Case No. 36/2006-8/2009-49/2009
THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA
RULING
ON THE COMPLIANCE OF PARAGRAPH 1 OF ARTICLE 11 OF THE
REPUBLIC OF LITHUANIA LAW ON COMPULSORY INSURANCE
AGAINST CIVIL LIABILITY OF HOLDERS OF VEHICLES (WORDING
OF 5 MARCH 2004) WITH THE CONSTITUTION OF THE REPUBLIC
OF LITHUANIA
3 February 2010
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 representative of the Seimas of the
Republic of Lithuania, the petitioner, who was Saulius
Bucevičius, a Member of the Seimas,
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 7 January 2010 heard constitutional justice case No.
36/2006-8/2009-49/2009 subsequent to:
1) the petition of the Vilnius Regional Court, the
petitioner, requesting to investigate whether Paragraph 1 of
Article 11 of the Republic of Lithuania Law on Compulsory
Insurance Against Civil Liability of Holders of Vehicles (wording
of 5 March 2004), which establishes that the sum insured under
compulsory insurance against civil liability of holders of
vehicles in a single road accident, irrespective of the number of
injured third parties, shall be 500,000 euros for personal injury
(including 500 euros for non-pecuniary damage) and 100,000 euros
for damage to property to the extent that, according to the
petitioner, the maximum size amounting to 500 euros is set for
non-pecuniary damage, is not in conflict with Paragraph 1 of
Article 29 of the Constitution of the Republic of Lithuania and
the constitutional principle of a state under the rule of law
(petition No. 1B-37/2006);
2) the petition of the Marijampolė District Local Court, the
petitioner, requesting to investigate whether Paragraph 1 of
Article 11 of the Republic of Lithuania Law on Compulsory
Insurance Against Civil Liability of Holders of Vehicles (wording
of 5 March 2004), which establishes that the sum insured under
compulsory insurance against civil liability of holders of
vehicles in a single road accident, irrespective of the number of
injured third parties, shall be 500,000 euros for personal injury
(including 500 euros for non-pecuniary damage) and 100,000 euros
for damage to property to the extent that, according to the
petitioner, the maximum size amounting to 500 euros is set for
non-pecuniary damage, is not in conflict with Paragraph 1 of
Article 29 of the Constitution of the Republic of Lithuania and
the constitutional principle of a state under the rule of law
(petition No. 1B-7/2009);
3) the petition of the Telšiai District Local Court, the
petitioner, requesting to investigate whether Paragraph 1 of
Article 11 of the Republic of Lithuania Law on Compulsory
Insurance Against Civil Liability of Holders of Vehicles (wording
of 5 March 2004), which establishes that the sum insured under
compulsory insurance against civil liability of holders of
vehicles in a single road accident, irrespective of the number of
injured third parties, shall be 500,000 euros for personal injury
(including 500 euros for non-pecuniary damage) and 100,000 euros
for damage to property to the extent that, according to the
petitioner, the maximum size amounting to 500 euros is set for
non-pecuniary damage, is not in conflict with Paragraph 1 of
Article 29 of the Constitution of the Republic of Lithuania and
the constitutional principle of a state under the rule of law
(petition No. 1B-62/2009);
By the Constitutional Court Decision "On joining petitions
into one case" of 22 December 2009 the petitions of the
petitioners were joined into one case and it was given reference
No. 36/2006-8/2009-49/2009.
The Constitutional Court
has established:
I
1. The Vilnius Regional Court, the petitioner, was
investigating a civil case. By its ruling the court suspended the
investigation of the case and applied to the Constitutional Court
with the petition requesting to investigate as to whether
Paragraph 1 of Article 11 of the Law on Compulsory Insurance
Against Civil Liability of Holders of Vehicles (wording of 5
March 2004, hereinafter referred to as the Law), which
establishes that the sum insured under compulsory insurance
against civil liability of holders of vehicles in a single road
accident, irrespective of the number of injured third parties,
shall be 500,000 euros for personal injury (including 500 euros
for non-pecuniary damage) and 100,000 euros for damage to
property, to the extent that, according to the petitioner, the
maximum size amounting to 500 euros is set for non-pecuniary
damage, is not in conflict with Paragraph 1 of Article 29 of the
Constitution and the constitutional principle of a state under
the rule of law (petition No. 1B-37/2006).
2. The Marijampolė District Local Court, the petitioner, was
investigating a civil case. By its ruling the court suspended the
investigation of the case and applied to the Constitutional Court
with the petition requesting to investigate as to whether
Paragraph 1 of Article 11 of the Law on Compulsory Insurance
Against Civil Liability of Holders of Vehicles (wording of 5
March 2004), which establishes that the sum insured under
compulsory insurance against civil liability of holders of
vehicles in a single road accident, irrespective of the number of
injured third parties, shall be 500,000 euros for personal injury
(including 500 euros for non-pecuniary damage) and 100,000 euros
for damage to property, to the extent that, according to the
petitioner, the maximum size amounting to 500 euros is set for
non-pecuniary damage, is not in conflict with Paragraph 1 of
Article 29 of the Constitution and the constitutional principle
of a state under the rule of law (petition No. 1B-7/2009);
3. The Telšiai District Local Court, the petitioner, was
investigating a civil case. By its ruling the court suspended the
investigation of the case and applied to the Constitutional Court
with the petition requesting to investigate as to whether
Paragraph 1 of Article 11 of the Law on Compulsory Insurance
Against Civil Liability of Holders of Vehicles (wording of 5
March 2004), which establishes that the sum insured under
compulsory insurance against civil liability of holders of
vehicles in a single road accident, irrespective of the number of
injured third parties, shall be 500,000 euros for personal injury
(including 500 euros for non-pecuniary damage) and 100,000 euros
for damage to property, to the extent that, according to the
petitioner, the maximum size amounting to 500 euros is set for
non-pecuniary damage, is not in conflict with Paragraph 1 of
Article 29 of the Constitution and the constitutional principle
of a state under the rule of law (petition No. 1B-62/2009).
II
1. The petition of the Vilnius Regional Court, the
petitioner, is substantiated by the following arguments.
1.1. By the provision of Paragraph 1 of Article 11 of the
Law on Compulsory Insurance Against Civil Liability of Holders of
Vehicles, which sets the limit of the insurance amount for
causing a non-pecuniary damage to be 500 euros, the rights and
interests of the injured persons are defended by the law less
than those of insurance companies. The injured person, who
receives no actual damage recovery, is discriminated. The law
does not provide proper protection to a person, who has insured
his civil liability, either. For this reason the situation of the
insurance companies is exceptional in comparison not only to the
victims of the insured event, but to the insurance payers, too.
Such legal regulation is in conflict with Paragraph 1 of Article
29 of the Constitution.
1.2. Having entrenched in the law the maximum limit of non-
pecuniary damage recovery, the insurer is granted a possibility
to avoid recovery of non-pecuniary damage, which was caused to
the person. The limitation of recovery of non-pecuniary damage
does not meet the expectations of not only the victims, but the
insured persons as well, because by concluding a contract on
compulsory insurance against civil liability a person reasonably
expects that the damage caused by him shall be recovered by the
insurer. For this reason, setting the maximum insurance
compensation (amounting to 500 euros) in the event of causing
non-pecuniary damage is in conflict with the constitutional
principle of a state under the rule of law.
2. The petition of the Marijampolė District Local Court is
based on virtually the same arguments as the petition of the
Vilnius Regional Court.
3. The petition of the Telšiai District Local Court is based
on virtually the same arguments as the petition of the Vilnius
Regional Court.
III
In the course of the preparation of the case for the
Constitutional Court hearing, written explanations were received
from the representative of the Seimas, the party concerned, who
was Saulius Bucevičius, a Member of the Seimas, and the former
representative of the Seimas, the party concerned, who was
Raimundas Palaitis, a Member of the Seimas (according to
Ordinance No. PP-77 R of the Speaker of the Seimas of 23 December
2009, R. Palaitis lost the power to represent the Seimas in this
constitutional justice case), in which it is maintained that the
disputed legal regulation is not in conflict with the
Constitution.
1. The position of the former representative of the Seimas,
the party concerned, who was R. Palaitis, is based on the
following arguments.
1.1. A contract of insurance against civil liability is
aimed at reducing a negative impact of the damage to be recovered
upon the material situation of the person who is liable for the
damage and at protecting the property interests of the victim.
The insurer and the insurance payer are two parties to the
contract, who have individual rights and duties. The principle of
freedom of contract means that the parties enjoy the right to set
contractual conditions, as well as their mutual rights and
obligations. However, the freedom of contract is not absolute
certain limits may be established by imperative norms of the law.
In the event of compulsory insurance, the freedom of contract is
limited, because the duty to conclude the contract on insurance
is established by the law. Such obligation is usually established
by the law in order to protect the legitimate interests of the
third persons, to whom damage is caused by the actions of the
insurance payers, rather than those of insurance payers, i.e.
such obligation is established on the grounds of the public
interest. Under the law it is not only the holders of vehicles,
but also notaries, bailiffs and health care institutions, who
have the obligation to insure their civil liability.
1.2. The legal relations of insurance originate between the
insurer and the insurance payer on the basis of an insurance
contract rather than a delict. The insurer himself (only due to
his legal status) has no duty to compensate all damage suffered
by the insurance payer. The insurance company usually accepts
limited liability, i.e. it compensates damage without exceeding
the insurance amount. In case the insurance sum fails to
compensate the full amount of damage, the victim may claim damage
from the person, who caused it, on general grounds (Paragraph 2
of Article 6.254 of the Civil Code of the Republic of Lithuania).
The provisions of the law that limit the amounts of non-pecuniary
damage to be paid by the insurer do not replace the common rights
of the victim to receive full compensation for damages as
entrenched in Article 30 of the Constitution and the Civil Code,
because the principles of independent damage recovery are not
consolidated in the course of setting the compulsory insurance,
it only provides what liability on behalf of the person who
caused damages must be accepted by the insurance company which
insured his liability. The insurance company and the person who
caused damage are liable as solidary debtors. However, the
liability of the insurance company is limited, whereas the
liability of the insured personunlimited.
