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On accepting a petition of the petitioner

 THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

 DECISION

ON THE PETITION OF A GROUP OF MEMBERS OF THE SEIMAS OF THE REPUBLIC OF LITHUANIA, THE PETITIONER, REQUESTING TO INVESTIGATE WHETHER CERTAIN PROVISIONS OF THE REPUBLIC OF LITHUANIA LAW ON BANKS, THE REPUBLIC OF LITHUANIA LAW ON ENTERPRISE BANKRUPTCY, THE REPUBLIC OF LITHUANIA LAW ON INSURANCE OF DEPOSITS AND LIABILITIES TO INVESTORS, THE REPUBLIC OF LITHUANIA LAW ON THE PROCEEDINGS OF ADMINISTRATIVE CASES, THE CIVIL CODE OF THE REPUBLIC OF LITHUANIA, THE CODE OF CIVIL PROCEDURE OF THE REPUBLIC OF LITHUANIA, THE REPUBLIC OF LITHUANIA LAW ON FINANCIAL SUSTAINABILITY, AS WELL AS CERTAIN LAWS AMENDING AND SUPPLEMENTING THE SAID LAWS, ARE NOT IN CONFLICT WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 5 March 2012

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court Egidijus Bieliūnas, Toma Birmontienė, Pranas Kuconis, Gediminas Mesonis, Ramutė Ruškytė, Egidijus Šileikis, Algirdas Taminskas, Romualdas Kęstutis Urbaitis, and Dainius Žalimas,

with the secretary—Daiva Pitrėnaitė,

in the procedural sitting of the Constitutional Court considered a petition (No. 1B-1/2012) of a group of Members of the Seimas of the Republic of Lithuania, the petitioner, requesting to investigate whether:

“1. Paragraph 2 (wording of 30 March 2004) of Article 87 of the Law on Banks, according to the content of norms, is not in conflict with the constitutional principle of a state under the rule of law and Articles 23, 29 and 46 of the Constitution.

  1. Paragraph 3 (wording of 4 November 2004) of Article 87 of the Law on Banks, according to the content of norms, is not in conflict with the constitutional principle of a state under the rule of law and Articles 23, 29 and 46 of the Constitution.
  2. Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Law on Banks, according to the content of norms and the extent of regulation, is not in conflict with the constitutional principle of a state under the rule of law and Articles 23, 29 and 46 of the Constitution.
  3. Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, according to the content of norms and the extent of regulation, is not in conflict with the constitutional principle of a state under the rule of law and Articles 23, 29 and 46 of the Constitution.
  4. Paragraph 2 (wording of 22 December 2011) of Article 7 of the Law on Amending and Supplementing Articles 1, 4, 5, 6, 8, 9, 10, 11, 12, 18, 21, 23, 26, 33, 35, 36 and 37 of the Law on Enterprise Bankruptcy and Supplementing the Law with Article 111 and the Third1 Section, according to the content of norms and the extent of regulation, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.
  5. Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors, according to the content of norms, is not in conflict with the constitutional principle of a state under the rule of law and Articles 23, 29 and 46 of the Constitution.
  6. The Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881 (wording of 17 November 2011), the Law on Amending Article 6.116 of the Civil Code (wording of 17 November 2011), the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671 (wording of 17 November 2011), the Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121 (wording of 17 November 2011), the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131 (wording of 17 November 2011), and the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid (wording of 17 November 2011), according to the extent of regulation as well as the procedure for adoption, publication and entry into force, are not in conflict with the constitutional principle of a state under the rule of law and Article 23 and Paragraph 1 of Article 30 of the Constitution.
  7. Article 8 (wording of 17 November 2011) of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Paragraph 2 of Article 5 and Articles 7 and 8 (wording of 17 November 2011) of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 6 (wording of 17 November 2011) of the Republic of Lithuania Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, Articles 1 and 2 (wording of 17 November 2011) of the Republic of Lithuania Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, and Articles 1 and 2 (wording of 17 November 2011) of the Republic of Lithuania Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, according to the content of norms, are not in conflict with the constitutional principle of a state under the rule of law and Article 23 and Paragraph 1 of Article 30 of the Constitution.”

The Constitutional Court

has established:

The Constitutional Court received a petition of a group of Members of the Seimas, the petitioner, requesting to investigate whether:

1) Paragraph 2 (wording of 30 March 2004) of Article 87 of the Republic of Lithuania Law on Banks, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

2) Paragraph 3 (wording of 4 November 2004) of Article 87 of the Republic of Lithuania Law on Banks, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

3) Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Republic of Lithuania Law on Banks, according to the content of norms and the extent of regulation, is not in conflict with Articles 23, 29 and 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

4) Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Republic of Lithuania Law on Enterprise Bankruptcy, according to the content of norms and the extent of regulation, is not in conflict with Articles 23, 29 and 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

5) Paragraph 2 (wording of 22 December 2011) of Article 7 of the Republic of Lithuania Law on Amending and Supplementing Articles 1, 4, 5, 6, 8, 9, 10, 11, 12, 18, 21, 23, 26, 33, 35, 36 and 37 of the Law on Enterprise Bankruptcy and Supplementing the Law with Article 111 and the Third1 Section, according to the content of norms and the extent of regulation, is not in conflict with Articles 23, 29 and 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

6) Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Republic of Lithuania Law on Insurance of Deposits and Liabilities to Investors, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

7) the Republic of Lithuania Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881 (wording of 17 November 2011), the Republic of Lithuania Law on Amending Article 6.116 of the Civil Code (wording of 17 November 2011), the Republic of Lithuania Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671 (wording of 17 November 2011), the Republic of Lithuania Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121 (wording of 17 November 2011), the Republic of Lithuania Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131 (wording of 17 November 2011), and the Republic of Lithuania Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid (wording of 17 November 2011), according to the extent of regulation as well as the procedure for adoption, publication and entry into force, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

8) Article 8 (wording of 17 November 2011) of the Republic of Lithuania Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Paragraph 2 of Article 5 and Articles 7 and 8 (wording of 17 November 2011) of the Republic of Lithuania Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 6 (wording of 17 November 2011) of the Republic of Lithuania Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, Articles 1 and 2 (wording of 17 November 2011) of the Republic of Lithuania Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, and Articles 1 and 2 (wording of 17 November 2011) of the Republic of Lithuania Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, according to the content of norms, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

The Constitutional Court

holds that:

I

  1. The group of Members of the Seimas, the petitioner, inter alia requests investigation into whether Paragraph 2 (wording of 30 March 2004) of Article 87 of the Law on Banks, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.

Paragraph 2 of Article 87 of the Law on Banks prescribes: “The claims of the state enterprise ‘Deposit and Investment Insurance’ on the expenses related to the payment of insurance payments to the depositors or investors of a bank referred in the Law on Insurance of Deposits and Liabilities to Investors shall be satisfied second.”

  1. The request of the petitioner to investigate whether Paragraph 2 (wording of 30 March 2004) of Article 87 of the Law on Banks, according to the content of norms, is not in conflict with the Constitution is substantiated by the following arguments.

2.1. The state enterprise “Deposit and Investment Insurance” does not essentially differ from other creditors of the bank in bankruptcy. A distinctive feature defining the activity of an insurer is that its activity is related with certain risk, i.e. the insurance payer pays insurance contributions, whereas the insurer runs a risk, since it takes over from the insurance payer the risk of the latter—a possibility that losses will be sustained. Under the regulation laid down in Paragraph 2 of Article 87 of the Law on Banks, the state enterprise “Deposit and Investment Insurance”, an insurer, does not take any risks. The claims of this enterprise are satisfied before the claims of the bank’s other creditors and virtually at the latter’s expense. In this way one has singled out the only one subject from among many subjects rendering insurance services and operating in the Republic of Lithuania, i.e. privileges are granted not to an objective group of persons rendering insurance services, but to one enterprise, namely the state enterprise “Deposit and Investment Insurance”. Due to this reason, the differentiated legal regulation entrenched in Paragraph 2 of Article 87 of the Law on Banks, which is applied to the state enterprise “Deposit and Investment Insurance”, if compared to the bank’s other creditors, the priority of satisfaction of whose claims is lower, is a discriminative one and violates the principle of equality of rights enshrined in Paragraph 1 of Article 29 of the Constitution. By means of such a regulation one does not strive for any positive goals of significance to society.

2.2. Under Paragraph 2 of Article 87 of the Law on Banks, the losses of exceptionally one subject—the state enterprise “Deposit and Investment Insurance”, which are possible as a result of a bank’s bankruptcy and which may occur upon the payment of deposit insurance funds, are transferred to other creditors, the priority of satisfaction of whose claims is lower, i.e. the rights of that state enterprise, as a creditor in bankruptcy proceedings, would be satisfied to the detriment of the rights of the bank’s other creditors, without reimbursing for that, in any way, the rest of the creditors. In this way one violates the principle of protection of property enshrined in Article 23 of the Constitution.

2.3. The rights and legitimate interests of the economic entities who are creditors of a lower priority rank in the order of satisfaction of claims than the second one are limited more than it is necessary to ensure the public interest and secure the constitutional values. Thus, one violates the provision that the state regulates economic activity so that it serves the general welfare of the Nation, which is entrenched in Paragraph 3 of Article 46 of the Constitution.

