Case No. 19/2008-25/2009
THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA
RULING
ON THE COMPLIANCE OF ITEMS 1 AND 2 OF RESOLUTION OF
THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA NO. 22
"ON ASSENTING TO A DRAFT AGREEMENT ON PURCHASE AND
SALE OF 34 PERCENT OF THE SHARES (WHICH BELONG TO THE
STATE BY RIGHT OF OWNERSHIP) OF THE JOINT-STOCK
COMPANY 'LIETUVOS DUJOS', ANNEXES TO THIS AGREEMENT,
AS WELL AS TO A DRAFT AGREEMENT OF SHAREHOLDERS" OF 9
JANUARY 2004, RESOLUTION OF THE GOVERNMENT OF THE
REPUBLIC OF LITHUANIA NO. 292 "ON A DRAFT SUPPLEMENT
TO THE LONG-TERM GAS SUPPLY AGREEMENT BETWEEN THE
JOINT-STOCK COMPANY 'LIETUVOS DUJOS' AND THE PUBLIC
JOINT-STOCK COMPANY 'GAZPROM'" OF 18 MARCH 2004 WITH
THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA
26 February 2010
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 a group of Members
of the Seimas of the Republic of Lithuania, a petitioner, who was
Jurgis Razma, a Member of the Seimas,
in the presence of the representatives of the Government of
the Republic of Lithuania, the party concerned, who were Rimvydas
Pilibaitis, the Deputy Head of the Legal Division of the Service
of the Prime Minister, and Nemunas Biknius, Chief Specialist of
the Division for Energy Resources, Electricity and Heat of the
Ministry of Energy of the Republic of Lithuania,
pursuant to Articles 102 and 105 of the Constitution of the
Republic of Lithuania and Article 1 of the Law on the
Constitutional Court of the Republic of Lithuania, in its public
hearing on 18 February 2010 heard case No. 19/2008-25/2009
subsequent to:
1) the petition of a petitioner, a group of Members of the
Seimas of the Republic of Lithuania, requesting to investigate,
whether Items 1 and 2 of Resolution of the Government of the
Republic of Lithuania No. 22 "On Assenting to a Draft Agreement
on Purchase and Sale of 34 Percent of the Shares (Which Belong to
the State by Right of Ownership) of the Joint-Stock Company '
Lietuvos dujos', Annexes to this Agreement, as well as to a Draft
Agreement of Shareholders" of 9 January 2004, as well as
Resolution of the Government of the Republic of Lithuania No. 292
"On a Draft Supplement to the Long-Term Gas Supply Agreement
Between the Joint-Stock Company 'Lietuvos dujos' and the Public
Joint-Stock Company 'Gazprom'" of 18 March 2004 are not in
conflict with Article 5, Paragraphs 3 and 5 of Article 46, and
Paragraph 1 of Article 128 of the Constitution of the Republic of
Lithuania (petition No. 1B-19/2008);
2) the petition, which is set forth in Article 1 of
Resolution of the Seimas of the Republic of Lithuania (a
petitioner) No. XI-246 "On applying to the Constitutional Court
of the Republic of Lithuania with a petition requesting to
investigate whether Items 1 and 2 of Resolution of the Government
of the Republic of Lithuania No. 22 'On Assenting to a Draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company "Lietuvos dujos", Annexes to this Agreement, as well as
to a Draft Agreement of Shareholders' of 9 January 2004,
Resolution No. 292 'On a Draft Supplement to the Long-Term Gas
Supply Agreement Between the Joint-Stock Company "Lietuvos dujos"
and the Public Joint-Stock Company "Gazprom"' of 18 March 2004,
according to the content of the norms, the extent of regulation
and the procedure of adoption, are not in conflict with Article
5, the Third and Fifth Paragraphs of Article 46, the First
Paragraph of Article 128 of the Constitution of the Republic of
Lithuania and the principle of a state under the rule of law" of
5 May 2009, requesting to investigate whether Items 1 and 2 of
Resolution of the Government of the Republic of Lithuania No. 22
"On Assenting to a Draft Agreement on Purchase and Sale of 34
Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders" of 9 January 2004 and Resolution of the Government
of the Republic of Lithuania No. 292 "On a Draft Supplement to
the Long-Term Gas Supply Agreement Between the Joint-Stock
Company 'Lietuvos dujos' and the Public Joint-Stock Company '
Gazprom'" of 18 March 2004, to the extent that the Government
assented to the provisions of Annex H and Item 9.1 of Agreement
No. 2/108 on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company "Lietuvos dujos", which was concluded between the state
enterprise State Property Fund and the Russian Federation public
joint-stock company "Gazprom" on 23 January 2004, and, subsequent
to these provisions, undertook obligations not to regulate the
prices of natural gas and to reimburse the losses, are not in
conflict, according to the content of the norms, the extent of
regulation and the procedure of adoption, with Article 5,
Paragraphs 3 and 5 of Article 46, and Paragraph 1 of Article 128
of the Constitution of the Republic of Lithuania and the
constitutional principle of a state under the rule of law
(petition No. 1B-28/2009).
By the Decision of the Constitutional Court "On joining
petitions into one case" of 29 September 2009, petition No. 1B-
19/2008 (case No. 19/2008) of the group of Members of the Seimas,
a petitioner, and petition No. 1B-28/2009 (case No. 25/2009) of
the Seimas, a petitioner, were joined into one case and it was
given reference No. 19/2008-25/2009.
The Constitutional Court
has established:
I
1. The group of Members of the Seimas, a petitioner, applied
to the Constitutional Court with the petition requesting to
investigate as to whether Items 1 and 2 of Government Resolution
No. 22 "On Assenting to a Draft Agreement on Purchase and Sale of
34 Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders" of 9 January 2004 (hereinafter also referred to as
Government Resolution No. 22 of 9 January 2004) and Government
Resolution No. 292 "On a Draft Supplement to the Long-Term Gas
Supply Agreement Between the Joint-Stock Company 'Lietuvos dujos'
and the Public Joint-Stock Company 'Gazprom'" of 18 March 2004
(hereinafter also referred to as Government Resolution No. 292 of
18 March 2004) are not in conflict with Article 5, Paragraphs 3
and 5 of Article 46, and Paragraph 1 of Article 128 of the
Constitution.
The petition of the group of Members of the Seimas, a
petitioner, was received at the Constitutional Court on 8 July
2008.
2. On 5 May 2009, the Seimas, a petitioner, adopted
Resolution No. XI-246 "On applying to the Constitutional Court of
the Republic of Lithuania with a petition requesting to
investigate whether Items 1 and 2 of Resolution of the Government
of the Republic of Lithuania No. 22 'On Assenting to a Draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company "Lietuvos dujos", Annexes to this Agreement, as well as
to a Draft Agreement of Shareholders' of 9 January 2004,
Resolution No. 292 'On a Draft Supplement to the Long-Term Gas
Supply Agreement Between the Joint-Stock Company "Lietuvos dujos"
and the Public Joint-Stock Company "Gazprom"' of 18 March 2004,
according to the content of the norms, the extent of regulation
and the procedure of adoption, are not in conflict with Article
5, the Third and Fifth Paragraphs of Article 46, the First
Paragraph of Article 128 of the Constitution of the Republic of
Lithuania and the principle of a state under the rule of law", in
Article 1 of which it set forth the petition to the Constitution
Court requesting to investigate whether Items 1 and 2 of
Government Resolution No. 22 of 9 January 2004 and Government
Resolution No. 292 of 18 March 2004, to the extent that the
Government assented to the provisions of Annex H and Item 9.1 of
Agreement No. 2/108 on Purchase and Sale of 34 Percent of the
Shares (Which Belong to the State by Right of Ownership) of the
Joint-Stock Company "Lietuvos dujos" (hereinafter referred to as
the Agreement on Purchase and Sale of the Shares), which was
concluded between the state enterprise State Property Fund and
the Russian Federation public joint-stock company "Gazprom" on 23
January 2004, and, subsequent to these provisions, undertook
obligations not to regulate the prices of natural gas and to
reimburse the losses, are not in conflict, according to the
content of the norms, the extent of regulation and the procedure
of adoption, with Article 5, Paragraphs 3 and 5 of Article 46,
and Paragraph 1 of Article 128 of the Constitution and the
constitutional principle of a state under the rule of law.
The petition of the Seimas, a petitioner, was received at
the Constitutional Court on 13 May 2009.
3. By its Decision "On accepting the petition of the Seimas
of the Republic of Lithuania, the petitioner, set forth in its
Resolution No. XI-246 'On applying to the Constitutional Court of
the Republic of Lithuania with a petition requesting to
investigate whether Items 1 and 2 of Resolution of the Government
of the Republic of Lithuania No. 22 "On Assenting to a Draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company 'Lietuvos Dujos', Annexes to This Agreement, as well as
to a Draft Agreement of Shareholders" of 9 January 2004,
Resolution No. 292 "On a Draft Supplement to the Long-Term Gas
Supply Agreement Between the Joint-Stock Company 'Lietuvos Dujos'
and the Public Joint-Stock Company 'Gazprom'" of 18 March 2004,
according to the content of the norms, the extent of regulation
and the procedure of adoption, are not in conflict with Article
5, the Third and Fifth Paragraphs of Article 46, the First
Paragraph of Article 128 of the Constitution of the Republic of
Lithuania and the principle of a state under the rule of law' of
5 May 2009" of 14 May 2009, the Constitutional Court decided to
accept the petition set forth in the Seimas Resolution of 5 May
2009, which requests to investigate whether Items 1 and 2 of
Government Resolution No. 22 of 9 January 2004 and Government
Resolution No. 292 of 18 March 2004, to the extent that the
Government assented to the provisions of Annex H and Item 9.1 of
Agreement No. 2/108 on Purchase and Sale of 34 Percent of the
Shares (Which Belong to the State by Right of Ownership) of the
Joint-Stock Company "Lietuvos dujos", which was concluded between
the state enterprise State Property Fund and the Russian
Federation public joint-stock company "Gazprom" on 23 January
2004, and, subsequent to these provisions, undertook obligations
not to regulate the prices of natural gas and to reimburse the
losses, are not in conflict, according to the content of the
norms, the extent of regulation and the procedure of adoption,
with Article 5, Paragraphs 3 and 5 of Article 46, and Paragraph 1
of Article 128 of the Constitution and the constitutional
principle of a state under the rule of law.
4. The announcement of the President of the Constitutional
Court regarding the acceptance of the said petition of the Seimas
was officially published in the official gazette "Valstybės
žinios" (Official Gazette Valstybės žinios, 2009, No. 58-2252) on
19 May 2009. From that day until publishing of a Constitutional
Court ruling regarding this constitutional justice case, the
validity of Items 1 and 2 of Government Resolution No. 22 of 9
January 2004 and that of Government Resolution No. 292 of 18
March 2004 have been suspended.
II
The petition of the group of Members of the Seimas and the
petition of the Seimas, the petitioners, are substantiated by the
following arguments.
1. The Government, by Items 1 and 2 of Government Resolution
No. 22 of 9 January 2004 and the provisions of Government
Resolution No. 292 of 18 March 2004, insofar as they assented to
the commitments of Annex H to the Agreement on Purchase and Sale
of the Shares not to regulate natural gas prices and insofar as
the powers were granted to undertake such commitments, regulates
the economic activity so that it no longer serves the general
welfare of the Nation and the rights of consumers are no longer
defended, but it is only the interest of the public joint-stock
company "Gazprom" that are protected. Thus, by means of the
disputed resolutions the Government undertook a commitment to
implement its competence in the process of law-making by taking
account of only the interests of the public joint-stock company
"Gazprom", even in cases when, due to this, the principles of
regulation of economic activity as entrenched in Article 46 of
the Constitution would be violated.
It was held in the Constitutional Court ruling of 18 October
2000 that the implementation of the Constitution may not be
restricted by any conditions. The commitment to reimburse the
losses to the public joint-stock company "Gazprom" (in case the
Government does not fulfil its commitment not to regulate prices
for natural gas) restricts the implementation of Paragraphs 3 and
5 of Article 46 of the Constitution, since the legal regulation,
which is designed for the general welfare of the Nation and
protection of the rights of consumers (regulation of gas prices),
becomes unfavourable in the economic aspect as it can create
conditions to apply financial sanctions to the State of
Lithuania. Alongside, the principle entrenched in Paragraph 3 of
Article 5 of the Constitution whereby state institutions shall
serve the people is violated.
2. It is possible to regard the commitment, which is set
forth in Item 9.1 of the Agreement on Purchase and Sale of the
Shares to reimburse the losses amounting to 100 million litas to
the public joint-stock company "Gazprom" in case one began to
regulate the gas prices by failing to keep the commitment
provided for in Annex H of the Agreement on Purchase and Sale of
the Shares, as a basic property liability of the state. Such an
opinion is substantiated by the fact that, under Articles 5 and 6
of the Law on State Debt, it is possible to regard property
liability of the state exceeding 40 million litas as a basic
property liability of the state, as well as by the fact that, in
its ruling of 17 June 1997, the Constitutional Court held that a
50 million litas issue of Government loan bonds is a basic
property liability of the state to repurchase the bonds by paying
interest. In addition, pursuant to the Constitutional Court
ruling of 18 October 2000, the commitment to reimburse losses to
the strategic investor and the joint-stock company "Mažeikių
nafta" is regarded as a basic property liability.
Paragraph 1 of Article 128 of the Constitution provides that
decisions concerning basic property liabilities of the state
shall be adopted by the Seimas on the proposal of the Government.
It was held in the Constitutional Court ruling of 18 October 2000
that, under the Constitution, decisions concerning basic property
liabilities may be adopted by the Seimas only, and only when
there is a recommendation of the Government. Thus, the provisions
of Items 1 and 2 of Government Resolution No. 22 of 9 January
2004 and Government Resolution No. 292 of 18 March 2004, to the
extent that they assented to the commitments made in Item 9.1 of
the Agreement on Purchase and Sale of the Shares and granted the
powers to undertake such commitments, are in conflict with the
procedure of adoption of such decisions, which is provided for in
Paragraph 1 of Article 128 of the Constitution. By means of the
disputed legal regulation the Government took over the
exceptional constitutional powers of the Seimas to adopt
decisions regarding basic property liabilities of the state,
therefore, such legal regulation is in conflict with Paragraph 1
of Article 128 of the Constitution also according to its content.
The petitioners, on the grounds of the official
constitutional doctrine formulated by the Constitutional Court
whereby the principle of separation of powers also means that in
case when the powers of a concrete state institution are directly
established in the Constitution, then no other institution may
take over such powers, asserts that the disputed legal regulation
established by the Government is clearly in conflict also with
the principle of separation of powers entrenched in Paragraph 1
of Article 5 of the Constitution.