1.3. When setting the amounts of the sums of compulsory
insurance against civil liability of holders of vehicles one
strives for two objectives: to provide maximum insurance of the
persons who suffered during a road accident and to create
preconditions for fair competition of insurance companies. When
setting the amounts of insurance sums one should take account not
only of the interests of the victims, but also the interests of
insurance payers and those of insurers, which are often opposite
ones. The victim will always have an interest that the insurance
compensation fully covers the pecuniary and non-pecuniary damage
suffered by him during a road accident. The insurance payer has
an interest in not only the recovery of damage caused by him, but
also in paying the least insurance contributions possible. The
insurance company has an interest in profitable economic and
commercial activity, which depends very much upon the ratio of
insurance contributions and compensations. In case the legislator
establishes the legal regulation which makes economic and
commercial activity of insurance companies non-profitable, the
system of insurance would not be efficient and useful to society.
Only in the event of proper balance of interests of all listed
persons one may expect that efficient system of compulsory
insurance to be created.
1.4. The most important task of compulsory insurance against
civil liability of holders of vehicles is to compensate to the
victim the damage which could be objectively assessed, i.e.
damage to property and a person. Non-pecuniary damage may not be
assessed objectively, because usually the assessment of such
damage is determined by a variety of subjective factors. Non-
pecuniary damage is spiritual harm, which may be assessed and
compensated only conditionally. The very essence of non-pecuniary
damage determines that one may not precisely define it and find
an undisputable monetary equivalent or restore the previous
condition of the victim by paying a material compensation. While
striving for full recovery of damages, the victim may also apply
to court with the claim for outstanding sum of damages from the
guilty person and the court, when establishing an additional sum
to be adjudged, will take into account the insurance compensation
that was received from the insurance company and the material
status of the person who caused the damage.
1.5. The legal acts of the European Union, which regulate
insurance against civil liability of holders of vehicles, clearly
define only two types of damages to be recovered and respective
sums of insurance: the sum of insurance for damage to property
and the sum of insurance for damage to a person, whereas issues
of recovery of non-pecuniary (moral) damage are not regulated by
the European Union directives at all.
1.6. The former representative of the Seimas, the party
concerned, concludes that the law establishes the minimum sums to
be recovered by insurance and that, in itself, the establishment
of such sums in the law does not violate the legitimate interests
of the insurance payers, the victims and the insurers, as well as
the Constitution. The minimum sum of compulsory insurance is
established for the benefit of the insurance payers and the third
persons who suffered the damage. This limits the rights of the
parties to an insurance contract but is justifiable by the public
interest, if the principle of proportionality is followed.
2. The position of the representative of the Seimas, the
party concerned, who was S. Bucevičius, is based on the following
arguments.
2.1. The insurance against civil liability of holders of
vehicles is one of insurance types. Pursuant to the Republic of
Lithuania Law on Insurance it is an economic-commercial activity,
whereby, on the basis of insurance contract and for the insurance
contribution one person accepts the risk of damages of another
person or in any other way attempts to protect material interests
of the latter. A contract of insurance against civil liability is
aimed at reducing a negative impact of the damage that is to be
recovered upon the material situation of the person who is liable
for the damage and at protecting material interests of the
victim.
2.2. The rights and obligations of both the insurance payer
and the insurer are established by the laws and the insurance
contract. The insurer himself does not have the duty to fully
recover the damage caused by the insurance payer, he undertakes
only limited liability in compensating the damage which does not
exceed the sum that is indicated in the insurance contract. In
case the insurance compensation does not cover the full amount of
the inflicted damage, the victim may claim it, on common grounds,
from the person, who cased damage.
2.3. Insurance relations are usually contractual relations
that are subject to the principle of freedom of contract.
However, the freedom of contract is not absolutecertain limits
may be established by imperative norms of the law. In the event
of compulsory insurance, the freedom of contract is limited,
because the duty to conclude the contract on insurance is
established by the law. Such obligation is usually established by
the law in order to protect the legitimate interests of the third
persons, to whom damage is caused by the actions of the insurance
payers, rather than those of insurance payers, i.e. such
obligation is established on the grounds of the public interest.
Freedom of the parties to the insurance against civil liability
is limited by the sums of insurance that are established in the
law. The establishment of such limitation is permitted by the
provision entrenched in Article 46 of the Constitution whereby
the state shall regulate economic activity so that it serves the
general welfare of the Nation. When setting the sums of insurance
one strives for two objectives: to provide maximum insurance of
the persons who suffered during a road accident and to create
preconditions for fair competition of insurance companies.
2.4. The interests of insurance payers and those of the
insurers are often opposite ones. The insurance payer has an
interest in not only the recovery of damage caused by him, but
also in paying the least insurance contributions possible. The
insurance company is interested in profitable economic and
commercial activity, which depends upon the ratio of insurance
contributions and compensations. Having established especially
high sums of insurance, the sum of insurance contribution paid by
the insurance payer would increase as well. This would not
necessarily guarantee cost-effectiveness of the insurance
company. Alongside, the number of holders of vehicles, who are
not able to insure their civil liability for even the minimum
sum, would increase. In such a case the system of insurance would
become inefficient and would not be beneficial to the society.
2.5. The petitioners state that the maximum amounts of the
sums paid by the insurance company are entrenched in the law,
however, the law does not indicate that the insurer and the
insurance payer may not agree on bigger sums of insurance.
2.6. Having established the minimum sums of insurance in the
law, one does not violate the legitimate interests of the
insurance payers, the victims and the insurers, as well as the
Constitution.
IV
In the course of the preparation of the case for the
Constitutional Court hearing, written explanations were received
from Petras Baguška, the Minister of Justice of the Republic of
Lithuania, Rimantas Šadžius, the Minister of Finance of the
Republic of Lithuania, Mindaugas Šalčius, the Chairman of the
Insurance Supervisory Commission of the Republic of Lithuania,
and Deividas Kriaučiūnas, the Director General of the European
Law Department under the Ministry of Justice.
V
1. At the Constitutional Court hearing, the representative
of the Seimas, the party concerned, who was S. Bucevičius,
virtually reiterated the arguments set forth in his written
explanations and answered to the raised questions.
2. At the Constitutional Court hearing, Mindaugas Šalčius,
the Chairman of the Insurance Supervisory Commission, and Vilija
Petronienė, the Head of the Legal Department of this Commission,
took the stand and answered the raised questions.
The specialists explained that the necessity to limit the
liability of the insurer originates from the specifics of the
contract of compulsory insurance against civil liability of
holders of vehicles, as an agreement on transfer of risk. For an
insurance contribution, the insurer takes from the insurance
payer a risk of losses, and sets the limits of obligations and
the size of risk that he undertakes, in order to become able to
assess his own financial abilities and to form respective
technical put-offs for insurance, while striving to properly
perform his obligations to pay insurance compensations. The
contributions of compulsory insurance against civil liability of
holders of vehicles are calculated upon consideration of the
average insurance compensations for the damage caused to the
person during a road accident.
Non-pecuniary damage is usually attributed to the category
of the risk that is not insured at all. In majority of cases it
is assessed on the grounds of subjective criteriathis is the
reason why the problem of assessment of this risk comes into
being. From the economic point of view, in case of unlimited
insurers' liability for non-pecuniary damages, the insurance
contributions would increase and insurers' ability to undertake
the insurance risk would decrease or they would even refuse to
undertake any such risk. From the social point of view, the
problem of responsibility of the insurance payers would arise,
because the insurance payer, who transferred all the insurance
risk related with certain events for an insurance contribution,
could start acting less responsibly.
The Constitutional Court
holds that:
I
1. The petitioners, who were the Vilnius Regional Court, the
Marijampolė District Local Court and the Telšiai District Local
Court, request to investigate whether Paragraph 1 of Article 11
of the Law on Compulsory Insurance Against Civil Liability of
Holders of Vehicles (wording of 5 March 2004), which establishes
that the sum insured under compulsory insurance against civil
liability of holders of vehicles in a single road accident,
irrespective of the number of injured third parties, shall be
500,000 euros for personal injury (including 500 euros for non-
pecuniary damage) and 100,000 euros for damage to property to the
extent that, according to the petitioner, the maximum size
amounting to 500 euros is set for non-pecuniary damage, is not in
conflict with Paragraph 1 of Article 29 of the Constitution and
the constitutional principle of a state under the rule of law.
2. It is clear from the arguments of the petitions of the
petitioners that the Constitutional Court is requested to
investigate whether Paragraph 1 of Article 11 of the Law (wording
of 5 March 2004) to the extent that it established the maximum
amount of 500 euros of non-pecuniary damage, which should be
recovered by the insurer, was not in conflict with Paragraph 1 of
Article 29 of the Constitution and the constitutional principle
of a state under the rule of law.
II
1. On 14 June 2001, the Seimas of the Republic of Lithuania
adopted the Law on Compulsory Insurance Against Civil Liability
of Owners and Holders of Vehicles, which, with certain
exceptions, came into force on 30 June 2001.
From the travaux préparatoires of this law it is clear that
one of the objectives of adoption of this law was granting more
guarantees to the victim of a road accident so that the damage
suffered by him become recovered more expeditiously.
1.1. Paragraph 1 of Article 1 "The Objective and Purpose of
the Law" of the Law on Compulsory Insurance Against Civil
Liability of Owners and Holders of Vehicles indicates that the
objective of this Law is "establishing the procedure of
compulsory insurance against civil liability in respect of owners
and holders of vehicles", whereas Paragraph 2 provides that "the
law establishes the procedure of compensation for damage to a
person and/or property, which was caused to the third persons
during a road accident or which originated as the result of a
road accident (hereinafter referred to as the damage caused
during the road accident) <...>".