2.4. The disputed legal regulation also violates the constitutional principle of a state under the rule of law, which, along with the other requirements, implies that human rights and freedoms must be secured, that all institutions implementing state power as well as other state institutions must act on the grounds of law and in compliance with law, that the Constitution has the supreme legal power, and that laws as well as other legal acts must be in compliance with the Constitution.

  1. From these arguments of the petitioner it is clear that the petitioner requests investigation into the compliance of Paragraph 2 (wording of 30 March 2004) of Article 87 of the Law on Banks, according to the content of norms, not with all the provisions of Articles 29 and 46 of the Constitution, but only with Paragraph 1 of Article 29 and Paragraph 3 of Article 46 thereof.
  2. It needs to be held that the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether Paragraph 2 (wording of 30 March 2004) of Article 87 of the Law on Banks, according to the content of norms, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law, is grounded on legal reasoning, therefore, this request is acceptable for consideration at the Constitutional Court.


II

  1. The group of Members of the Seimas, the petitioner, inter alia requests to investigate whether Paragraph 3 (wording of 4 November 2004) of Article 87 of the Law on Banks, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.

Paragraph 3 (wording of 4 November 2004) of Article 87 of the Law on Banks prescribes: “The claims related to the payment of taxes and making other payments to the budget, contributions of state social insurance and compulsory health insurance, as well as to the granted loans received on behalf of the state and with the guarantee of the state, shall be satisfied third.”

From the arguments of the petition of the petitioner it is clear that the petitioner requests investigation into whether Paragraph 3 (wording of 4 November 2004) of Article 87 of the Law on Banks, to the extent that it establishes that the claims related to the payment of taxes and making other payments to the budget as well as to the granted loans received on behalf of the state and with the guarantee of the state are satisfied third, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law.

  1. The request of the petitioner to investigate whether Paragraph 3 (wording of 4 November 2004) of Article 87 of the Law on Banks, according to the content of norms, is not in conflict with the Constitution is substantiated by the following arguments.

2.1. Upon ascribing a higher priority rank to the state and creditors connected therewith in the order of satisfaction of claims, if compared to the bank’s other creditors, which are specified in Paragraphs 4–7 of Article 87 of the Law on Banks, the state and creditors connected therewith are granted a privilege—a greater opportunity to satisfy their claims in bank bankruptcy proceedings. The state is under a constitutional obligation to lay down such a legal regulation of bank bankruptcy proceedings that would ensure the equal protection of the property rights of all the creditors of a bank. Alongside, it needs to be noted that, while regulating the said relations, the state enjoys the right to separate certain groups of creditors whose claims would be satisfied before those of the rest of the bank’s creditors. However, while separating such groups, one must heed the constitutional principles of a state under the rule of law, protection of property, and non-discrimination, as well as the international obligations undertaken by the state. The alleged non-compliance of the disputed legal regulation with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law is substantiated by the identical arguments as the ones regarding the compliance of Paragraph 2 of Article 87 of the Law on Banks with the same provisions of the Constitution, as well as by the following other arguments.

2.2. The constitutional principle of a state under the rule of law is inseparable from the principle of justice, and vice versa. In its rulings the Constitutional Court has held more than once that justice is one of the basic objectives of law as the means of regulation of social relations. It is one of the basic moral values and one of the basic foundations of a state under the rule of law. Justice may be implemented by ensuring certain equilibrium of interests, by escaping fortuity and arbitrariness, instability of social life and conflict of interests.

2.3. The distinguishing of the claims of the state regarding the payment of taxes and making other payments to the budget, as well as the claims of the state creditors and other creditors whose granted loans have been guaranteed by the state, may not ipso facto be identified with the public interest or the interest of society. Under Paragraphs 1 and 3 of Article 87 of the Law on Banks, priority is given to the satisfaction of the employee claims related to employment relations, the claims to compensate for damage done due to mutilation or other bodily injury, contraction of an occupational disease, or death as a result of an accident at work, as well as of the claims related to the payment of contributions of compulsory state social insurance and compulsory health insurance. Only in these cases the state acts in the interests of society, protecting the weak party to the employment contract—an employee. In all other cases any type of the establishment of the priority of satisfying the claims of creditors of a bank in bankruptcy, under Article 1 of the First Protocol of the Convention for the Protection of Human Rights and Fundamental Freedoms (hereinafter referred to as the Convention), is to be assessed as the deprivation of property of the creditors whose claims are satisfied only after the creditors’ claims of a higher priority rank have been satisfied.

2.4. While speaking about the claims of the state regarding the payment of taxes and making other payments to the budget, it needs to be noted that the reservation of the First Protocol of the Convention regarding the guaranteeing of the payment of taxes, other contributions and penalties gives the state the right to deprive of the property (or limit the property of) only the subject who has liabilities to the state, which are related to the payment of taxes, other contributions and penalties, himself, but not the creditors of that subject. Therefore, the said reservation gives no right to deprive of the property (the rights to a claim) (limit the property (rights to a claim) of) not a bank in bankruptcy itself, but the creditors thereof. The priority of the claims arising from loans granted to the state and other loans granted with the guarantee of the state is not grounded, either. Paragraph 1 of Article 2.36 of the Civil Code consolidates a fundamental principle of private law, whereby the state and its institutions are subjects of civil relations subject to the same grounds as other participants thereof. This inter alia means that, while acting as parties of contractual relations with a bank and/or while using the services of the bank, the state and creditors connected therewith take an equal risk of the bank’s insolvency.

  1. It needs to be held that the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether Paragraph 3 (wording of 4 November 2004) of Article 87 of the Law on Banks, to the extent that it establishes that the claims related to the payment of taxes and making other payments to the budget as well as to the granted loans received on behalf of the state and with the guarantee of the state are satisfied third, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law, is grounded on legal reasoning, therefore, this request is acceptable for consideration at the Constitutional Court.

III

  1. The group of Members of the Seimas, the petitioner, requests investigation into whether Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Law on Banks, according to the content of norms and the extent of regulation, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.

Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Law on Banks prescribes:

“Upon the handing down of a ruling of a court on the opening of bank bankruptcy proceedings: <...> 2) the discharge of all financial obligations not discharged prior to the opening of bankruptcy proceedings, including payment of interest, default interest, taxes and other mandatory payments, as well as the recovery of debts from the bank in bankruptcy through court or without suit, shall be prohibited.”

From the arguments of the petitioner it is clear that the petitioner requests investigation into whether Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Law on Banks, to the extent that it prohibits the discharge of a financial obligation—offset of a counter-claim of the same kind—not discharged prior to the opening of bankruptcy proceedings, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law.

  1. The request of the petitioner to investigate whether Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Law on Banks, to the extent that it prohibits the discharge of a financial obligation—offset of a counter-claim of the same kind—not discharged prior to the opening of bankruptcy proceedings, is not in conflict with the Constitution, is substantiated by the following arguments.

2.1. Paragraph 4 (wording of 22 December 2011) of Article 85 of the Law on Banks provides for a possibility of offsetting the claim of the depositor or the investor (as defined in Paragraphs 3 and 11 of Article 2 of the Law on Insurance of Deposits and Liabilities to Investors) who is concurrently a borrower of the bank, where no insurance compensation is paid to the depositor or investor in observance of Item 4 of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors, against the bank’s claim to the depositor or the investor concerning the outstanding loan, but the offset amount (and where the depositor or the investor has been paid the insurance compensation—the offset amount together with the insurance compensation) may not exceed the amounts of insurance compensations for depositors or investors established in Paragraph 3 of Article 9 of the Law on Insurance of Deposits and Liabilities to Investors. Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy provides that the offset of counter-claims of the same kind is also possible in the cases where such offset is allowed under the provisions of tax laws providing for the offset of tax overpayment (difference). Having distinguished, by means of such a differentiated regulation, only certain economic subjects, i.e. only the depositors whose counter-claims against the bank in bankruptcy do not exceed the insured sums as set by the Law on Insurance of Deposits and Liabilities to Investors, as well as the state and creditors connected therewith, the legislator has not essentially resolved the issue of offset in bankruptcy proceedings, by leaving the possibly anti-constitutional provisions of the law to be still in force.

2.2. The creditor’s right to a claim, as well as any other type of property, is an object of private ownership law. If a claim of a bank in bankruptcy is satisfied, whereas a counter-claim of the same kind made by the other party to the obligation is not satisfied or is satisfied only in part (even though both of the claims could have been satisfied prior to the opening of bankruptcy proceedings), one violates the principle of legal protection of ownership, which is entrenched in Article 23 of the Constitution, and precludes the proper implementation of the right of ownership, which would be ensured if offset were permitted in bankruptcy proceedings.

2.3. Under the disputed provision of the law, considering the aforementioned provisions of Paragraph 4 (wording of 22 December 2011) of Article 85 of the Law on Banks and Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, those creditors whose counter-claims against the bank in bankruptcy exceed the insured sums as set by the Law on Insurance of Deposits and Liabilities to Investors, and who had not offset the said counter-claims of the same kind prior to the opening of bankruptcy proceedings against the bank, are put in a much worse position. These creditors, deprived of the possibility of offsetting their claim in full, will be under an obligation to pay off the remaining loan to the bank in bankruptcy, whereas the assets of the bank in bankruptcy will be, in any case, divided among all the creditors in accordance with the procedure laid down by laws. The existing legal regulation in question discriminates against the creditors who are concurrently the borrowers of the bank, as they are forced to incur up to twice as much losses as other creditors. Such legal regulation also discriminates against solvent enterprises, if compared to the insolvent bank, since they are obliged to pay off their debts to the insolvent bank in full, whereas the debts owed to them may be recovered only in accordance with the procedure laid down by the Law on Banks and the Law on Enterprise Bankruptcy. A claim of a bank in bankruptcy is given priority over a claim of a solvent enterprise. Thus, the constitutional principle of equality of rights of persons entrenched in Paragraph 1 of Article 29 of the Constitution is violated.