3. According to the petitioners, the principle entrenched in
Paragraph 2 of Article 5 of the Constitution that scope of power
is limited by the Constitution is closely related to the
principle of separation of powers entrenched in Paragraph 1 of
the same article and with "the principle of serving to the
people". Thus, if it were established that the provisions of
Items 1 and 2 of Government Resolution No. 22 of 9 January 2004
and Government Resolution No. 292 of 18 March 2004, to the extent
that they assented to the commitments made in Item 9.1 of the
Agreement on Purchase and Sale of the Shares not to regulate the
gas prices and to reimburse the losses due to failure of such
commitment and granted the powers to undertake such commitments,
are in conflict with Paragraphs 1 and 3 of Article 5 of the
Constitution, one should also hold that these provisions are in
conflict with Paragraph 2 of Article 5 of the Constitution as
well.
The provisions of Items 1 and 2 of Government Resolution No.
22 of 9 January 2004 and Government Resolution No. 292 of 18
March 2004 are in conflict with Paragraph 2 of Article 5 of the
Constitution also in the aspect that the principle of publicity
was violated. This opinion is substantiated by the doctrine of
the constitutional principle of a state under the rule of law
formulated in the Constitutional Court ruling of 23 October 2002
and the doctrine of Paragraph 1 of Article 128 of the
Constitution which was formulated in the Constitutional Court
ruling of 17 June 1997, whereby consideration regarding a state
loan and other basic property liabilities of the state in the
Seimas implies a public discussion. The petitioners maintain that
Government Resolution No. 22 of 9 January 2004 and Government
Resolution No. 292 of 18 March 2004 lack the constitutional
grounds and the grounds established by laws, and the provisions
of these resolutions are not concrete, but entirely formal ones;
these resolutions assented to agreements the content of which is
unknown to the public, and by which basic property liabilities of
the state were undertaken and restrictions of implementation of
constitutional provisions were established, therefore, such legal
regulation is in conflict with Paragraph 2 of Article 5 of the
Constitution and the constitutional principle of a state under
the rule of law.
III
1. In the course of the preparation of the case for the
Constitutional Court hearing written explanations regarding the
petition of the group of Members of the Seimas were received from
the representatives of the Government, the party concerned, who
were Neringa Pažūsienė, Director of the Law and Public
Procurement Department of the Ministry of Economy, and Vladas
Gagilas, Director of the Department for Energy Resources of the
same ministry, and written explanations regarding the petition of
the Seimas were received from the representatives of the
Government, the party concerned, who were Neringa Pažūsienė,
Director of the Law and Public Procurement Department of the
Ministry of Economy, Nemunas Biknius, Chief Specialist of the
Division for Energy Resources, Electricity and Heat of the
Ministry of Energy, and Rasa Stankauskienė, a lawyer of the Legal
Division of the Legal Department of the state enterprise State
Property Fund, wherein it is maintained that Items 1 and 2 of
Government Resolution No. 22 of 9 January 2004 and Government
Resolution No. 292 of 18 March 2004 are not in conflict with
Article 5, Paragraphs 3 and 5 of Article 46, and Paragraph 1 of
Article 128 of the Constitution and the constitutional principle
of a state under the rule of law. The position of the
representatives of the Government regarding the compliance of the
disputed resolutions of the Government with the Constitution is
presented while taking account of the fact that, under the
Constitutional Court rulings of 18 October 2000 and 23 May 2007,
the Constitutional Court does not enjoy powers to investigate
treaties or other agreements concluded by the Government with a
strategic investor, to present a conclusion regarding such
agreements in the resolution part of its ruling, and that the
Constitutional Court does not consider the drafting, signing and
implementation of such agreements.
2. The position of N. Pažūsienė and V. Gagilas, the
representatives of the party concerned regarding the petition of
the group of Members of the Seimas, is substantiated by the
following arguments.
2.1. The Government, while assenting to the draft Agreement
on Purchase and Sale of the Shares and draft annexes to the said
agreement by means of Items 1 and 2 of Resolution No. 22 of 9
January 2004, and while empowering the Director General of the
state enterprise State Property Fund to sign this agreement and
its annexes, and while assenting to the draft supplement to the
Long-term Gas Supply Agreement Between the Joint-stock Company
"Lietuvos dujos" and the Public Joint-stock Company "Gazprom"
(hereinafter referred to as the Gas Supply Agreement) by means of
Resolution No. 292 of 18 March 2004, did not create any new legal
norms or those which are different from the legal norms provided
for in laws, therefore, the Government, while adopting such
decisions, did not violate the powers granted to it under the
Constitution and laws.
2.2. Article 14 of the Republic of Lithuania Natural Gas Law
(which was valid at the time of adoption of the disputed
resolutions of the Government) prescribed that in the gas sector
transmission prices, distribution prices, storage prices, natural
gas prices for regulated customers shall be regulated; the State
Prices and Energy Control Commission (hereinafter referred to as
the Commission) shall set the thresholds of top prices for gas
transmission, distribution and storage and the thresholds of top
prices for the regulated customers. Thus, the legislator
established the legal regulation whereby it commissioned the
Commission, but not the Government, to regulate the thresholds of
top gas prices. Therefore, the Government decision by which the
regulation of natural gas prices would be established might be
treated as a legal act amending the law and creating new legal
norms of general character. In this way the hierarchy of legal
acts entrenched in the Constitution would be violated.
2.3. The commitment, for the time of the validity of the Gas
Supply Agreement, undertaken by the Government, which is
established Annex H to the Agreement on Purchase and Sale of the
Shares (this agreement was assented by Item 1 of disputed
Government Resolution No. 22 of 9 January 2004) not to adopt,
exclusively upon its own initiative, including legislative
initiative, any decisions prompting the Commission or other
institutions to establish natural gas prices to free customers
(save the transportation prices, transmission prices, and
distribution prices) is to be interpreted as abstaining by the
Government in initiating amendments to the Natural Gas Law
insofar as such amendments are related to the regulation of
natural gas prices to free customers. Such commitment does not
limit the right of the legislator to initiate draft laws and to
pass laws, nor does it limit the competence of the Commission in
the sphere of regulation of natural gas prices.
2.4. Paragraph 1 of Article 128 of the Constitution implies
that an issue of concerning the state loan or other basic
property liability of the state must always be debated in the
Seimas and a decision regarding this issue must also be adopted
in the Seimas. The Law on State Debt mentioned in the petition of
the group of Members of the Seimas, a petitioner, is not to be
applied to the commitment, which is specified in Item 9.1 of the
Agreement on Purchase and Sale of the Shares, regarding
reimbursement of the losses, since the provisions of Articles 6.
245 and 6.251 of the Civil Code of the Republic of Lithuania are
to be applied with respect to it.
3. The position of N. Pažūsienė, N. Biknius and R.
Stankauskienės, the representatives of the party concerned
regarding the petition of the Seimas, is substantiated by the
following arguments.
3.1. Paragraph 2 of Article 128 of the Constitution provides
that the procedure for the possession, use and disposal of state
property shall be established by law. The provisions of Paragraph
1 of Article 7 and Item 1 of Paragraph 1 of Article 17 of the
Republic of Lithuania Law on the Possession, Use and Disposal of
State and Municipal Property, Item 5 of Article 22 of the Law on
the Government of the Republic of Lithuania, Paragraph 2 of
Article 3 and Paragraph 4 of Article 10 of the Republic of
Lithuania Law on the Privatisation of State-owned and Municipal
Property allow to draw a conclusion that the Government enjoyed
the right granted to it by laws to assent, by means of the
disputed resolutions, to the draft Agreement on Purchase and Sale
of the Shares and the draft supplement to the Gas Supply
Agreement and to grant the powers to the Head of state enterprise
State Property Fund to sign the Agreement on Purchase and Sale of
the Shares. In its ruling of 23 May 2007, the Constitutional
Court also stated the existence of the right of the Government to
assent or not to assent to draft privatisation transactions.
Thus, disputed Government Resolution No. 22 of 9 January 2004 and
disputed Government Resolution No. 292 of 18 March 2004,
according to the procedure of their adoption, are not in conflict
with Paragraph 2 of Article 128 and Paragraph 1 of Article 5 of
the Constitution.
3.2. One of the main strategic tasks of the state in the
course of privatisation of the shares of the joint-stock company
"Lietuvos dujos" was securing long-term gas supply under
favourable prices to the consumers of this country, while taking
account to the accession of Lithuania to the European Union.
3.3. Under the legal regulation which was valid in 2003, the
prices of gas supply to free customers were contractual ones,
they could not regulated. The mechanism of the regulation of the
prices was only established in Article 23 of the Republic of
Lithuania Law on Amending the Natural Gas Law, which was adopted
by the Seimas on 20 March 2007it was established that also the
supply prices to free customers shall be regulated, while
thresholds of top prices shall be regulated by a decision of the
State Prices and Energy Control Commission.
In the constitutional doctrine, which was formulated in the
Constitutional Court rulings of 18 December 2001, 5 March 2004,
31 May 2006, and 13 August 2007, it is inter alia entrenched
that, under the Constitution, the Government, while issuing legal
acts, must observe the valid laws, that legal acts of the
Governmentsub-statutory legal actsmay not establish any such
legal regulation which would compete with the legal regulation
established in laws, that it is important that the Government
adopt sub-statutory legal acts without exceeding its powers, and
that these sub-statutory legal acts would not be in conflict with
the Constitution and laws.
3.4. The assurance by the Government consolidated in Annex H
of the Agreement on Purchase and Sale of the Shares in no way
places limits upon the legislator, the Seimas, and upon the
rights and duties of the Commission in the aspect of regulation
of natural gas prices to free customers and initiation of such
regulation. In addition, this assurance by the Government is not
unconditional, since the Government, while observing laws, may
resort to measures of legal regulation related with limiting
natural gas prices if the difference (margin) between the price
for acquisition (purchase) of natural gas paid by the joint-stock
company "Lietuvos dujos" and the sale of the natural gas to free
customers exceeds 15 percent. By this 15 percent margin one
protects the public interest and the welfare of the nation, the
interests of free customers are defended against unreasonable
profit of the company which supplies gas.
3.5. The commitment consolidated in Annex H of the Agreement
on Purchase and Sale of the Shares to reimburse the losses
incurred by the purchaser due to an essential violation of the
assurance submitted by the Government in Annex H of this
agreement is not expressed in any concrete amount. The general
liability is limited by the sum of 100 million litas, however, it
does not allow to maintain unreservedly that due to the said
essential violation limits one would incur losses at all, or that
one would incur losses exceeding 40 million litas, i.e. the sum
which, according to the petitioner, is to be regarded under the
Law on State Debt as a basic property liability of the state.
According to the representatives of the party concerned, in
its ruling of 18 October 2000, the Constitutional Court did not
recognise the commitment to reimburse losses to the strategic
investor and the joint-stock company "Mažeikių nafta" as a basic
property liability. Thus, the provisions of the Agreement on
Purchase and Sale of the Shares which establish commitments to
reimburse the losses due to non-fulfilment of the commitment not
to regulate natural gas prices are not basic property liabilities
of the state.
3.6. The disputed Government resolutions did not violate the
principle of publicity, since the confidentiality commitments
made by parties (inter alia the Government) to civil relations in
contracts is a common commercial practice.
3.7. Since, according to the representatives of the party
concerned, the provisions of Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 and Government Resolution No.
292 of 18 March 2004, to the extent that they assented to the
commitments made in Item 9.1 of the Agreement on Purchase and
Sale of the Shares and granted the powers to undertake such
commitments, are not in conflict with Paragraphs 1 and 3 of
Article 5 of the Constitution, therefore, they are not in
conflict with Paragraph 2 of Article 5 of the Constitution,
either. In addition, since the disputed provisions of the
Government are not in conflict with Article 5, Paragraphs 3 and 5
of Article 46 and Paragraph 1 of Article 128 of the Constitution,
they are not in conflict with the constitutional principle of a
state under the rule of law as well.
IV
1. In the course of the preparation of the case for the
Constitutional Court hearing, explanations were received from
Feliksas Petrauskas, Director of the State Consumer Rights
Protection Authority, Danas Janulionis, Deputy Chairman of the
State Prices and Energy Control Commission, and Viktoras
Valentukevičius, Director General of the joint-stock company
"Lietuvos dujos".
2. In the course of the preparation of the case for the
Constitutional Court hearing, alongside with a note of Olegas
Romančikas, Deputy Chancellor or the Prime Minister, the
documents of preparation of draft Government Resolutions No. 22
of 9 January 2004 and No. 292 of 18 March 2004 were received. In
the said note it was requested, pursuant to Paragraph 8 of
Article 16 of the Republic of Lithuania Law on State Secrets and
Official Secrets, to secure the protection of the submitted
classified information.
V
At the Constitutional Court hearing, J. Razma, the
representative of the group of Members of the Seimas, a
petitioner, virtually reiterated the arguments set forth in the
petition of the petitioner. R. Pilibaitis and N. Biknius, the
representatives of the Government, virtually reiterated the
arguments set forth in their written explanations and in those of
Pažūsienė, V. Gagilas and R. Stankauskienė, the former
representatives of the Government, the party concerned.
The Constitutional Court
holds that:
I
1. On 9 January 2004, the Government adopted Resolution No.
22 "On Assenting to a Draft Agreement on Purchase and Sale of 34
Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders", which came into force on 16 January 2004. This
resolution prescribed:
"Conforming to Paragraph 5 of Article 10 of the Republic of
Lithuania Law on the Privatisation of State-owned and Municipal
Property (Official Gazette Valstybės žinios, 1997, No. 107-2688),
the Government of the Republic of Lithuania shall resolve:
1. To assent to the draft Agreement on Purchase and Sale of
34 Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos' between
the state enterprise State Property Fund acting on behalf of the
Government of the Republic of Lithuania, and the public joint-
stock company 'Gazprom', to the annexes to this agreement, as
well as to the draft Agreement of Shareholders among the state
enterprise State Property Fund, public joint-stock company '
Gazprom' and 'Ruhrgas Energie Beteiligungs AG'.
2. To empower Povilas Milašauskas, Director General of the
state enterprise State Property Fund to sign, on behalf of the
Government of the Republic of Lithuania, the Agreement on
Purchase and Sale of 34 Percent of the Shares (Which Belong to
the State by Right of Ownership) of the Joint-Stock Company '
Lietuvos dujos' between the state enterprise State Property Fund
acting on behalf of the Government of the Republic of Lithuania,
and the public joint-stock company 'Gazprom', the annexes to this
agreement, as well as to the Agreement of Shareholders among the
state enterprise State Property Fund, public joint-stock company
'Gazprom' and 'Ruhrgas Energie Beteiligungs AG'.