1.2. It was inter alia established in this law that:
- "the driver of the vehicle, who participates in the road
traffic, must insure with the compulsory insurance of owners and
holders of vehicles against his civil liability or be insured
with this insurance, and must have a valid insurance certificate
(policy) which attests the existence of an insurance contract"
(Paragraph 2 of Article 4);
- "'Insurer' means an insurance company, which holds
permission to engage in compulsory insurance against civil
liability of owners and holders of vehicles, which was issued by
the Board of the State Insurance Supervisory Service under the
Ministry of Finance and which is a member of the Bureau, and
which has concluded a contract of insurance against civil
liability of owners and holders of vehicles with the insurance
payer (hereinafter referred to as the insurance contract)"
(Paragraph 1 of Article 2);
- "'Insurance object' means civil liability of owners and
holders of vehicles for damage caused during a road accident. By
the insurance contract one insures the civil liability of the
insurance payer and every person who legitimately holds the motor
vehicle, which may originate in the course of holding the motor
vehicle as is indicated in the insurance certificate (policy) of
compulsory insurance of owner and holders of vehicles against
civil liability (hereinafter referred to as the insurance
certificate (policy))" (Paragraph 1 of Article 3);
- "An insurance company, which holds permission to engage in
compulsory insurance of owners and holders of vehicles against
civil liability and which is a member of the Bureau, must
conclude insurance contracts with the owners or legitimate
holders of vehicles, who have submitted applications and all
documents that are necessary in order to conclude such contracts.
A refusal by the insurer to conclude an insurance contract may be
contested in court" (Article 12);
- "'The Bureau' means an association established by funds of
insurance companies, which hold permission to engage in
compulsory insurance of owners and holders of vehicles against
civil liability, and holding the rights of a legal entity,
accounts in banks, a seal with its name and performing the
functions that are defined in this law <
>" (Paragraph 1 of
Article 23).
1.3. Thus, by this law the institute of compulsory insurance
of owners and holders of vehicles against civil liability was
consolidated, i.e. the obligation of insurance of owners and
holders of vehicles against civil liability was established to
all owners and holders of vehicles. Civil liability had to be
insured by concluding an insurance contract. Compulsory insurance
of owners and holders of vehicles against civil liability was
implemented through insurersinsurance companies. The insurance
companies, which held permission to engage in compulsory
insurance of owners and holders of vehicles against civil
liability, were obligated to conclude contracts of compulsory
insurance of owners and holders of vehicles against civil
liability with the owners or legitimate holders of vehicles, who
submitted applications and all documents that were necessary in
order to conclude such contracts.
2. Paragraph 1 of Article 13 "Amounts of Insurance Sums and
Insurance Contributions" of this Law (wording of 14 June 2001)
prescribed: "Compulsory insurance of owners and holders of
vehicles against civil liability shall be 30,000 litas for
personal injury and 30,000 litas for damage to property."
Article 19 "Requirement to Compensate Damage" of this Law
(wording of 14 June 2001) inter alia prescribed: "In the event
that the insurer or the Bureau does not compensate the full
amount of damage caused during a road accident due to the fact
that the damage exceeds the sums of insurance, the person who
suffered the damage in the road accident has the right to apply
to the guilty person for the compensation for the outstanding
part of the damage."
Article 20 "Compensation of Damage" of the aforementioned
Law (wording of 14 June 2001) inter alia prescribed:
"Damage caused during a road accident shall be recovered by
the insurer who has insured the civil liability of the person who
is liable for the damage inflicted during the road accident <
>.
The Bureau shall pay insurance compensations to the persons
who suffered damage during the road accident if the driver of the
vehicle, who is liable for the damage caused during the road
accident:
1) has not insured himself or was not insured by the
compulsory insurance of owners or holders of vehicles against
civil liability established in this law;
2) has caused the damage in the course of holding the
vehicle without a contract on use or rent, or in the course of
holding the vehicle without any other legitimate grounds;
3) has caused damage on intention;
4) has caused damage to the person's health or/and has
caused damage by killing a person and is unknown;
5) has caused damage by a vehicle that was captured (stolen)
or appropriated or taken in any other illegal means.
The Bureau pays insurance compensations also in the events
when a member of the Bureau becomes insolvent and the insolvency
is attested by the State Insurance Supervisory Service under the
Ministry of Finance.
The insurer or the Bureau compensates to the person, who
suffered damage during the road accident, only the damage which
was caused during the road accident, which is proven by evidence
and which does not exceed the sums of insurance established in
Article 13 of this law, and has the right to reject unreasoned
claims on compensation for damage caused during the road
accident."
Thus, the maximum amounts for the damage that was caused
during one road accident to property (30,000 litas) and to a
person (30,000 litas) to be compensated by the insurer were
entrenched in the Law on Compulsory Insurance Against Civil
Liability of Owners and Holders of Vehicles (wording of 5 March
2004). The insurance sum to be paid as compensation for non-
pecuniary damage that was caused to the person was not
established in the law. In the law the duty to pay compensation
was imposed on two personsthe insurer who undertook the
obligation under the contract to the extent established in the
contract and legal acts, and the guilty person, if the insurance
compensation was not sufficient to recover the damage in full.
It needs to be noted that such regulation, as entrenched in
Paragraph 1 of Article 13 of the Law on Compulsory Insurance
Against Civil Liability of Owners and Holders of Vehicles
(wording of 14 June 2001), when one establishes the sum of the
compulsory insurance against civil liability, means that in case
of the insured event the compensation paid by the insurer may not
exceed the sum of insurance that is indicated in the law.
3. On 25 March 2003, the Seimas adopted the Republic of
Lithuania Law on Amending and Supplementing Articles 10, 14, 15
and 18 of the Law on Compulsory Insurance Against Civil Liability
of Owners and Holders of Vehicles, which came into force on 9
April 2003.
By this law Article 13 (wording of 14 June 2001) of the Law
on Compulsory Insurance Against Civil Liability of Owners and
Holders of Vehicles, which entrenched the sums of compulsory
insurance against civil liability for damage that was caused
during a road accident to person and property, was not amended
and/or supplemented.
4. On 5 March 2004, the Seimas adopted the Republic of
Lithuania Law on Supplementing Article 13 of the Law on
Compulsory Insurance Against Civil Liability of Owners and
Holders of Vehicles, which came into force on 13 March 2004.
Article 1 of this law, whereby one supplemented Paragraph 1
(wording of 14 June 2001) of Article 13 of the Law on Compulsory
Insurance Against Civil Liability of Owners and Holders of
Vehicles, prescribed:
"In Paragraph 1 of Article 13, after the numbers and words
'30,000 litas to property' to include numbers and words 'or 500,
000 euros for personal injury and 100,000 euros for damage to
property' and to set forth this paragraph as follows:
'1. The compulsory insurance of owners and holders of
vehicles against civil liability shall be 30,000 litas for
personal injury and 30,000 litas for damage to property or 500,
000 euros for personal injury and 100,000 euros for damage to
property.'"
It is clear from the travaux préparatoires of this law that
the law was supplemented in order to create possibilities to the
owners and holders of vehicles in the course of getting insurance
against civil liability to choose also bigger sums of insurance,
which are indicated in the law in euros (500,000 euros for
personal injury and 100,000 euros for damage to property).
5. On the same day, which was 5 March 2004, the Seimas
adopted the Republic of Lithuania Law on Amending the Law on
Compulsory Insurance Against Civil Liability of Owners and
Holders of Vehicles, by Article 1 of which it set forth the Law
on Compulsory Insurance Against Civil Liability of Owners and
Holders of Vehicles in a new wording and changed its titlethe
law got a new title, which was the Law on Compulsory Insurance
Against Civil Liability of Holders of Vehicles.
Pursuant to Article 1 of the Republic of Lithuania Law on
Amending the Law on Compulsory Insurance Against Civil Liability
of Owners and Holders of Vehicles, the Law on Compulsory
Insurance Against Civil Liability of Holders of Vehicles (wording
of 5 March 2004) came into force (with certain exceptions) on 1
May 2004.
5.1. Having set forth the Law on Compulsory Insurance
Against Civil Liability of Owners and Holders of Vehicles in the
new wording, inter alia the numbering of its articles was
changed.
5.2. Paragraph 1 of Article 4 "Obligation to Conclude an
Insurance Contract" of the Law (wording of 5 March 2004)
prescribed:
"Vehicles used in the territory of the Republic of Lithuania
must be covered by compulsory insurance against civil liability
in respect of the use of vehicles. A motor vehicle normally based
in the territory of the Republic of Lithuania must be covered by
compulsory insurance against civil liability in respect of the
use of vehicles as long as the vehicle is registered."
Paragraph 2 of Article 4 of the Law (wording of 5 March
2004) inter alia prescribed: "Responsibility for concluding an
insurance contract <
> shall fall on the owner of motor vehicle
<
>"
Having compared the legal regulation established in Article
4 of the Law (wording of 5 March 2004) with the legal regulation
established in Article 4 of the Law on Compulsory Insurance
Against Civil Liability of Owners and Holders of Vehicles
(wording of 14 June 2001), it is clear that it virtually remained
intactan imperative duty of holders of vehicles to conclude a
contract of compulsory insurance against civil liability remained
explicitly entrenched in the Law.
5.3. Paragraph 6 of Article 2 of the Law (wording of 5 March
2004) prescribed: "'Insurer' means a person (an insurance
undertaking of the Republic of Lithuania, an insurance
undertaking of another Member State of the European Union or a
branch of a foreign insurance undertaking established in the
Republic of Lithuania) which conducts, in accordance with the
procedure established in legal acts, the business of compulsory
insurance against civil liability in respect of the use of
vehicles in the Republic of Lithuania and which is a member of
the Bureau."
Having compared the legal regulation established in
Paragraph 6 of Article 2 of the Law (wording of 5 March 2004)
with the legal regulation established in Paragraph 1 of Article 2
of the Law on Compulsory Insurance Against Civil Liability of
Owners and Holders of Vehicles (wording of 14 June 2001) it is
clear that the concept of the insurer who is engaged in
compulsory insurance against civil liability of holders of
vehicles was expandedinsurance undertakings of other Member
States of the European Union were indicated as well.
Paragraph 2 of Article 6 of the Law (wording of 5 March
2004) inter alia prescribed:
"The insurer must conclude insurance contracts with persons
<
> who have submitted applications in person or through their
representatives and have presented all the required information
and documentation necessary for the conclusion of a contract. A
refusal by the insurer to conclude an insurance contract may be
contested in court."
Having compared the legal regulation established in
Paragraph 2 of Article 6 of the Law (wording of 5 March 2004)
with the legal regulation established in Article 12 of the Law on
Compulsory Insurance Against Civil Liability of Owners and
Holders of Vehicles (wording of 14 June 2001), it is clear that
it virtually remained intactthe obligation of insurance
companies to conclude contracts on compulsory insurance against
civil liability of holders of vehicles with the persons who have
submitted applications and have presented all the required
information and documentation necessary for the conclusion of a
contract.