Moreover, the Law on Financial Collateral Arrangements permits the application and implementation of close-out netting irrespective of the fact that the winding-up proceedings of a legal person have been commenced or are underway. However, the aforesaid law is applicable only to a limited circle of subjects which is specified in Article 3 of this law. This provides a ground to maintain that in the said way in Lithuania conditions are created to discriminate against persons and to violate Paragraph 1 of Article 29 of the Constitution, by taking account of not only the grounds for the appearance of monetary claims in the process of bankruptcy, but also of the legal status of the person.

2.4. The disputed regulation limits the rights of part of the creditors of a bank in bankruptcy, who are also the bank’s borrowers, even though these limitations are more severe than it is necessary in order to ensure the public interest. The main purpose set for bankruptcy process is to satisfy claims of creditors; however, the satisfaction of claims of certain creditors at the expense of other creditors may not be viewed as designed to serve the general welfare of the Nation. Thus, thereby one violates Paragraph 3 of Article 46 of the Constitution.

2.5. The indicated prohibition against set-off during the process of bank bankruptcy violates the principle of justice, since one pays heed only to the interests of the insolvent bank and does not take into account the interests of a solvent enterprise, which is concurrently a creditor as well as a borrower of that insolvent bank. The prohibition against offset in the course of bank bankruptcy also violates the principle of proportionality, under which the measures set by legal acts and put into application must be proportionate to the objective sought, whereas the rights of the person may not be limited more than it is necessary in order to implement a legitimate and universally significant objective, which is a constitutionally grounded one. One also violates the principle of a state under the rule of law, since, once the previously existing possibility of offsetting counter-claims of the same kind is quashed upon opening bankruptcy proceedings, legitimate expectations of persons are disregarded. Legally, the persons who have counter-claims of the same kind, once offset against each other has not been performed, are concurrently both creditors and borrowers, however, in fact, they have no liabilities to each other (to the extent the amounts of the claims coincide) and can set that at any time by means of offset. By putting the persons who, in fact, have no liabilities to each other, back to such a factual state where one of them is repaid the debt, whereas the other pays off the debt, but is additionally forced to remain in the position of a creditor and wait in the queue of creditors, one violates the legitimate expectations of the latter. If the protection of legitimate expectations, legal certainty and legal security is not ensured, the trust of the person in the state and law is not secured.

  1. It needs to be held that the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Law on Banks, to the extent that it prohibits the discharge of a financial obligation—offset of a counter-claim of the same kind—not discharged prior to the opening of bankruptcy proceedings, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law, is grounded on legal reasoning, therefore, this request is acceptable for consideration at the Constitutional Court.

IV

  1. The group of Members of the Seimas, the petitioner, inter alia requests investigation into whether Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, according to the content of norms and the extent of regulation, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.

Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy prescribes:

“After the court ruling to institute bankruptcy proceedings becomes effective: <...> 3) the discharge of all financial obligations not discharged prior to the opening of bankruptcy proceedings, including payment of interest, default interest, taxes and other mandatory payments, also the recovery of debts from the enterprise through court or without suit, shall be prohibited. The computation of default interest and interest on all obligations of the enterprise, including on default in payments related to employment relationship, shall be suspended. It is not permitted to impose a mandatory hypothec. The validity of the collective agreement of the enterprise shall be restricted as prescribed by the creditors’ meeting.”

From the arguments of the petitioner it is clear that the petitioner requests to investigate whether Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, to the extent that it prohibits the discharge of a financial obligation—offset of a counter-claim of the same kind—not discharged prior to the opening of bankruptcy proceedings, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law.

  1. The petitioner’s doubt regarding the conflict of the disputed (to a certain extent) legal regulation laid down in Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law is substantiated by the same arguments as the petitioner’s doubt regarding the compliance of Item 2 (wording of 30 March 2004) (to a certain extent) of Paragraph 3 of Article 85 of the Law on Banks with the same provisions of the Constitution.
  2. It needs to be held that the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, to the extent that it prohibits the discharge of a financial obligation—offset of a counter-claim of the same kind—not discharged prior to the opening of bankruptcy proceedings, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law, is grounded on legal reasoning, therefore, this request is acceptable for consideration at the Constitutional Court.

V

  1. The group of Members of the Seimas, the petitioner, inter alia requests investigation into whether Paragraph 2 of Article 7 of the Law on Amending and Supplementing Articles 1, 4, 5, 6, 8, 9, 10, 11, 12, 18, 21, 23, 26, 33, 35, 36 and 37 of the Law on Enterprise Bankruptcy and Supplementing the Law with Article 111 and the Third1 Section, according to the content of norms and the extent of regulation, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.

On 22 December 2011, the Seimas adopted the Law on Amending and Supplementing Articles 1, 4, 5, 6, 8, 9, 10, 11, 12, 18, 21, 23, 26, 33, 35, 36 and 37 of the Law on Enterprise Bankruptcy and Supplementing the Law with Article 111 and the Third1 Section, which, save the exceptions indicated in Paragraph 5 of Article 20 thereof, comes into effect on 1 March 2012. By Paragraph 2 of Article 7 of this law Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy was amended and set forth in a new wording. Thus, the petitioner is disputing Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, wherein it is prescribed:

“3) the discharge of all financial obligations not discharged prior to the opening of bankruptcy proceedings, including payment of interest, default interest, taxes and other mandatory payments, also the recovery of debts from the enterprise through court or without suit, shall be prohibited, save the offset of counter-claims of the same kind, where such offset is allowed under the provisions of tax laws providing for the offset of tax overpayment (difference). The computation of default interest and interest on all obligations of the enterprise, including on default in payments related to employment relationship, shall be suspended. It is not permitted to impose a mandatory hypothec. The validity of the collective agreement of the enterprise shall be restricted as prescribed by the creditors’ meeting.”

  1. From the arguments of the petitioner it is clear that the petitioner requests investigation into whether Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, to the extent that it prescribes that the discharge of all financial obligations not discharged prior to the opening of bankruptcy proceedings, including payment of interest, default interest, taxes and other mandatory payments, also the recovery of debts from the enterprise through court or without suit, is prohibited, save the offset of counter-claims of the same kind where such offset is allowed under the provisions of tax laws providing for the offset of tax overpayment (difference), is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law.
  2. The petitioner’s doubt regarding the conflict of the disputed (to a certain extent) legal regulation laid down in Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law is substantiated by the same arguments as the petitioner’s doubt regarding the compliance of Item 3 (wording of 20 March 2006) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy (to a certain extent) with the same provisions of the Constitution.

In addition, as regards the alleged conflict of the exception “save the offset of counter-claims of the same kind where such offset is allowed under the provisions of tax laws providing for the offset of tax overpayment (difference)” entrenched in the disputed provision of Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy with the aforementioned provisions of the Constitution, the petitioner maintains that such regulation privileges the state and creditors connected therewith and thereby grants them priority in satisfying their claims in the process of enterprise bankruptcy. Therefore, the differentiated legal regulation entrenched in Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy is, with respect to other creditors of the enterprise, i.e. those not connected with the state, a discriminatory one and it violates the principle of inviolability of property enshrined in Article 23 of the Constitution, the principle of equality of rights enshrined in Article 29 of the Constitution, the requirement entrenched in Paragraph 3 of Article 46 of the Constitution whereby economic activity should serve the general welfare of the Nation, as well as the constitutional principle of a state under the rule of law. Such an assertion of the petitioner is substantiated by analogous arguments as its doubt regarding the compliance of Paragraph 3 (wording of 4 November 2004) (to a certain extent) of Article 87 of the Law on Banks with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law.

  1. It needs to be held that the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Law on Enterprise Bankruptcy, to the extent that it prescribes that the discharge of all financial obligations not discharged prior to the opening of bankruptcy proceedings, including payment of interest, default interest, taxes and other mandatory payments, also the recovery of debts from the enterprise through court or without suit, is prohibited, save the offset of counter-claims of the same kind where such offset is allowed under the provisions of tax laws providing for the offset of tax overpayment (difference), is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution and the constitutional principle of a state under the rule of law, is grounded on legal reasoning, therefore, this request is acceptable for consideration at the Constitutional Court.

VI

The group of Members of the Seimas, the petitioner, inter alia requests investigation into whether Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.

Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 “Limitations on Insurance Compensations” of the Law on Insurance of Deposits and Liabilities to Investors prescribes:

“Insurance compensations shall not be paid in the following cases: <...> 4) to borrowers of a bank, a credit union or an enterprise, where the deposits or liabilities to investors are not in excess of their liabilities (the outstanding loans and interest). If the deposit of a borrower of a bank, a credit union or an enterprise or liabilities to an investor are in excess of that borrower’s liabilities (the outstanding loans and interest), the insured amount shall be calculated by deducting the borrower’s liabilities from the deposit or liabilities to the investor, however, it may not exceed the amount indicated in Paragraph 3 of Article 9 of this Law.”