3. The state enterprise State Property Fund must, prior to
transfer of the ownership right to the shares, submit a draft
Long-Term Gas Supply Agreement Between the Joint-Stock Company '
Lietuvos dujos' and the Public Joint-Stock Company 'Gazprom' (i.
e. a draft amendment and extension of validity of the now valid
gas supply agreement between the joint-stock company 'Lietuvos
dujos' and the public joint-stock company 'Gazprom' at least
until 2014 inclusively).
4. In the long-term gas supply agreement specified in Item 3
of this Resolution the following most important conditions must
be established:
4.1. The public joint-stock company 'Gazprom' undertakes an
obligation to supply natural gas directly to the joint-stock
company 'Lietuvos dujos' in the amounts, which would satisfy not
less that 70 percent of the general needs of consumers in the
Republic of Lithuania, which is stated by the joint-stock company
'Lietuvos dujos' (save the supply to the joint-stock company
"Achema" and the closed joint-stock company 'Kauno termofikacinė
elektrinė').
4.2. The price for natural gas must be established by the
formula specified in the valid gas supply agreement concluded
between the joint-stock company 'Lietuvos dujos' and the public
joint-stock company 'Gazprom'; this formula can be changed by
agreement of the parties by taking account of the dynamism of
prices for alternative fuel in the Republic of Lithuania.
4.3. Natural gas must be supplied in the amount provided for
in the long-term gas supply agreement from the beginning of the
nearest half-year period following the conclusion of this
agreement."
2. On 18 March 2004, the Government adopted Resolution No.
292 "On a Draft Supplement to the Long-Term Gas Supply Agreement
Between the Joint-Stock Company 'Lietuvos dujos' and the Public
Joint-Stock Company 'Gazprom'", which came into force on 20 March
2004. This resolution prescribed:
"Pursuant to Items 3 and 4 of Resolution of the Government
of the Republic of Lithuania No. 22 'On Assenting to a Draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company "Lietuvos dujos", Annexes to this Agreement, as well as
to a Draft Agreement of Shareholders' of 9 January 2004 (Official
Gazette Valstybės žinios, 2004, No. 8-185), the Government of the
Republic of Lithuania shall resolve:
To assent to the provisions of the draft supplement to the
Long-term Gas Supply Agreement Between the Joint-stock Company '
Lietuvos dujos' and the Public Joint-stock Company 'Gazprom',
which meet the conditions established in Item 1 of the Programme
for Privatisation of the 34 Percent Block of Shares (Which Belong
to the State by Right of Ownership) of the Joint-Stock Company '
Lietuvos dujos' and in Article 7.4 of the Agreement on Purchase
and Sale of 34 Percent of the Shares (Which Belong to the State
by Right of Ownership) of the Joint-Stock Company 'Lietuvos
dujos' concluded between the state enterprise State Property Fund
acting and the public joint-stock company 'Gazprom'."
3. The group of Members of the Seimas, a petitioner,
requests to investigate whether Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 and Government Resolution No.
292 of 18 March 2004 are not in conflict with Article 5,
Paragraphs 3 and 5 of Article 46, Paragraph 1 of Article 128 of
the Constitution and the constitutional principle of a state
under the rule of law.
4. The Seimas, a petitioner, requests to investigate whether
Items 1 and 2 of Government Resolution No. 22 of 9 January 2004
and Government Resolution No. 292 of 18 March 2004 to the extent
that the Government, according to the petitioner, assented to the
provisions of Annex H and Item 9.1 of the Agreement on Purchase
and Sale of the Shares and, subsequent to these provisions,
undertook obligations not to regulate the prices of natural gas
and to reimburse the losses, are not in conflict with Article 5,
Paragraphs 3 and 5 of Article 46, and Paragraph 1 of Article 128
of the Constitution and the constitutional principle of a state
under the rule of law.
5. It is clear from the petition of the group of Members of
the Seimas, a petitioner, that the petitioner disputes the
compliance of Items 1 and 2 of Government Resolution No. 22 of 9
January 2004 and that of Government Resolution No. 292 of 18
March 2004 with the Constitution to the same extent as the
Seimas, a petitioner, i.e. to the extent that the Government,
according to the petitioner, assented to the provisions of Annex
H and Item 9.1 of the Agreement on Purchase and Sale of the
Shares and, subsequent to these provisions, undertook obligations
not to regulate the prices of natural gas and to reimburse the
losses.
6. It needs to be noted that by Item 1 of Government
Resolution No. 22 of 9 January 2004 the Government assented not
to the Agreement on Purchase and Sale of the Shares itself, but
to the draft agreement and to the draft annexes thereto.
Government Resolution No. 292 of 18 March 2004 assented not to
the draft Agreement on Purchase and Sale of the Shares and the
draft annexes thereto, but to the provisions of the draft
supplement to the Long-term Gas Supply Agreement Between the
Joint-stock Company "Lietuvos dujos" and the Public Joint-stock
Company "Gazprom", which meet the conditions established in Item
1 of the Programme for Privatisation of the 34 Percent Block of
Shares (Which Belong to the State by Right of Ownership) of the
Joint-Stock Company "Lietuvos dujos" and in Article 7.4 of the
Agreement on Purchase and Sale of the Shares. The petitioners do
not dispute Government Resolution No. 292 of 18 March 2004 to the
extent that it assented to the provisions of the draft supplement
of the Gas Supply Agreement.
7. Thus, the group of Members of the Seimas and the Seimas,
the petitioners, request to investigate whether Items 1 and 2 of
Government Resolution No. 22 of 9 January 2004 and Government
Resolution No. 292 of 18 March 2004 to the extent that the
Government, according to the petitioners, assented to the
provisions of Annex H and Item 9.1 of the Agreement on Purchase
and Sale of the Shares and, subsequent to these provisions,
undertook obligations not to regulate the prices of natural gas
and to reimburse the losses, are not in conflict with Article 5,
Paragraphs 3 and 5 of Article 46, and Paragraph 1 of Article 128
of the Constitution and the constitutional principle of a state
under the rule of law.
8. It needs to be noted that the request of the petitioners
to investigate whether Items 1 and 2 of Government Resolution No.
22 of 9 January 2004 and Government Resolution No. 292 of 18
March 2004 to the extent that the Government, according to the
petitioners, assented to the provisions of Annex H and Item 9.1
of the Agreement on Purchase and Sale of the Shares and,
subsequent to these provisions, undertook obligations not to
regulate the prices of natural gas and to reimburse the losses,
are not in conflict the Constitution is substantiated by the
provisions of Item 9.1 of the draft Agreement on Purchase and
Sale of the Shares and those of draft Annex H to the said
agreement. Thus, the request of the petitioners to investigate
whether Items 1 and 2 of Government Resolution No. 22 of 9
January 2004 and Government Resolution No. 292 of 18 March 2004
are not in conflict with Article 5, Paragraphs 3 and 5 of Article
46, and Paragraph 1 of Article 128 of the Constitution and the
constitutional principle of a state under the rule of law, also
means a request to investigate whether the provisions of Item 9.1
of the draft Agreement on Purchase and Sale of the Shares and
those of draft Annex H to the said agreement are not in conflict
with the Constitution.
Under the Constitution and the Law on the Constitutional
Court, the Constitutional Court shall decide whether the laws and
other acts of the Seimas are not in conflict with the
Constitution and whether the acts of the President of the
Republic and the Government are not in conflict with the
Constitution or laws.
In this context it needs to be mentioned that, while
investigating whether Government Resolution No. 1698 "On the
Consent to the Draft Agreement on Purchase and Sale of the Shares
of the Joint-Stock Company 'Alita' which Belong to the State by
Right of Ownership" of 24 December 2003 was not in conflict with
the principle of a state under the rule of law and with Paragraph
2 (wording of 4 November 1997) of Article 3 and the provision
"negotiations on how to improve the bids may be entered into with
the potential buyer or potential buyers who have submitted the
highest bids and whose bids do not differ from each other by more
than 15 per cent" of Paragraph 1 (wording of 4 November 1997) of
Article 16 (wording of 17 December 2001) of the Law on
Privatisation of State-owned and Municipal Property, the
Constitutional Court held that "the assent of the Government to
the corresponding draft agreement is to be assessed only as a
permit to conclude the transaction (the conditions of which, as
it is taken for granted in the commercial practice, are not made
public), and not as its conclusion, such draft agreement is not
to be treated as a part of this legal act entrenching certain
legal regulation, which could be of the same legal power as the
other parts of this Government resolution. Therefore, the said
draft agreement is not a constituent part of the Government
resolution which is investigated in the constitutional justice
case at issue, it is not a legal act at all, let alone a legal
act with whose respect the Constitutional Court would have powers
to present a certain conclusion (decision) in the resolution part
of its ruling" (Constitutional Court ruling of 23 May 2007).
While one takes account of this, the draft Agreement on
Purchase and Sale of the Shares and the draft annexes thereto are
not legal acts, therefore, under the Constitution and the Law on
the Constitutional Court, they are not the matter of
investigation by the Constitutional Court. Thus, in the
constitutional justice case at issue the draft Agreement on
Purchase and Sale of the Shares and the draft annexes thereto
will not be investigated.
Alongside, it needs to be noted that in cases when it is
clearly evident from the content of a Government resolution which
assented to a certain draft agreement (inter alia from the aim,
object and conditions of the agreement), as well as from other
circumstances under which such Government resolution was adopted,
that such Government resolution is in conflict with the general
welfare of the Nation, poses a threat to the independence of the
State of Lithuania, territorial integrity, the constitutional
order, the security of the state or other vitally important
interests of the state, the Constitutional Court must state this
and recognise that the Government, while assenting to the draft
agreement, acted ultra vires.
9. Taking account of the arguments set forth, subsequent to
the petitions of the group of Members of the Seimas and the
Seimas, the petitioners, the Constitutional Court will
investigate whether the following is not in conflict with Article
5, Paragraphs 3 and 5 of Article 46, and Paragraph 1 of Article
128 of the Constitution and the constitutional principle of a
state under the rule of law:
- Items 1 and 2 of Government Resolution No. 22 "On
Assenting to a Draft Agreement on Purchase and Sale of 34 Percent
of the Shares (Which Belong to the State by Right of Ownership)
of the Joint-Stock Company 'Lietuvos dujos', Annexes to this
Agreement, as well as to a Draft Agreement of Shareholders" of 9
January 2004 to the extent that the Government assented to
selling 34 percent of the shares (which belonged to the state by
right of ownership) of the joint-stock company "Lietuvos dujos"
to the public joint-stock company "Gazprom" and empowered the
Director General of the state enterprise State Property Fund to
sign, on behalf of the Government, the Agreement on Purchase and
Sale of the Shares and annexes to this agreement;
- Government Resolution No. 292 "On a Draft Supplement to
the Long-Term Gas Supply Agreement Between the Joint-Stock
Company 'Lietuvos dujos' and the Public Joint-Stock Company '
Gazprom'" of 18 March 2004.
II
On the compliance of Items 1 and 2 of Government Resolution
No. 22 "On Assenting to a Draft Agreement on Purchase and Sale of
34 Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders" of 9 January 2004 and Government Resolution No. 292
"On a Draft Supplement to the Long-Term Gas Supply Agreement
Between the Joint-Stock Company 'Lietuvos dujos' and the Public
Joint-Stock Company 'Gazprom'" of 18 March 2004 with Article 5,
Paragraphs 3 and 5 of Article 46, and Paragraph 1 of Article 128
of the Constitution and the constitutional principle of a state
under the rule of law.
1. It has been mentioned that by Item 1 of Resolution No. 22
of 9 January 2004 the Government inter alia assented to the draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company "Lietuvos dujos" between the state enterprise State
Property Fund acting on behalf of the Government, and the public
joint-stock company "Gazprom", and also to the draft annexes of
this agreement, while by Item 2 of the same resolution it inter
alia empowered the Director General of the state enterprise State
Property Fund to sign, on behalf of the Government, the Agreement
on Purchase and Sale of 34 Percent of the Shares (Which Belong to
the State by Right of Ownership) of the Joint-Stock Company
"Lietuvos dujos" between the state enterprise State Property Fund
and the public joint-stock company "Gazprom", and also the draft
annexes to this agreement.
2. While deciding, subsequent to the petitions of the group
of Members of the Seimas and the Seimas, the petitioners, whether
Items 1 and 2 of Government Resolution No. 22 of 9 January 2004
to the corresponding extent are not in conflict with the
Constitution, it is first necessary to elucidate whether the
Government had the powers to adopt the decisions regarding the
privatisation of 34 percent of the shares (which belonged to the
state by right of ownership) of the joint-stock company "Lietuvos
dujos" and the powers to assent to the draft Agreement on
Purchase and Sale of the Shares and the draft annexes thereto;
otherwise, it would be impossible to give an answer whether the
Government, by assenting to the said drafts by its Resolution No.
22 of 9 January 2004, acted ultra vires.
2.1. Government Resolution No. 22 of 9 January 2004 was
adopted in connection with selling 34 percent of the shares
(which belonged to the state by right of ownership) of the joint-
stock company "Lietuvos dujos", i.e. in connection with
privatising state-owned property. At the time of adoption of this
resolution, the privatisation of state-owned and municipal
property was regulated by the Law on the Privatisation of State-
owned and Municipal Property (wording of 4 November 1997 with
subsequent amendments and supplements).
