of law and order about violations of the
conditions of the activities and the said violations have not
been removed; 22.6. the enterprise is in arrears to the state
budget of the Republic of Lithuania, municipal budgets or funds,
the taxes paid whereto is administered by the State Tax
Inspectorate (save the cases where the payment of the taxes,
default interest and fines is postponed under procedure
established by legal acts of the Republic of Lithuania or there
is a tax payment dispute regarding the said payment of the taxes,
default interest and fines), and is in debt to the budget of the
State Social Insurance Fund; <
>" (Item 22 (wording of 1 March
2004));
- "The validity of the licence is abolished if: <
> 42.4.
the enterprise with regard to which the validity of the licence
is suspended does not remove, within the established time, the
specified violations of the licensed activity; 42.5. the
enterprise with regard to which the validity of the licence is
suspended, conducts the activity specified in the licence (Item
42 (wording of 1 March 2004));
- "The validity of the licence shall be suspended and
abolished by the institution that issued the licence (Item 44
(wording of 1 March 2004).
7. Summing up the discussed provisions of the Rules, in the
context of the legal regulation disputed by the petitioner one is
to note that:
- the Rules are designated to regulate licensing the
wholesale and retail trade in unprepacked petroleum products in
the Republic of Lithuania;
- corresponding requirements are established to the entities
which intend to engage in retail trade in unprepacked engine
petrol, diesel oil (diesel fuel), liquefied gas intended for
vehicles, and biodiesel oil: it is necessary to receive a licence
for such activity; the issuance and validity of the licence are
bound by established corresponding conditions (inter alia not to
be in arrears to the state budget of the Republic of Lithuania
and municipal budgets);
- licences are issued for indefinite time;
- the provision "The validity of the licence shall be
abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect <
>" of
Item 42 (wording of 31 January 2006) of the Rules established the
legal regulation whereby the abolishment of the validity of the
licence was provided for in all situations after a court ruling
to institute the bankruptcy case against the enterprise comes
into effect. No exceptions to this rule were provided.
8. As mentioned, the petitioner disputed the compliance of
Item 42 (wording of 31 January 2006) of the Rules with inter alia
the provision "After the court decision to institute bankruptcy
proceedings becomes effective <
> 5) the enterprise shall be
entitled to engage in economic-commercial activities, provided it
reduces creditor losses incurred by reason of bankruptcy <
>" of
Paragraph 7 (wording of 20 March 2001) of Article 10 of the
Enterprise Bankruptcy Law.
9. On 20 March 2001, the Seimas adopted the Enterprise
Bankruptcy Law, which came into force on 1 July 2001 (Paragraph 1
of Article 37). This law, in the aspect of which the above legal
regulation is disputed by the petitioner in the constitutional
justice case at issue, was and is designed for the regulation of
enterprise bankruptcy proceedings (Paragraph 1 of Article 1).
9.1. Article 2 (wording of 20 March 2001) of the Enterprise
Bankruptcy Law provides:
"'Bankruptcy' means the state of an insolvent enterprise
where bankruptcy proceedings have been instituted in court or the
creditors are performing extrajudicial bankruptcy procedures in
the enterprise" (Paragraph 1); "'Bankruptcy process' means the
sum total of judicial or extrajudicial enterprise bankruptcy
procedures" (Paragraph 2); "'Bankruptcy proceedings' means a
civil case opened in court over disputes arising from legal
relations connected with bankruptcy" (Paragraph 3); "'Enterprise
in bankruptcy' means an enterprise against which bankruptcy
proceedings have been instituted or in respect of which
extrajudicial bankruptcy procedures are applied" (Paragraph 4);
"'Insolvency of an enterprise' means the state of an enterprise
when it fails to settle with the creditor/creditors <
>"
(Paragraph 8).
Paragraph 7 (wording of 20 March 2001) of Article 10 (
"Instituting Bankruptcy Proceedings in Court") of the Enterprise
Bankruptcy Law provides:
"7. After the court ruling to institute bankruptcy
proceedings becomes effective:
1) the enterprise managing bodies must transfer to the
administrator the assets of the enterprise according to the
financial accounts drawn up on the basis of the data as of the
day of institution of the enterprise bankruptcy proceedings and
all pertinent documents within the time limits set by the court.