  1. The petitioner is disputing Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors and maintains that the said Item singles out one category of persons (depositors), who objectively do not have any distinctions that would make such regulation justifiable. The petitioner only notes that it is absolutely unclear what social good is sought by the legislator when it separates namely those depositors who are borrowers of a bank and why namely those depositors are deprived of insurance protection.

It needs to be mentioned that, under Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors, insurance compensations are not paid not only to the persons indicated by the petitioner and enumerated in Item 4 of Paragraph 1 of this article, but also to the persons specified in other Items of Paragraph 1 of this article, as, for instance: to the depositors or investors whose deposits or liabilities to the investors have been declared as illegally acquired by a court decision (Item 1); to the depositors or investors whose deposits or liabilities to the investors have been transferred, under contracts or in any other way (with the exception of inheritance), after the day of an insured event (Item 2 (wording of 18 January 2008)); to heads of the administration of a bank, a credit union or an enterprise, heads of branches of a bank, a credit union or an enterprise, members of the council (supervisory council) and the board; to the persons holding at least 5 per cent of the bank’s share capital, or the persons holding more than 50 per cent of the capital of the enterprises holding at least 5 per cent of the bank’s share capital; to the persons who are carrying out an independent audit of the bank, the credit union or the enterprise; to the children, adopted children, spouses, cohabitants living in registered partnership, parents and adoptive parents of the persons indicated in this item (Item 3 (wording of 20 January 2005)); for the deposits kept in anonymous and coded accounts (Item 5); for the deposits for which the insured has fixed an interest rate twice as high as the interest rate set for comparable deposits held with the same credit institution (Item 6).

Thus, the insurance protection established in the Law on Insurance of Deposits and Liabilities to Investors is not applied not only to the persons indicated by the petitioner, but also to other persons enumerated in the aforesaid law.

When distinguishing the persons specified in Item 4 of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors from other persons, inter alia from those specified in Paragraph 1 of Article 12 of the said law, the petitioner does not analyse their features, does not assess their peculiarities, nor compares the said persons among themselves.

Thus, the petitioner provides no legal reasoning regarding the conflict of Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors with Article 29 of the Constitution.

The petitioner doubts as regards the compliance of Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors inter alia with Articles 23 and 46 of the Constitution and the constitutional principle of a state under the rule of law. The petitioner sets forth assertions of a general character (the disputed legal regulation limits the rights and legitimate interests of “<...> economic subjects (depositors who are borrowers) more than it is necessary in order to ensure the public interest and protect constitutional values. The right of persons to the protection of property is not secured. By means of an essentially illegitimate regulation property is being expropriated without compensation”), however the petitioner does not provide any legal arguments grounding its doubt.

  1. Under Item 8 of Paragraph 1 of Article 66 of the Law on the Constitutional Court, a petition for the investigation of the compliance of a legal act with the Constitution, whereby one applies to the Constitutional Court, must contain the position of the petitioner concerning the compliance of an appropriate act with the Constitution and legal support of such position containing reference to laws.

While construing the said item of the Law on the Constitutional Court, the Constitutional Court has held more than once that “the position of the petitioner concerning the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must be indicated clearly and unambiguously, the petition must contain the arguments and reasoning grounding the doubt of the petitioner that the legal act (part thereof) is in conflict with the Constitution. Thus, the petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must clearly indicate concrete articles (parts thereof), items of the legal act the compliance of which with the Constitution is doubtful from the petitioner’s viewpoint, also concrete provisions—norms and/or principles—of the Constitution, with which, in the opinion of the petitioner, the concretely indicated articles or items of the disputed legal act are in conflict. The petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must also clearly set forth the legal reasoning grounding the doubt of the petitioner as regards every concretely indicated article (part thereof) or item of the disputed legal act (part thereof), the compliance of which with the concretely indicated provisions of the Constitution is doubtful to the petitioner. Otherwise, the request to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must be considered to be not in line with the requirements of Article 66 of the Law on the Constitutional Court”.

It also needs to be noted that if, in the petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation, one does not indicate concrete articles (parts thereof), items of the legal act, the compliance of which with the Constitution is doubtful to the petitioner, nor concrete provisions—norms and/or principles—of the Constitution with which, in the opinion of the petitioner, the concretely indicated articles (parts thereof) or items of the disputed legal act are in conflict according to the content of norms and/or the extent of regulation, nor the legal reasoning grounding the doubt of the petitioner concerning each concretely indicated article (part thereof) or item of the disputed legal act (part thereof), the compliance of which with the concretely indicated provisions of the Constitution according to the content of norms and/or the extent of regulation is doubtful to the petitioner, and in case such a petition was accepted at the Constitutional Court and a case was commenced subsequent to it, one would also restrict the rights of the party concerned, the state institution that has passed the disputed legal act, since it would be more difficult for the party concerned to present explanations concerning the arguments of the petitioner and to prepare for the judicial consideration (Constitutional Court decisions of 16 April 2004 and 19 March 2010).

  1. It needs to be held that the petition of the group of Members of the Seimas, the petitioner, does not contain any clear legal reasoning grounding the petitioner’s doubt regarding the conflict of Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law. Thus, this petition of the petitioner fails to comply with the requirements of Article 66 of the Law on the Constitutional Court.

If a petition (part thereof) fails to comply with the requirements set forth in Article 66 of the Law on the Constitutional Court, under Article 70 of the Law on the Constitutional Court, such a petition is returned to the petitioner.

  1. Taking account of the arguments set forth it needs to be held that there is a ground to return the request of the group of Members of the Seimas, the petitioner, to investigate whether Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Law on Insurance of Deposits and Liabilities to Investors, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution and the constitutional principle of a state under the rule of law.

VII

  1. The group of Members of the Seimas, the petitioner, inter alia requests investigation into whether the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881 (wording of 17 November 2011), the Law on Amending Article 6.116 of the Civil Code (wording of 17 November 2011), the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671 (wording of 17 November 2011), the Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121 (wording of 17 November 2011), the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131 (wording of 17 November 2011), and the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid (wording of 17 November 2011), according to the extent of regulation as well as the procedure for adoption, publication and entry into force, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law.
  2. In Item 6.2 of the petition the petitioner inter alia presents its opinion regarding the compliance of the disputed laws with the Constitution according to the extent of regulation. While summing up the laws adopted by the Seimas on 17 November 2011, which are being disputed by the petitioner, in Item 6.2.1 of the petition the petitioner maintains that the said laws consolidate important provisions relating to the management of a bank, the management, use and disposal of assets and liabilities of a bank, as well as the consideration of disputes related to the administration of a bank after the measures to enhance financial stability provided for in Article 2 of the Law on Financial Sustainability are imposed on a bank. This summing-up is followed by the articles (or parts thereof) of the disputed laws wherein, according to the petitioner, the aforesaid provisions are consolidated. Then the petitioner provides the provisions of the official constitutional doctrine formulated by the Constitutional Court in relation to the protection and judicial defence of ownership, as well as the protection of legitimate expectations, however, it does not set forth any clear legal reasoning grounding its doubt as regards the compliance of the disputed regulation with the Constitution according to the extent of regulation.
  3. The petitioner is also disputing the indicated laws according to the procedure for adoption, publication and entry into force as stipulated in the Constitution and maintains that the disputed laws were adopted under the special urgency procedure, without establishing any special procedure for their entry into force or any reservations as to their application, and by means of them it was sought to legally regulate the legal status of one concrete economic subject—AB Bank “Snoras”. The petitioner does not specify which concrete provisions—norms and/or principles—of the Constitution, also the provisions of the legal acts establishing the procedure for adoption, publication or entry into force of laws, were violated upon the adoption and publication of the disputed laws or establishment of the procedure for their entry into force.

It needs to be noted that the laws disputed by the petitioner do not contain provisions designated for only one economic subject—AB Bank “Snoras”, the provisions in question are designated for all economic subjects of the same type and for the regulation of interrelations of these as well as other subjects (state institutions, creditors, etc.).

  1. It has been mentioned that, under Item 8 of Paragraph 1 of Article 66 of the Law on the Constitutional Court, a petition for the investigation of the compliance of a legal act with the Constitution, whereby one applies to the Constitutional Court, must contain the position of the petitioner concerning the compliance of an appropriate act with the Constitution and legal support of such position containing reference to laws.

It has also been mentioned that, while construing the said item of the Law on the Constitutional Court, the Constitutional Court has held more than once that the position of the petitioner concerning the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must be indicated clearly and unambiguously, the petition must contain the arguments and reasoning grounding the doubt of the petitioner that the legal act (part thereof) is in conflict with the Constitution. Thus, the petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must clearly indicate concrete articles (parts thereof), items of the legal act the compliance of which with the Constitution is doubtful from the petitioner’s viewpoint, also concrete provisions—norms and/or principles—of the Constitution, with which, in the opinion of the petitioner, the concretely indicated articles or items of the disputed legal act are in conflict. The petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must also clearly set forth the legal reasoning grounding the doubt of the petitioner as regards every concretely indicated article (part thereof) or item of the disputed legal act (part thereof), the compliance of which with the concretely indicated provisions of the Constitution is doubtful to the petitioner.