2.2. In the context of the constitutional justice case at
issue, the following provisions of the Law on the Privatisation
of State-owned and Municipal Property (wording of 4 November 1997
with subsequent amendments and supplements) are to be mentioned:
- "privatisation" means transfer of state-owned and
municipal property to the ownership of potential buyers under
privatisation transactions concluded in accordance with the
procedure established by this law (Paragraph 1 of Article 1);
- "privatisation object" means shares or other property
which is owned by the state or a municipality by the right of
public ownership and which is put on the list of privatisation
objects by the Government (Paragraph 2 of Article 1);
- "privatisation transaction" means an arrangement entered
into pursuant to this law, under which the holder of a state-
owned or municipal privatisation object obligates himself to
transfer the privatisation object into the ownership of the
potential buyer, whereas the potential buyer commits himself to
pay the amount of money agreed upon and/or fulfil other
obligations established under the arrangement (Paragraph 4 of
Article 1);
- the Government resolutions on privatisation issues adopted
on the basis of this law and other laws of the Republic of
Lithuania shall be binding on state and privatisation
institutions (Paragraph 2 of Article 3);
- the State Property Fund (hereinafter referred to as the
Property Fund) is a privatisation institution (Item 1 of
Paragraph 1 of Article 3), which, while fulfilling the functions
assigned to it under this law and the Law on the State Property
Fund in the sphere of privatisation shall act as the holder of
the privatisation object, privatising the property owned by the
state (Paragraph 1 of Article 4), draft the list of privatisation
objects and submit it to the Government for approval (Item 1 of
Paragraph 2 of Article 4), establish the method of privatisation
and terms and conditions of privatisation of a specific object
(Item 2 of Paragraph 2 of Article 4), sign privatisation
transactions on behalf of the Government (Item 8 of Paragraph 2
of Article 4);
- Privatisation Commission is a government institution set
up for the purpose of privatisation supervision and operating in
accordance with this law and the regulations approved by the
Government (Paragraph 1 of Article 5); the Privatisation
Commission shall be accountable to the Seimas (Paragraph 2 of
Article 5); the Privatisation Commission shall consist of 13
members; the Chairman of the Commission and its 6 members shall
be appointed and removed from office by the Seimas on the
recommendation of the Government; the remaining 6 members of the
Privatisation Commission shall be appointed and removed from
office by the Seimas on the recommendation of the Members of the
Seimas political groups (Paragraph 3 (wording of 4 November 1999)
of Article 5). The Privatisation Commission shall have the right
to approve or refuse to approve draft object privatisation
programmes (Item 1 of Paragraph 4 of Article 5);
- the object privatisation programme is a document, which
specifies (Paragraph 4 of Article 10): the name of the object and
the privatisation method (Item 1); the deadline for privatisation
(Item 2); short description of the privatisation object (the
authorised capital or value, the nominal value of shares owned by
the state or a municipality, profitability of the authorised
capital, the volume of production or annual turnover, the number
of employees, type of principal activity, geographical location,
information on the market share of the production or services of
the enterprise controlled by the state or a municipality and the
rights of third persons to the enterprise) (Item 3); terms and
conditions of privatisation (Item 4); the Government shall have
the right to set requirements other than those laid down in
Paragraph 4 of Article 10 of the Law on the Privatisation of
State-owned and Municipal Property for drafting of the object
privatisation programmes (including the right to establish
binding terms and conditions of the object privatisation
programmes and methods of privatisation), and also the right to
approve or refuse to approve draft programmes of privatisation of
the key objects of Lithuanian economy and draft privatisation
transactions of such objects (Paragraph 5 of Article 10); the
object privatisation programme must be publicly announced in the
Information Bulletin of Privatisation (Item 1 of Paragraph 1 of
Article 11);
- the list of privatisation objects shall be approved by the
Government on the recommendation of the Property Fund; the list
may include shares in all enterprises owned by the state and a
municipality, except for shares in joint-stock and closed joint-
stock companies privatisation whereof is restricted by laws;
under the Law on the Privatisation of State-owned and Municipal
Property, inter alia the property owned by the Republic of
Lithuania by the right of exclusive ownership may not be included
in the list of privatisation objects (Paragraph 2 (wording of 5
March 2002) of Article 10).
While summing up the listed provisions of the Law on the
Privatisation of State-owned and Municipal Property (wording of 4
November 1997 with subsequent amendments and supplements), it
needs to be noted that they establish the powers of the
Government, the Property Fund, the Privatisation Commission in
privatisation of property that belongs to the state by right of
ownership, inter alia the powers of the Government to approve the
list of privatisation objects (this list could not include shares
of the joint-stock and closed joint-stock companies the
privatisation whereof is restricted by laws), to approve or
refuse to approve draft programmes of privatisation of the key
objects of Lithuanian economy and draft privatisation
transactions of such objects.
2.3. Article 2 of the Republic of Lithuania Law "On Special-
purpose Enterprises and Areas of Their Activities" (wording of 15
February 1995 which came into force on 10 March 1995) prescribed:
"The enterprises entered into Appendix 2 to this Law must
undergo reorganisation and become special-purpose joint-stock
companies and closed joint-stock companies. <...>
The enterprises entered into Appendix 2 to this Law and
reorganised into special-purpose joint-stock companies may
increase their authorised capital only from their own funds under
procedure established in the Law on Companies. <...>
To prohibit that the enterprises entered into Appendix 2 to
this Law and reorganised into special-purpose joint-stock
companies change the status of a special company or undergo
reorganisation other than becoming special-purpose companies."
Appendix 2 "The List of State Enterprises Which Must Become
Special-Purpose Enterprises until 2000" to this Law inter alia
prescribed: "2005952 State enterprise 'Lietuvos dujos'."
It needs to be mentioned that, under Paragraph 2 (wording of
19 March 1998) of Article 5 of the Republic of Lithuania Law on
Companies, the shares held by a state or municipal institution in
a special-purpose company must carry at least 2/3 of all the
votes.
Thus, under the legal regulation established in the Law "On
Special-purpose Enterprises and Areas of Their Activities"
(wording of 15 February 1995 with subsequent amendments) and
Paragraph 2 (wording of 19 March 1998) of Article 5 of the Law on
Companies, the shares held by a state or municipal institution in
a special-purpose company had to carry at least 2/3 of all the
votes, and it was prohibited to change the status of the special-
purpose company. Thus, under this legal regulation, the shares
held by a non-state or non-municipal institution in a special-
purpose company could carry no more that 1/3 of all the votes.
2.4. On 17 October 2000, the Seimas adopted the Republic of
Lithuania Law on Reorganising the Joint-stock Company "Lietuvos
dujos", which came into force on 31 October 2000. This law
established the way and procedure of reorganisation of the said
joint-stock company (Paragraph 1 of Article 1), inter alia it
provided that during the reorganisation the special-purpose
status of the joint-stock company "Lietuvos dujos" is abolished
and its articles of association are amended (Article 2).
The amended articles of association of the joint-stock
company "Lietuvos dujos" were registered in the state enterprise
Centre of Registers on 31 December 2000.
2.5. Chapter 7.5 "Energy" of the 2001-2004 Programme of the
Government of the Republic of Lithuania, which was assented to by
the Seimas by Article 1 of Resolution No. IX-455 "On the
Programme of the Government of the Republic of Lithuania" of 12
July 2001 (it came into force on 12 July 2001), inter alia
prescribed: to restructure and reorganise the energy system, to
privatise certain objects thereof; to draft and adopt the basic
laws regulating energy, electricity, gas and other resources,
necessary for carrying out privatisation; to carry out the
privatisation and development of the gas sector by taking account
of the necessity to increase competitiveness and transparency of
the market, to gradually increase the opening of the markets to
unregulated customers by creating opportunities to buy natural
gas directly from gas enterprises without intermediaries.
2.6. It has been mentioned that, under Paragraph 2 (wording
of 5 March 2002) of Article 10 of the Law on the Privatisation of
State-owned and Municipal Property, the list of privatisation
objects could not include shares of the joint-stock and closed
joint-stock companies which belonged to the state or a
municipality by right of ownership the privatisation whereof was
restricted by laws and such shares could not be privatised.
At the time of the adoption of Government Resolution No. 22
of 9 January 2004 the limitations upon privatisation of
enterprises were inter alia established in the Republic of
Lithuania Law on Enterprises and Facilities of Strategic
Importance to National Security and Other Enterprises Important
to Ensuring National Security (wording of 10 October 2002), whose
purpose is to specify the enterprises and facilities of strategic
importance to national security, which of such enterprises and
facilities must belong to the state by the right of ownership and
in which, and the conditions under which, a part of the capital
may be held by the private national and foreign capital meeting
the criteria of European and trans-Atlantic integration provided
the power of decision is retained by the state, also to specify
other enterprises of importance to ensuring national security
(Article 1).
Article 2 of this law established the state enterprises and
the facilities belonging to the state by the right of ownership,
Article 3enterprises in which a proportion of the capital may be
held by the private national and foreign capital meeting the
criteria of European and trans-Atlantic integration, provided the
power of decision is retained by the state and facilities,
Paragraph 1 of Article 4 of this law provides: "In addition to
the enterprises and facilities indicated in Articles 2 and 3 of
this Law, the following enterprises shall also be of importance
to ensuring national security: <...> 2) joint-stock company '
Lietuvos dujos' <...>", whereas Paragraph 2 of Article 4 thereof
prescribed: "With a view to ensuring national security, laws may
set forth additional requirements for the operation of the
enterprises indicated in Paragraph 1 of this Article."
Thus, under this law, joint-stock company "Lietuvos dujos"
was not ascribed to state enterprises (Article 2 of this law) or
to enterprises in which a proportion of the capital may be held
by the private national and foreign capital meeting the criteria
of European and trans-Atlantic integration, provided the power of
decision is retained by the state (Article 3 of this law).
It needs to be noted that, at the time of the adoption of
Government Resolution No. 22 of 9 January 2004, there were not
any provisions establishing limitations upon privatisation of the
shares of the joint-stock company "Lietuvos dujos" in the
Republic of Lithuania Law on Energy (wording of 16 May 2002 with
subsequent amendments and supplements), which was designed to
regulate general energy activities, the basic principles of
energy development and management, energy and energy resources
efficiency, in the Natural Gas Law (wording of 10 October 2000
with subsequent amendments and supplements), which was designed
for the general principles of the natural gas sector and the
operations of natural gas enterprises and relations with the
customers (in the supply, distribution, transmission and storage
of natural gas), or in any other laws.
2.7. It also needs to be mentioned that, on 10 October 2002,
the Seimas adopted Resolution No. IX-1130 "On Approving the
National Energy Strategy" (it came into force on 17 October
2002), whereby it approved a renewed National Energy Strategy
submitted by the Government (Article 1) and recognised Seimas
Resolution No. VIII-1348 "On Approving the National Energy
Strategy" of 5 October 1999 as no longer valid (Article 2).
Chapter II "Aims of the Energy Strategy" of the renewed National
Energy Strategy, while taking account of the main factors forming
the energy policy, established inter alia the following aim of
the Lithuanian energy strategy: "<...> 3) to privatise the
enterprises, which are subject to privatisation, in natural gas
transmission and distribution and electricity sectors, to
continue the privatisation of oil refining and oil transportation
enterprises; <...>."
2.8. Summing up the discussed provisions of the legal acts,
in the context of the constitutional justice case at issue it
needs to be noted that:
- the Seimas recognised that privatisation of the natural
gas transmission and distribution enterprises, which are subject
to privatisation, was a strategic aim of the energy sector of
Lithuania;
- laws and other acts of the Seimas did not contain any
prohibition to privatise the shares (which belonged to the state
by right of ownership) of the joint-stock company "Lietuvos
dujos";
- under the legal regulation established in laws and other
acts of the Seimas, the Government enjoyed the powers to decide
on sale of the shares (which belonged to the state by right of
ownership) of the joint-stock company "Lietuvos dujos".
3. While deciding, whether Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 to the corresponding extent
are not in conflict with the Constitution, it is important to
elucidate whether the Government, while adopting a decision to
assent to the Draft Agreement on Purchase and Sale of 34 Percent
of the Shares (Which Belong to the State by Right of Ownership)
of the Joint-stock Company "Lietuvos dujos" between the state
enterprise State Property Fund and the public joint-stock company
"Gazprom", was following the requirements established in laws and
other acts of the Seimas.
3.1. It has been mentioned that, under Paragraph 2 (wording
of 5 March 2002) of Article 10 of the Law on the Privatisation of
State-owned and Municipal Property, the list of privatisation
objects shall be approved by the Government on the recommendation
of the Property Fund.
3.1.1. On 23 February 1998, the Government adopted
Resolution No. 228 "On Approving the List of Privatisation
Objects" (it came into force on 1 March 1998; hereinafter also
referred to as Government Resolution No. 228 of 23 February
1998), by Item 1 whereof it approved the list of privatisation
objects. Government Resolution No. 228 of 23 February 1998 was
amended and supplemented more than once.
3.1.2. On 2 March 2000, the Government adopted Resolution
No. 246 "On Approving the Basic Provisions of Privatisation and
Reorganisation of the Joint-stock Company 'Lietuvos dujos'" (it
came into force on 9 March 2000), wherein it was prescribed:
"While implementing the provisions of the National Energy
Strategy, the Government of the Republic of Lithuania has
resolved:
To approve the Basic Provisions of Privatisation and
Reorganisation of the Joint-stock Company 'Lietuvos dujos'
(enclosed)."
The said resolution was amended by Government Resolution No.
1194 "On Partial Amendment of Resolution of the Government of the
Republic of Lithuania No. 246 'On Approving the Basic Provisions
of Privatisation and Reorganisation of the Joint-stock Company
"Lietuvos dujos"' of 2 March 2000" of 4 October 2001.
3.1.3. On 2 May 2000, the Government adopted Resolution No.
495 "On Co-ordinating the Privatisation Process of the Joint-
stock Company 'Lietuvos dujos'" (it came into force on 2 May
2000), whereby it formed the commission for co-ordination of the
privatisation process of the joint-stock company "Lietuvos dujos"
(Item 1) and inter alia commissioned the commission to do the
following: by way of a public tender, to choose a privatisation
consultant (expert) with international experience (Item 2.1); to
consider the issues and problems related to the privatisation of
the shares of the enterprise (Item 2.3); to propose the following
to the Property Fund: the terms and conditions of the object of
privatisation (selling price, terms of payment, investment
requirements, as well as requirements of development of the
object, its future activity, and preservation of jobs), the time-
table of drafting and execution of the privatisation of the
object, the qualification criteria and conditions for potential
buyers and a system of assessment of submitted proposals (Item
2.4); to consider the draft programme of the privatisation of the
object, draft transaction documents and other draft documents
related to the privatisation of the object and submit conclusions
on these issues (Item 2.5).
3.1.4. On 26 March 2001, the Government adopted Resolution
No. 325 "On Partial Amendment of Resolution of the Government of
the Republic of Lithuania No. 228 'On Approving the List of
Privatisation Objects' of 23 February 1998" (it came into force
on 30 March 2001), which in part amended the list of
privatisation objects approved by Government Resolution No. 228
of 23 February 1998 (with subsequent amendments and supplements)
and set it forth in a new wording. The joint-stock company
"Lietuvos dujos" was also included into this list with an added
note that this object may be privatised only after the Government
has approved of its privatisation programme.