In the cases where the assets of the enterprise are not separated
from the assets of the enterprise owner or those of the members
of the enterprise, the owner/owners must within the said time
period submit to the administrator the list of all available
assets, including the assets which are the object of joint
ownership;
2) the enterprise managing bodies shall lose their powers,
while the enterprise administrator shall upon a 15-day written
advance notice terminate employment contracts with the members of
the enterprise board and the head of the administration. The said
individuals shall not be entitled to severance pay or
compensation, except for monetary compensation for the unused
holidays. Upon the court order, the above persons and the chief
financier (accountant) must present, in the course of the
bankruptcy process, all information required for the bankruptcy
process;
3) discharge of financial obligations not met prior to the
institution of bankruptcy proceedings, including payment of
interest, default interest, taxes and other mandatory payments,
also recovery of debts from the enterprise through court or
without suit shall be prohibited. Computation of default interest
and interest on all obligations of the enterprise, including on
default in payments related to employment relationship, shall be
suspended. It is not permitted to impose a mandatory hypothec;
4) if the administrator does not notify the interested
parties within 30 days from the effective date of the court order
to initiate bankruptcy proceedings that he will not implement the
unexpired contracts entered into by the enterprise, the said
contracts (including contracts of lease, loan for use
agreements), except for employment contracts and contracts from
which claims of the enterprise in bankruptcy arise, shall be
deemed to have expired, and claims arising by reason thereof
shall be met in the manner specified by Article 35 of this Law;
5) the enterprise shall be entitled to engage in economic-
commercial activities, provided it reduces creditor losses
incurred by reason of bankruptcy, and shall also have the right
to use the income received from the above activities to cover
expenses related to the activities. Where taxable objects
provided for by tax laws and laws on other mandatory payments are
created by the enterprise's economic-commercial activities, the
enterprise shall pay taxes and other mandatory payments in
compliance with laws. Where claims relating to undischarged
obligations and commitments emerge as a result of the above
economic-commercial activities, they shall be met in accordance
with the procedure specified by Article 35 of this Law;
6) upon a motion by the creditors the court may impose
restrictions on the enterprise's economic-commercial activities
and disposal of its assets, which may be sold, leased, or
pledged, also used as a collateral or a guarantee for the
discharge of other entities' obligations, or may be otherwise
transferred (conveyed) only by leave of the court;
7) the enterprise shall acquire the status of the enterprise
in bankruptcy."
Article 10 (wording of 20 March 2001) of the Enterprise
Bankruptcy Law has been amended and supplemented more than once,
however, Item 5 (wording of 20 March 2001) of Paragraph 7 of this
article, in the aspect of which the aforementioned legal
regulation is disputed by the petitioner in the constitutional
justice case at issue, has not been amended or supplemented.
9.3. In this context, the following provisions of the
Enterprise Bankruptcy Law (wording of 20 March 2001) are to be
mentioned:
- a bankruptcy case shall be discontinued when: 1) all
creditors waive their claims and the court adopts a ruling to
accept the waivers; 2) the enterprise in bankruptcy effects
settlement with all the creditors/creditor and the administrator
files documents in proof thereof with the court; 3) a composition
with the creditors is reached and approved by the court (Article
27);
- having investigated the bankruptcy case and declared the
enterprise bankrupt, the court shall issue an order to put the
enterprise into liquidation as a result of bankruptcy (Article
30).
10. Summing up the discussed provisions of the Enterprise
Bankruptcy Law (wording of 20 March 2001) in the context of the
constitutional justice case at issue, one is to note that:
- the Enterprise Bankruptcy Law regulates the relations
which are inter alia related with the protection of the rights
and interests of creditors of an insolvent enterprise. This law
does not regulate expressis verbis the issues of abolishment of
the validity of licences of an enterprise in bankruptcy (or of an
enterprise which was liquidated due to bankruptcy);
- after a court ruling to institute a bankruptcy case
against an enterprise become effective, there appear essential
limitations on the activities of the enterprise which acquired
the status of an enterprise in bankruptcy (e.g. the powers of the
governing bodies thereof cease), and preconditions are created to
the court to adopt a ruling to liquidate the enterprise after the
court has considered the bankruptcy case (where the case has not
been dismissed) and recognised the enterprise bankrupt;
- the provision "After the court decision to institute
bankruptcy proceedings becomes effective <
> 5) the enterprise
shall be entitled to engage in economic-commercial activities,
provided it reduces creditor losses incurred by reason of
bankruptcy <
>" of Paragraph 7 (wording of 20 March 2001) of
Article 10 of the Enterprise Bankruptcy Law establishes the legal
regulation whereby the enterprise which acquired the status of an
enterprise in bankruptcy has the right to engage in economic-
commercial activity only under the exceptional condition, i.e.,
if the losses of the creditors incurred because of the bankruptcy
are diminished.