5.4. Paragraph 1 of Article 24 of the Law (wording of 5
March 2004) prescribed: "'Bureau' means an association of
insurers who are permitted to engage in compulsory insurance
against civil liability of holders of vehicles in the Republic of
Lithuania, which was established in view of the Recommendation
No. 5 adopted by the Sub-Committee on Road Transport of the
Inland Transport Committee of the Economic Commission for Europe
of the United Nations on 25 January 1949 and which performs the
functions established in this law."
Having compared the legal regulation established in
Paragraph 1 of Article 24 of the Law (wording of 5 March 2004)
with the legal regulation established in Paragraph 1 of Article
23 of the Law on Compulsory Insurance Against Civil Liability of
Owners and Holders of Vehicles (wording of 14 June 2001) it is
clear that the former virtually remained intact.
5.5. Article 11 of the Law (wording of 5 March 2004),
Paragraph 1 of which to the respective extent is disputed by the
petitioners, prescribed:
"1. The sum insured under compulsory insurance against civil
liability in respect of the use of vehicles shall be 500,000
euros for personal injury (including 500 euros for non-pecuniary
damage) and 100,000 euros for damage to property in a single road
accident, whatever the number of injured third parties.
2. A single road accident means an accident which occurred
for same reason, even if more than one injured third party may
pursue claims in respect of such a road accident.
3. The insurer shall pay compensation for the damage caused
in another Member State of the European Union based on the sums
insured in accordance with the legal acts of the Member State
concerned or the sums insured as specified in Paragraph 1 of this
Article, whichever are higher.
4. Amounts of insurance premiums shall be fixed by the
insurer.
5. Should the insurance payer fail to pay the insurance
premium in due time, the insurer shall have the right to charge
late-payment interest of 0.04 percent on the overdue amount for
each delayed day, unless otherwise provided in the insurance
contract.
6. The insurer may not refuse to pay compensation in respect
of an insured event which occurred in the period for which the
insurance payer failed to pay the insurance premium within the
time limit set in the insurance contract or in the period for
which the insurance payer was released from the obligation to pay
insurance premiums.
7. If the insurance payer failed to pay, within the time-
limit set in the insurance contract, the insurance premium for
the insurance coverage provided under the insurance contract and
if the vehicle covered by that insurance contract caused damage
during the said period or the damage was caused during the period
for which the insurance payer was released from the obligation to
pay insurance premiums, the insurer shall be entitled to claim
reimbursement from the insurance payer for the amounts paid by
the insurer to the insurance payer by way of compensation for
damage."
Having compared the legal regulation established in
Paragraph 1 of Article 11 of the Law (wording of 5 March 2004)
with the legal regulation established in Paragraph 1 of Article
13 of the Law on Compulsory Insurance Against Civil Liability of
Owners and Holders of Vehicles (wording of 14 June 2001) it is
clear that the former changed only to the extent that it became
explicitly established that the maximum sum of compulsory
insurance against civil liability of holders of vehicles for one
road accident is 500 euros for causing non-pecuniary damage to
the person, which is indicated as a part of the established sum
of compulsory insurance of 500,000 euros for the damage caused to
the person.
5.6. Paragraph 2 of Article 13 of the Law (wording of 5
March 2004) prescribed: "In the event that the insurer or the
Bureau does not compensate the full amount of damages caused
during the road accident due to the fact that the damage exceeds
the sums of insurance, the person who suffered damage in the road
accident has the right to apply to the guilty person for the
compensation for the outstanding part of the damage."
Having compared the legal regulation established in
Paragraph 2 of Article 13 of the Law (wording of 5 March 2004)
with the legal regulation established in Article 19 of the Law on
Compulsory Insurance Against Civil Liability of Owners and
Holders of Vehicles (wording of 14 June 2001) it is clear that
the legal regulation, which is set forth in these provisions,
remained unchangedit remained established in the Law that in the
event that the sum of compulsory insurance against civil
liability of holders of vehicles is not enough for the full
recovery of damage that was caused during the road accident, the
difference between the actual amount of damage and the insurance
compensation is covered by the person who caused the damage or
other person who is liable for the actions of the latter.
5.7. Paragraph 1 of Article 17 of the Law (wording of 5
March 2004) prescribed:
"The Bureau shall pay compensation to third parties injured
in road accidents occurring in the territory of the Republic of
Lithuania in the cases where:
1) damage is caused by an identified liable person with an
uninsured (identified) vehicle, provided that the user of vehicle
incurs civil liability in respect of the damage;
2) an unidentified liable person causes personal injury
and/or loss of life, provided that the damage is caused in
circumstances proving the civil liability of the user of vehicle;
3) damage is caused by an identified liable person who, at
the time when the damage is done, is covered by compulsory
insurance against civil liability in respect of the use of
vehicles, but the responsible insurer is the subject of
bankruptcy proceedings."
Having compared the legal regulation established in
Paragraph 1 of Article 17 of the Law (wording of 5 March 2004)
with the legal regulation established in Paragraphs 2 and 3 of
Article 20 of the Law on Compulsory Insurance Against Civil
Liability of Owners and Holders of Vehicles (wording of 14 June
2001) it is clear that the list of cases when the damage to the
victim is compensated by the Bureau was expanded.
5.8. Paragraph 6 of Article 19 of the Law (wording of 5
March 2004) prescribed:
"The amount payable by the insurer or the Bureau by way of
compensation to the third party injured in a road accident shall
not be higher than sufficient to cover the damage which was
caused in the road accident and which is supported by evidence
and shall not exceed the sums insured as specified in Article 11
of this Law; the insurer or the Bureau shall have the right to
reject invalid claims for compensation for the damage caused in
the road accident. At the request of the injured third party, the
insurer or the Bureau shall remit the payable sum directly to the
repair shop repairing the damaged property in question, which has
been chosen by the injured third party. An insurer or the Bureau
shall remit the payable sum to this repair shop not later than
one working day after the damaged property was repaired and the
payment order was presented."
Having compared the legal regulation established in
Paragraph 6 of Article 19 of the Law (wording of 5 March 2004)
with the legal regulation established in Paragraph 4 of Article
20 of the Law on Compulsory Insurance Against Civil Liability of
Owners and Holders of Vehicles (wording of 14 June 2001) it is
clear that the essence of the legal regulation remained the
samethe law consolidated the maximum sums of insurance for
damage caused to property during the road accident (100,000
euros) and damage caused to the person (500,000 euros), inter
alia non-pecuniary damage (500 euros).
6. The Law (wording of 5 March 2004) was adopted with a view
to implementing inter alia the directives of the European
Parliament and the Council that were related to insurance against
civil liability of holders of motor vehicles. These directives
were listed in the Annex "EU Legal Acts Implemented by the Law"
to the Law. The following directives inter alia were implemented
by the law:
- Council Directive 72/166/EEC of 24 April 1972 on the
approximation of the laws of Member States relating to insurance
against civil liability in respect of the use of motor vehicles,
and to the enforcement of the obligation to insure against such
liability (so-called First Motor Insurance Directive);
- Second Council Directive 84/5/EEC of 30 December 1983 on
the approximation of the laws of the Member States relating to
insurance against civil liability in respect of the use of motor
vehicles (so-called Second Motor Insurance Directive);
- Third Council Directive 90/232/EEC of 14 May 1990 on the
approximation of the laws of the Member States relating to
insurance against civil liability in respect of the use of motor
vehicles (so-called Third Motor Insurance Directive);
- Directive 2000/26/EC of the European Parliament and of the
Council of 16 May 2000 on the approximation of the laws of the
Member States relating to insurance against civil liability in
respect of the use of motor vehicles and amending Council
Directives 73/239/EEC and 88/357/EEC (so-called Fourth Motor
Insurance Directive).
6.1. It was established in Paragraph 1 of Article 3 of the
First Motor Insurance Directive 72/166/EEC:
Each Member State shall <
> take all appropriate measures to
ensure that civil liability in respect of the use of vehicles
normally based in its territory is covered by insurance. The
extent of the liability covered and the terms and conditions of
the cover shall be determined on the basis of these measures."
6.2. It was entrenched inter alia in Paragraph 2 of Article
1 of the Second Motor Insurance Directive 84/5/EEC:
"Without prejudice to any higher guarantees which Member
States may lay down, each Member State shall require that the
amounts for which such insurance is compulsory are at least:
- in the case of personal injury, 350,000 ECU where there is
only one victim; where more than one victim is involved in a
single claim, this amount shall be multiplied by the number of
victims,
- in the case of damage to property 100,000 ECU per claim,
whatever the number of victims.
Member States may, in place of the above minimum amounts,
provide for a minimum amount of 500,000 ECU for personal injury
where more than one victim is involved in a single claim or, in
the case of personal injury and damage to property, a minimum
overall amount of 600,000 ECU per claim whatever the number of
victims or the nature of the damage."
By the Third and Fourth Motor Insurance directives 90/232/
EEC and 2000/26/EC one regulates other aspects of compulsory
insurance against civil liability of holders of vehicles that are
not related to the establishment of maximum amount of
compensation paid by the insurer as recovery of damage caused by
holders of vehicles.
6.3. It needs to be noted that it was already after the date
of coming into force of the Law (wording of 5 March 2004) that
the Directive 2005/14/EC of the European Parliament and of the
Council of 11 May 2005 amending Council Directives 72/166/EEC,
84/5/EEC, 88/357/EEC and 90/232/EEC and Directive 2000/26/EC of
the European Parliament and of the Council relating to insurance
against civil liability in respect of the use of motor vehicles
(Fifth Motor Insurance Directive) was adopted.