3.1.5. On 4 October 2001, the Government adopted Resolution
No. 1194 "On Partial Amendment of Resolution of the Government of
the Republic of Lithuania No. 246 'On Approving the Basic
Provisions of Privatisation and Reorganisation of the Joint-stock
Company "Lietuvos dujos" of 2 March 2000'" (it came into force on
11 October 2001), which in part amended the Basic Provisions of
Privatisation and Reorganisation of the Joint-stock Company
"Lietuvos dujos" approved by Government Resolution No. 246 of 2
March 2000.
Item 1 "The main aims of the privatisation and
reorganisation of the joint-stock company 'Lietuvos dujos'
(hereinafter referred to as the Company) shall be:" (wording of 4
October 2001) of the Basic Provisions of Privatisation and
Reorganisation of the Joint-stock Company "Lietuvos dujos" inter
alia prescribes:
"1.5. in the course of the privatisation of the Company, to
attract an investor meeting the European and trans-Atlantic
integration criteria (hereinafter referred to as the Strategic
Investor), a supplier of natural gas (hereinafter referred to as
the Supplier) and other investors."
Item 2 "The basic provisions of privatisation and
reorganisation of the Company shall be:" of (wording of 4 October
2001) of the Basic Provisions of Privatisation and Reorganisation
of the Joint-stock Company "Lietuvos dujos" inter alia
prescribes:
"2.3. The Company shall be privatised by selling part of the
shares which belong to the state by right of ownership;
2.4. by way of a public tender, 34 percent of the shares of
the Company shall be sold to the Strategic Investor <
>;
2.10. by way of a public tender, 34 percent of the shares of
the Company shall be sold to the Supplier or a consortium, in
which the right of decisive vote belongs to at least one or
several participants meeting the requirements raised to the
Supplier in these Provisions;
2.11. The Supplier must secure the gas supply for at least
10-year period, which would satisfy not less that 70 percent of
the general needs of natural gas of this country, and indicate
the price formula for the supplied natural gas; <...>."
3.2. It has been mentioned that, under Paragraph 5 of
Article 10 of the Law on the Privatisation of State-owned and
Municipal Property, the Government inter alia has the right to
approve or refuse to approve draft privatisation transactions of
the key objects of Lithuanian economy. On 15 May 2002, the
Government adopted Resolution No. 670 "On Assenting to a Draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company 'Lietuvos dujos', Annexes to this Agreement, as well as
to a Draft Agreement of Shareholders" (it came into force on 18
May 2002), whereby it assented to selling of 34 percent of the
shares (which belonged to the state by right of ownership) of the
joint-stock company "Lietuvos dujos" to the German capital
enterprises "Ruhrgas AG" and "E.ON Energie AG". On 2 December
2003, the Government adopted Resolution No. 1504 "On the Transfer
of Shares of the Joint-stock Enterprise 'Lietuvos dujos'" (it
came into force on 6 December 2003), whereby it resolved to
permit that "E.ON Energie AG" transfer its acquired shares of the
joint-stock company "Lietuvos dujos" to "Ruhrgas Energie
Beteiligungs AG", a daughter company of "Ruhrgas AG".
3.3. As mentioned, under Paragraph 5 of Article 10 of the
Law on the Privatisation of State-owned and Municipal Property,
the Government inter alia has the right to approve or refuse to
approve draft programmes of privatisation of the key objects of
Lithuanian economy.
3.3.1. On 7 June 2002, the Government adopted Resolution No.
846 "On Assenting to the Privatisation Programme of 34-Percent
Block of Shares (Which Belong to the State by Right of Ownership)
of the Joint-stock Company 'Lietuvos dujos' with a Provision to
Sell Said Block by Means of Public Tender to Suppliers of Natural
Gas" (it came into force on 13 June 2002), whereby, while
following Paragraph 5 of Article 10 of the Law on the
Privatisation of State-owned and Municipal Property (wording of 4
November 1997) and Government Resolution No. 443 "On Approving
the Regulations for Privatisation of Shares of Enterprises Which
Are Important Objects of Infrastructure or Dominant Objects in a
Branch of Economy" of 14 April 1998, assented to the
privatisation programme of the 34-percent block of shares (which
belonged to the state by right of ownership) of the joint-stock
company "Lietuvos dujos" (enterprise code2005952) with a
provision to sell the said block by means of public tender to
suppliers of natural gas (Item 1).
The Chapter "Terms and Conditions for Privatisation" of the
privatisation programme, which was assented by the Government by
the aforesaid resolution, inter alia prescribed that a potential
buyer had to secure the gas supply for at least 10-year period,
which would satisfy not less that 70 percent of the general needs
of natural gas of this country, and propose an acceptable price
formula for the supplied natural gas (Item 1).
The Government adopted this resolution after the
Privatisation Commission had approved "Draft Privatisation
Programme of 34-Percent Block of Shares (Which Belong to the
State by Right of Ownership) of the Joint-stock Company 'Lietuvos
dujos' (To Suppliers of Natural Gas)" on 24 May 2002 (minutes No.
22 (262) of the 24 May 2002 sitting of the Privatisation
Commission). The privatisation programme was announced in the
Information Bulletin of Privatisation in 2002, No. 7. It has been
mentioned that, under the Law on the Privatisation of State-owned
and Municipal Property, the Privatisation Commission had the
right to approve or refuse to approve draft object privatisation
programmes.
3.3.2. On 9 September 2002, the Government adopted
Resolution No. 1416 "On Assenting to Amendments to the
Privatisation Programme of 34-Percent Block of Shares (Which
Belong to the State by Right of Ownership) of the Joint-stock
Company 'Lietuvos dujos'" (it came into force on 12 September
2002), whereby the Government assented to amendments to the
privatisation programme of 34-percent block of shares (which
belonged to the state by right of ownership) of the joint-stock
company "Lietuvos dujos" with a provision to sell said block by
means of public tender to suppliers of natural gas, which had
been assented to by Government Resolution No. 846 of 7 June 2002,
where the amendments established that the deadline of acceptance
of initial tender bids submitted by potential buyers shall be 26
September 2002, whereas the deadline of acceptance of final
tender bids shall be 20 November 2002. Government Resolution No.
1416 of 9 September 2002 was amended by Government Resolution No.
1775 "On Amending Resolution of the Government of the Republic of
Lithuania No. 1416 'On Assenting to Amendments to the
Privatisation Programme of 34-Percent Block of Shares (Which
Belong to the State by Right of Ownership) of the Joint-stock
Company "Lietuvos dujos"' of 9 September 2002" of 13 November
2002 (it came into force on 16 November 2002), wherein it was
established that "the deadline of acceptance of final tender bids
and the beginning of their review shall be 28 February 2003, at
14 o'clock, and by Government Resolution No. 291 "On Amending
Resolution of the Government of the Republic of Lithuania No.
1416 'On Assenting to Amendments to the Privatisation Programme
of 34-Percent Block of Shares (Which Belong to the State by Right
of Ownership) of the Joint-stock Company "Lietuvos dujos"' of 9
September 2002" of 5 March 2003 (it came into force on 8 March
2003) wherein it was established that the deadline of acceptance
of final tender bids and the beginning of their review shall be
11 April 2003, at 14 o'clock.
3.4. On 9 January 2004, the Government adopted Resolution
No. 22 "On Assenting to a Draft Agreement on Purchase and Sale of
34 Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders" by Item 1 whereof it assented to selling 34 percent
of the shares (which belonged to the state by right of ownership)
of the joint-stock company "Lietuvos dujos" to the public joint-
stock company "Gazprom".
3.5. It has been mentioned that the Seimas recognised that
privatisation of the natural gas transmission and distribution
enterprises, which are subject to privatisation, was a strategic
aim of the energy sector of Lithuania, that laws and other acts
of the Seimas did not contain any prohibition to privatise the
shares (which belonged to the state by right of ownership) of the
joint-stock company "Lietuvos dujos" and, under the legal
regulation established in laws and other acts of the Seimas, the
Government enjoyed the powers to decide on sale of the shares
(which belonged to the state by right of ownership) of the joint-
stock company "Lietuvos dujos".
3.6. Thus, one is to draw a conclusion that the Government,
while adopting a decision to assent to the Draft Agreement on
Purchase and Sale of 34 Percent of the Shares (Which Belong to
the State by Right of Ownership) of the Joint-stock company
"Lietuvos dujos" between the state enterprise state Property Fund
and the public joint-stock company "Gazprom", was implementing
the provisions of laws and corresponding resolutions of the
Seimas.
4. It needs to be noted that, under the Constitution, the
Government, as it has been held by the Constitutional Court more
than once, is also bound by the resolutions that it adopted
itself. It has been mentioned in this ruling that resolutions of
the Government on privatisation issues adopted while following
the Law on the Privatisation of State-owned and Municipal
Property and other laws of the Republic of Lithuania, are
mandatory to state and privatisation institutions, inter alia the
Property Fund and the Privatisation Commission.
4.1. In this context it needs to be noted that under Item 1
of the Regulations for Privatisation of Shares of Enterprises
Which Are Important Objects of Infrastructure or Dominant Objects
in a Branch of Economy approved by Item 1 of Government
Resolution No. 443 "On Approving the Regulations for
Privatisation of Shares of Enterprises Which Are Important
Objects of Infrastructure or Dominant Objects in a Branch of
Economy" of 14 April 1998 (hereinafter also referred to as
Government Resolution No. 443 of 14 April 1998), it is these
regulations (with subsequent amendments and supplements) that
have regulated the specific conditions of preparation for
privatisation and carrying out the privatisation (by co-
ordinating the methods of privatisation provided for in the Law
on the Privatisation of State-owned and Municipal Property) of
the shares (which belong to the state or a municipality by right
of ownership) in enterprises which are controlled by the state or
a municipality and which are important objects of infrastructure
or dominant objects in a branch of economy.
Item 2 of Government Resolution No. 443 of 14 April 1998
(wording of 7 November 2001) prescribed that, while following the
Regulations for Privatisation of Shares of Enterprises Which Are
Important Objects of Infrastructure or Dominant Objects in a
Branch of Economy approved by this resolution, inter alia the
following (included into the list of privatisation objects and
belonging to the state by right of ownership) shall be subject to
privatisation: the shares (held by the Property Fund on trust) of
joint-stock companies and closed joint-stock companies which are
suggested by the Property Fund and which meet at least one of the
criteria specified in Item 2.1.4 of the resolution (the
authorised capital of the enterprise exceeds 50 million litas;
the enterprise is dominant in the market of its main activity;
the enterprise is an object of infrastructure); the shares of the
enterprises the privatisation of which is decided by the
Government according to the regulations approved by this
resolution (Item 2.1.5). Item 2.2 of the same resolution inter
alia prescribed that the tender commission formed by Government
Resolution No. 495 "On Co-ordinating the Privatisation Process of
the Joint-stock Company 'Lietuvos dujos'" of 2 May 2000
discharges the functions of the tender commission established in
the regulations approved by this resolution. It needs to be
mentioned that representatives from various institutions, inter
alia the Seimas, the Ministry of Economy, the state enterprise
State Property Fund, the State Prices and Energy Control
Commission, the Securities Commission, i.e. state institutions,
comprised the commission for co-ordination of the privatisation
process of the joint-stock company "Lietuvos dujos", which was
formed by Government Resolution No. 495 of 2 May 2000.
4.2. It has been mentioned that Government Resolution No.
846 of 7 June 2002, whereby it was assented to the privatisation
programme of 34-percent block of shares (which belonged to the
state by right of ownership) of the joint-stock company "Lietuvos
dujos" with a provision to sell the said block by means of public
tender to suppliers of natural gas, was adopted while following
inter alia Government Resolution No. 443 of 14 April 1998 which
approved the Regulations for Privatisation of Shares of
Enterprises Which Are Important Objects of Infrastructure or
Dominant Objects in a Branch of Economy.
It is clear from the case material that the 34-percent block
of shares (which belonged to the state by right of ownership) of
the joint-stock company "Lietuvos dujos" was sold to suppliers of
natural gas by means of a public tender. The tender took place
within the programme of privatisation of 34 percent of shares
(which belonged to the state by right of ownership) of the joint-
stock company "Lietuvos dujos" (to suppliers of natural gas),
which, as mentioned, was assented to by the Privatisation
Commission and the Government within established time periods. It
has been mentioned that by its resolutions, inter alia Resolution
No. 1416 of 9 September 2002, Resolution No. 1775 of 13 November
2002, Resolution No. 291 of 5 March 2003, the Government changed
the dates of the deadline of acceptance of initial tender bids
submitted by potential buyers, the deadline of acceptance of
final tender bids and of the beginning of their review. The
public tender for privatisation of 34 percent of shares (which
belonged to the state by right of ownership) of the joint-stock
company "Lietuvos dujos" was won by the public joint-stock
company "Gazprom".
In the constitutional justice case at issue there are no
grounds to assert that in the course of privatising the 34-
percent block of shares (which belonged to the state by right of
ownership) of the joint-stock company one did not follow the
requirements established in the Regulations for Privatisation of
Shares of Enterprises Which Are Important Objects of
Infrastructure or Dominant Objects in a Branch of Economy
approved by Government Resolution No. 443 of 14 April 1998. Nor
do the group of Members of the Seimas and the Seimas, the
petitioners, present such information.
Thus, in the case at issue there is no information on the
grounds of which it would be possible to assert that the
Government, while adopting a decision to assent to the Draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-stock
Company "Lietuvos dujos" between the state enterprise State
Property Fund and the public joint-stock company "Gazprom", and
to draft annexes to the said agreement, disregarded the procedure
established in its own resolutions.
5. It has been mentioned that the group of Members of the
Seimas and the Seimas, the petitioners, dispute the compliance of
Items 1 and 2 of Government Resolution No. 22 of 9 January 2004
with inter alia Article 5 and Paragraph 1 of Article 128 of the
Constitution.
5.1. It has been mentioned that Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 prescribed:
"1. To assent to the draft Agreement on Purchase and Sale of
34 Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos' between
the state enterprise State Property Fund acting on behalf of the
Government of the Republic of Lithuania, and the public joint-
stock company 'Gazprom', to the annexes to this agreement, as
well as to the draft Agreement of Shareholders among the state
enterprise State Property Fund, public joint-stock company '
Gazprom' and 'Ruhrgas Energie Beteiligungs AG'.
2. To empower Povilas Milašauskas, Director General of the
state enterprise State Property Fund to sign, on behalf of the
Government of the Republic of Lithuania, the Agreement on
Purchase and Sale of 34 Percent of the Shares (Which Belong to
the State by Right of Ownership) of the Joint-Stock Company '
Lietuvos dujos' between the state enterprise State Property Fund
acting on behalf of the Government of the Republic of Lithuania,
and the public joint-stock company 'Gazprom', the annexes to this
agreement, as well as to the Agreement of Shareholders among the
state enterprise State Property Fund, public joint-stock company
'Gazprom' and 'Ruhrgas Energie Beteiligungs AG'."