11. As mentioned, by its Resolution No. 113 "On Licensing
Trade in Unprepacked Petroleum Products" of 28 January 2003, the
Government, approved the Rules for Licensing Trade in Unprepacked
Petroleum Products.
12. On 16 May 2002, the Seimas adopted the Law on Energy
which came into force (save Paragraphs 2, 3 and 4 of Article 20
thereof) on 1 July 2002 (Article 29).
13. In the context of the constitutional justice case at
issue, it needs to be noted that the following provisions were
entrenched in the Law on Energy:
- "The Law on Energy regulates general activities of the
energy sector, the basic principles of development and management
of the energy sector, energy and energy resources efficiency.
Peculiarities of activities of individual energy systems and of
relations between enterprises energy of the energy sector and
consumers shall be established by other laws" (Article 1);
- "'Energy systems' means areas of the energy sector
directly connected with any type of energy resources or energy:
electricity, heat, nuclear energy, natural gas, solid fuel, oil,
petroleum products, renewable energy resources" (Paragraph 4 of
Article 2);
- "When carrying out State management of the energy sector,
the Government or its authorised institution shall: <
> approve
the rules for licensing activities in the energy sector; <
>
establish the procedure for licensing trade in unprepacked
petroleum products <
>" (Paragraph 2 of Article 5);
- "Within its territory a municipality shall: <
> grant,
according to the nomenclature approved by the Government,
licences for retail trade in unprepacked petroleum products"
(Article 8);
- "Licences or permits may be established for energy
activities. The types of licensed activities shall be determined
by the laws on energy systems and other laws. The list of
activities subject to licensing shall be approved by the
Government <
>" (Paragraph 1 of Article 16).
14. Summing up the discussed provisions of the Law on Energy
(wording of 16 May 2002) in the context of the constitutional
justice case at issue, one is to note that:
- the Law on Energy (wording of 16 May 2002) is designed for
the regulation of general activity of the energy sector. This law
inter alia consolidates certain provisions related with licensing
unprepacked petroleum products, i.e. is established that the
procedure for licensing the trade in unprepacked petroleum
products is established by the Government or an institution
authorised by it;
- the Law on Energy (wording of 16 May 2002) did not
establish the grounds (cases) of abolishment of the validity of
licences to engage in trade in unprepacked petroleum products;
- the Law on Energy (wording of 16 May 2002) established
that the types of the licensed activity are established by law on
energy systems and other laws. In this context it needs to be
noted that there have not been any laws on energy systems and any
other laws adopted, which, by establishing the types of the
licensed activity, would have established the grounds of
abolishment of the validity of licences to engage in trade in
unprepacked petroleum products.
15. The Law on Energy (wording of 16 May 2002) has been
amended and supplemented more than once, however, the said
provisions thereof, save Paragraph 1 of Article 16, have not been
amended and/or supplemented.
It needs to be noted that, under Paragraph 1 (wording of 24
June 2003) of Article 16 of the Law on Energy, "Licences,
authorisations or certificates of attestation for energy
activities shall be prescribed by this Law and other laws. The
types of licensed activities shall be determined by the laws on
energy systems and other laws". Under Paragraph 1 (wording of 6
November 2008) of Article 16 of the same law, "The types of
licensed activities, issuance of licences for energy related
activity, amendment, suspension of the validity and abolishment
of the validity of the said licences shall be determined by the
laws on energy systems and other laws <
>".