It was established in Item 10 of the Recital of the Fifth
Motor Insurance Directive 2005/14/EC:
"Member States' obligations to guarantee insurance cover at
least in respect of certain minimum amounts constitute an
important element in ensuring the protection of victims. The
minimum amounts provided for in Directive 84/5/EEC should not
only be updated to take account of inflation, but also increased
in real terms, to improve the protection of victims. The minimum
amount of cover for personal injury should be calculated so as to
compensate fully and fairly all victims who have suffered very
serious injuries, whilst taking into account the low frequency of
accidents involving several victims and the small number of
accidents in which several victims suffer very serious injuries
in the course of one and the same event. A minimum amount of
cover of EUR 1,000,000 per victim or EUR 5,000,000 per claim,
regardless of the number of victims, is a reasonable and adequate
amount. With a view to facilitating the introduction of these
minimum amounts, a transitional period of five years from the
date of implementation of this Directive should be established.
Member States should increase their amounts to at least a half of
those levels within 30 months of the date of implementation."
By Article 2 of the Fifth Motor Insurance Directive
2005/14/EC one amended inter alia Paragraph 2 of Article 1 of the
Second Motor Insurance Directive 84/5/EEC and it was set forth as
follows:
"Without prejudice to any higher guarantees which Member
States may lay down, each Member State shall require insurance to
be compulsory at least in respect of the following amounts:
a) in the case of personal injury, a minimum amount of cover
of EUR 1,000,000 per victim or EUR 5,000,000 per claim, whatever
the number of victims;
b) in the case of damage to property, EUR 1,000,000 per
claim, whatever the number of victims.
If necessary, Member States may establish a transitional
period of up to five years from the date of implementation of
Directive 2005/14/EC of the European Parliament and of the
Council of 11 May 2005 amending Council Directives 72/166/EEC,
84/5/EEC, 88/357/EEC and 90/232/EEC and Directive 2000/26/EC of
the European Parliament and of the Council relating to insurance
against civil liability in respect of the use of motor vehicles,
within which to adapt their minimum amounts of cover to the
amounts provided for in this paragraph."
6.4. In summary it is to be held that in the European Union
directives related to insurance against civil liability of
holders of motor vehicles one entrenches the obligation of Member
States of the European Union to ensure the compulsory insurance
against civil liability of holders of vehicles and indicates the
minimum sum of damage caused during the road accident, which must
be recovered by the insurer; one distinguishes between damage
caused to property and damage caused to a person, however,
compensation for non-pecuniary damage is not explicitly set
forth. In the Fifth Motor Insurance Directive 2005/14/EC one also
establishes the maximum transition period of five years from the
date of implementation of this directive, within which the Member
States must adapt the sums recovered by the insurer that are
consolidated in their national legal acts to the amounts
indicated in the directives.
7. On 17 May 2007, the Seimas adopted the Republic of
Lithuania Law on Amending the Law on Compulsory Insurance Against
Civil Liability of Holders of Vehicles, whereby it set forth the
Law (wording of 5 March 2004) in a new wording.
Article 11 of the Law (wording of 17 May 2007) prescribes:
"1. The sum insured under compulsory insurance against civil
liability in respect of the use of vehicles in a single road
accident in the Republic of Lithuania, whatever the number of
injured third parties shall be:
1) until 10 December 2009500,000 euros for personal injury
(including 1,000 euros for non-pecuniary damage) and 100,000
euros for damage to property;
2) from 11 December 2009 until 10 June 20122,500,000 euros
for personal injury (including 2,500 euros for non-pecuniary
damage) and 500,000 euros for damage to property;
3) from 11 June 20125,000,000 euros for personal injury
(including 5,000 euros for non-pecuniary damage) and 1,000,000
euros for damage to property.
2. A single road accident means an accident which occurred
for same reason, even if more than one injured third party may
pursue claims in respect of such a road accident.
3. The insurer shall pay compensation for the damage caused
in another Member State of the European Union based on the sums
insured in accordance with the legal acts of the Member State
concerned or the sums insured as specified in Paragraph 1 of this
Article, whichever are higher.
4. Amounts of insurance premiums shall be fixed by the
insurer.
5. Should the insurance payer fail to pay the insurance
premium in due time, the insurer shall have the right to charge
late-payment interest of 0.04 percent on the overdue amount for
each delayed day, unless otherwise provided in the insurance
contract.
6. The insurer may not refuse to pay compensation in respect
of an insured event which occurred in the period for which the
insurance payer failed to pay the insurance premium within the
time limit set in the insurance contract or in the period for
which the insurance payer was released from the obligation to pay
insurance premiums.
7. If the insurance payer failed to pay, within the time-
limit set in the insurance contract, the insurance premium for
the insurance coverage provided under the insurance contract and
if the motor vehicle covered by that insurance contract caused
damage during the said period or the damage was caused during the
period for which the insurance payer was released from the
obligation to pay insurance premiums in accordance with Paragraph
3 of Article 9 of this Law, the insurer shall be entitled to
claim reimbursement from the insurance payer for the amounts paid
by the insurer by way of compensation for the inflicted damage.
8. The insurer shall not have the right to fix a sum in the
insurance contract whereby the compensation paid in the case of
an insured event would be reduced.
9. Every five years from 11 June 2012 the amounts of the
sums insured for personal injury and damage to property, referred
to in Item 3 of Paragraph 1 of this Article, shall be adjusted in
line with the percentage change of the European Index of Consumer
Prices for the relevant period and rounded up to a multiple of
10,000 euros. The adjusted amounts of sums insured shall be
announced in a resolution of the Government of the Republic of
Lithuania."
Having compared the legal regulation established in
Paragraph 1 of Article 11 of the Law (wording of 17 May 2007)
with the one established in Paragraph 1 of Article 11 of the Law
(wording of 5 March 2004), in the context of the constitutional
justice case at issue it needs to be noted that the Law (wording
of 17 May 2007) provided for bigger sums of compulsory insurance
against civil liability in relation to compensation for non-
pecuniary damage: the Law (wording of 5 March 2004) provides for
the insurance sum of 500 euros for recovery of non-pecuniary
damage, whereas the Law (wording of 17 May 2007) provides for the
insurance sum of 1,000 euros for recovery of non-pecuniary
damage; from 11 December 2009the insurance sum of 2,500 euros
for non-pecuniary damage, and from 11 June 2012the insurance sum
of 5,000 euros for recovery of non-pecuniary damage.
It is clear from the travaux préparatoires of the Law on
Compulsory Insurance Against Civil Liability of Holders of
Vehicles that the legislator, while striving to transfer the
provisions of directives of the European Union to the national
law, made use of the five year transitional period, as provided
for in the Fifth Motor Insurance Directive 2005/14/EC, which is
calculated from the date of implementation of the aforementioned
directive (i.e. from the date of coming into force of the Law
(wording of 17 May 2007)), and consolidated the consistent
increase of the sums of compulsory insurance against civil
liability of holders of vehicles which are set forth in the Law
(wording of 5 March 2004).
It needs to be noted that having adopted the Directive
2009/103/EC of the European Parliament and of the Council of 16
September 2009 relating to insurance against civil liability in
respect of the use of motor vehicles, and the enforcement of the
obligation to insure against such liability (codified version),
Directives 72/166/EEC, 84/5/EEC, 90/232/EEC of the Council and
Directive 2005/26/EC of the European Parliament and of the
Council were codified and therefore revoked.
8. The disputed (by the petitioner) legal regulation, which
regulates the relations of compulsory insurance against civil
liability of holders of vehicles, is to be construed in the
context of other provisions that regulate insurance relations,
inter alia provisions of the Civil Code and the Law on Insurance.
8.1. Paragraph 2 of Article 6.250 "Non-pecuniary damage" of
the Civil Code prescribes:
"Non-pecuniary damage shall be compensated only in cases
provided for by laws. Non-pecuniary damage shall be compensated
in all cases where it is incurred due to crime, health impairment
or deprivation of life, as well as in other cases provided for by
laws. The court in assessing the amount of non-pecuniary damage
shall take into consideration the consequences of such damage
sustained, the gravity of the fault of the person by whom the
damage is caused, his financial status, the amount of pecuniary
damage sustained by the aggrieved person, also any other
circumstances of importance for the case, likewise to the
criteria of good faith, justice and reasonableness."
Article 6.251 "Compensation of damages in full" of the Civil
Code prescribes:
"The damages incurred must be compensated in full, except in
cases when limited liability is established by laws or a
contract.
The court, having considered the nature of liability, the
financial status of the parties and their interrelation, may
reduce the amount of repairable damages if awarding full
compensation would lead to unacceptable and grave consequences.
However, the reduction may not exceed the amount for which the
debtor has or ought to have covered his civil liability by
compulsory insurance."
Paragraph 2 of Article 6.263 "Obligation to compensate for
damage caused" of the Civil Code prescribes: "Any bodily or
property damage caused to another person and, in the cases
established by the law, non-pecuniary damage must be fully
compensated by the liable person."
It is inter alia established in Paragraph 1 of Article 6.254
"Insurance of civil liability" of the Civil Code that "In the
instances provided for by laws or a contract, civil liability may
be insured by concluding a contract of insurance".
It is established in Paragraph 2 of the same article that
"where the insurance benefit <
> is not sufficient for the
compensation for damage in whole, the difference between the
insurance benefit and actual amount of damage shall be redressed
by the insured person himself liable for the damage caused."
In Article 6.987 "Concept of the insurance agreement" of the
Civil Code it is established that "By the insurance agreement one
party (the insurer) undertakes to pay, subject to the insurance
contribution (premium), established in the agreement, to the
other party (the insured) or the third person for whose benefit
the agreement has been made, the insurance indemnity established
in the insurance agreement to be calculated in the procedure
prescribed in the insurance agreement, if an insured event set
forth in the law or the insurance agreement occurs."
Paragraph 1 of Article 6.997 "The amount of insurance" of
the Civil Code prescribes: "The amount of insurance of property
interests and the amount of the insurance indemnity (the amount
of insurance) the insurer undertakes to pay, shall be established
by agreement of the parties to the insurance agreement or by the
law."
Paragraph 3 of Article 6.988 "Forms and branches of
insurance" of the Civil Code prescribes: "The types and
conditions of insurance as well as the branches of insurance and
the interests of insurance shall be governed by other laws."
Article 6.1000 "Additional insurance" of the Civil Code
prescribes:
"If only a portion of the value of property or risk
(insurance) is insured in the non-life insurance agreement,
except for cases stipulated by laws, the insured (the
beneficiary) shall be entitled to additionally insure them by
entering into an additional insurance agreement with the same or
any other insurer. However, in such cases the total amount of
insurance under all insurance agreements may not exceed the value
of insurance."