5.2. In its rulings the Constitutional Court has held more
than once that the principle of separation of powers entrenched
in Article 5 of the Constitution as well as in other articles of
the Constitution in which the powers of state institutions
executing state power are established inter alia means that if
the powers of a particular state institution are established in
the Constitution, this state institution cannot waive, nor
transfer these powers to any other institution, nor can they be
changed or limited by the law.
The powers of the Government as an institution of state
power are established inter alia in Article 94 of the
Constitution. Under Article 94 of the Constitution, the
Government: shall administer the affairs of the country, protect
the inviolability of the territory of the Republic of Lithuania,
guarantee State security and public order (Item 1); shall execute
laws and resolutions of the Seimas on the implementation of the
laws as well as the decrees of the President of the Republic
(Item 2); shall co-ordinate the activities of the ministries and
other establishments of the Government (Item 3); shall prepare a
draft State Budget and submit it to the Seimas; execute the State
Budget and submit to the Seimas a report on the execution of the
budget (Item 4); shall prepare draft laws and present them to the
Seimas for consideration (Item 5); shall establish diplomatic
ties and maintain relations with foreign states and international
organisations (Item 6); shall discharge other duties prescribed
to the Government by the Constitution and other laws (Item 7).
The powers of the Government are also established in Item 3
of Article 84, Paragraph 1 of Article 89, Paragraph 1 of Article
123, Paragraph 1 of Article 128, etc. of the Constitution. The
powers of the Government arise from the Constitution and laws.
Everything that the Government performs, while implementing the
powers established for it in the Constitution and laws, is
resolving of the affairs of state administration (Constitutional
Court rulings of 29 November 2001 and 30 May 2003).
Paragraph 1 of Article 128 of the Constitution provides that
decisions concerning the state loan and other basic property
liabilities of the state shall be adopted by the Seimas on the
proposal of the Government. It means that, under the
Constitution, decisions concerning basic property liabilities may
be adopted by the Seimas only, and only when there is a
recommendation of the Government (Constitutional Court ruling of
18 October 2000). In its ruling of 17 June 1997, the
Constitutional Court held that there exist two important aspects
of legal regulation in the content of this constitutional norm:
first of all, an imperative requirement is consolidated therein
that only the Seimas may adopt decisions concerning state loans
and other basic property liabilities of the state; the Government
has the right to initiate discussions on such issues at the
Seimas; the second aspect is the fact that deliberations upon
state loans and other basic property liabilities of the state
presuppose an open discussion.
Paragraph 1 of Article 128 of the Constitution is
inseparable from Paragraph 2 of the same article, wherein it is
prescribed that the procedure for the possession, use and
disposal of state property shall be established by law. When
construing that, the Constitutional Court has held more than once
that the transfer of the property, which belongs by right of
ownership to the state, as ownership to other subjects must be
based on the law, that the laws must inter alia establish the
state institutions which have the right to adopt decisions
concerning the transfer of the property, which belongs by right
of ownership to the state, as ownership to other subjects, and
the powers of these institutions to transfer the said property,
as well as the conditions and procedure of this transfer of the
property. This is also applicable to the Government which does
not enjoy any discretion to decide on non-application of
provisions of a certain law, which regulates corresponding
relations, unless non-application of a certain provision of the
law is expressis verbis provided for in laws (Constitutional
Court rulings of 23 May 2007 and 2 March 2009).
5.3. The petitioners substantiate their doubts, as regards
the compliance of Items 1 and 2 of Government Resolution No. 22
with Article 5 and Paragraph 1 of Article 128 of the
Constitution, by the fact that the Government, while assenting to
the Agreement on Purchase and Sale of the Shares, assumed a basic
property liability, whereas under Paragraph 1 of Article 128 of
the Constitution, only the Seimas was allowed to do so on the
proposal of the Government.
5.4. While deciding whether Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 to the extent that the
Government assented to selling 34 percent of the shares (which
belonged to the state by right of ownership) of the joint-stock
company "Lietuvos dujos" to the public joint-stock company
"Gazprom" and empowered the Director General of the state
enterprise State Property Fund to sign, on behalf of the
Government, the Agreement on Purchase and Sale of the Shares and
annexes to this agreement are not in conflict with Article 5 and
Paragraph 1 of Article 128 of the Constitution, it needs to be
noted that, as it has been held in this ruling, under the legal
regulation established in laws and other acts of the Seimas, the
Government enjoyed the powers to decide on sale of the shares
(which belonged to the state by right of ownership) of the joint-
stock company "Lietuvos dujos". Thus, the Seimas had adopted a
decision to privatise the enterprises, which are subject to
privatisation, in natural gas transmission and distribution
sectors, therefore, there are no legal grounds to assert that the
Government was not allowed to assent to the sale of 34 percent of
the shares (which belonged to the state by right of ownership) of
the joint-stock company "Lietuvos dujos" to the public joint-
stock company "Gazprom".
It also needs to be emphasised that Items 1 and 2 of
Government Resolution No. 22 of 9 January 2004 do not contain any
provisions by which the Government assumes a basic property
liability. The petitioners point out that a basic property
liability of the state is established in the draft Agreement on
Purchase and Sale of the Shares. It has been mentioned that the
draft Agreement on Purchase and Sale of the Shares and the draft
annexes thereto are not legal acts, therefore, under the
Constitution and the Law on the Constitutional Court, they are
not the matter of investigation by the Constitutional Court,
either.
Alongside, it needs to be noted that laws do not contain any
regular definition of a basic property liability of the state. In
some cases the legislator relates the notion of a basic property
liability of the state with the amount of adopted property
liabilities. For instance, Paragraph 2 of Article 5 of the
Republic of Lithuania Law on Concessions (the 24 June 2003
wording of the said law, which came into force on 1 October 2003)
inter alia prescribes: "Decisions relating to concessions
whereunder the Republic of Lithuania assumes basic property
liabilities shall be taken by the Seimas of the Republic of
Lithuania on the recommendation of the Government of the Republic
of Lithuania. For the purposes of this Law any property liability
(including potential civil liability arising under the concession
contract) which exceeds LTL 200 million shall be deemed as a
basic one"; Paragraph 9 of Article 15-2 of the Republic of
Lithuania Law on Investment (wording of 16 June 2009, which came
into force on 1 January 2010) provides: "A decision with regard
to general government and private entities' partnership under
which the State assumes liabilities exceeding LTL 200 million
(including the potential civil liability arising under a general
government and private entities' partnership agreement) shall be
taken by the Seimas of the Republic of Lithuania on the
recommendation of the Government of the Republic of Lithuania."
It also needs to be mentioned that no law establishes as to
what property liability, which could arise from agreements on
privatisation of state-owned property, is to be regarded as a
basic property liability of the state.
5.5. Taking account of the arguments set forth, one is to
draw a conclusion that Items 1 and 2 of Government Resolution No.
22 "On Assenting to a Draft Agreement on Purchase and Sale of 34
Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders" of 9 January 2004 to the extent that, according to
the petitioners, the Government, having assented to selling 34
percent of the shares (which belonged to the state by right of
ownership) of the joint-stock company "Lietuvos dujos" to the
public joint-stock company "Gazprom" and having empowered the
Director General of the state enterprise State Property Fund to
sign, on behalf of the Government, the Agreement on Purchase and
Sale of the Shares and annexes to this agreement, assumed basic
property liabilities, are not in conflict with Article 5 and
Paragraph 1 of Article 128 of the Constitution.
6. It has been mentioned that the group of Members of the
Seimas and the Seimas dispute the compliance of Items 1 and 2 of
Government Resolution No. 22 of 9 January 2004 with inter alia
Paragraphs 3 and 5 of Article 46 of the Constitution.
6.1. Paragraph 3 of Article 46 of the Constitution provides
that the state shall regulate economic activity so that it serves
the general welfare of the Nation.
The Constitutional Court has held the following: the formula
"the State shall regulate economic activity" of Paragraph 3 of
Article 46 of the Constitution means not the right of the state
to administer all or certain economic activity at its discretion,
but its right to establish legal regulation of economic activity,
inter alia establishment of limitations (prohibitions) and
conditions of economic activity, regulation of procedures in
legal acts (rulings of 13 May 2005, 4 December 2008, and 29 April
2009).
The Constitutional Court has held more than once that, while
regulating economic activity, the state has to follow the
principle of coordination of interests of the person and society
and has to guarantee the interests of both the private person (a
subject of economic activity) and society; by means of regulation
of economic activity the state must seek the welfare of not
individual persons but precisely the general welfare of the
Nation; the general welfare of the Nation cannot be opposed to
the welfare, rights and legitimate interests of the economic
entity (whose economic activity is regulated) itself as well as
those of other persons who have established and are running the
said economic entity or are otherwise related to the said entity;
one is not permitted to ground or to justify, by invoking the
general welfare of the Nation, any regulation by which the rights
and legitimate interests of a certain economic entity would be
limited more than necessary to secure the public interest, and
whereby unfavourable and unequal economic conditions are
established to economic entities, their initiative is restricted
and opportunities for its manifestation are not created.
As a rule, regulation of economic activity is linked with
establishment of conditions for economic activity, regulation of
certain procedures, control of economic activity, as well as with
certain limitations and prohibitions of this activity
(Constitutional Court rulings of 13 May 2005, 5 March 2008, 30
June 2008 and 29 April 2009). In its rulings the Constitutional
Court has held more than once that, according to the
Constitution, it is permitted to limit the rights and freedoms of
a person, including freedom of economic activity, in case the
following conditions are observed: this is done by law; the
limitations are necessary in a democratic society in order to
protect the rights and freedoms of other persons and the values
entrenched in the Constitution as well as the constitutionally
important objectives; the limitations do not deny the nature and
essence of the rights and freedoms; the constitutional principle
of proportionality is followed.
Paragraph 5 of Article 46 of the Constitution provides that
the state shall defend the interests of the consumer. The
Constitutional Court has held more than once that this provision
implies that laws and other legal acts ought to establish various
measures of protection of the interests of consumers, that state
institutions ought to control economic entities how the latter
are following such measures, and if the production and the market
are virtually concentrated in the area of certain economic
relations, a duty falls on the institutions of the state power to
establish an additional legal regulation which would ensure the
protection of the interests of consumers.
6.2. The petitioners substantiate their doubts as regards
the compliance of Items 1 and 2 of Government Resolution No. 22
of 9 January 2004 with Paragraphs 3 and 5 of Article 45 of the
Constitution by the fact that by means of the said resolution the
Government assumed the obligation not to regulate natural gas
prices and thus limited the implementation of the principles of
regulation of economic activity and protection of the rights of
consumers, which are established in the aforementioned norms of
the Constitution.
6.3. In this context it needs to be mentioned that Article
14 "Price Regulation" (wording of 10 October 2000) of the Natural
Gas Law, which was valid at the time of the adoption of
Government Resolution No. 22 of 9 January 2004, inter alia
prescribed:
"1. The following prices shall be regulated in the gas
sector:
1) transmission prices;
2) distribution prices;
3) storage prices;
4) gas prices for regulated customers."
It also needs to be mentioned that the Constitutional Court,
while investigating the provision "The enterprise which is
engaged in gas supply, must: <...> 37.9. Establish for free
customers the price of gas supply which would not exceed the
price cap of gas supply established by the Commission" of Item 37
(wording of 23 December 2002) of the Rules of Licensing the
Transmission, Distribution, Storage and Supply of Natural Gas
approved by Government Resolution No. 743 "On the Approval of the
Rules of Licensing the Transmission, Distribution, Storage and
Supply of Natural Gas" of 19 June 2001 with the Constitution and
laws, held that namely Paragraph 1 (wording of 10 October 2000)
of Article 14 of the Natural Gas Law established the nomenclature
of the regulated prices in the gas sector, and that until
Paragraph 1 (wording of 10 October 2000) of Article 14 of the
Natural Gas Law was either amended or supplemented, one was
allowed to regulate only the prices for gas transmission,
distribution and storage and the gas prices for regulated
customers, while other prices, inter alia the prices of gas
supply for free customers, were contractual (they could not be
regulated) (Constitutional Court ruling of 29 April 2009).
Thus, at the time of the adoption of Government Resolution
No. 22 of 9 January 2004 the gas prices could not be regulated
for free customers (they were contractual ones).
On 20 March 2007, the Seimas adopted the Law on Amending the
Natural Gas Law, which came into force on 19 April 2007. By
Article 1 of the Law on Amending the Natural Gas Law, the Natural
Gas Law (wording of 10 October 2000 with subsequent amendments
and supplements) was set forth in a new wording.
Article 23 "Price Regulation" of the Natural Gas Law
(wording of 20 March 2007) prescribes:
"1. The following prices shall be regulated in the gas
sector, by establishing the threshold of top prices thereof:
1) transmission prices;
2) liquefaction prices;
3) storage prices;
4) distribution prices;
5) supply prices."
Thus, upon amending the Natural Gas Law (wording of 10
October 2000 with subsequent amendments and supplements) and
setting it forth in a new wording (wording of 20 March 2007), one
established the legal regulation which regulated also the gas
supply price, inter alia the gas supply price for free customers.
It needs to be noted that, under Paragraph 2 of Article 23 of the
Natural Gas Law (wording of 20 March 2007), as from 1 July 2007
all customers (legal and natural persons) who buy gas are free
customers (Paragraph 40 of Article 3 of the Natural Gas Law).
Thus, under the Natural Gas Law (wording of 20 March 2007), as
from 1 July 2007, the gas supply price is regulated for all
customers.
6.4. While deciding whether Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 to the extent that the
Government assented to selling 34 percent of the shares (which
belonged to the state by right of ownership) of the joint-stock
company "Lietuvos dujos" to the public joint-stock company
"Gazprom" and empowered the Director General of the state
enterprise State Property Fund to sign, on behalf of the
Government, the Agreement on Purchase and Sale of the Shares and
annexes to this agreement are not in conflict with Paragraphs 3
and 5 of Article 46 of the Constitution, it needs to be
emphasised that Items 1 and 2 of Government Resolution No. 22 of
9 January 2004 do not contain any provisions whereby the
Government would undertake a commitment not to regulate the
natural gas prices.