It also needs to be noted that, as regards the said
provision "<
> issuance of licences for energy related activity,
amendment, suspension of the validity and abolishment of the
validity of the said licences shall be determined by the laws on
energy systems and other laws" of Paragraph 1 (wording of 6
November 2008) of Article 16 of the Law on Energy, there have not
been any laws adopted, which would regulate the grounds of
abolishment of the validity of licences to trade in unprepacked
petroleum products.
16. In the context of the constitutional justice case at
issue also some provisions of the Civil Code are to be mentioned,
as, for instance:
- "Legal capacity of legal persons may not be imposed
limitations in any other manner except as by express provision
and procedure of law" (Paragraph 1 of Article 2.75 "Restrictions
on the Legal Capacity of Legal Persons");
- "In cases provided by law legal persons may be engaged in
a certain type of activities only after a licence has been
granted in accordance with the procedure established by the law"
(Paragraph 1 of Article 2.77 "Licensing of the Activities of
Legal Persons').
It also needs to be mentioned that Article 2.78 "Licensing
Rules" (wording of 18 July 2000) of the Civil Code provides:
"1. The Government approves licensing rules for every
licensed sphere of activities provided by law except as otherwise
provided by other laws.
2. Licensing rules shall indicate the following:
1) licensed activities;
2) licensing institution and its authority;
3) documents for the issuance of a licence;
4) procedure and term for the investigation of documents;
5) types of licences, conditions of their issuance, re-
issuance of a licence;
6) forms of licences;
7) procedure for the registration of issued licences;
8) cases of refusal to issue a licence;
9) conditions of licensed activities;
10) procedure for the supervision of the observance of the
conditions of a licence;
11) procedure and cases for the abolishment and withdrawal
of a licence.
3. Licensing rules may provide for other requirements and a
different procedure."
17. Summing up the aforesaid provisions of the Civil Code in
the context of the constitutional justice case at issue, it needs
to be noted that Paragraph 1 of Article 1.9 "Principles of
Interpretation of the Civil Code Provisions" of the Civil Code
provides: "In order to ensure the integrity of the present Code
and the conformity of its separate structural parts, the
provisions of this Code in the process of their application shall
be interpreted by taking into account the structure and system of
this Code."
Thus, the suspension and abolishment of the validity of a
licence means limitation of legal capacity of legal persons. It
has been mentioned that, under Paragraph 1 of Article 2.75 of the
Civil Code, the grounds of limitation of legal capacity of legal
persons may be established only by means of laws.
In this context it also needs to be noted that in its ruling
of 21 January 2008, the Constitutional Court, upon investigation
of a constitutional justice case on abolishment of the validity
of licences to engage in wholesale and retail trade in alcohol
products, held that the provisions of Article 2.78 of the CC
could not be construed as, purportedly, permitting the Government
to establish, in its acts, completely new grounds of abolishment
of the validity of licences, which are not established in laws.
III
1. As mentioned, in the constitutional justice case at
issue, the Vilnius Regional Administrative Court, the petitioner,
disputes the compliance of the legal regulation established in a
substatutory legal act with inter alia Paragraphs 1, 2 and 3 of
Article 46 of the Constitution, and with the constitutional
principles of justice and a state under the rule of law.
2. The Constitutional Court has held more than once (inter
alia in its rulings of 13 May 2005, 27 March 2009 and 29 April
2009) that the principles enshrined in Article 46 of the
Constitution constitute a whole, which is the constitutional
basis of the economy of this country, therefore, the provisions
of all paragraphs of this article are interrelated and supplement
each other; there is a balance between these principles, each of
them is interpreted without denying the other principles, and
that if a legal norm which is in a certain paragraph of this
article is violated, the legal norms laid down in the other
paragraphs of this article are violated as well, or preconditions
are created for their violation.
2.1. Paragraph 1 of Article 46 of the Constitution provides
that Lithuania's economy shall be based on the right of private
ownership, freedom of individual economic activity and
initiative. The Constitutional Court has held more than once that
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 and which implies inter alia 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.
The Constitutional Court has also held more than once that
freedom of economic activity is not absolute, the person makes
use of it only by following certain obligatory requirements and
limitations. On the other hand, under the Constitution, the state
is not allowed to interfere with the economic activity of persons
without limitations, therefore, 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.