It needs to be noted that the said requirements as to the position of the petitioner concerning the compliance of a legal act with the Constitution according to the content of norms and/or the extent of regulation as well as the legal support of such a position are mutatis mutandis also applicable in those cases where the petitioner is disputing the laws according to the procedure for their adoption, publication and entry into force as established in the Constitution.

  1. It needs to be held that the petition of the group of Members of the Seimas, the petitioner, does not set forth any clear legal reasoning as to why the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, the Law on Amending Article 6.116 of the Civil Code, the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, the Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121, the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, and the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, according to the extent of regulation, are in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law. At the same time, it needs to be held that the petition does not indicate which concrete provisions—norms and/or principles—of the Constitution, also the provisions of the legal acts establishing the procedure for adoption, publication or entry into force of laws, were violated upon the adoption and publication of the disputed laws or establishment of the procedure for their entry into force.

Thus, this petition of the petitioner fails to comply with the requirements of Article 66 of the Law on the Constitutional Court.

If a petition (part thereof) fails to comply with the requirements set forth in Article 66 of the Law on the Constitutional Court, under Article 70 of the Law on the Constitutional Court, such a petition is returned to the petitioner.

  1. Taking account of the arguments set forth it needs to be held that there is a ground to return the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, the Law on Amending Article 6.116 of the Civil Code, the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, the Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121, the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, and the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, according to the extent of regulation and the procedure for adoption, publication and entry into force, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law.

VIII

  1. The group of Members of the Seimas, the petitioner, inter alia requests investigation into whether Article 8 (wording of 17 November 2011) of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Paragraph 2 of Article 5, Articles 7 and 8 (wording of 17 November 2011) of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 6 (wording of 17 November 2011) of the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, Articles 1 and 2 (wording of 17 November 2011) of the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, and Articles 1 and 2 (wording of 17 November 2011) of the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, according to the content of norms, are not in conflict with the constitutional principle of a state under the rule of law and Article 23 and Paragraph 1 of Article 30 of the Constitution.
  2. In Item 6.3 of the petition the petitioner sets forth its opinion regarding the compliance of the disputed laws with the Constitution according to the content. In Item 6.3.1.1 of the petition one indicates the articles (or parts thereof) of the disputed laws, which, according to the petitioner, consolidate the provisions relating to the transfer of assets, rights, transactions and liabilities of a bank to another bank.

The petitioner maintains that, under the legal regulation laid down in Article 1, Paragraph 4 of Article 6, Articles 7 and 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 1 of the Law on Amending Article 6.116 of the Civil Code, and Articles 1–3 of the Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121 (which were adopted by the Seimas on 17 November 2011), legal preconditions are created for a temporary bank administrator to adopt, upon approval of the supervisory institution, a decision regarding the transfer of part of assets, rights, transactions and liabilities of the bank subject to administration to another bank, if there is a real threat that the net value of assets of the bank subject to administration will fall below the bank’s liabilities or that the bank will meet, or that it already meets, other conditions established by legal acts adopted by the supervisory institution for recognising the bank as insolvent, and it is established that the transfer of assets, rights, transactions and liabilities of the bank subject to administration to another bank would allow to maintain the trust of depositors in the stability and reliability of the banking system and otherwise protect public interests, while the liquidation of the bank subject to administration due to bankruptcy would not protect such interests to the same extent. The petitioner also cites the conditions for the transfer of assets, rights, transactions and liabilities of a bank subject to administration to another bank, which are established in Paragraph 5 of Article 761 (wording of 17 November 2011) of the Law on Banks.

From the said arguments of the petitioner it is not clear whether the petitioner is disputing the entire legal regulation laid down in Article 1, Paragraph 4 of Article 6, Articles 7 and 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 1 of the Law on Amending Article 6.116 of the Civil Code, and Articles 1–3 of the Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121, or whether it is disputing only certain provisions of this regulation and only to a certain extent. From the arguments set forth by the petitioner regarding the compliance of the provisions of the disputed laws, according to their content, with Articles 23 and 29 of the Constitution and the constitutional principle of a state under the rule of law it is also not clear as to which concrete provisions of the indicated laws are being disputed by the petitioner.

  1. It has been mentioned that, under Item 8 of Paragraph 1 of Article 66 of the Law on the Constitutional Court, a petition for the investigation of the compliance of a legal act with the Constitution, whereby one applies to the Constitutional Court, must contain the position of the petitioner concerning the compliance of an appropriate act with the Constitution and legal support of such position containing reference to laws.

It has also been mentioned that, while construing the said provision of the Law on the Constitutional Court, the Constitutional Court has held more than once that the petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must clearly indicate concrete articles (parts thereof), items of the legal act the compliance of which with the Constitution is doubtful from the petitioner’s viewpoint, also concrete provisions—norms and/or principles—of the Constitution, with which, in the opinion of the petitioner, the concretely indicated articles or items of the disputed legal act are in conflict. The petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution must clearly indicate the legal reasoning grounding the doubt of the petitioner as regards the compliance of every concretely indicated article (part thereof) or item of the disputed legal act (part thereof) with the concretely indicated provisions of the Constitution.

  1. It needs to be held that in the petition of the group of Members of the Seimas, the petitioner, one does not indicate any concrete provisions of Article 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Paragraph 2 of Article 5, Articles 7 and 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 6 of the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, Articles 1 and 2 of the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, and Articles 1 and 2 of the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, which, in the opinion of the petitioner, according to the content of norms, to the extent the petitioner relates it to the transfer of assets, rights, transactions and liabilities of a bank to another bank, are in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law.

Thus, this petition of the petitioner fails to comply with the requirements of Article 66 of the Law on the Constitutional Court.

If a petition (part thereof) fails to comply with the requirements set forth in Article 66 of the Law on the Constitutional Court, under Article 70 of the Law on the Constitutional Court, such a petition is returned to the petitioner.

  1. Taking account of the arguments set forth, it needs to be held that there is a ground to return the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether Article 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Paragraph 2 of Article 5, Articles 7 and 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 6 of the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, Articles 1 and 2 of the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, and Articles 1 and 2 of the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, according to the content of norms, to the extent the petitioner relates it to the transfer of assets, rights, transactions and liabilities of a bank to another bank, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law.
  2. From the petition of the group of Members of the Seimas, the petitioner, requesting to investigate whether Article 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Paragraph 2 of Article 5, Articles 7 and 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 6 of the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, Articles 1 and 2 of the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, and Articles 1 and 2 of the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, according to the content of norms, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law, it is clear that the petitioner doubts as regards the compliance of the said laws (provisions thereof) to the extent that the regulation in question limits the right to judicial defence (Item 6.3.2 of the petition).
  3. The petitioner is specifically disputing the provisions of the aforesaid laws whereby:

1) the bank administrator is prohibited from inspecting the transactions concluded when the temporary bank administrator is conducting the transfer of the bank’s assets, rights, transactions and liabilities to another bank as well as from bringing actions in court for invalidation of such transactions (Article 8 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid);

2) one is prohibited from bringing in court the claims concerning the annulment of the actions (acts) of the Government or an institution authorised by it, the Bank of Lithuania or other institutions or subjects that are related with the application of measures to enhance financial stability, also concerning the imposition of the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored, as well as the claims concerning the actions of the Bank of Lithuania, a temporary administrator and other subjects that are related with the performance of the transfer (return) of assets, rights, transactions and liabilities of the bank. In the cases where such claims are made, in satisfying the claim or complaint (request), the court is prohibited from annulling the contested action (act) or imposing the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored (Article 6 of the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131; Paragraph 2 of Article 5 and Article 7 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid; Article 2 of the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881; Article 2 of the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671);

3) courts are prohibited from applying the temporary protective measures and measures to secure a claim that would restrict the performance of actions related with the application of measures to enhance financial stability as well as the performance of actions (acts) of the Bank of Lithuania, the temporary administrator or other entities that are related with the organisation and implementation of the transfer (return) of assets, rights, transactions and liabilities of a bank (Article 6 of the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131; Article 7 of the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid; Article 1 of the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881; Article 1 of the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671).

  1. On 17 November 2011, the Seimas adopted the Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, and the Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671.

8.1. The Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid inter alia prescribes:

– “2. To supplement Article 72 with a new Paragraph 10 as follows:

‘10. Having examined the complaint (request) concerning the decision of the Bank of Lithuania to impose sanctions specified in Items 6, 7 and 8 of Paragraph 1 and Items 2 and 3 of Paragraph 3 of this article, the court shall have the right, provided that the conditions set forth in this law exist, to award damages, but in satisfying the complaint (request) it may not cancel the contested decision, may not impose on the Bank of Lithuania the obligation to carry out any actions as a result of which the validity of the contested decision would be suspended or terminated or the condition which existed prior to the adoption of the decision would be otherwise restored’” (Paragraph 2 of Article 5 “Supplementing and Amending of Article 72”);

– “To supplement the law with Article 761 as follows:

‘Article 761. Transfer of Assets, Rights, Transactions and Liabilities of a Bank

  1. The assets, rights, transactions and liabilities of a bank whose activities are subject to a moratorium and to which a temporary administrator is appointed according to Article 76 of this law (hereinafter referred to in this article as the “bank subject to administration”) may be transferred to another bank if:

1) there is a real threat that the net value of assets of the bank subject to administration will fall below the bank’s liabilities or that the bank will meet other conditions established by legal acts adopted by the supervisory institution under Paragraph 1 of Article 84 of this law for recognising the bank as insolvent, or it is established that the bank already meets the conditions for recognising the bank as insolvent, and

2) the transfer of assets, rights, transactions and liabilities of the bank subject to administration to another bank would allow to maintain the trust of depositors in the stability and reliability of the banking system and otherwise protect public interests, while liquidation of the bank subject to administration due to bankruptcy would not protect such interests to the same extent.