In summary of this legal regulation, in the context of the
case at issue it needs to be held that the insurer undertakes, in
the event of the insured road accident, in return of the
insurance premium established in the contract to pay to the third
person an insurance compensation, which is calculated upon the
procedure set forth in the law or insurance contract. In case the
insurance compensation is not sufficient to recover the damage,
inter alia non-pecuniary damage, in full, the difference between
the actual amount of the damage and the insurance compensation is
recovered by the person who caused the damage or another person
who is liable for the actions of the latter. Having taken into
account the criteria established in the law, a court may reduce
the amount of compensation for incurred damages, however, the
reduced amount of compensation for inter alia non-pecuniary
damage may not be less than the sum of insurance, whereby the
civil liability of the holder of vehicle was or had to be insured
on a compulsory basis. It should be noted that the insurance
payer, who strives that in case of the insured event the insurer
recovers bigger damage caused by him in comparison to the sum of
compulsory insurance established in the law, may get additional
voluntary insurance against his civil liability for causing
damage.
8.2. It was established in Paragraph 3 of Article 2 of the
Law on Insurance (wording of 18 September 2003) that "'Civil
liability insurance' means the insurance of property interests
related to civil liability for the damage caused to the injured
party or its property where the amount of the benefit paid by the
insurer depends on the amount of the indemnity which the insured
person must pay to the third party for the damage, which,
however, must be within the limits of the insurance sum if it
specified in the contract."
The insurance object is defined in Paragraph 20 of Article 2
of the Law on Insurance (wording of 18 September 2003): "'
Insurance object' means property interests related to a person's
life, health, property, or civil liability."
Paragraph 8 of Article 2 of the Law on Insurance (wording of
18 September 2003) prescribes: "'Insurer' means a person
authorised under law to engage in insurance activity."
The activity of insurance companies is defined in Paragraph
27 of Article 2 of the Law on Insurance (wording of 18 September
2003), in which it is inter alia established: "'Insurance
activity' means economic-commercial activity whereby the risk of
the losses of other persons is assumed in the form of the
insurance contract or it is sought to protect property interests
of these persons in any other way upon occurrence of insured
events <...>."
In summary it needs to be held that the obligation of the
insurer to compensate to the victim the inflicted damage stems
from the insurance contract that was concluded on the basis of
the law. The obligation of the insurer to recover damage caused
by the insured person does not mean that in all cases when the
insured event takes place the insurer undertakes the obligation
to compensate the damage in full; the amount of damage to be
compensated by the insurer is limited by the sum of insurance
which is established in the contract. The insurance company is a
kind of mediator, who recovers damages to the third person, to
whom damage is caused, related to the damage caused by the person
whose civil liability is insured against. The activity of
insurers is economic-commercial activity.
The Law on Insurance (wording of 18 September 2003) has been
amended and/or supplemented more than once, however, the quoted
legal regulation virtually did not change.
8.3. Thus, in summary of the quoted provisions of the Civil
Code and the Law on Insurance and in their construction together
with the legal regulation entrenched in the Law (wording of 5
March 2004), a conclusion is to be made that compulsory insurance
against civil liability of holders of vehicles is a specific
economic-commercial activity, in which the insurers (insurance
companies) are engaged. Insurance against civil liability of
holders of vehicles is compulsory and aimed at protecting
property and other interests of the victims and insurance payers.
In case the sum of compulsory insurance against civil liability
of holders of vehicles is not sufficient to fully recover the
damage, inter alia non-pecuniary damage, inflicted during a road
accident, the difference between the actual amount of the damage
and the insurance compensation is recovered by the person who
caused the damage or another person who is liable for the actions
of the latter. The parties concerned who wish that in case of the
insured event the insurer would compensate the bigger damage,
inter alia non-pecuniary damage, that was caused by him in
comparison to the sum of compulsory insurance established in the
law, may get additional voluntary insurance against his civil
liability for causing damage.
9. In the context of the constitutional justice case at
issue it needs to be noted that certain aspects of the relations
of compulsory insurance against civil liability of holders of
vehicles are disclosed in jurisprudence of the Court of Justice
of the European Union (former Court of Justice of the European
Communities, hereinafter referred to as the CJEC).
In the course of assessment of a statement by the Republic
of Italy that the objective of compulsory insurance against civil
liability is the social protection of victims of road accidents,
the CJEC noted that "social protection objective, which amounts,
essentially, to ensuring that such victims will be adequately
compensated, can be taken into account as an overriding
requirement relating to the public interest" (Judgment of the
CJEC of 28 April 2009 in the case C-518/06 Commission of the
European Communities v Italian Republic, items 73-74). The CJEC
has stressed that "as Community law stands at present, the Member
States are free to determine the type of civil liability
applicable to road-traffic accidents" (Judgment of CJEC of 14
September 2000 in the case C-348/98 Mendes Ferreira and Delgado
Correia Ferreira, Items 23-29; Judgment of 19 April 2007 in the
case C-356/05 Elaine Farrell, Items 33-35). However, the Member
States must exercise their powers in compliance with Community
law, "whose aim is to ensure that compulsory motor vehicle
insurance allows all passengers who are victims of an accident
caused by a motor vehicle to be compensated for the injury or
loss they have suffered. <
> The national provisions which govern
compensation for road accidents cannot, therefore, deprive those
provisions of their effectiveness." (Judgment of the CJEC of 30
June 2005 in the case C-537/03 Katja Candolin, Items 27-28).
Therefore any chosen type of civil liability established in the
legal norms of national laws of the Member States must be covered
by compulsory insurance in regard of the established minimum sums
(Judgment of the CJEC of 14 September 2000 in the case C-348/98
Mendes Ferreira and Delgado Correia Ferreira, Items 39-40;
Judgment of 19 April 2007 in the case C-356/05 Elaine Farrell,
Item 33). The national legislation which provides for a number of
types of civil liability applicable to road-traffic accidents and
sets for one of them maximum amounts of cover which are lower
than the minimum cover prescribed by the directive, are in
conflict with the provisions of the directive (Order of the CJEC
of 24 July 2003 in the case C-166/02 Daniel Fernando Messajana
Viegas). The CJEC has also noted that one of the ways for the
Member States to follow the established obligation to ensure that
the citizens get insured by a type of insurance against civil
liability of holder of vehicles is "to ensure that every owner of
a vehicle is able to take out such insurance for a premium which
is not excessive" (Judgment of the CJEC of 28 April 2009 in the
case C-518/06 Commission of the European Communities v Italian
Republic, Items 77-78).
In summary it needs to be noted that pursuant to the
European Union directives, which consolidate provisions relating
to compulsory insurance against civil liability of holders of
vehicles, the Member States remain free to choose a system of
compulsory insurance against civil liability and measures of its
implementation. The Member States must ensure all persons, who
suffered damage during a road accident shall receive compensation
for damage, that the sums of insurance that are established in
national legal acts of the Member States shall not be less than
the minimum sums of insurance established in the directives, and
they must ensure that owners and holders of vehicles have a
possibility to get insured against this risk for a not too
excessive insurance premium.
10. It should also be noted that in all Member States of the
European Union and in many countries of the world the civil
liability of holders of vehicles is ensured by compulsory
insurance. Certain foreign countries (France, Belgium, Germany,
United Kingdom, etc.) do not set forth any limits of recovery of
non-pecuniary damage in their laws. In such countries the amount
of moral damage in monetary expression is assessed by court
pursuant to the established practice of courts. However, the
principle that limits the compensation for non-pecuniary damage
pursuant to the contracts of compulsory insurance against civil
liability of drivers exists in law of certain foreign countries
(Estonia, Latvia, Denmark). Restriction of recovery of non-
pecuniary damage is set forth in the Motor Third Party Liability
Insurance Act of the Republic of Estonia that was adopted on 10
April 2001 (with subsequent amendments), in the Mandatory Civil
Liability Insurance of Owners of Motor Vehicles Law of the
Republic of Latvia that was adopted on 27 September 2007, and in
the Liability for Damages Act of the Kingdom of Denmark that was
adopted on 8 September 1986.
III
1. It has been mentioned that the petitioners have doubts as
to whether Paragraph 1 of Article 11 of the Law (wording of 5
March 2004) to the extent that it established the maximum amount
of 500 euros of non-pecuniary damage, which should be recovered
by the insurer, was not in conflict with Paragraph 1 of Article
29 of the Constitution and the constitutional principle of a
state under the rule of law.
2. In the context of the constitutional justice case at
issue it needs to be noted that in Paragraph 2 of Article 30 of
the Constitution, in which it is established that compensation
for material and moral damage inflicted upon a person shall be
established by law, one uses the notion "moral damage", whereas
in the disputed provision of the Law and provisions of the Civil
Code, which regulate recovery of damage caused to the person, one
uses the notion "non-pecuniary damage".
The Constitutional Court has noted that treating the
requirement to describe the same phenomena in laws and other
legal acts always in the same words and formulas unreservedly
would mean not only the seeking to artificially restrict and stop
the development of language, inter alia legal terminology, when
not only words (formulas) describing the same phenomena, which
are different from the text of the Constitution, are used in the
laws and other legal acts, but new terms (formulas) in general,
which were not yet created at the time of drawing the text of the
Constitution, but it might also provoke to correct the text of
the Constitution according to the terminology (words, formulas)
entrenched in the laws and other legal acts also in such cases,
when the intervention into the text of the Constitution, which as
the supreme law must be a permanent act, is not legally
necessary; the Constitution does not prevent usage of other words
or formulas in laws and other legal acts than those used in the
text of the Constitution (Constitutional Court rulings of 16
January 2006 and 19 August 2006). Thus, the kinds of damage
mentioned in Paragraph 2 of Article 30 of the Constitution may
also be named in the laws by different terms only if these terms
do not deny (distort) the constitutional concept of these kinds
of damage (Constitutional Court ruling of 19 August 2006).
It needs to be held that the notion "non-pecuniary damage",
which is used in the disputed provision of the Law, means the
same as the notion "moral damage", which is used in the
Constitution.