2.2. Paragraph 2 of Article 46 of the Constitution provides
that the state shall support economic efforts and initiative that
are useful to society. As the Constitutional Court has held more
than once this provision implies the duty of state and municipal
institutions and that of officials by their decisions not to
hinder the expression and development of initiative of persons
provided this initiative is not harmful to society.
2.3. Paragraph 3 of Article 46 of the Constitution provides
that the state shall regulate economic activity so that it serves
the general welfare of the Nation.
The Constitutional Court has held the following: the formula
"the State shall regulate economic activity" of Paragraph 3 of
Article 46 of the Constitution means not the right of the state
to administer all or certain economic activity at its discretion,
but its right to establish legal regulation of economic activity,
inter alia establishment of limitations (prohibitions) and
conditions of economic activity, regulation of procedures in
legal acts.
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
(Constitutional Court rulings of 13 May 2005, 5 March 2008, 30
June 2008 and 29 April 2009).
In its rulings the Constitutional Court has held more than
once that, according to the Constitution, it is permitted to
limit the human rights and freedoms, including freedom of
economic activity, in case the following conditions are observed:
this is done by law; the limitations are necessary in a
democratic society in order to protect the rights and freedoms of
other persons and the values entrenched in the Constitution as
well as the constitutionally important objectives; the
limitations do not deny the nature and essence of the rights and
freedoms; the constitutional principle of proportionality is
followed (inter alia rulings of 14 March 2002, 31 May 2006, 4
December 2008, 29 April 2009).
The Constitutional Court has held more than once that, 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 society; 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 (whose economic activity is regulated) itself 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;
in addition, one is not permitted to ground or to justify, by
invoking the general welfare of the Nation, any regulation by
which the rights and legitimate interests of a certain economic
entity are limited more than necessary to secure the public
interest, and whereby unfavourable and unequal economic
conditions are established to economic entities, their initiative
is restricted and opportunities for its manifestation are not
created.
3. The Constitutional Court has also held in its acts more
than once that the principle of a state under the rule of law
entrenched in the Constitution implies the hierarchy of legal
acts as well, inter alia the fact that substatutory legal acts
may not be in conflict with laws, constitutional laws and the
Constitution, that substatutory legal acts must be adopted on the
basis of laws, that a substatutory legal act is an act of
application of norms of the law, irrespective of whether the act
is of one-time (ad hoc) application, or permanent validity. The
Constitutional Court has also held that if the legal regulation
established in the Government resolutions competed with the legal
regulation established in the laws or were not grounded on the
laws, not only the constitutional principle of a state under the
rule of law and Item 2 of Article 94 of the Constitution would be
violated but also Paragraph 2 of Article 5 of the Constitution,
in which it is established that the scope of power shall be
limited by the Constitution; the constitutional principle of
separation of powers could also be violated (Constitutional Court
rulings of 31 May 2006, 13 August 2007 and 29 April 2009).
4. The constitutional principle of a state under the rule of
law is inseparable from the principle of justice, and vice versa
(Constitutional Court rulings of 17 March 2003, 17 November 2003,
3 December 2003, and 24 December 2008). The constitutional
principles of a state under the rule of law and justice also
imply that the measures of limitation (prohibition) of economic
activity must be in line with legitimate and generally important
objectives sought, they may not restrict the freedom of economic
activity and initiative more than necessary to achieve these
objectives; there must be a fair balance (proportionality)
between the objective sought and the measures chosen to achieve
this objective.
IV
On the compliance of the provision "The validity of the
licence shall be abolished if <
> 42.10. a court ruling to
institute the bankruptcy case against the enterprise comes into
effect <
>" of Item 42 (wording of 31 January 2006) of the Rules
for Licensing Trade in Unprepacked Petroleum Products approved by
Government Resolution No. 113 "On Licensing Trade in Unprepacked
Petroleum Products" of 28 January 2003 with Paragraphs 1, 2, and
3 of Article 46 of the Constitution, with the constitutional
principles of justice and a state under the rule of law, and with
the provision "After the court decision to institute bankruptcy
proceedings becomes effective <
> 5) the enterprise shall be
entitled to engage in economic-commercial activities, provided it
reduces creditor losses incurred by reason of bankruptcy <
>" of
Paragraph 7 (wording of 20 March 2001) of Article 10 of the
Enterprise Bankruptcy Law.