  1. The transfer of assets, rights, transactions and liabilities of a bank subject to administration, upon approval of the supervisory institution and in observance of its instructions, shall be organised and performed by the temporary administrator.
  2. If the supervisory institution approves the transfer of assets, rights, transactions and liabilities of a bank subject to administration, the temporary administrator shall, acting in observance of instructions of the supervisory institution, organise and hold negotiations on the takeover of assets, rights, transactions and liabilities of the bank subject to administration with banks authorised to render financial services related with the assets, rights, transactions and liabilities of the bank subject to administration. Banks participating in the negotiations shall have the right to familiarise with the information about the financial situation of the bank subject to administration, which, in the temporary administrator’s opinion, is necessary for the adoption of a decision on the takeover of assets, rights, transactions and liabilities of the bank subject to administration. Protection of such information shall be governed mutatis mutandis by provisions of Article 55 of this law.
  3. Having regard to the need to address the matter of transfer of assets, rights, transactions and liabilities of a bank subject to administration with particular urgency and effectiveness, also relying on the information available to the supervisory institution at the moment of taking the decision about the capability of banks authorised to render financial services in the Republic of Lithuania to take over the assets, rights, transactions and liabilities of the bank subject to administration or believing, due to other reasons, that the organisation and holding of negotiations according to the provisions of Paragraph 3 of this article would be inappropriate, the supervisory institution shall have the right to instruct the temporary administrator to organise and hold the negotiations only with certain banks authorised to render financial services related with the assets, rights, transactions and liabilities of the bank subject to administration, or with one of such banks, or to instruct not to organise and not to hold the negotiations at all, and to prepare for the transfer of or to transfer the assets, rights, transactions and liabilities of the bank subject to administration to the provisional bank to be established or established according to the provisions of Article 71 of the Law of the Republic of Lithuania on Financial Sustainability.
  4. The transfer of assets, rights, transactions and liabilities of a bank subject to administration may involve the transfer of all or part of assets, rights (property and non-property) and transactions and all or part of liabilities of the bank subject to administration, however:

1) liabilities of the bank subject to administration to the depositors and investors specified in the Republic of Lithuania Law on Insurance of Deposits and Liabilities to Investors who, upon occurrence of an insured event, would receive insurance compensations within the limits of the amount payable to them by the state enterprise “Deposit and Investment Insurance”, as well as liabilities of the bank to state institutions and establishments arising from transactions concluded after the day of announcement of the moratorium on activities of the bank, must be transferred in all instances;

2) liabilities of the bank subject to administration to the creditors whose claims in the event of the bank’s bankruptcy according to the provisions of Article 87 of this law are to be satisfied fifth, sixth and seventh shall not be transferred;

3) it must be ensured that the creditors of the bank subject to administration who have been excluded from Items 1 and 2 of this paragraph and whose claims in the event of the bank’s bankruptcy would be satisfied in accordance with the same priority as specified in Article 87 of this law be treated equally and not incur greater losses than if bankruptcy proceedings would have been opened at the same time against the bank subject to administration instead of the transfer of its assets, rights, transactions and liabilities to another bank.

  1. The assets, rights, transactions and liabilities of a bank subject to administration may be transferred only after the performance of their assessment by an audit firm and/or property appraisal company engaged by the temporary administrator. The costs of the assessment shall be borne by the bank subject to administration. When it is necessary to address the matter of the transfer of assets, rights, transactions and liabilities of the bank subject to administration with particular urgency, the assets, rights, transactions and liabilities of the bank subject to administration may be transferred only after their preliminary assessment is carried out by the temporary administrator and its conclusions are approved by the supervisory institution, with the assessment by the audit firm and/or property appraisal company performed already after the transfer of the assets, rights, transactions and liabilities. The value of the bank’s assets, rights, transactions and liabilities must be established having regard to the conclusion issued by the supervisory institution as to the existence of grounds for withdrawal of the licence of the bank subject to administration and to the licence withdrawal consequences specified in Article 10 of this law, however not having regard to the measures for enhancing financial stability that are already applied or could be potentially applied to the bank according to the Law of the Republic of Lithuania on Financial Sustainability.
  2. If the value of the transferred liabilities of a bank subject to administration exceeds the value of the concurrently transferred assets, rights and transactions of the bank subject to administration, the transfer of the assets, rights, transactions and liabilities of the bank subject to administration shall be performed in observance of provisions of Article 121 of the Law of the Republic of Lithuania on Insurance of Deposits and Liabilities to Investors, or by covering the difference in values from other sources. If upon assessment carried out by an audit firm and/or property appraisal company according to Paragraph 6 of this article it transpires that the value of the transferred liabilities of the bank subject to administration is lower than the value of the concurrently transferred assets, rights and transactions of the bank subject to administration, the bank taking over the assets, rights, transactions and liabilities of the bank subject to administration shall pay to the bank subject to administration a monetary compensation for the difference in values.
  3. When transferring the assets, rights, transactions and liabilities of a bank subject to administration to another bank:

1) the assets, rights, transactions and liabilities of the bank subject to administration to be transferred may be transferred in their entirety, or in part;

2) the already transferred assets, rights, transactions and liabilities may be returned to the bank subject to administration under the terms and conditions provided for in the documents on the transfer of assets, rights, transactions and liabilities, if necessary by appropriately adjusting the amount covering the difference in values (paid according to Paragraph 7 of this Article), where such a possibility is explicitly specified in such documents or the circumstances indicating that the transferred assets, rights, transactions and liabilities had not been intended for the transfer transpire;

3) when assets, rights, transactions and liabilities, which are being transferred, are governed by foreign law, and such a transfer is not recognised under the foreign jurisdiction, the bank subject to administration must transfer such assets, rights, transactions and liabilities by the right of trust to the bank taking over the assets, rights, transactions and liabilities. The bank subject to administration and the bank taking over the assets, rights, transactions and liabilities must take all necessary steps to ensure legal enforcement of such transfer of assets, rights, transactions and liabilities.

  1. When transferring the assets, rights, transactions and liabilities of a bank subject to administration:

1) the provisions of the Civil Code of the Republic of Lithuania, other laws and legal acts or transactions concluded by the bank stipulating the requirement to notify in advance creditors, borrowers or other persons about the actions performed for the purposes of the transfer of assets, rights, transactions and liabilities, the requirement to obtain permits or consents of other persons for the performance of such actions, including the consent of the creditor to transfer the debt to another person, or otherwise limiting the performance of the transfer of assets, rights, transactions and liabilities shall not apply;

2) the transfer of assets, rights, transactions and liabilities shall not be considered as a violation of the transaction and/or a valid ground for creditors, borrowers or other persons to terminate a transaction concluded with the bank subject to administration. If the creditors, borrowers or other persons terminate a transaction disregarding the said provision, such a transaction may be returned to the bank subject to administration.

  1. The transfer of assets, rights, transactions and liabilities shall be announced by the temporary administrator without delay on the website of the bank subject to administration and, no later than within five working days of the transfer of assets, rights, transactions and liabilities—at least in two national newspapers of the Republic of Lithuania.
  2. Upon completion of the transfer of assets, rights, transactions and liabilities, the supervisory institution shall, if there is information showing that the bank subject to administration is insolvent, refer to court for the opening of bankruptcy proceedings against the bank subject to administration. The powers of the temporary administrator shall expire after the court issues a ruling on the opening of bankruptcy proceedings against the bank subject to administration and appoints the administrator. The court shall also have the right to appoint the temporary administrator to the position of the bank’s administrator. Where the court appoints the temporary administrator to the position of the bank’s administrator, the requirements established by the Republic of Lithuania Law on Enterprise Bankruptcy concerning the obligation to acquire the right to provide enterprise bankruptcy administration services in observance of the procedure established by the Republic of Lithuania Law on Enterprise Bankruptcy and legal acts related to implementation thereof shall not apply.
  3. During and after the transfer of assets, rights, transactions and liabilities of a bank subject to administration the latter, even if the bankruptcy proceedings are open against it, must co-operate with the bank taking over its assets, rights, transactions and liabilities, by granting, at the arm’s length price, thereto temporary access to its information and accounting systems and documents, and provide information and services necessary for the bank taking over the assets, rights, transactions and liabilities to duly render the financial services related with the assets, rights, transactions and liabilities taken over.
  4. The duty to co-operate and render services to the bank taking over the assets, rights, transactions and liabilities of a bank subject to administration as specified in Paragraph 12 of this article shall also apply to persons providing services to the bank subject to administration during the moratorium on activities of the bank.
  5. When examining in court the claims or complaints (requests) concerning actions (acts) of the Bank of Lithuania, the temporary administrator or other entities related with the organisation and implementation of the transfer (return) of the bank’s assets, rights, transactions and liabilities, the provisions of Article 131 of the Republic of Lithuania Law on Financial Sustainability shall apply mutatis mutandis.
  6. Upon taking over the assets, rights, transactions and liabilities of a bank subject to administration, the bank shall not be liable to creditors of the bank subject to administration whose claims have not been transferred thereto’” (Article 7 “Supplementing of the Law with Article 761”);

– “To supplement Article 85 with Paragraph 9 as follows:

‘9. Upon the opening of a bank’s bankruptcy proceedings, where the bank has transferred the bank’s assets, rights, transactions and liabilities to another bank in compliance with the provisions of Article 761 of this law, the administrator shall not have the right to inspect the transactions concluded when transferring the bank’s assets, rights, transactions and liabilities in compliance with the provisions of Article 761 of this law and bring actions in court for invalidation of such transactions’” (Article 8 “Supplementing of Article 85 with Paragraph 9”).