3. Constitutional Court has held that in the course of
protection and defence of the human rights and freedoms (and, in
general, personal onesnot only those of a natural but also legal
person), inter alia dignity of the person, a particular
importance falls on the institute of compensation for damage
(Constitutional Court ruling of 19 August 2006). Thus, the
necessity to compensate material and moral damage inflicted upon
a person is a constitutional principle (Constitutional Court
rulings of 20 January 1997, 13 December 2004, 19 August 2006, and
27 March 2009). While implementing this constitutional principle,
it is attempted to ensure that the persons who suffered material
or moral damage be compensated for it (Constitutional Court
ruling of 20 January 1997).
4. Constitutional Court has also held that the grouping of
damage (which is subject to compensation) inflicted upon the
person into material and moral one entrenched in the Constitution
determines the peculiarities of the legal regulation of the
relations linked to the compensation for damage of a
corresponding kind. One of these peculiarities is related to the
establishment (assessment) of the amount of the inflicted damage
and with the form of compensation for that damage. While
compensating for material damage, in all cases it is possible to
follow the principle of full (adequate) compensation for damage
(restitutio in integrum), when the amount of the inflicted damage
may be expressed in a monetary equivalent and the damage may be
compensated with money (it does not deny the possibility to
compensate for material damage also by means of other property or
otherwise); thus, material losses are compensated with material
assets. Meanwhile, moral damage is a spiritual offence which can
only be assessed and compensated materially on condition; quite
often the inflicted moral damage, as the sustained moral offence
by the person, cannot be in general replaced (inter alia by any
material compensation), because it is impossible to return back
the psychological, emotional and other condition of the person,
which had existed before the spiritual offence took placesuch
condition sometimes (at best) can be newly created while using
inter alia material (first of all, monetary) compensation for
that moral damage (however, sometimes, moral satisfaction alone
for the sustained moral damage is not impossible) (Constitutional
Court ruling of 19 August 2006).
5. When construing the legal regulation established in
Paragraph 2 of Article 30 of the Constitution that compensation
for material and moral damage inflicted upon a person shall be
established by law, the Constitutional Court held that in this
paragraph one provides for a duty of the legislator to pass a law
or laws providing for compensation for damage for a person who
suffered material or moral damage, that the laws must provide for
factual protection of violated human rights and freedoms, and
this protection must be coordinated with protection of the other
values entrenched in the Constitution, as well as that the
Constitution guarantees the right of an individual to
compensation for material or moral damage, including recovery of
damage under judicial procedure (Constitutional Court rulings of
30 June 2000 and 13 December 2004).
6. The aforementioned general constitutional principles of
recovery of damage to the victim originate inter alia from the
constitutional principles of justice and the state under the rule
of law.
7. It needs to be noted that the legislator, while
regulating by a law or laws the relations linked to the
compensation for material and/or moral damage inflicted upon the
person, has certain discretion, inasmuch as it is not restricted
by the Constitution (Constitutional Court ruling of 19 August
2006).
The provision of Paragraph 2 of Article 30 of the
Constitution, which consolidates the right of a person to
recovery of material and moral damage caused to him, obligates
the legislator to set sufficient measures of implementation of
this right.
When performing the duty to adopt a law or laws that
establish the recovery of damage to the person for the inflicted
damage, the legislator, by using the discretion vested in him,
may choose and consolidate in a law or laws various forms of
recovery of the inflicted damage. In the context of the
constitutional justice case at issue it should be noted that the
constitutional principle of justice implies also that the damage
must be usually recovered by the person who caused it or other
person liable for the actions of the latter.
8. In the context of the constitutional justice case at
issue it should also be noted that the legislator, having taken
into account inter alia the fact that the risk of causing damage
(origination of damage) is higher in certain spheres of activity,
and while striving to ensure that the damage caused to the person
is recovered efficiently and timely, may establish also such
legal regulation, when on the basis of the contract the
obligation to recover damage caused to other persons is
undertaken by the person other than the one who has caused
damage, or other than the one, who is liable for the actions of
the latter, i.e. to establish the so-called insured method of
damage recovery. When setting forth such method of recovery of
damage caused to a person, the legislator must consolidate the
fundamentals of the insured recovery of damage.
In the context of the constitutional justice case at issue
it should also be noted that the legislator, having taken into
account the fact that use of certain objects involves a bigger
risk to the rights and legitimate interests of other persons, as
well as having taken into account particularities of certain
vocational or economic activity of other persons, may establish
such legal regulation, according to which the persons who use
certain objects or who are engaged in certain vocational or
economic activity, must get insured against civil liability for
causing damage. When setting the fundamentals and conditions of
compulsory insurance, the legislator may inter alia set the
maximum sums of insurance. When establishing such conditions, the
legislator must ensure that the carrying out the duty to pay
insurance contributions does not become a too heavy burden for
the person who must, pursuant to the law, insure his civil
liability for causing damage.
9. It has been mentioned that the activity of economic
entities, which undertake, on the grounds of the law or contract,
to recover to a certain extent the damage caused by another
person, is to be considered as a type of certain economic-
commercial activity. Thus, the legislator, when regulating the
relations of recovery of the insured damage, inter alia when
setting the grounds of legal position of the entities which
undertake, under the contract, to recover to the certain extent
the damage caused by another person, must pay heed to the
imperatives that stem inter alia from Article 46 of the
Constitution.
9.1. 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.
9.2. 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 (Constitutional Court rulings of inter alia 13
May 2005, 31 May 2006, 5 March 2008, 2 March 2009, 27 March 2009,
29 April 2009, 8 June 2009, and 8 October 2009).
9.3. It needs to be emphasised that Paragraph 3 of Article
46 of the Constitution clearly indicates the trend of legal
regulation of economic activity: the economic activity must serve
the general welfare of the Nation (Constitutional Court rulings
of 13 February 1997, 13 May 2005, 31 May 2006, and 30 June 2008).
9.4. The state, while regulating the economic activity so
that it would serve the general welfare of the Nation, may
establish a differentiated legal regulation which is determined
by the particularity of the economic activity; therefore, the
state, taking account of the particularity of the economic
activity, may use various measures of legal regulation
(Constitutional Court ruling of 2 March 2009).
The concept "general welfare of the Nation" of Paragraph 3
of Article 46 of the Constitution implies also that by regulation
of economic activity the state must strive for the balance of
interests of various persons.
"The general welfare of the Nation" cannot be opposed to the
welfare, rights and legitimate interests of the economic 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
(Constitutional Court rulings of 13 May 2005 and 31 May 2006).
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 March 2003, 26 January 2004, 13 May 2005, 31 May 2006, 5 March
2008, 30 June 2008, 2 March 2009, and 29 April 2009).
9.5. In the context of the constitutional justice case at
issue it needs to be noted that the legislator, while paying heed
to the requirement, which is entrenched in Article 46 of the
Constitution, to regulate the economic activity so that it serves
the general welfare of the Nation, as well as other norms and
principles of the Constitution, may set forth, by a law, certain
conditions of economic activity, inter alia insurance activity,
in view of ensuring the interests of both the private person (an
entity of economic activity), and the whole society and its
members.
10. It needs to be noted that the legal regulation of
relations of damage recovery may be differentiated by law in view
of whether the damage is to be compensated to the person upon
judicial or non-judicial procedure, however, under no
circumstances one may establish such legal regulation, which
would deny the right of the person to apply to court and to
demand the just compensation for the caused damage either from
the entity which undertook, under the contract, to recover damage
to a certain extent, or from the person who caused damages, or
from another person who is liable for the actions of the latter.
When regulating the said relations by law, one must follow the
principle of equality of rights of persons, justice and other
constitutional principles.
11. Pursuant to the Constitution, the damage recovery must
be realistic and fair.
11.1. The legislator may not establish any such legal
regulation, which would create preconditions for a situation,
where the person who suffered damage, inter alia moral damage,
would not be able to get fair compensation for damages.
11.2. The constitutional principle of damage recovery is
inseparable from the principle of justice entrenched in the
Constitution: all the necessary legal preconditions must be
created by laws in order to justly compensate for the inflicted
damage (Constitutional Court ruling of 19 August 2006). Thus, the
Constitution imperatively requires establishment by law such
legal regulation that the person, to whom damage was caused,
could in all cases demand fair compensation for damage and
receive it.
11.3. The constitutional imperative whereby damage must be
justly reimbursed is linked to the constitutional principles of
proportionality and adequacy of reimbursement of damage which
require that the measures which are established in laws and which
are applied be proportionate to the objective sought and not
limit the rights of a person more than it is necessary for
achieving the lawful and universally significant,
constitutionally grounded objective and not create preconditions
to abuse law (Constitutional Court ruling of 27 March 2009).
11.4. In the context of the constitutional justice case at
issue it should be noted that the legislator, who sets inter alia
the legal regulation of reimbursement of damage caused to the
person when certain entities on the basis of insurance contract
undertake to compensate for damage that was caused by another
person, is not obligated to establish such sums of insurance,
which, in case of the insured event, in all cases would ensure
the recovery of damage in full. However, the legislator must not
deny the constitutional right of a person to claim, on general
grounds, the full reimbursement of the damage that was caused to
him, inter alia when the insurance sum does not suffice the full
recovery of damage, i.e. to claim damages from the person who
caused the damage or from another person who is liable for the
actions of the latter.
11.5. The Constitutional Court has held more than once that
the constitutional principle of a state under the rule of law is
inseparable from the principle of justice and vice versa; the
protection of legitimate expectations, legal certainty and legal
security are inseparable elements of the principle of a state
under the rule of law.
The principle of protection of legitimate interests implies
the duty of the state, as well as institutions implementing state
power and other state institutions, to fulfil obligations
undertaken by the state. This principle also means protection of
the acquired rights, i.e. persons have the right to reasonably
expect that the rights that they have acquired pursuant to the
valid laws and other legal acts, which are not in conflict with
the Constitution, will be maintained for the established time and
implemented in reality (Constitutional Court ruling of 24
December 2008).