1. As mentioned, in the constitutional justice case at issue
the Vilnius Regional Administrative Court, the petitioner,
requests to investigate the compliance of the provision "The
validity of the licence shall be abolished if <
> 42.10. a court
ruling to institute the bankruptcy case against the enterprise
comes into effect <
>" of Item 42 (wording of 31 January 2006) of
the Rules with inter alia the provision "After the court decision
to institute bankruptcy proceedings becomes effective <
> 5) the
enterprise shall be entitled to engage in economic-commercial
activities, provided it reduces creditor losses incurred by
reason of bankruptcy <
>" of Paragraph 7 (wording of 20 March
2001) of Article 10 of the Enterprise Bankruptcy Law.
2. As mentioned, the provision "After the court decision to
institute bankruptcy proceedings becomes effective <
> 5) the
enterprise shall be entitled to engage in economic-commercial
activities, provided it reduces creditor losses incurred by
reason of bankruptcy <
>" of Paragraph 7 (wording of 20 March
2001) of Article 10 of the Enterprise Bankruptcy Law establishes
the legal regulation whereby the enterprise which acquired the
status of an enterprise in bankruptcy has the right to engage in
economic-commercial activity only under the exceptional
condition, i.e., if the losses of the creditors incurred because
of the bankruptcy are diminished.
It was also mentioned that the provision "The validity of
the licence shall be abolished if <
> 42.10. a court ruling to
institute the bankruptcy case against the enterprise comes into
effect <
>" of Item 42 (wording of 31 January 2006) of the Rules
established the legal regulation whereby the abolishment of the
validity of the licence was provided for in all situations after
a court ruling to institute the bankruptcy case against the
enterprise comes into effect. No exceptions to this rule were
provided.
Thus, the disputed legal regulation meant that, contrary to
what was provided for in the said provision of Paragraph 7
(wording of 20 March 2001) of Article 10 of the Enterprise
Bankruptcy Law, an enterprise which acquired the status of an
enterprise in bankruptcy, which had a licence to engage in trade
in unprepacked petroleum products, upon abolishment of such
licence, lost the right to engage in such licensed activity even
in the case where this activity diminished the losses incurred by
the creditors because of the bankruptcy.
Thus, the legal regulation established in the provision "The
validity of the licence shall be abolished if <
> 42.10. a court
ruling to institute the bankruptcy case against the enterprise
comes into effect <
>" of Item 42 (wording of 31 January 2006) of
the Rules put limitations upon the economic activity of an
enterprise which acquired the status of an enterprise in
bankruptcy, which had a licence to engage in trade in unprepacked
petroleum products, more than such activity was limited by the
provision "After the court decision to institute bankruptcy
proceedings becomes effective <
> 5) the enterprise shall be
entitled to engage in economic-commercial activities, provided it
reduces creditor losses incurred by reason of bankruptcy <
>" of
Paragraph 7 (wording of 20 March 2001) of Article 10 of the
Enterprise Bankruptcy Law.
Taking account of the arguments set forth, one is to draw a
conclusion that the provision "The validity of the licence shall
be abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect <
>" of
Item 42 (wording of 31 January 2006) of the Rules for Licensing
Trade in Unprepacked Petroleum Products approved by Government
Resolution No. 113 "On Licensing Trade in Unprepacked Petroleum
Products" of 28 January 2003 was in conflict with the provision
"After the court decision to institute bankruptcy proceedings
becomes effective <
> 5) the enterprise shall be entitled to
engage in economic-commercial activities, provided it reduces
creditor losses incurred by reason of bankruptcy <
>" of
Paragraph 7 (wording of 20 March 2001) of Article 10 of the
Enterprise Bankruptcy Law.
3. As mentioned, the Vilnius Regional Administrative Court,
the petitioner, requests to investigate the compliance of the
disputed provision "The validity of the licence shall be
abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect <
>" of
Item 42 (wording of 31 January 2006) of the Rules with inter alia
Paragraphs 1, 2, and 3 of Article 46 of the Constitution, and
with the constitutional principles of justice and a state under
the rule of law.