6.5. It has been mentioned in this ruling that, by its
Resolution No. 22 of 9 January 2004, the Government not only
assented to draft the Agreement on Purchase and Sale of the
Shares and to draft annexes thereto, but also empowered the
Director General of the state enterprise State Property Fund to
sign, on behalf of the Government, this agreement and annexes
theretoas it has been mentioned, Items 3 and 4 of the said
agreement prescribed:
"3. The state enterprise State Property Fund must, prior to
transfer of the ownership right to the shares, submit a draft
Long-Term Gas Supply Agreement Between the Joint-Stock Company '
Lietuvos dujos' and the Public Joint-Stock Company 'Gazprom' (i.
e. a draft amendment and extension of validity of the now valid
gas supply agreement between the joint-stock company 'Lietuvos
dujos' and the public joint-stock company 'Gazprom' at least
until 2014 inclusively).
4. In the long-term gas supply agreement specified in Item 3
of this Resolution the following most important conditions must
be established:
4.1. The public joint-stock company 'Gazprom' undertakes an
obligation to supply natural gas directly to the joint-stock
company 'Lietuvos dujos' in the amounts, which would satisfy not
less that 70 percent of the general needs of consumers in the
Republic of Lithuania, which is stated by the joint-stock company
'Lietuvos dujos' (save the supply to the joint-stock company
"Achema" and the closed joint-stock company 'Kauno termofikacinė
elektrinė').
4.2. The price for natural gas must be established by the
formula specified in the valid gas supply agreement concluded
between the joint-stock company 'Lietuvos dujos' and the public
joint-stock company 'Gazprom'; this formula can be changed by
agreement of the parties by taking account of the dynamism of
prices for alternative fuel in the Republic of Lithuania.
4.3. Natural gas must be supplied in the amount provided for
in the long-term gas supply agreement from the beginning of the
nearest half-year period following the conclusion of this
agreement."
6.6. While deciding whether Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 to the extent that the
Government assented to selling 34 percent of the shares (which
belonged to the state by right of ownership) of the joint-stock
company "Lietuvos dujos" to the public joint-stock company
"Gazprom" and empowered the Director General of the state
enterprise State Property Fund to sign, on behalf of the
Government, the Agreement on Purchase and Sale of the Shares and
annexes to this agreement are not in conflict with Paragraphs 3
and 5 of Article 46 of the Constitution, it is also necessary to
elucidate whether the legal regulation established in Items 3 and
4 of Government Resolution No. 22 of 9 January 2004, while
following which the Government adopted its Resolution No. 292 of
18 March 2004, was in line with the requirements established by
laws.
6.7. It has been mentioned that Government Resolution No. 22
of 9 January 2004 was adopted while following Paragraph 5 of
Article 10 of the Law on the Privatisation of State-owned and
Municipal Property, which provides that the Government shall have
the right to set requirements other than those laid down in
Paragraph 4 of Article 10 of the Law on the Privatisation of
State-owned and Municipal Property for drafting of the object
privatisation programmes (including the right to establish
binding terms and conditions of the object privatisation
programmes and methods of privatisation), and also the right to
approve or refuse to approve draft programmes of privatisation of
the key objects of Lithuanian economy and draft privatisation
transactions of such objects. It has also been mentioned that
Paragraph 4 of Article 10 of the Law on the Privatisation of
State-owned and Municipal Property prescribes that the object
privatisation programme is a document, which specifies: the name
of the object and the privatisation method (Item 1); the deadline
for privatisation (Item 2); short description of the
privatisation object (the authorised capital or value, the
nominal value of shares owned by the state or a municipality,
profitability of the authorised capital, the volume of production
or annual turnover, the number of employees, type of principal
activity, geographical location, information on the market share
of the production or services of the enterprise controlled by the
state or a municipality and the rights of third persons to the
enterprise) (Item 3); conditions of privatisation (Item 4).
Thus, the law granted the right to the Government also to
set additional requirements (other than those laid down in the
Law on the Privatisation of State-owned and Municipal Property)
for drafting of privatisation programmes of individual objects.
6.8. It has also been mentioned that the shares of the
joint-stock company "Lietuvos dujos" were privatised while
following the Regulations for Privatisation of Shares of
Enterprises Which Are Important Objects of Infrastructure or
Dominant Objects in a Branch of Economy approved by Item 1 of
Government Resolution No. 443 of 14 April 1998 which regulate the
specific conditions of preparation for privatisation and carrying
out the privatisation (by co-ordinating the methods of
privatisation provided for in the Law on the Privatisation of
State-owned and Municipal Property) of the shares (which belong
to the state or a municipality by right of ownership) in
enterprises which are controlled by the state or a municipality
and which are important objects of infrastructure or dominant
objects in a branch of economy.
Item 20 of the Regulations for Privatisation of Shares of
Enterprises Which Are Important Objects of Infrastructure or
Dominant Objects in a Branch of Economy provide that both the
Property Fund and the tender commission, while drafting the
programme for privatisation of shares of an enterprise, must
consider all issues related to the privatisation of the shares of
the enterprise, identify and analyse the questions to be decided
prior to and during the privatisation of the object, and inter
alia establish:
"20.3. financial, technical, managerial and other needs of
the enterprise and the requirements for investment and
development of the enterprise, which should be met by the
strategic investor. These requirements for the investor may be
included into the conditions for privatisation of the object
and/or used as assessment criteria in the course of assessment of
technical bids submitted by potential buyers."
Thus, the Government, while making use of the right granted
to it by Paragraph 5 of Article 10 of the Law on the
Privatisation of State-owned and Municipal Property, established
the specific conditions of preparation for privatisation of
enterprises which are important objects of infrastructure or
dominant objects in a branch of economy.
6.9. As mentioned, on 24 May 2002, while following
Government Resolution No. 443 "On Approving the Regulations for
Privatisation of Shares of Enterprises Which Are Important
Objects of Infrastructure or Dominant Objects in a Branch of
Economy" of 14 April 1998, the Privatisation Commission assented
to "the draft programme of privatisation of 34 percent of shares
(which belonged to the state by right of ownership) of the joint-
stock company 'Lietuvos dujos' (to suppliers of natural gas)";
the Chapter "Terms and Conditions for Privatisation" of the
privatisation programme inter alia prescribed that a potential
buyer had to secure the gas supply for at least 10-year period,
which would satisfy not less that 70 percent of the general needs
of natural gas of this country, and propose an acceptable price
formula for the supplied natural gas (Item 1).
The Chapter "Qualification criteria and conditions shall be
applied to potential buyers" of this privatisation programme
inter alia prescribed: "A potential buyerSupplier of Natural
Gasmust be a subject that supplies natural gas to the JSC '
Lietuvos dujos' or to other enterprises in Lithuania and which
either directly or through its controlled entities controls and
exploits natural gas resources and the infrastructure of natural
gas transportation, which is necessary to carry out its
obligations in an efficient manner, and presents evidence proving
this."
It has also been mentioned that, by its Resolution No. 846
"On Assenting to the Privatisation Programme of 34-Percent Block
of Shares (Which Belong to the State by Right of Ownership) of
the Joint-stock Company 'Lietuvos dujos' with a Provision to Sell
Said Block by Means of Public Tender to Suppliers of Natural Gas"
of 7 June 2002, while following Paragraph 5 of Article 10 of the
Law on the Privatisation of State-owned and Municipal Property
(wording of 4 November 1997) and Government Resolution No. 443
"On Approving the Regulations for Privatisation of Shares of
Enterprises Which Are Important Objects of Infrastructure or
Dominant Objects in a Branch of Economy" of 14 April 1998, the
Government assented to the privatisation programme of the 34-
percent block of shares (which belonged to the state by right of
ownership) of the joint-stock company "Lietuvos dujos" with a
provision to sell the said block by means of public tender to
suppliers of natural gas.
6.10. In the context of the constitutional justice case at
issue one is to draw the following conclusions as regards the
legal regulation established in Items 3 and 4 of Government
Resolution No. 22 of 9 January 2004:
- the legal regulation established in Items 3 and 4 of
Government Resolution No. 22 of 9 January 2004 is grounded on
corresponding provisions of the privatisation programme of the
34-percent block of shares (which belonged to the state by right
of ownership) of the joint-stock company "Lietuvos dujos" with a
provision to sell the said block by means of public tender to
suppliers of natural gas;
- the privatisation programme of the 34-percent block of
shares (which belonged to the state by right of ownership) with a
provision to sell the said block by means of public tender to
suppliers of natural gas is grounded on the provisions of the
Regulations for Privatisation of Shares of Enterprises Which Are
Important Objects of Infrastructure or Dominant Objects in a
Branch of Economy approved by Item 1 of Government Resolution No.
443 of 14 April 1998;
- Government Resolution No. 443 of 14 April 1998 and the
regulations approved by it are grounded on Paragraph 5 of Article
10 of the Law on the Privatisation of State-owned and Municipal
Property.
Therefore, the legal regulation established in Items 3 and 4
of Government Resolution No. 22 of 9 January 2004 was in line
with the requirements established by the law.
Thus, the Government, while assenting, by means of its
Resolution No. 22 of 9 January 2004, to selling 34 percent of the
shares (which belonged to the state by right of ownership) of the
joint-stock company "Lietuvos dujos" to the public joint-stock
company "Gazprom" and empowering the Director General of the
state enterprise State Property Fund to sign, on behalf of the
Government, the Agreement on Purchase and Sale of the Shares and
annexes to this agreement, alongside obligated the state
enterprise State Property Fund to submit, prior to transfer of
the ownership right to the shares, a draft Long-Term Gas Supply
Agreement Between the Joint-Stock Company "Lietuvos dujos" and
the Public Joint-Stock Company "Gazprom" to the Government for
assenting, and established the main conditions for this
agreement: the public joint-stock company "Gazprom" had to
undertake an obligation to supply natural gas in the amounts,
which would satisfy not less that 70 percent of the general needs
of consumers in the Republic of Lithuania; the price for natural
gas had to be established by the formula specified in the valid
gas supply agreement, whereas this formula could be changed by
agreement of the parties by taking account of the dynamism of
prices for alternative fuel in the Republic of Lithuania; gas had
to be supplied from the beginning of the nearest half-year period
following the conclusion of this agreement. Such legal regulation
was in line with the requirements established by the law; by the
said legal regulation the Government sought to secure long-term
supply of natural gas to Lithuania and that the price for the gas
would be established by taking account of the prices for
alternative fuel.
Thus, there are no legal grounds to assert that the legal
regulation established in Government Resolution No. 22 of 9
January 2004 disregarded the constitutional imperative to
regulate the economic activity so that it serves the general
welfare of the Nation, or created preconditions to violate the
interests of consumers.
6.11. Taking account of the arguments set forth, one is to
draw a conclusion that Items 1 and 2 of Government Resolution No.
22 "On Assenting to a Draft Agreement on Purchase and Sale of 34
Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders" of 9 January 2004 to the extent that the Government
assented to selling 34 percent of the shares (which belonged to
the state by right of ownership) of the joint-stock company
"Lietuvos dujos" to the public joint-stock company "Gazprom" and
empowered the Director General of the state enterprise State
Property Fund to sign, on behalf of the Government, the Agreement
on Purchase and Sale of the Shares and annexes to this agreement
are not in conflict with Paragraphs 3 and 5 of Article 46 of the
Constitution.
7. It has been mentioned that the group of Members of the
Seimas and the Seimas, the petitioners, dispute the compliance of
Items 1 and 2 of Government Resolution No. 22 of 9 January 2004
with inter alia the constitutional principle of a state under the
rule of law.
7.1. In its rulings the Constitutional Court has held more
than once that, while preparing and adopting legal acts,
institutions of state power must follow the principle of a state
under the rule of law entrenched in the Constitution. The
Constitutional Court has also held that the principle of a state
under the rule of law implies, along with the other requirements,
that the Constitution has the supreme legal power and that the
laws, Government resolutions and other legal acts must be in
conformity with the Constitution, that the institutions
exercising sate authority and other state institutions must act
on the basis of law and in compliance with law; the principle of
a state under the rule of law also implies that the institutions
exercising state authority may not exceed the powers established
for them in the Constitution, and that one institution of state
authority may not interfere with the powers of another
institution of state authority, which are established for the
latter in the Constitution.
The Constitutional Court has also held in its acts more than
once that the principle of a state under the rule of law
entrenched in the Constitution implies the hierarchy of legal
acts as well, inter alia the fact that sub-statutory legal acts
may not be in conflict with laws, constitutional laws and the
Constitution, that sub-statutory legal acts must be adopted on
the basis of laws, that a sub-statutory legal act is an act of
application of norms of the law, irrespective of whether the act
is of one-time (ad hoc) application, or permanent validity. The
Constitutional Court has also held that if the legal regulation
established in the Government resolutions competed with the legal
regulation established in the laws or were not grounded on the
laws, not only the constitutional principle of a state under the
rule of law and Item 2 of Article 94 of the Constitution would be
violated but also Paragraph 2 of Article 5 of the Constitution,
in which it is established that the scope of power shall be
limited by the Constitution; the constitutional principle of
separation of powers could thus also be violated (Constitutional
Court rulings of 31 May 2006, 13 August 2007, 29 April 2009 and 8
October 2009).
7.2. The petitioners substantiate their doubts as regards
the compliance of Items 1 and 2 of Government Resolution No. 22
of 9 January 2004 with the constitutional principle of a state
under the rule of law by the fact that this resolution assented
to the agreement whose content was unknown to the public and
principle of publicity was thus violated, and, in addition, the
said provisions of the Government resolution of 9 January 2004 to
the corresponding extent are in conflict with the constitutional
principle of a state under the rule of law also because they are
in conflict with Article 5, Paragraphs 3 and 5 of Article 46 and
Paragraph 1 of Article 128 of the Constitution.
7.3. While deciding whether Items 1 and 2 of Government
Resolution No. 22 of 9 January 2004 to the extent that the
Government assented to selling 34 percent of the shares (which
belonged to the state by right of ownership) of the joint-stock
company "Lietuvos dujos" to the public joint-stock company
"Gazprom" and empowered the Director General of the state
enterprise State Property Fund to sign, on behalf of the
Government, the Agreement on Purchase and Sale of the Shares and
annexes to this agreement are not in conflict with the
constitutional principle of a state under the rule of law, it
needs to be noted that, as mentioned, the assent of the
Government to the corresponding draft agreement is to be assessed
only as a permit to conclude the transaction (the conditions of
which, as it is taken for granted in the commercial practice, are
not made public), and not as its conclusion, such draft agreement
is not to be treated as a part of this legal act entrenching
certain legal regulation, which could be of the same legal power
as the other parts of this Government resolution; such draft
agreement is not a legal act at all.