12. The Constitutional Court has held more than once that
the constitutional principle of equality of persons must be
followed both in passing of laws and in their application; the
constitutional principle of equality of persons before the law
means an innate human right to be treated equally with the others
(Constitutional Court rulings of 2 April 2001, 23 April 2002, 4
July 2003, and 3 December 2003) and obliges to legally assess the
homogenous facts in the same manner and prohibits to arbitrarily
assess the facts, which are the same in essence, in a different
manner; on the other hand, this principle does not deny a
possibility to provide in a law for a different legal regulation
in respect to certain categories of persons who are in different
situations (Constitutional Court rulings of 23 April 2002, 4 July
2003, 3 December 2003, and 26 September 2007).
13. Pursuant to Paragraph 2 of the Constitutional Act "On
Membership of the Republic of Lithuania in the European Union",
legal norms of the European Union constitute a part of the legal
system of the Republic of Lithuania, and where it concerns the
founding Treaties of the European Union, the norms of the
European Union law shall be applied directly, while in the event
of collision of legal norms, they shall have supremacy over the
laws and other legal acts of the Republic of Lithuania.
As mentioned, the relations of compulsory insurance against
civil liability of holders of vehicles are regulated by
respective legal acts of the European Union, as well. In the
context of the constitutional justice case at issue it needs to
be noted that in the course of regulation of relations of
compulsory insurance against civil liability of holders of
vehicles the legislator must pay heed also to the requirements
that originate from legal acts of the European Union. The laws of
the Republic of Lithuania that regulate the aforementioned
relations may not compete with the legal acts of the European
Union.
IV
On the compliance of Paragraph 1 of Article 11 of the Law on
Compulsory Insurance Against Civil Liability of Holders of
Vehicles (wording of 5 March 2004) with Paragraph 1 of Article 29
of the Constitution and the constitutional principle of a state
under the rule of law.
1. It has been mentioned that subsequent to the petitions of
the petitioners the Constitutional Court will investigate whether
Paragraph 1 of Article 11 of the Law (wording of 5 March 2004) to
the extent that it established the maximum amount of 500 euros of
non-pecuniary damage, which should be recovered by the insurer,
was not in conflict with Paragraph 1 of Article 29 of the
Constitution and the constitutional principle of a state under
the rule of law.
2. Paragraph 1 of Article 11 of the Law (wording of 5 March
2004) prescribed: "The sum insured under compulsory insurance
against civil liability in respect of the use of vehicles shall
be 500,000 euros for personal injury (including 500 euros for
non-pecuniary damage) and 100,000 euros for damage to property in
a single road accident, whatever the number of injured third
parties."
In the context of the constitutional justice case at issue
it should be noted that it was explicitly entrenched in Paragraph
1 of Article 11 of the Law (wording of 5 March 2004) that the sum
insured under compulsory insurance against civil liability in
respect of the use of vehicles is 500 euros for non-pecuniary
damage in a single road accident, and it means that in case of
the insured event the insurance compensation paid by the insurer
for non-pecuniary damage that was caused to the person may not
exceed the sum which is established in the Law.
3. In the opinion of the petitioners, Paragraph 1 of Article
11 of the Law (wording of 5 March 2004) to the extent that it
established the maximum amount of 500 euros of non-pecuniary
damage, which should be recovered by the insurer, was in conflict
inter alia with the constitutional principle of a state under the
rule of law, because by consolidating in the Law the maximum
amounts of recovery of non-pecuniary damage the insurer is
granted a possibility to avoid reimbursement of non-pecuniary
damage that was caused to the person, whereas the limitation of
amount of reimbursement of non-pecuniary damage does not meet the
expectations of not only the victims, but the insured persons, as
well.
4. It has been noted in this ruling that the necessity to
compensate to the person for the inflicted material and moral
damage is a constitutional principle and that the Constitution
obliges the legislator to set sufficient measures of
implementation of the right of the person to recovery of material
and moral damage that was caused to him.
It has also been mentioned that the laws must create all the
necessary preconditions for fair compensation of the inflicted
damage; the constitutional principle of justice implies also that
the damage must usually be recovered by the person who caused it
or another person liable for the actions of the latter; while
striving to ensure that the damage caused to the person is
recovered efficiently and timely, the legislator may establish
also such legal regulation when, on the basis of the contract the
obligation to recover damage caused to other persons is
undertaken by the person other than the one who has caused
damage, or another than the one who is liable for the actions of
the latter, i.e. to establish the so-called insured method of
damage recovery. When setting the fundamentals and conditions of
compulsory insurance, the legislator may inter alia set the
maximum sums of insurance; when establishing inter alia such
legal regulation of reimbursement of damage that was inflicted
upon the person when certain entities, on the basis of the
compulsory insurance contract, undertake to compensate for the
damage caused by another person, the legislator has no obligation
to set such sums of insurance, which, in case of the insured
event, in all cases would ensure recovery of the inflicted damage
in full, however, he must not deny the constitutional right of a
person to claim, on general grounds, the full reimbursement of
the damage that was caused to him, inter alia when the insurance
sum does not suffice the full recovery of damage, i.e. to claim
damages from the person who caused the damage or from another
person who is liable for the actions of the latter.
It has also been mentioned that when establishing the
conditions of compulsory insurance the legislator must ensure
that the carrying out the duty to pay insurance contributions
does not become a too heavy burden for the person who must,
pursuant to the law, insure his civil liability for causing
damage.
5. It has been mentioned that by compulsory insurance
against civil liability of holders of vehicles one strives to
protect property and other interests of the victims and insurance
payers; in case the insurance compensation is not sufficient to
recover the damage, inter alia non-pecuniary damage, in full, the
difference between the actual amount of the damage and the
insurance compensation is recovered by the person who caused the
damage or another person who is liable for the actions of the
latter.
It was also mentioned that the insurance payer, who strives
that in case of the insured event the insurer recovers bigger
damage that was caused by him than the sum of compulsory
insurance established in the law, may get additional voluntary
insurance against his civil liability for causing damage.
6. It means that by the legal regulation, which is
entrenched in Paragraph 1 of Article 11 of the Law (wording of 5
March 2004), pursuant to which the insurer pays compensation that
amounts up to 500 euros for non-pecuniary damage, one strives to
create conditions to the insurer to fulfil his obligations
undertaken under the insurance contract rather than to avoid
recovery of non-pecuniary damage inflicted to the person, as the
petitioner believes. Such legal regulation does not deny the
constitutional right of a person to claim, on general grounds,
the full reimbursement of the damage that was caused to him, i.e.
to claim damages from the person who caused the damage or from
another person who is liable for the actions of the latter.
7. It has been mentioned that the principle of legitimate
expectations means that the persons have the right to reasonably
expect that their rights acquired under the valid laws or other
legal acts that are not in conflict with the Constitution will be
retained for the established period of time and could be
implemented in reality.
It is to be held that the legislator, by entrenching the
legal regulation, pursuant to which the holders of vehicles enter
into compulsory insurance contract against civil liability, does
not create the grounds for origination of legitimate expectations
that the insurer will reimburse all the damage caused by them,
because, as already mentioned, under the law the insurer
undertakes to recover a certain amount of damage upon the
procedure established by the law and on the grounds of insurance
contract inter alia to the extent provided for in the law and in
the contract. Thus, there is no ground to state that the
legislator, while establishing that the insurer pays the maximum
reimbursement of non-pecuniary damage amounting to 500 euros,
violates the legitimate expectations of the insured persons.
8. Taking account of the arguments set forth, one is to draw
a conclusion that Paragraph 1 of Article 11 of the Law (wording
of 5 March 2004) to the extent that it established the maximum
amount of 500 euros of non-pecuniary damage, which should be
recovered by the insurer, was not in conflict with the
constitutional principle of a state under the rule of law.
9. In the opinion of the petitioners, Paragraph 1 of Article
11 of the Law (wording of 5 March 2004) to the extent that it
established the maximum amount of 500 euros of non-pecuniary
damage, which should be recovered by the insurer, was in conflict
with inter alia Paragraph 1 of Article 29 of the Constitution,
because by such legal regulation the rights and interests of the
victim are protected less than those of insurance companies, and
without getting a realistic reimbursement of damage the victim is
discriminated.
10. It has been mentioned in this ruling that the
constitutional principle of equality of persons against the law
means the innate right of the person to be treated equally with
the others and obliges to assess the homogenous facts in the same
manner and prohibits to arbitrarily assess the facts, which are
the same in essence, in a different manner; on the other hand,
this principle does not deny a possibility to provide in a law
for a different legal regulation in respect to certain categories
of persons who are in different situations.
The legal regulation established in Paragraph 1 of Article
11 of the Law (wording of 5 March 2004) is related to the
interests of persons of different categories: the insurers who
pay the compulsory insurance sums as set forth in the Law in case
of the insured event; the persons who caused damage by a motor
vehicle and who had insured their civil liability (the insurance
payers); the persons who suffered damage during road accidents
and who receive respective insurance compensation. It is obvious
that insurers, insurance payers and victims have different rights
and obligations, and comprise different categories of persons,
whose legal position is different. They may not be identified as
the same. It needs to be noted that the same legal regulation is
established in regard to every individual category of such
persons, who are insurers, insurance payers and victims. Thus,
there are no grounds to state that the rights and interests
victims are protected by the legal regulation established in
Paragraph 1 of Article 11 of the Law (wording of 5 March 2004)
less than those of insurance companies, or that victims are
discriminated in comparison to insurance companies.
11. Taking account of the arguments set forth, one is to
draw a conclusion that Paragraph 1 of Article 11 of the Law
(wording of 5 March 2004) to the extent that it established the
maximum amount of 500 euros of non-pecuniary damage, which should
be recovered by the insurer, was not in conflict with Paragraph 1
of Article 11 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
the Law on the Constitutional Court of the Republic of Lithuania,
the Constitutional Court of the Republic of Lithuania has passed
the following
ruling:
To recognise that Paragraph 1 of Article 11 of the Republic
of Lithuania Law on Compulsory Insurance Against Civil Liability
of Holders of Vehicles (wording of 5 March 2004) (Official
Gazette Valstybės žinios, 2004, No. 46-1498) to the extent that
it established the maximum amount of 500 euros of non-pecuniary
damage, which should be recovered by the insurer, was not in
conflict with the Constitution of the Republic of Lithuania.
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
Egidijus Šileikis
Algirdas Taminskas
Romualdas Kęstutis Urbaitis