Thus, the petitioner requests investigation into whether Paragraph 10 (wording of 17 November 2011) of Article 72, Article 761 (wording of 17 November 2011) and Paragraph 9 (wording of 17 November 2011) of Article 85 of the Law on Banks are not in conflict with the provisions of the Constitution indicated by the petitioner.

8.2. Article 6 “Supplementing of the Law with Article 131” of the Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131 prescribes:

“To supplement the law with Article 131 as follows:

Article 131. Peculiarities of Judicial Consideration of Administrative and Civil Cases Related with the Application of Measures to Enhance Financial Stability

  1. In court cases where claims or complaints (requests) are considered concerning the actions (acts) of the Government or an institution authorised by it, the Bank of Lithuania or other institutions or subjects that are related with the application of the measures to enhance financial stability provided for in this law, one may not apply the measures provided for in Items 6, 7, 12 and 13 of Paragraph 1 of Article 145 of the Civil Code of the Republic of Lithuania or any other temporary protective measures that would limit the performance of actions related with the application of measures to enhance financial stability (when the case is considered according to the procedure set in the Code of Civil Procedure of the Republic of Lithuania), nor the measures to secure a claim that are provided for in Items 1 and 3 of Paragraph 3 of Article 71 of the Republic of Lithuania Law on the Proceedings of Administrative Cases (when the case is considered according to the procedure set in the Republic of Lithuania Law on the Proceedings of Administrative Cases).
  2. Having examined the claim or complaint (petition) concerning the actions (acts) of the Government or an institution authorised by it, the Bank of Lithuania or other institutions or subjects that are related with the application of the measures to enhance financial stability provided for in this law, the court shall have the right, provided that the conditions set forth in this law exist, to award damages, but in satisfying the claim or complaint (petition) it may not cancel the contested action (act) and may not impose the obligation to carry out any actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition which existed prior to the adoption of the contested action (act) would be otherwise restored” (Article 6 “Supplementing of the Law with Article 131”).

Thus, the petitioner requests investigation into whether Article 131 (wording of 17 November 2011) of the Law on Financial Sustainability is not in conflict with the provisions of the Constitution indicated by the petitioner.

8.3. The Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881 prescribes:

– “1. To supplement Article 71 with a new Paragraph 2 as follows:

“2. The court or the judge may not, upon a motivated petition of the participants in the proceedings or upon his/its own initiative, take the measures to secure a claim provided for in Paragraph 3 of this law, where this is prescribed by other laws regulating the imposition of sanctions or measures to enhance financial stability and reliability on banks” (Paragraph 1 of Article 1 “Supplementing and Amending of Article 71”);

– “To supplement the law with Article 881 as follows:

‘Article 881. Decisions Which Might Exert Influence on the Effectiveness of Measures to Enhance Financial Stability and Reliability of Banks

Other laws may provide for the cases in which court decisions which might exert influence on the effectiveness of measures to enhance financial stability and reliability of banks are issued only with regard to adjudging of damages’” (Article 2 “Supplementing of the Law with Article 881”).

Thus, the petitioner requests investigation into whether Paragraph 2 (wording of 17 November 2011) of Article 71 and Article 881 (wording of 17 November 2011) of the Law on the Proceedings of Administrative Cases are not in conflict with the provisions of the Constitution indicated by the petitioner.

8.4. The Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671 inter alia prescribes:

– “To supplement Article 145 with a new Paragraph 3 as follows:

‘3. The court may not, upon a petition of the participants in the proceedings or other parties concerned or upon its own initiative, take the temporary protective measures provided for in Items 6, 7, 12 and 13 of Paragraph 1 of this law, where this is prescribed by other laws regulating the imposition of sanctions or measures to enhance financial stability and reliability on banks’” (Paragraph 1 of Article 1 “Supplementing and Amending of Article 145”);

– “To supplement the Code with Article 2671 as follows:

‘Article 2671. Decisions Which Might Exert Influence on the Effectiveness of Measures to Enhance Financial Stability and Reliability of Banks

Other laws may provide for the cases in which court decisions which might exert influence on the effectiveness of measures to enhance financial stability and reliability of banks are issued only with regard to adjudging of damages’” (Article 2 “Supplementing of the Code with Article 2671”).

Thus, the petitioner requests investigation into whether Paragraph 3 (wording of 17 November 2011) of Article 145 and Article 2671 (wording of 17 November 2011) of the Code of Civil Procedure are not in conflict with the provisions of the Constitution indicated by the petitioner.

  1. From the petition of the petitioner it is clear that the petitioner requests investigation into whether:

– Paragraph 9 (wording of 17 November 2011) of Article 85 of the Law on Banks, to the extent that it prescribes that, upon the opening of bankruptcy proceedings of a bank, the bank administrator does not have the right to inspect the transactions concluded when the temporary bank administrator is conducting the transfer of the bank’s assets, rights, transactions and liabilities to another bank and bring actions in court for invalidation of such transactions, is not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law;

– Paragraph 1 of Article 131 (wording of 17 November 2011) of the Law on Financial Sustainability, Paragraph 10 (wording of 17 November 2011) of Article 72 and Paragraph 14 of Article 761 (wording of 17 November 2011) of the Law on Banks, Article 881 (wording of 17 November 2011) of the Law on the Proceedings of Administrative Cases, and Article 2671 (wording of 17 November 2011) of the Code of Civil Procedure, to the extent that it is prohibited therein to bring in court the claims concerning the annulment of the actions (acts) of the Government or an institution authorised by it, the Bank of Lithuania or other institutions or subjects that are related with the application of measures to enhance financial stability, also concerning the imposition of the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored, as well as the claims concerning the actions of the Bank of Lithuania, a temporary administrator and other subjects that are related with the performance of the transfer (return) of assets, rights, transactions and liabilities of a bank, and to the extent that in the cases where the said claims are made, in satisfying the claim or complaint (request), the court is prohibited from annulling the contested action (act) or imposing the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law;

– Paragraph 2 of Article 131 (wording of 17 November 2011) of the Law on Financial Sustainability, Paragraph 14 of Article 761 (wording of 17 November 2011) of the Law on Banks, Paragraph 2 (wording of 17 November 2011) of Article 71 of the Law on the Proceedings of Administrative Cases, and Paragraph 3 (wording of 17 November 2011) of Article 145 of the Code of Civil Procedure, to the extent that it is prohibited therein for courts to take the temporary protective measures and measures to secure a claim that would restrict the performance of actions related with the application of measures to enhance financial stability as well as the performance of the actions (acts) of the Bank of Lithuania, a temporary administrator and other subjects that are related with the organisation and implementation of the transfer (return) of assets, rights, transactions and liabilities of a bank, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law.

  1. The petitioner maintains that by limiting, groundlessly, by means of the disputed provisions of the indicated laws, the right of the person to apply to court as well as the powers of courts, one essentially restricts the opportunities of a bank administrator as well as creditors of a bank and other persons to defend the rights of ownership that are violated by the possibly unlawful actions (acts) of the Government or an institution authorised by it, the Bank of Lithuania, a temporary administrator or other institutions or subjects. By excluding the possibility for the courts to decide as to which procedural measure and/or remedy for violation of rights is the most appropriate in each concrete situation, the rights of the aforesaid persons as well as the powers of judiciary are groundlessly limited. This, according to the petitioner, provides a ground to believe that the disputed legal regulation is in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law.
  2. It needs to be held that the request of the group of Members of the Seimas, the petitioner, to investigate whether:

– Paragraph 9 (wording of 17 November 2011) of Article 85 of the Law on Banks, to the extent that it prescribes that, upon the opening of bankruptcy proceedings of a bank, the bank administrator does not have the right to inspect the transactions concluded when the temporary bank administrator is conducting the transfer of the bank’s assets, rights, transactions and liabilities to another bank and bring actions in court for invalidation of such transactions, is not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law,

– Paragraph 1 of Article 131 (wording of 17 November 2011) of the Law on Financial Sustainability, Paragraph 10 (wording of 17 November 2011) of Article 72 and Paragraph 14 of Article 761 (wording of 17 November 2011) of the Law on Banks, Article 881 (wording of 17 November 2011) of the Law on the Proceedings of Administrative Cases and Article 2671 (wording of 17 November 2011) of the Code of Civil Procedure, to the extent that it is prohibited therein to bring in court the claims concerning the annulment of the actions (acts) of the Government or an institution authorised by it, the Bank of Lithuania or other institutions or subjects that are related with the application of measures to enhance financial stability, also concerning the imposition of the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored, as well as the claims concerning the actions of the Bank of Lithuania, a temporary administrator and other subjects that are related with the performance of the transfer (return) of assets, rights, transactions and liabilities of a bank, and to the extent that in the cases where the said claims are made, in satisfying the claim or complaint (request), the court is prohibited from annulling the contested action (act) or imposing the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law,

– Paragraph 2 of Article 131 (wording of 17 November 2011) of the Law on Financial Sustainability, Paragraph 14 of Article 761 (wording of 17 November 2011) of the Law on Banks, Paragraph 2 (wording of 17 November 2011) of Article 71 of the Law on the Proceedings of Administrative Cases and Paragraph 3 (wording of 17 November 2011) of Article 145 of the Code of Civil Procedure, to the extent that it is prohibited therein for courts to take the temporary protective measures and measures to secure a claim that would restrict the performance of actions related with the application of measures to enhance financial stability as well as the performance of the actions (acts) of the Bank of Lithuania, a temporary administrator and other subjects that are related with the organisation and implementation of the transfer (return) of assets, rights, transactions and liabilities of the bank (return), are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution and the constitutional principle of a state under the rule of law,

is grounded on legal reasoning, therefore, this request is acceptable for consideration at the Constitutional Court.