Paragraph 2 of Article 7 of the Constitution consolidates
that only laws which are published shall be valid. The
Constitutional Court has held that, while taking account of the
constitutional requirement that law may not be non-public, the
notion "laws" which is employed in Paragraph 2 of Article 7 of
the Constitution should not be construed only literallyit should
be construed in an expanding manner, as a notion that includes
not only legal acts, which have the power of the law, but also
other legal acts (Constitutional Court rulings of 29 October
2003, 27 June 2007, and 9 February 2010). The Constitutional
Court has also held that the constitutional requirement that only
laws which are published are valid is inseparable from the
constitutional principle of a state under the rule of law and it
is one of the essential elements of the constitutional principle
of a state under the rule of lawit is an important precondition
for legal certainty (Constitutional Court rulings of 29 November
2001, 30 May 2003, 29 October 2003, and 27 June 2007).
It needs to be noted that Government Resolution No. 22 of 9
January 2004 Items 1 and 2 whereof inter alia assented to selling
34 percent of the shares (which belonged to the state by right of
ownership) of the joint-stock company "Lietuvos dujos" to the
public joint-stock company "Gazprom" and empowered the Director
General of the state enterprise State Property Fund to sign, on
behalf of the Government, the Agreement on Purchase and Sale of
the Shares and annexes to this agreement, was officially
published (Official Gazette Valstybės žinios, 2004, No. 8-185),
however, the draft agreement and draft annexes thereto, which
were assented to by the Government by means of the said
resolution, have not been published officially.
In the context of the constitutional justice case at issue
it also needs to be noted that the constitutional requirement
that law cannot be non-public must be followed also in the course
of issuance acts of the Government whereby privatisation
agreements are assented to. The said constitutional requirement
means not only that a resolution of the Government, whereby
draft agreements on privatisation of key objects of Lithuanian
economy and draft annexes to such agreements are assented to,
must be officially published, but also that such a resolution of
the Government must contain not only formal assent to the draft
agreement and to the draft annexes thereto, but also it must
state the compliance of the provisions of the assented draft
resolution with terms and conditions provided for in the
privatisation programme, it must specify the principled
provisions of the agreement, as, for instance, the purpose of the
agreement, the object of the agreement, the basic commitments
undertaken by the state. On the other hand, it is not allowed to
disregard the requirement for confidentiality established in the
commercial practice, where certain conditions of the agreements
are not made public. Alongside, it also needs to be noted that in
cases where the state is a party to an agreement, inter alia a
privatisation agreement, the fact that the conditions are made
not public must be constitutionally grounded: as a rule, the
agreement conditions can be made not public in order to protect a
state, professional, or commercial secret.
This ruling has held: under the legal regulation established
in laws and other acts of the Seimas, the Government enjoyed the
powers to decide on sale of the shares (which belonged to the
state by right of ownership) of the joint-stock company "Lietuvos
dujos"; the Government, while adopting a decision to sell the 34
percent of the shares (which belonged to the state by right of
ownership) of the joint-stock company "Lietuvos dujos" to the
public joint-stock company "Gazprom", was following the procedure
established in laws and other legal acts; the privatisation
programme of 34-percent block of shares (which belonged to the
state by right of ownership) of the joint-stock company "Lietuvos
dujos" provided to sell the said block by means of public tender
to suppliers of natural gas; this programme provided for
qualification requirements and conditions for potential buyers
and it provided for privatisation conditions; the privatisation
programme was public, it was announced in the Information
Bulletin of Privatisation in 2002, No. 7; the Government, while
assenting, by means of the disputed resolution, to the draft
Agreement on Purchase and Sale of the Shares and draft annexes to
this agreement, obligated the state enterprise State Property
Fund to submit, prior to transfer of the ownership right to the
shares, a draft Long-Term Gas Supply Agreement Between the Joint-
Stock Company "Lietuvos dujos" and the Public Joint-Stock Company
"Gazprom" to the Government for assenting, and established the
main conditions for this agreement. Thus, the Government was
seeking to secure long-term supply of natural gas to Lithuania,
where account would be taken to prices for alternative fuel.
In this ruling it has been mentioned that no law establishes
as to what property liability, which could arise from agreements
on privatisation of state-owned property, is to be regarded as a
basic property liability of the state.
Thus, although the draft Agreement on Purchase and Sale of
the Shares and draft annexes to this agreement, which were
assented to by the Government by means of Item 1 of its
Resolution No. 22 of 9 January 2004, had not been published
officially, a certain part of the conditions of this agreement
were known from this and other published legal acts.
7.4. Taking account of the arguments set forth, one is to
draw a conclusion that Items 1 and 2 of Government Resolution No.
22 "On Assenting to a Draft Agreement on Purchase and Sale of 34
Percent of the Shares (Which Belong to the State by Right of
Ownership) of the Joint-Stock Company 'Lietuvos dujos', Annexes
to this Agreement, as well as to a Draft Agreement of
Shareholders" of 9 January 2004 to the extent that the Government
assented to selling 34 percent of the shares (which belonged to
the state by right of ownership) of the joint-stock company
"Lietuvos dujos" to the public joint-stock company "Gazprom" and
empowered the Director General of the state enterprise State
Property Fund to sign, on behalf of the Government, the Agreement
on Purchase and Sale of the Shares and annexes to this agreement
are not in conflict with the constitutional principle of a state
under the rule of law.
8. It has been mentioned that the group of Members of the
Seimas and Seimas, the petitioners, request to investigate
whether Government Resolution No. 292 "On a Draft Supplement to
the Long-Term Gas Supply Agreement Between the Joint-Stock
Company 'Lietuvos dujos' and the Public Joint-Stock Company '
Gazprom'" of 18 March 2004 is not in conflict with Article 5,
Paragraphs 3 and 5 of Article 46 and Paragraph 1 of Article 128
of the Constitution and the constitutional principle of a state
under the rule of law.
8.1. It has been mentioned that Government Resolution No.
292 of 18 March 2004 prescribed:
"Pursuant to Items 3 and 4 of Resolution of the Government
of the Republic of Lithuania No. 22 'On Assenting to a Draft
Agreement on Purchase and Sale of 34 Percent of the Shares (Which
Belong to the State by Right of Ownership) of the Joint-Stock
Company "Lietuvos dujos", Annexes to this Agreement, as well as
to a Draft Agreement of Shareholders' of 9 January 2004 (Official
Gazette Valstybės žinios, 2004, No. 8-185), the Government of the
Republic of Lithuania shall resolve:
To assent to the provisions of the draft supplement to the
Long-term Gas Supply Agreement Between the Joint-stock Company '
Lietuvos dujos' and the Public Joint-stock Company 'Gazprom',
which meet the conditions established in Item 1 of the Programme
for Privatisation of the 34 Percent Block of Shares (Which Belong
to the State by Right of Ownership) of the Joint-Stock Company '
Lietuvos dujos' and in Article 7.4 of the Agreement on Purchase
and Sale of 34 Percent of the Shares (Which Belong to the State
by Right of Ownership) of the Joint-Stock Company 'Lietuvos
dujos' concluded between the state enterprise State Property Fund
acting and the public joint-stock company 'Gazprom'."
8.2. It has also been mentioned that on 24 May 2002 the
Privatisation Commission assented to "draft privatisation
programme of 34-percent block of shares (which belong to the
state by right of ownership) of the joint-stock company 'Lietuvos
dujos' (to suppliers of natural gas)". Item 1 of the Chapter
"Terms and Conditions for Privatisation" of the said programme
prescribed that a potential buyer had to secure the gas supply
for at least 10-year period, which would satisfy not less that 10
percent of the general needs of natural gas of this country, and
propose an acceptable price formula for the supplied natural gas.
8.3. It needs to be noted that Government Resolution No. 292
of 18 March 2004 was adopted while following Items 3 and 4 of
Government Resolution No. 22 of 9 January 2004, which, as
mentioned, prescribed:
"3. The state enterprise State Property Fund must, prior to
transfer of the ownership right to the shares, submit a draft
Long-Term Gas Supply Agreement Between the Joint-Stock Company '
Lietuvos dujos' and the Public Joint-Stock Company 'Gazprom' (i.
e. a draft amendment and extension of validity of the now valid
gas supply agreement between the joint-stock company 'Lietuvos
dujos' and the public joint-stock company 'Gazprom' at least
until 2014 inclusively).
4. In the long-term gas supply agreement specified in Item 3
of this Resolution the following most important conditions must
be established:
4.1. The public joint-stock company 'Gazprom' undertakes an
obligation to supply natural gas directly to the joint-stock
company 'Lietuvos dujos' in the amounts, which would satisfy not
less that 70 percent of the general needs of consumers in the
Republic of Lithuania, which is stated by the joint-stock company
'Lietuvos dujos' (save the supply to the joint-stock company
"Achema" and the closed joint-stock company 'Kauno termofikacinė
elektrinė').
4.2. The price for natural gas must be established by the
formula specified in the valid gas supply agreement concluded
between the joint-stock company 'Lietuvos dujos' and the public
joint-stock company 'Gazprom'; this formula can be changed by
agreement of the parties by taking account of the dynamism of
prices for alternative fuel in the Republic of Lithuania.
4.3. Natural gas must be supplied in the amount provided for
in the long-term gas supply agreement from the beginning of the
nearest half-year period following the conclusion of this
agreement."
8.4. Thus, Government Resolution No. 292 of 18 March 2004
was adopted while implementing the provisions of Item 3 of
Government Resolution No. 22 of 9 January 2004; the draft
supplement (which was assented to by the Government by means of
its Resolution No. 292 of 18 March 2004) to the Gas Supply
Agreement had to establish amendments of and supplements to
Agreement No. 1GLi-2000 on the Amounts and Conditions of Supply
of Natural Gas from Russia to the Republic of Lithuania in 2000-
2005 which was concluded between the public joint-stock company
"Gazprom" and the joint-stock company "Lietuvos dujos", which had
to be in line with the requirements and main conditions
established in Item 4 of Government Resolution No. 22 of 9
January 2004 as well as with the conditions established in Item 1
of the Privatisation Conditions of the Privatisation Programme
and Article 7.4 of the Agreement on Purchase and Sale of the
Shares.
8.5. It has been mentioned that the legal regulation
established in Items 3 and 4 of Government Resolution No. 22 of 9
January 2004, by following which the Government adopted its
Resolution No. 292 of 18 March 2004, were in line with the
requirements established in laws.
8.6. It has been mentioned that, under the Constitution, the
Government, as it has been held by the Constitutional Court more
than once, is also bound by the resolutions that it adopted
itself. It has also been mentioned that Government Resolution No.
292 of 18 March 2004 was adopted while implementing the
provisions of Item 3 of Government Resolution No. 22 of 9 January
2004.
Having held that the legal regulation established in Items 3
and 4 of Government Resolution No. 22 of 9 January 2004 was in
line with the requirements established in laws, one is also to
hold that the legal regulation established in Government
Resolution No. 292 of 18 March 2004 was also in line with the
requirements of laws.
8.7. While disputing the compliance of Government Resolution
No. 292 of 18 March 2004 with the Constitution, the group of
Members of the Seimas and the Seimas, the petitioners, point out
the same arguments as those that they indicate when disputing the
compliance of Items 1 and 2 of Government Resolution No. 22 of 9
January 2004 with the Constitution.
8.8. It has been held in this Constitutional Court ruling
that Items 1 and 2 of Government Resolution No. 22 of 9 January
2004 to the extent that the Government assented to selling 34
percent of the shares (which belonged to the state by right of
ownership) of the joint-stock company "Lietuvos dujos" to the
public joint-stock company "Gazprom" and empowered the Director
General of the state enterprise State Property Fund to sign, on
behalf of the Government, the Agreement on Purchase and Sale of
the Shares and annexes to this agreement are not in conflict with
Paragraph 5, Paragraphs 3 and 5 of Article 46, Paragraph 1 of
Article 128 of the Constitution and the constitutional principle
of a state under the rule of law. In this ruling it has also been
held that the legal regulation established in Items 3 and 4 of
Government Resolution No. 22 of 9 January 2004, and in Government
Resolution No. 292 of 18 March 2004, was in line with the
requirements established in laws.
8.9. Having held this, on the grounds of the same arguments
one is also to hold that Government Resolution No. 292 "On a
Draft Supplement to the Long-Term Gas Supply Agreement Between
the Joint-Stock Company 'Lietuvos dujos' and the Public Joint-
Stock Company 'Gazprom'" of 18 March 2004 is not in conflict with
Paragraph 5, Paragraphs 3 and 5 of Article 46, Paragraph 1 of
Article 128 of the Constitution and the constitutional principle
of a state under the rule of law, either.
9. In the context of the constitutional justice case at
issue it needs to be noted that the legal regulation and the
practice that has come into being on the grounds of the said
legal regulation, where the Government in corpore discusses draft
privatisation agreements and adopts decisions to assent to such
draft agreements and draft annexes thereto, by commissioning a
concrete official to sign such agreements on behalf of the
Government, are debatable. This virtually creates preconditions
to depersonalise responsibility for possibly committed
violations.
Conforming to Articles 102 and 105 of the Constitution of
the Republic of Lithuania and Articles 1, 53, 54, 55 and 56 of
the Law on the Constitutional Court of the Republic of Lithuania,
the Constitutional Court of the Republic of Lithuania has passed
the following
ruling:
1. To recognise that Items 1 and 2 of Resolution of the
Government of the Republic of Lithuania No. 22 "On Assenting to a
Draft Agreement on Purchase and Sale of 34 Percent of the Shares
(Which Belong to the State by Right of Ownership) of the Joint-
Stock Company 'Lietuvos dujos', Annexes to this Agreement, as
well as to a Draft Agreement of Shareholders" of 9 January 2004
(Official Gazette Valstybės žinios, 2004, No. 8-185) to the
extent that the Government of the Republic of Lithuania assented
to selling 34 percent of the shares (which belonged to the state
by right of ownership) of the joint-stock company "Lietuvos
dujos" to the public joint-stock company "Gazprom" and empowered
the Director General of the state enterprise State Property Fund
to sign, on behalf of the Government of the Republic of
Lithuania, the Agreement on Purchase and Sale of the Shares and
annexes to this agreement are not in conflict with Constitution
of the Republic of Lithuania.
2. To recognise that Resolution of the Government of the
Republic of Lithuania No. 292 "On a Draft Supplement to the Long-
Term Gas Supply Agreement Between the Joint-Stock Company '
Lietuvos dujos' and the Public Joint-Stock Company 'Gazprom'" of
18 March 2004 (Official Gazette Valstybės žinios, 2004, No. 42-
1386) is 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
Ramutė Ruškytė
Egidijus Šileikis
Algirdas Taminskas
Romualdas Kęstutis
Urbaitis