4. While deciding whether the provision "The validity of the
licence shall be abolished if <
> 42.10. a court ruling to
institute the bankruptcy case against the enterprise comes into
effect <
>" of Item 42 (wording of 31 January 2006) of the Rules
for Licensing Trade in Unprepacked Petroleum Products approved by
Government Resolution No. 113 "On Licensing Trade in Unprepacked
Petroleum Products" of 28 January 2003 was not in conflict with
inter alia Paragraphs 1, 2, and 3 of Article 46 of the
Constitution, and with the constitutional principles of justice
and a state under the rule of law, one is to note that, as
mentioned, the Constitutional Court has held:
- the principle of a state under the rule of law entrenched
in the Constitution implies the hierarchy of legal acts as well,
inter alia the fact that substatutory legal acts may not be in
conflict with laws, constitutional laws and the Constitution,
that substatutory legal acts must be adopted on the basis of
laws, that a substatutory legal act is an act of application of
norms of the law, irrespective of whether the act is of one-time
(ad hoc) application, or permanent validity;
- if the legal regulation established in the Government
resolutions competed with the legal regulation established in the
laws or were not grounded on the laws, not only the
constitutional principle of a state under the rule of law and
Item 2 of Article 94 of the Constitution would be violated but
also Paragraph 2 of Article 5 of the Constitution, in which it is
established that the scope of power shall be limited by the
Constitution; the constitutional principle of separation of
powers could also be violated;
- it is permitted to limit the human rights and freedoms,
including freedom of economic activity, in case the following
conditions are observed: this is done by law; the limitations are
necessary in a democratic society in order to protect the rights
and freedoms of other persons and the values entrenched in the
Constitution as well as the constitutionally important
objectives; the limitations do not deny the nature and essence of
the rights and freedoms; the constitutional principle of
proportionality is followed.
5. It needs to be noted that the disputed provision of Item
42 (wording of 31 January 2006) of the Rules whereby the validity
of the licence shall be abolished if a court ruling to institute
the bankruptcy case against the enterprise comes into effect
means limitation upon the commercial activity of the enterprise,
since the enterprise loses its right to engage in the licensed
activity. As mentioned, the Constitutional Court has held that
freedom of economic activity of a person may be limited only by
means of a law, but not by means of a substatutory act.
5.1. In this context it needs to be noted that, as
mentioned, regardless of the provision "<
> The types of licensed
activities shall be determined by the laws on energy systems and
other laws. <
>" of Paragraph 1 (wording of 16 May 2002) of
Article 16 of the Law on Energy, there have not been any laws on
energy systems and any other laws adopted, which, by establishing
the types of the licensed activity, would have established the
grounds of abolishment of the validity of licences to engage in
trade in unprepacked petroleum products.
It needs to be noted that the laws which were valid at the
time of adoption of the Law on Energy (wording of 16 May 2002)
and its entry into force did not establish any grounds (inter
alia the ground disputed in the constitutional justice case at
issue) of abolishment of the validity of licences to engage in
trade in unprepacked petroleum products, either.
5.2. It also needs to be noted that, as mentioned, under
Paragraph 1 of Article 1.9, Paragraph 1 of Article 2.75,
Paragraph 1 of Article 2.77, and Paragraphs 1 and 2 of Article
2.78 of the Civil Code, the suspension and abolishment of the
licence means limitation of the legal capacity of legal persons.
It has been mentioned that, under Paragraph 1 of Article 2.75 of
the Civil Code, the grounds for the limitation of legal capacity
of legal persons must be established by means of laws.
As mentioned, the Constitutional Court has held that the
Constitutional Court has held that the provisions of Article 2.78
of the Civil Code could not be construed as, purportedly,
permitting the Government to establish, in its acts, completely
new grounds of abolishment of the validity of licences, which are
not established in laws (wording of 21 January 2008).
5.3. Thus, neither the Law on Energy (wording of 16 May
2002), nor the laws on energy systems and other laws, nor the
Civil Code established the ground of abolishment of the licence,
which was entrenched by the disputed legal regulation. This
ground was established only by a substatutory legal actthe
Government resolution.