IX

  1. The decision of the Constitutional Court on accepting the petition neither approves of nor denies the arguments upon which the group of Members of the Seimas, the petitioner, grounds its position; when adopting such a decision, the fact of essential significance is whether the petition of the petitioner is grounded on legal reasoning (Constitutional Court decisions of 15 December 2006, 8 January 2008, 8 October 2008, 3 April 2009 and 14 May 2009).
  2. In this Constitutional Court decision it has been held that the petition of the group of Members of the Seimas, the petitioner, to a certain extent is not grounded on legal arguments, that the petition requesting to investigate the compliance of a legal act (part thereof) with the Constitution according to the content of norms and/or the extent of regulation must clearly indicate concrete articles (parts thereof), items of the legal act the compliance of which with the Constitution is doubtful from the petitioner’s viewpoint, also concrete provisions—norms and/or principles—of the Constitution, with which, in the opinion of the petitioner, the concretely indicated articles or items of the disputed legal act are in conflict. Thus, it has been held that the petition of this petitioner is to be, to a certain extent, considered as not complying with the requirements set forth in Article 66 of the Law on the Constitutional Court.
  3. If a petition (part thereof) fails to comply with the requirements set forth in Article 66 of the Law on the Constitutional Court, under Article 70 of the Law on the Constitutional Court, such a petition is returned to the petitioner. The return of a petition shall not take away the right to apply to the Constitutional Court according to the common procedure after removal of the deficiencies thereof.

Conforming to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania, Paragraph 3 of Article 22 and Articles 25, 28, 66 and 70 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania has passed the following


decision:

  1. To accept the petition of the group of Members of the Seimas of the Republic of Lithuania, the petitioner, requesting to investigate whether:

– Item 2 (wording of 30 March 2004) of Paragraph 3 of Article 85 of the Republic of Lithuania Law on Banks, to the extent that it prohibits the discharge of a financial obligation—offset of a counter-claim of the same kind—not discharged prior to the opening of bankruptcy proceedings, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– Paragraph 2 (wording of 30 March 2004) of Article 87 of the Republic of Lithuania Law on Banks, according to the content of norms, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– the provision “The claims related to the payment of taxes and making other payments to the budget <...> as well as to the granted loans received on behalf of the state and with the guarantee of the state shall be satisfied third” of Paragraph 3 (wording of 4 November 2004) of Article 87 of the Republic of Lithuania Law on Banks is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– Item 3 (wording of 20 April 2006) of Paragraph 7 of Article 10 of the Republic of Lithuania Law on Enterprise Bankruptcy, to the extent that it prohibits the discharge of a financial obligation—offset of a counter-claim of the same kind—not discharged prior to the opening of bankruptcy proceedings, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– the provision “the discharge of all financial obligations not discharged prior to the opening of bankruptcy proceedings, including payment of interest, default interest, taxes and other mandatory payments, also the recovery of debts from the enterprise through court or without suit, shall be prohibited, save the offset of counter-claims of the same kind where such offset is allowed under the provisions of tax laws providing for the offset of tax overpayment (difference)” of Item 3 (wording of 22 December 2011) of Paragraph 7 of Article 10 of the Republic of Lithuania Law on Enterprise Bankruptcy, is not in conflict with Article 23, Paragraph 1 of Article 29 and Paragraph 3 of Article 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– Paragraph 9 (wording of 17 November 2011) of Article 85 of the Republic of Lithuania  Law on Banks, to the extent that it prescribes that, upon the opening of bankruptcy proceedings of a bank, the bank administrator does not have the right to inspect the transactions concluded when the temporary bank administrator is conducting the transfer of the bank’s assets, rights, transactions and liabilities to another bank and bring actions in court for invalidation of such transactions, is not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– Paragraph 1 of Article 131 (wording of 17 November 2011) of the Republic of Lithuania Law on Financial Sustainability, Paragraph 10 (wording of 17 November 2011) of Article 72 and Paragraph 14 of Article 761 (wording of 17 November 2011) of the Republic of Lithuania Law on Banks, Article 881 (wording of 17 November 2011) of the Republic of Lithuania Law on the Proceedings of Administrative Cases, and Article 2671 (wording of 17 November 2011) of the Code of Civil Procedure of the Republic of Lithuania, to the extent that it is prohibited therein to bring in court the claims concerning the annulment of the actions (acts) of the Government or an institution authorised by it, the Bank of Lithuania or other institutions or subjects that are related with the application of measures to enhance financial stability, also concerning the imposition of the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored, as well as the claims concerning the actions of the Bank of Lithuania, a temporary administrator and other subjects that are related with the performance of the transfer (return) of assets, rights, transactions and liabilities of a bank, and to the extent that in the cases where the said claims are made, in satisfying the claim or complaint (request), the court is prohibited from annulling the contested action (act) or imposing the obligation to carry out the actions as a result of which the validity of the contested action (act) would be suspended or terminated or the condition that existed prior to the adoption of the disputed action (act) would be otherwise restored, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– Paragraph 2 of Article 131 (wording of 17 November 2011) of the Republic of Lithuania Law on Financial Sustainability, Paragraph 14 of Article 761 (wording of 17 November 2011) of the Republic of Lithuania Law on Banks, Paragraph 2 (wording of 17 November 2011) of Article 71 of the Republic of Lithuania Law on the Proceedings of Administrative Cases, and Paragraph 3 (wording of 17 November 2011) of Article 145 of the Code of Civil Procedure of the Republic of Lithuania, to the extent that it is prohibited therein for courts to take the temporary protective measures and measures to secure a claim that would restrict the performance of actions related with the application of measures to enhance financial stability as well as the performance of the actions (acts) of the Bank of Lithuania, a temporary administrator and other subjects that are related with the organisation and implementation of the transfer (return) of assets, rights, transactions and liabilities of a bank, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

  1. To return the petition of the group of Members of the Seimas of the Republic of Lithuania, the petitioner, requesting to investigate whether:

– Item 4 (wording of 20 January 2005) of Paragraph 1 of Article 12 of the Republic of Lithuania Law on Insurance of Deposits and Liabilities to Investors, according to the content of norms, is not in conflict with Articles 23, 29 and 46 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– the Republic of Lithuania Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, the Republic of Lithuania Law on Amending Article 6.116 of the Civil Code, the Republic of Lithuania Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, the Republic of Lithuania Law on Amending Articles 20, 21 and 25 of the Law on Insurance of Deposits and Liabilities to Investors and Supplementing the Law with Article 121, the Republic of Lithuania Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, and the Republic of Lithuania Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, according to the extent of regulation and the procedure for adoption, publication and entry into force, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law;

– Article 8 of the Republic of Lithuania Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Paragraph 2 of Article 5, Articles 7 and 8 of the Republic of Lithuania Law on Amending and Supplementing Articles 10, 23, 72, 76 and 85 of the Law on Banks, Supplementing the Law with Article 761 and Recognising Articles 28 and 29 Thereof as No Longer Valid, Article 6 of the Republic of Lithuania Law on Amending and Supplementing Articles 2, 4, 11, 14 and the Title of the Third Section of the Law on Financial Sustainability and Supplementing the Law with Articles 71 and 131, Articles 1 and 2 of the Republic of Lithuania Law on Supplementing and Amending Article 145 of the Code of Civil Procedure and Supplementing the Code with Article 2671, and Articles 1 and 2 of the Law on Supplementing and Amending Article 71 of the Law on the Proceedings of Administrative Cases and Supplementing the Law with Article 881, according to the content of norms, to the extent the petitioner relates it to the transfer of assets, rights, transactions and liabilities of a bank to another bank, are not in conflict with Article 23 and Paragraph 1 of Article 30 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

This decision of the Constitutional Court is final and not subject to appeal.

The decision is promulgated in the name of the Republic of Lithuania.

Justices of the Constitutional Court:                        Egidijus Bieliūnas

                                                                                            Toma Birmontienė

                                                                                            Pranas Kuconis

                                                                                            Gediminas Mesonis

                                                                                            Ramutė Ruškytė

                                                                                            Egidijus Šileikis

                                                                                            Algirdas Taminskas

                                                                                            Romualdas Kęstutis Urbaitis

                                                                                            Dainius Žalimas