In the constitutional justice case at issue it has been held
that the provision "The validity of the licence shall be
abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect <
>" of
Item 42 (wording of 31 January 2006) of the Rules for Licensing
Trade in Unprepacked Petroleum Products approved by Government
Resolution No. 113 "On Licensing Trade in Unprepacked Petroleum
Products" of 28 January 2003 was in conflict with the provision
"After the court decision to institute bankruptcy proceedings
becomes effective <
> 5) the enterprise shall be entitled to
engage in economic-commercial activities, provided it reduces
creditor losses incurred by reason of bankruptcy <
>" of
Paragraph 7 (wording of 20 March 2001) of Article 10 of the
Enterprise Bankruptcy Law.
6. Thus, the legal regulation established in the disputed
provision of Item 42 (wording of 31 January 2006) of the Rules
was grounded on the law.
Therefore, the legal regulation entrenched in the provision
of Item 42 (wording of 31 January 2006) of the Rules, which is
disputed in the constitutional justice case at issue, was not in
line with the requirement (arising from Paragraphs 1, 2, and 3 of
Article 46 of the Constitution) that the economic activity may be
limited only by means of a law, the requirement (arising from
Item 2 of Article 92 of the Constitution and the constitutional
principles of a sate under the rule of law and justice) that a
substatutory legal act may not be in conflict with a law, and
with the imperative (arising from Paragraph 2 of Article 5 of the
Constitution) that the scope of power shall be limited by the
Constitution.
Taking account of the arguments set forth, one is to draw a
conclusion that the provision "The validity of the licence shall
be abolished if <
> 42.10. a court ruling to institute the
bankruptcy case against the enterprise comes into effect <
>" of
Item 42 (wording of 31 January 2006) of the Rules for Licensing
Trade in Unprepacked Petroleum Products approved by Government
Resolution No. 113 "On Licensing Trade in Unprepacked Petroleum
Products" of 28 January 2003 was in conflict with Paragraph 2 of
Article 5, Paragraphs 1, 2, and 3 of Article 46, Item 2 of
Article 94 of the Constitution, and with the constitutional
principles of justice and a state under the rule of law.
Conforming to Articles 102 and 105 of the Constitution of
the Republic of Lithuania and Articles 1, 53, 54, 55 and 56 of
the Law on the Constitutional Court of the Republic of Lithuania,
the Constitutional Court of the Republic of Lithuania has passed
the following
ruling:
1. To recognise that the provision "The validity of the
licence shall be abolished if <
> 42.10. a court ruling to
institute the bankruptcy case against the enterprise comes into
effect <
>" of Item 42 (wording of 31 January 2006; Official
Gazette Valstybės žinios, 2006, No. 14-477) of the Rules for
Licensing Trade in Unprepacked Petroleum Products approved by
Resolution of the Government of the Republic of Lithuania No. 113
"On Licensing Trade in Unprepacked Petroleum Products" of 28
January 2003 was in conflict with the provision "After the court
decision to institute bankruptcy proceedings becomes effective
<
> 5) the enterprise shall be entitled to engage in economic-
commercial activities, provided it reduces creditor losses
incurred by reason of bankruptcy <
>" of Paragraph 7 (wording of
20 March 2001) of Article 10 of the Republic of Lithuania
Enterprise Bankruptcy Law.
2. To recognise that the provision "The validity of the
licence shall be abolished if <
> 42.10. a court ruling to
institute the bankruptcy case against the enterprise comes into
effect <
>" of Item 42 (wording of 31 January 2006; Official
Gazette Valstybės žinios, 2006, No. 14-477) of the Rules for
Licensing Trade in Unprepacked Petroleum Products approved by
Resolution of the Government of the Republic of Lithuania No. 113
"On Licensing Trade in Unprepacked Petroleum Products" of 28
January 2003 was in conflict with Paragraph 2 of Article 5,
Paragraphs 1, 2, and 3 of Article 46, Item 2 of Article 94 of the
Constitution of the Republic of Lithuania, and with the
constitutional principles of justice and a state under the rule
of law.
This ruling of the Constitutional Court 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
Pranas Kuconis
Kęstutis Lapinskas
Zenonas Namavičius
Ramutė Ruškytė
Egidijus Šileikis
Algirdas Taminskas
Romualdas Kęstutis Urbaitis